Johannesburg, Dec 5 (I-Net Bridge) - The confluence of favourable circumstances in the agricultural sector suggests that 2012 will be more rewarding for industry players than the previous three years, according to Absa AgriBusiness outlook.
Speaking in Johannesburg on Monday, head of Absa AgriBusiness Ernst Janovsky, said he expected supportive weather conditions, relatively stable agricultural commodity prices and benefits for exporters, should the rand stay on a weaker footing.
"These factors all count in the favour of farmers, and they explain why more people want to be back in agriculture sector," he said.
Janovsky pointed to a trend of rising profitability in the SA agricultural sector, with a resulting steady increase in farm property values. This leads to a decline in the debt-to-asset ratio of farmers, implying that they have a higher capacity to take on more debt if they need to, which in turn points to a much healthier financial farming sector.
Aside from supply and demand factors being favourable for the sector, Janovsky sees significant benefits coming from the widespread take-up of new technologies that are changing the approach to agricultural production.
"Technology is an overriding positive for agriculture and advances are being made in a number of areas, across all forms of farming, which support the longer term effectiveness and profitability of the sector," he said.
Over the last three to five years, farmers experienced a cost squeeze due to significant increases in input costs, which placed a constraint on profitability.
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