Trump and agriculture

Freelance journalist, Ewan Pate, writes exclusively for #OFCInsights about President-Elect Donald Trump and his relationship with US agriculture. 

Since November 8 the world has been developing a new vocabulary. We now live in Trumpian times.  Trumpism will be the new political dogma. We will have Trumpiana and Trumpgate to look forward to no doubt but what does it all mean for agriculture?

It is probably better to look first at the prospects within the United States. There is no doubt American farmers – wanting to be made great again – contributed enthusiastically to the Trump victory. The agricultural heartlands would never be expected to vote anything other than Republican. From the Corn Belt to the Prairies and down through Oklahoma and Texas the map has been Republican red for as long as anyone can remember. Conservatism rules politically and domestically but there was an extra enthusiasm for Trump with rural voters turning out for the brash New Yorker in greater numbers than they did for Mitt Romney in 2012.

That might seem strange given Mr Trump’s lack of anything resembling rural folksiness. He is a metropolitan in every way but he still managed to convince farmers that he was their friend and supporter.  Now he has to prove it.

The President-elect’s basic message is that he will do everything he can to reduce on-farm production costs. Delivering grain to the elevators as cheaply as possible makes it competitive on world markets, argues Mr Trump, the businessman. He promised during the election campaign to cut red tape by 70%. A member of his transition team has more quietly said that a 10% cut would be more likely. 

Nonetheless the message was popular with farmers. They also have high expectations of the new Farm Bill which will have to be in place by 2018. There should be some support measures in it and with both houses of Congress also Republican, its passage should be easier than its much-debated and delayed predecessor.

Mr Trump has already said he will remove the Supplemental Nutrition Assistance Program from the new bill. This currently delivers food vouchers worth $125 per month to the staggering total of 46.5m Americans. It is included as agricultural support on the somewhat loosely connected logic that it boosts demand for domestically produced food.

There is nothing else that suggests a reduction in support for farming. But there are some areas where Mr Trump’s policies will adversely affect the agricultural industry.
Zippy Duvall, the appropriately named President of the American Farm Bureau Federation, (AFBA) has wasted no time in flagging up some of these issues particularly over immigrant labour and the Mexican wall. It has been estimated that 78% of the farm   was born elsewhere than in the US. On behalf of his members Mr Duvall has written: “We rely on a huge skilled farm workforce in America that is often undocumented. We are not looking for an amnesty but there has to be a way for these people to legally do these jobs.”

Indeed, there must. A Californian labour provider giving evidence to a congressional committee has already warned that if the immigrant workforce - largely Mexican- is unduly restricted, the large fruit and vegetable concerns will simply move their production bases to Mexico, Chile and Peru. The loss to agriculture if immigration controls were strictly enforced by measures such as the Mexican wall is given as staggering $60bn per annum.

Trade is contentious too. Mr Trump has already said he will tear up agreements such as the Trans-Pacific Partnership (TPP) and the already floundering Transatlantic Trade and Investment Partnership (TTIP). This cavalier approach finds no favour with the AFBA.  Mr Duvall has put the potential value of the TTP alone at $4.4 bn per annum. Over 500 million consumers around the Pacific rim would have   favoured access to US farm produce if the deal succeeds. He has reminded the Trump transition team that 36% of US agricultural produce is exported and he wants to see more, not less global market access.

The rival National Farmers Union however supports the abandonment of TPP and favours more protectionism. It doesn’t like globalisation much.
Mr Trump’s policies on renewable energy will also be pivotal. He favours a resurgence in coal and will face difficulties with blue collar workers in the Rust Belt if he reneges. He also favours fracking and increases in natural gas production. All of that could be at the expense of subsidised bioethanol production with these new supplies of fossil fuels competing with the 13.3bn gallons of fuel produced from crops, mostly maize.

So where does that leave the British farmer?  Most of it would point to increased supplies of cheaper commodities exiting the US but it all depends on the    height of the tariff walls erected on this side of the Atlantic. The EU, especially in the light of a failed TTIP, might be expected to keep tariffs high, but a post- Brexit UK government might be very keen to forge its own bilateral trade deals with the US. Protecting the UK farmer’s interest might come well down the list. 

It is all complex stuff   - roll on the 2017 Oxford Farming Conference and a proper opportunity to dissect and discuss the challenges. Or indeed the opportunities!  

Comments from Martin Davies, OFC 2017 Chairman

Martin Davies travels to the USA regularly for his work, during his travels he has picked up the following:

• Waters of the United States Rule – Trump is promising to relax this which is legislation tracing water pollution from farms back to source.
• Estate tax – Trump is proposing to introduce APR type relief for farmers.
• Renewable fuel standard 2005 – Trump gave commitment to maintain this in one of his Iowa speeches – probably got him Iowa farm there because of importance of corn ethanol.
• Minimum wage for farm workers - $15/hour, some states e.g. California are introducing this at state level, Clinton was proposing federal introduction.
• Affordable care act – Trump opposes, requires submission of information on workers which is not desirable in places like California where many Mexican workers are illegal.