November 10, 2016
Incoming Trump presidency casts uncertainty on meat trade with US
The November 9 victory of latest US President-elect Donald Trump has delivered shockwaves through international markets as the surprise win rattled major currencies and consequentially poses a challenge to the global meat trade for 2017.
In the fallout from Democrat president-nominee Hillary Clinton's failure to secure winning electoral votes, Mexico is curtailed in its efforts to import US red meat and poultry products due to a sharp fall of the Peso, Beef Central reported.
That exchange rates, which according to analysts, will remain unstable for possibly the rest of the year highlights the lingering uncertainty over a Trump presidency. The controversial billionaire has promised to reject the Trans Pacific Partnership (TPP), impose hefty tariffs on imports and eliminate free trade restrictions during what has been observed as one of the most fractious Election season in recent US history. Among the developments that could suffered from a TPP U-turn is the import of beef, pork, dairy and wheat into Japan: under the agreement, the country would abrogate tariffs on these products, a good news for the local agriculture industry, not so for international export sectors like those in the States.
Steiner Consulting's Daily Livestock Report mulls over the ramifications for the US meat industry including those stirred by Trump's ambitious pledge to set a physical wall between the US and Mexico, one of the nation's biggest trading partners, as well as an intention to nullify the North American Free Trade Agreement (NAFTA). The report warned that livestock producers could "lose more than others" as the upcoming administration might reverse fortunes gained over the past years. For two decades in fact, NAFTA benefitted pork producers in the US, with the country's exports rising from under 454,000 tonnes in 1995 to more than 1,700,000 tonnes last year.
Also affected will be US exports for chicken as overseas deliveries ensures the stability of the industry. In 1995, exports were under 1,800,000 tonnes. These grew to 2,817,262 tonnes in 2015. For beef, exports rose to 9.6% of US beef output, a higher percentage than 7.3% 20 years ago. The competitiveness of US beef, already mitigated by competitors' agreements with US export customers, could diminished further with more restrictions on trade due to supplies of other proteins and limited access to the growing Asian markets, the Dairy Livestock Report says.
Australia: Fears of US protectionism marring exports-dependent sector
Australian farmers shared similar concerns with their American counterparts following one of the most unexpected political coup of 2016, Beef Central stated. Any protectionist actions by a Trump administration will likely hit the country's agricultural exports which amounts to "more than 70%" of what local farmers produce, Brent Finlay, president of National Farmers Federation, remarked. Higher tariffs, coupled with lower import quota, will upset export trades to the US, he added, maintaining that trade liberation should continue to expand and bolster the growth of the agricultural sector.
The next best alternative for Australia - should the TPP not come into force - is the Regional Comprehensive Economic Partnership (RCEP), a proposed FTA between ASEAN nations and the six countries that ASEAN has existing FTAs with.
In meantime, the NFF will continue to work with industry players and other partners in expanding and improving trade. The organisation will examine the outcome of the US Election and its impact on long term trade objectives, Finlay said.