South African Agribusiness Confidence Advances From 2009 Low

(Bloomberg) -- Confidence in South Africa’s agricultural industry improved from the worst reading since 2009 in the first quarter but lingered at levels that indicate producers are still downbeat about business conditions.

The Agbiz/IDC Agribusiness Confidence Index rose to 46 in the first three months of the year compared with 42 in the prior quarter, the Pretoria-based Agricultural Business Chamber said in an emailed statement Monday.

Key Insights:

  • The reading is below the 50 neutral mark. The gauge reflects the perceptions of at least 25 agribusiness decision-makers on subjects including economic growth and export volumes and was conducted from Feb. 28 to March 15.
  • The improvement “is by no means a cause for celebration, as confidence levels in the agricultural sector are still in contraction territory,” Wandile Sihlobo, the chief economist at Agbiz, said in the statement.
  • Respondents remain concerned about the ruling African National Congress’s land-reform plans, he said. The party is changing the country’s constitution to to make it easier to expropriate land without pay, and is processing separate legislation that outlines the circumstances under which the state can do this.
  • The party says amendments are needed to address racially skewed ownership patterns dating back to colonialism and white-minority rule, a view shared by the Economic Freedom Fighters, the second-largest opposition party. Farmers’ groups and some other opposition parties say the changes will undermine property rights and deter investment, and that they will contest any changes in court.
  • The outcome of the ongoing land-reform processes, such as President Cyril Ramaphosa’s advisory panel, and the parliamentary review committee, “are key to determining the path for fixed investments in South Africa’s agricultural sector, and thereafter long-run growth prospects and employment,” Sihlobo said.

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