UK farmers ‘face similar upheavals to US counterparts under Trump’
PUBLISHED: 15:21 07 February 2019 | UPDATED: 16:38 07 February 2019
UK farmers bracing themselves for Brexit are facing similar turmoil to the American agricultural sector under Trump, a US farming leader says.
Roger Johnson, president of the USA National Farmers’ Union, who was speaking after he addressed East Anglian farmers at Sentry’s regional farming conference in Newmarket on Wednesday (February 6), said there were parallels to be drawn with the upheavals caused by the election of President Donald Trump in America.
“The way I look at it is whenever you have significant uncertainty it’s a major contributor to risk, and risk is something that costs money – not knowing what to do, what the rules are going to be, what the future is, what the outcomes are going to be, makes it very difficult to plan. Farmers’ businesses might just sort of pull back, not make investments, not make decisions because you don’t know the direction,” he said.
“I’m no expert on Brexit, nor do I want to talk a whole lot about that, but I do think there’s a similarity between that and what President Trump has done.”
American farmers, particularly in North Dakota where he is from, faced huge upheaval last year when Trump declared a trade war with China by imposing steep tariffs on steel and aluminium. The result was retaliatory action on tariffs on US agricultural goods, including soybeans, a north Dakotan staple, which saw sales to China drop to zero.
Overnight, soybean growers lost a huge slice of their market, with dire consequences, he explained, including a downward pull on other crop prices. American farmers are hugely reliant on export markets - the US is a net exporter of farm commodities – and saw soybean trade drop by a quarter. Its main export markets are China, Mexico and Canada, and the Chinese soybean market immediately switched to South America where it is also grown. The rail link taking the crop from Dakota to the Pacific to be shipped across to China shut down.
Subsequent talks between the US and Chinese leaders resulted in a slight relaxation, but nowhere near enough to turn the tide, he said.
“It’s a real problem, and a pretty major shock,” he said. Net farm income was already suffering a drop of 48% over five years, he explained. But in the UK, the devaluation of sterling post-referendum meant the aftermath from the Brexit referendum had been countered, he said.
“I think there are a lot of similarities behind what happened in the UK with the vote and the dilemma that you find yourselves in and how you go about Brexit,” he said.
He was critical of President Trump alienating Mexico, Canada and the European Union through some of his rhetoric, but did feel Trump’s underlying gripe with China, that its practices are unfair in relation to the markets, were well-founded, and could have been pursued through co-operation with other nations also affected. “They behave like a non-market economy,” he said. “They needed to be held to account – I don’t think there’s much question of that.”
He added: “The problem with Trump administration is not their diagnosis that China is a problem. The problem is they first went about offending the rest of the world.”
US farmers had voted ‘pretty overwhelmingly’ for Trump and support remained ‘quite strong’, he said, but he detected growing frustration. “We have sort of ostracised the rest of the world,” he said. “With the imposition of these tariffs, but also this insulting behaviour this president is known for.”
He didn’t see much scope for UK agricultural goods making their way to the US, nor a change in the UK pursuing the ‘precautionary principle’ on food regulations versus the ‘science-led’ World Trade Organisation (WTO) approach in the US. The chances of the UK adopting the US approach were “very slim”, and the chances of the US ramping up to EU style regulations were “extraordinarily remote”, he said.
One approach for UK producers might be on disclosure labelling, but it would still face tough competition from its US counterparts, he predicted.
Mr Johnson, a lifelong Democrat who has previously been elected to office in North Dakota, stressed the American NFU, like its UK counterpart, is politically neutral.