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Confidence in the agriculture business sector dipped by another four points in the second quarter of 2026 after an 18-point decline in the first three months, weighed down mainly by concerns over the effect of the Middle East war on energy and fertiliser prices.The lingering impact of foot-and-mouth disease, which has brought financial pressure on the cattle industry, is also still a major challenge despite accelerated imports of vaccines, according to the agribusiness confidence index produced by the Agricultural Business Chamber of South Africa (Agbiz) and the Industrial Development Corporation (IDC).Lower global prices in the sugar and wheat industries were among the key constraints respondents highlighted as major risks weighing on sentiment, while indications that El Niño weather conditions may characterise the 2026/27 production season have added to concerns about the outlook.At 45 points, the second quarter index level is below the 50 neutral mark, indicating that South African agribusinesses remain pessimistic about business conditions. The survey was conducted in the second week of June, reflecting the perceptions of at least 25 decision-makers on the 10 most important aspects influencing a business in the agricultural sector.These comprise turnover, net operating income, market share, employment, capital investment, export volumes, economic growth, general agricultural conditions, debtor provision for bad debt and financing cost.The survey is used by agribusiness executives, policymakers and economists to understand perceptions of the agribusiness sector and serves as a leading indicator of agricultural output value, providing a basis for agribusinesses to support their business decisions.“The cost pressures of the Middle East conflict and the increased likelihood of unfavourable weather conditions over the coming production season are top-of-mind concerns for agribusinesses,” said Wandile Sihlobo, chief economist at Agbiz.The survey was conducted before the latest signals of a tentative peace agreement between the US and Iran which could open up the flow of cargo through the key Strait of Hormuz, easing price pressures on oil and fertiliser.Fertiliser accounts for a notable share of input costs in grains, oilseeds and sugarcane — about 20%-35% depending on the crop — while fuel takes up about 10%-15% of farmers’ input costs.While the faster pace of importing vaccines for foot-and-mouth have been encouraging, the disease remains a problem, Sihlobo said.“The livestock and pig industries are under immense financial pressure due to the disease, and these results reflect the challenge at hand. What remains key is a speedy vaccination process that will get us off the current worrying path,” he said.At the start of the month, agriculture minister John Steenhuisen said South Africa had procured 13.5-million doses of foot-and-mouth disease vaccine since February, as the government ramps up efforts to contain the outbreak and restore confidence in the livestock sector.He said just under 4.4-million animals had been vaccinated across the country by May 28 in what he called “the largest vaccine acquisition programme ever undertaken by the South African state”.The minister said 3.5-million Biogenesis Bago vaccine doses had arrived in South Africa the previous week and would be distributed to industry bodies and provinces to accelerate vaccination in affected and at-risk areas.He acknowledged the financial pressure on farmers, saying movement restrictions had limited trade, increased feed costs and created uncertainty over markets, cash flow and future production. Steenhuisen noted critics’ argument that the vaccine rollout should have happened faster but said the state had been required to shift from a reactive disease-control system to a more proactive, preventative and risk-based biosecurity model.In the Agbiz/IDC second quarter survey, the subindex measuring agriculture export volumes deteriorated by 13 points to 38, dragged down by worries about the impact of the Middle East conflict on logistics as well as rising shipping costs.But overall, South Africa’s agricultural exports have remained fairly strong, totalling $3.7bn in the first quarter, an 11% increase from the same period a year ago.
