S Africa’s agri outlook is positive: Agbiz

South Africa’s agricultural sector has shown consistent improvement, but controversial land reform could hurt capital investment, according to Agbiz.

South Africa’s agricultural sector continued to expand for the third consecutive quarter, indicating “a consistent improvement in agribusiness activity,” according to the Agricultural Business Chamber, or Agbiz.

The latest Agbiz/IDC Agribusiness Confidence Index, which the chamber compiles in cooperation with South Africa’s Industrial Development Corporation, gained two index points in the first quarter to 57.

“A reading above 50, indicates expansion in the South African agribusiness activity,” Agbiz noted in a statement announcing the latest results. “Therefore, a 57 index point suggests that agribusinesses are holding an optimistic view regarding business conditions in the country.”

The gain was the result of improvements across a majority of the 10 sub-indices that comprise it, including perceptions of profitability, economic growth, confidence in net operating income and employment growth.

Among those, the economic growth sub-index jumped up 16 points from the previous quarter to 50, reflecting the overall positive sentiment in the country following the South African Reserve Bank’s economic growth forecast of 1.1 percent for 2017 compared to 0.4 percent last year.

Agbiz also noted that the National Crop Estimate Committee’s first production estimates for summer crops was up 72 percent from the previous season, which “could be the largest crop since the 2013/14 production season.”

“The Agbiz/IDS Agribusiness Confidence Index results paint an encouraging picture of the South African agricultural sector,” the chamber said. “Following higher rainfall in the past few months, the sector is expected to show positive improvements in production this year compared to the previous one.”

Sentiment surrounding capital investment, however, deteriorated, falling 13 points from the previous quarter to 56, in large part due to the rise of ‘radical economic transformation’ and controversial land reform statements, according to Agbiz.

Last year, South Africa’s legislature passed the Land Expropriation Act, which would allow the government to acquire land without an owner’s consent — in order to distribute land away from primarily white ownership — at a price set by the Valuer General, an independent government body established in 2011.

President Jacob Zuma in February sent the controversial measure back to parliament for further consideration in order to enable more public participation, creating uncertainty which “could potentially discourage investments in the agricultural sector over the foreseeable future,” Agbiz said.

The president’s office had not responded to a request for comment on this article by press time.