A few weeks into the new US administration and the key word emanating from agricultural circles is ‘uncertainty’. There are concerns that Trump does not see farming as a key priority as evidenced by the length of time it took to appoint Sonny Perdue as agricultural secretary.
Added to this, there are mixed signals on support for the bio-ethanol and renewables sector. As reported last month, despite promises of support during the presidential campaign, Scott Pruitt, the head of the Environmental Protection Agency is a critic of biofuels. Furthermore, the administration contains numerous appointments with close links to the oil and gas industry. However, one area where farmers feel that Trump has sent clear signals that he will support them on is reduced environment-related regulation.
Trade is another area where there are major concerns. The US withdrawal from the Trans-Pacific Partnership (TPP) is seen as a significant, if not unexpected, blow as many farmers saw possibilities to export more soybeans, corn and pork to Asia. There is also anxiety over trade with China which is a major outlet for soybeans. If the US imposes tariffs on Chinese manufactured goods, then it is likely that the Chinese would react by importing soybeans from elsewhere.
There are also questions over the stance that the Trump administration will take on the next US Farm Bill, which is due to be put before Congress by autumn 2018, as well as migrant labour which was covered previously on InsideTrack.
From a UK perspective, the US has a major underlying influence on prices for arable commodities. The US biofuels policy supports grain prices globally. Any trade disputes will disrupt prices although this could also present opportunities especially as the UK strives to be a champion of freer trade.
The prospect of a bilateral US-UK trade deal should not be ignored. This is likely to be much less ambitious than the proposed US-EU trade deal (TTIP) which according to most experts has gone into ‘cold storage’. Market access for US beef to the UK under such a deal would be a key issue for British farming. If the US secures good access for hormone-treated beef, UK farmers would struggle to be competitive, based on its current production standards. Arguably, US beef could displace imports from the EU, especially Ireland which imports sizeable volumes of animal feed from the UK. Any significant decrease in UK and Irish beef output would have negative implications for UK feed grain prices.