The Agbiz/IDC agribusiness confidence index dropped to 42 in the fourth quarter of the year, well below the neutral 50-point mark. Picture: THINKSTOCK
The Agbiz/IDC agribusiness confidence index dropped to 42 in the fourth quarter of the year, well below the neutral 50-point mark. Picture: THINKSTOCK

Confidence in the agricultural sector has fallen to the lowest level in nine years on the back of uncertainty around land reform.

Following a decline from 54 to 48 points in the third quarter of 2018, the Agbiz/IDC agribusiness confidence index dropped to 42 in the fourth quarter of the year.

The results, which are below the neutral 50-point mark which divides expansion from contraction, indicate that agribusinesses are gloomy about business conditions.

The drop in confidence in the fourth quarter of 2018 was driven by turnover, net operating income and general agricultural conditions.

“We doubt that there will be a meaningful improvement in confidence in the near term if there is still no clarity regarding the land-reform policy in SA,” said agriculture economist Wandile Sihlobo.

“Any reckless move in policy which might undermine property rights could dent investment and long-run growth prospects in the sector.”

Parliament’s joint constitutional review committee formally resolved last month to recommend the amendment of section 25 of the constitution to allow for the expropriation of land without compensation.

The agribusiness confidence index figures are released on the same day as third-quarter GDP figures which will be released by Stats SA on Tuesday.

The agricultural sector weighed heavily on growth in the first half of the year, placing SA in a recession for the first time in almost a decade.

menons@businesslive.co.za