Drought worries put damper on agribusiness confidence

Goats roam around the cracked mud floor of the Adelaide Dam, outside the town. The situation has improved slightly for these animals since aid organisation Gift of the Givers trucked in fodder and started filling troughs
Goats roam around the cracked mud floor of the Adelaide Dam, outside the town. The situation has improved slightly for these animals since aid organisation Gift of the Givers trucked in fodder and started filling troughs
Image: Fredlin Adriaan

Agribusinesses are slightly less optimistic about business conditions due to drought and unfavourable government policies, according to the Agbiz/IDC confidence index, which fell slightly in the fourth quarter of 2019.

The index, which gauges among other things capital investment, exports and operating income for SA’s agribusinesses, declined to 44 points from 46 in the third quarter, with the export subindex plunging 11 points to 39.

The index is below 50 for the sixth consecutive quarter, the longest period of subdued confidence for almost a decade.

Fears remain that drought could lead to poor crop production, while there is also concern that foot-and-mouth disease could lead to export bans,  Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo said.

Weather conditions and an unfavourable regulatory environment contributed to depressed confidence, and were expected to persist.

“While SA’s agricultural policy environment, specifically land reform and water regulations, remains unsatisfactory, the unfavourable weather conditions and biosecurity are pressing matters that could constrain agricultural economic fortunes,” the statement read.

“The recession that SA’s agricultural economy finds itself in is caused by these very same factors, and we fear it might spill over to 2020, other things being equal.”

The subindex covering general economic conditions plunged 15 points to nine. — BusinessLIVE

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