The interest rate remains unchanged as expected, given that the world economy is experiencing extreme levels of uncertainty. Whilst a reduction in borrowing costs would have been the preferable outcome, the announcement of an unchanged interest rate was expected considering such uncertainty.

With primary and secondary agricultural debt estimated at around R280 billion, an increase in interest rates would have set the sector back, potentially pushing some farmers into financial distress. While unchanged rates prevent a rise in debt servicing costs, interest rates remain relatively high, continuing to place pressure on farmers managing existing debt, while the input cost squeeze continues to erode farmers margins.

However, the agriculture sector remains optimistic, supported by the Agbiz/IDC Agribusiness Confidence Index (ACI), which increased by 11 points from the fourth quarter of 2024 to 70 in the first quarter of 2025, marking its highest level since late 2021. This increase in confidence reflects optimism among South African agribusinesses, driven by several key factors such as favourable weather conditions, improved export performance, enhanced port efficiency, and progress in disease control, to mention a few.

We remain optimistic that the SARB may cut rates later in the year and the proposed Value Added Tax (VAT) increases announced in the Budget.