11-14-16 Rabobank Analysts Discuss Impact of Trump Election on Food & Ag Sector

 

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Rabobank Analysts Discuss Impact of Trump Election on Food & Ag Sector

Report addresses key areas of focus for U.S. ag industry

(NEW YORK, NY) Nov. 15, 2016 – The election of Republican candidate Donald Trump as the 45th President of the United States has the food and agriculture sector awaiting clarification on his policies and positions. The Rabobank Food & Agribusiness Research and Advisory (FAR) group has authored a report on the possible implications of the election.

“Republican-controlled Executive and Legislative branches could mean swift action when the new administration takes office,” notes Pablo Sherwell, Rabobank head of Food & 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.”

While President-elect Trump’s policies are yet to be clearly defined, his statements during the campaign suggest drastic changes from current policy could be on the horizon. Acknowledging that any change, and the subsequent impact, is uncertain, Rabobank analysts dissect key areas to watch, both short and long-term:

•            In the short term, agricultural markets may be affected by foreign exchange volatility, as well as changing business appetite and consumer confidence.

•            Looking towards the next year, it will be critical to watch potential revisions to trade agreements, labor policies and business regulations, as well as the effects these elements will have on economic growth.

Short-Term Implications

The lack of market information creates uncertainty, and uncertainty generates market volatility. We saw this first-hand last week, when an initial uncertainty over President-elect Trump’s policy direction resulted in a short-term sell-off reaction by markets.

“Currently, the export share of U.S. agricultural production represents more than 20 percent in volume and value terms, making U.S. price formation highly dependent on foreign trade and therefore foreign currency,” said Sherwell.

Longer-Term Implications

Trade agreements, agricultural policy and labor will act as key areas where potential policy changes could have longer-term implications on the industry as a whole.

Trade Agreements: As the number-one global agricultural exporter, the U.S. F&A sector is one of the main drivers of global agriculture and trade, reaching nearly $125 billion in 2016. Currently, the U.S. exports commodities that complement the rest of the world’s food supply—any change to U.S. agricultural trade agreements will not only affect global prices and trade dynamics but also U.S. farmer margins.

Farm Bill 2018: The current Farm Bill is scheduled to be renewed by 2018. Because the Republican Party holds the majority, the development, approval and implementation of the 2018 Farm Bill is likely to be a smoother process than that of the previous bill. Regulatory reductions have been a policy direction advocated by President-elect Trump during his candidacy, and it is likely that the direction will shift even more toward an environment of reduced regulation.

Labor: The U.S. food and agriculture industry is highly dependent on migrant labor, particularly in sectors such as produce, animal protein and food service operation. If immigration laws are enforced more strictly, business owners may face labor shortages, which would pressure their margins.

The full report, “The F&A Sector After the Election: What to Watch” is available here.

About Rabobank International Food & Agribusiness Research and Advisory (FAR)

The Rabobank International Food & Agribusiness Research and Advisory (FAR) group is a global team of more than 80 analysts who monitor and evaluate global market events that affect agriculture worldwide. This international team works to collect key insights into commodity markets; conduct in-depth analysis of the factors that drive sector success (or failure); and examine the megatrends that ultimately influence clients’ business strategy. These analysts are internationally respected experts in sectors from protein to produce, inputs to oilseeds, and their knowledge is shared with Rabobank customers. 

About Rabo AgriFinance

As a leading financial services provider for agricultural producers and agribusinesses in the United States, Rabo AgriFinance adds value using industry expertise, client-focused solutions, and by creating long-term business relationships. Rabo AgriFinance offers a comprehensive portfolio of services that gives producers the right products to prepare for, and take advantage of, market opportunities. Rabo AgriFinance representatives offer a wide array of financial services and knowledge to help customers realize their ambitions. This comprehensive suite of services includes loans, insurance, input finance and effective risk management products. Rabo AgriFinance is a division of Rabobank Group, the premier bank to the global agriculture industry and one of the world’s largest and safest banks.

About Rabobank

Rabobank Group is a global financial services leader providing wholesale and retail banking, leasing, and real estate services in more than 40 countries worldwide. Founded over a century ago, Rabobank today is one of the world’s largest banks in the world with over $750 billion in assets. In the Americas, Rabobank is a premier bank to the food, agribusiness and beverage industry, providing sector expertise, strategic counsel and tailored financial solutions to clients across the entire food value chain. Additional information is available on our North America Wholesale Banking website or social media: Twitter LinkedIn.

About Rabobank, N.A.

Rabobank, N.A. is a California community bank and a leading provider of agricultural financing and full-service banking products to California consumers, businesses, and the agriculture industry. With nearly 120 retail branches, we serve the needs of communities from Redding to the Imperial Valley through a regional structure that promotes local decision-making and active community involvement by our employees. 

Rabobank, N.A. is a division of Rabobank Group, the premier lender to the global food and agricultural industry and a financial services leader providing commercial, retail, and agricultural finance solutions in 48 countries around the world. From its century-old roots in the Netherlands, Rabobank has grown into one of the world’s largest and safest banks.  http://www.rabobankamerica.com