Negative sentiment on farming

An index tracking confidence in SA’s agriculture industry declined to the lowest in more than two years as the ANC presses ahead with plans to change the constitution to make it easier to expropriate land without compensation.

The Agbiz/IDC agribusiness confidence index declined to 48 in the third quarter, the Agricultural Business Chamber said. That’s the weakest since 2016, when SA was in the grips of a drought that ensued after the lowest annual rainfall in at least a century.

A reading below the neutral 50 mark means industry participants, who were surveyed in August, are downbeat about conditions.

Perceptions of capital-investment confidence fell to the lowest point since the fourth quarter of 2017, when the ANC adopted the policy that could enable land expropriation without pay.

The move to amend the constitution has added to wider emerging-market jitters in knocking SA assets. Critics of the plan and investors say the move could lead to an erosion of property rights. The ANC says more needs to be done to correct racially skewed land-ownership patterns dating back to colonial and apartheid rule.

While there’s widespread consensus that land reform needs to be accelerated, views on how it should be done are widely divergent.

Policy uncertainty

Output by the agricultural industry contracted 29% in the second quarter – a major contributor to SA falling into its first recession since 2009.

“The root of pessimism” is lingering policy uncertainty and weak economic growth,” said the chamber’s Wandile Sihlobo. “The lack of clarity regarding the land reform policy proposal, particularly expropriation without compensation, remains a key risk that could potentially undermine investment and long-run growth prospects in the sector. Nonetheless, we have not seen evidence pointing to disinvestment yet.” –

The root of pessimism is lingering policy uncertainty and weak economic growth.

Wandile Sihlobo

Agricultural Business Chamber