Latest news with #SAAMA
Zawya
03-06-2025
- Business
- Zawya
South Africa: Agriculture profitability outlook boosted after a surprise rate cut, the first for 2025
The Sarb's recent surprise decision to cut interest rates by 0.25% effective from 30 May 2025 provides a further boost for the agriculture profitability outlook. This is a welcome reprieve for farmers in terms of reduced debt servicing costs following a drought-induced agriculture contraction, with overall sector performance dropping by 8% year-on-year, with debt uptake already up by 8% year-on-year at R221.82bn. Total agriculture debt increased by 67% in the past ten years, with a compound annual growth rate (CAGR) of 5.8%. Improved margins and investment recovery Not only will the interest rate cut help ease pressure on profit margins, but it will also spur investment recovery in the sector as output rebounds on the back of favourable production conditions. The signals for an agricultural growth upswing include a 15.7% year-on-year increase in the expected 2024/25 summer crop harvest, a rebound in agriculture machinery sales, and the bullishness in the Agribusiness Confidence Index (ACI). The quarterly ACI update for Q1 of 2025 surged by 11 points from Q4 of 2024 to reach the highest level since Q4 of 2021, to 70 points. Agri machinery sales show strong recovery We saw an uptick in agriculture machinery sales total for Q1 of 2025 increasing by a whopping 27% relative to the same period in 2024 at 1,827units, and were up 22% for the year to April 2025 at 2,400 units, according to the South African Agriculture Machinery Association's (SAAMA) update in April 2025.05. Further, the recent cut and more in the offing for later in the year will help lift consumer confidence and boost demand for agricultural commodities in a benign inflation and macroeconomic outlook. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
Zawya
12-05-2025
- Business
- Zawya
Record rebound in agriculture machinery sales as South Africa's rains boost crop yields
After a unsteady start to the 2024/25 summer crop season with delayed rains despite the La Niña forecasts, production improved significantly as the season progressed. Excellent rains Although excessive and consequently delaying the onset of harvesting in some areas, seasonal rains were excellent since the beginning of the year across the production regions. This, combined with an upswing in the Agribusiness Confidence Index (ACI) helped lift the agriculture machinery sales from the doldrums. The quarterly Agbiz/IDC ACI update showed a sharply increase of 11 points from Q4 of 2024, reaching the highest level since Q4 of 2021 to 70 points in Q1 of 2025 underpinned by the benign interest rate outlook, improved efficiencies at ports, and progress in containment of animal diseases. The latest data from the South African Agriculture Machinery Association (SAAMA) showed a sustained recovery following a massive contraction in 2024 with the monthly sales for April 2025 up by 9% year‑on‑year (y/y) at 573 units comprised of 92% and 8% tractors and combine harvesters respectively. Total agriculture machinery sales for Q1 of 2025 increased by a whopping 27% relative to the same period in 2024 at 1,827units, and were up 22% for the year to April 2025 at 2,400 units. Ramping up harvesting Though delayed by incessant late seasonal rains, farmers will soon ramp up their harvesting of 4.44 million hectares under summer crops, and further intent to plant 827,970 ha under winter crops for 2025. Commodity prices have been excellent this season with maize touching best levels of over R6,800/t and R5,600/t for white and yellow respectively. Similarly, sunflower and soybean prices reached highs of R10,800/t (+20%y/y) and R9,094/t (+12% y/y) respectively this season. Although South Africa's economy remains pedestrian with headwinds from the global economy, the growth outlook is still optimistic including that for agriculture. So far, indications are that we are likely to experience further excellent agriculture conditions for the 2025/26 season as forecasts show probabilities of ENSO‑neutral conditions (El Niño, La Niña, and the Southern Oscillation) towards year end. The combination of the lower interest rate outlook amid low inflation and a stronger rand exchange rate bodes well for machinery sales as most are imported.
