NEW YORK – The election of Donald Trump as President of the United States has the food and agriculture sector awaiting clarification on his policies and positions. The possible implications of the election is the topic of a recent report published by the Rabobank Food & Agribusiness Research and Advisory (FAR) group.
“Republican-controlled Executive and Legislative branches could mean swift action when the new administration takes office,” according to Pablo Sherwell, Rabobank’s head of food and agribusiness research and advisory, North America. “Our analysts and others around the world are keeping a close eye on trade, labor, the upcoming Farm Bill and regulations impacting production agriculture, as these areas are where potential policy changes could have longer-term implications on the industry as a whole.”
President-elect Trump’s agriculture policies are not yet defined and some of his statements during the campaign suggest drastic changes to the current policy might be on the horizon. Rabobank analysts looked at key areas to watch.
For the short term, agricultural markets may have foreign exchange volatility and uncertainty with the lack of market information.
“Currently, the export share of US agricultural production represents more than 20 percent in volume and value terms, making US price formation highly dependent on foreign trade and therefore foreign currency,” Sherwell said.
In the long term, Rabobank and others will look at trade agreements, agricultural policy and labor policies and business regulations to see how it affects economic growth.
As the No. 1 global agricultural exporter, the US food and agriculture sector is one of the main drivers of global agriculture and trade, reaching nearly $125 billion in 2016. Currently, the US exports commodities that complement the rest of the world’s food supply — any change to US agricultural trade agreements will not only affect global prices and trade dynamics but also US farmer margins.
For agriculture, Rabobank pointed out that the 2018 Farm Bill is likely to be a smoother process than that of the previous bill since Republicans have the majority in Congress. Regulatory reductions have been a policy direction advocated by President-elect Trump during his candidacy, and it is likely that the direction will shift toward an environment of reduced regulation.
Rabobank also said that because the US relies on migrant labor in sectors that include animal protein production and foodservice operations, drastic changes in enforcement of immigration laws could result in business owners experiencing labor shortages.
The full report, “The F&A Sector After the Election: What to Watch” is available here.