A restructured management approach that has put more onus on staff is paying dividends for farm managers Isaac and Michelle Johnstone.
Business, industry advocates and established institutions of US society and the world are reeling from a very angry and confusing agenda that shows little respect for humanity, history, science, economics, the planet or logic … and no time for reason.
It’s hard to line up the potential consequences from much of what’s been ordered (and threatened) with the benefits to the Administration’s constituents – US business, farmers, rust-belt communities for a few – that Trump claims to have championed.
While we’ve never seen so much humorous rebuttal of the regime and its figures, what’s actually happening isn’t funny.
I’ve just returned from a major gathering of the US dairy industry, where it was evident that Trump’s actions and intent are making manufacturers and farmers very anxious.
Trade with the rest of the world is critical to most major ag sectors in the US – dairy in particular. The industry’s milk output has a strong steady growth trajectory which exceeds the potential demand from its own consumers.
External markets are crucial to continued wealth creation on farms and in processing businesses.
Trump shows little belief in the benefits of two-way trade for the US economy. A promise to tear up and renegotiate the North American Free Trade Agreement (NAFTA) with Mexico and Canada has profound implications.
The US dairy sector has issues with its northern neighbours over some protective policies claimed to discriminate US products, but Mexico is a different matter.
A trade war over the flow of Mexican manufactured products into the US could not only damage the Mexican economy and slow dairy demand, but may spark a tit-for-tat action that damages or even stops US dairy exports altogether. Mexico is by far the biggest dairy export market for both cheese and low-fat milk powders.
Interestingly the EU and New Zealand have each announced it will speed up efforts for FTAs with Mexico. Europe has a bit of milk powder on its hands.
A bigger worry is Trump’s dispute with China over trade, currency and sovereign territory. If this dangerous dispute escalates the impact on dairy trade (China is an important whey market) would be a small part of a far greater economic problem, and provide Trump with his own political nightmare.
US consumers (including Trump’s rust-belt battlers) have thrived on low-cost consumer goods – electronics, clothing, and other goods – supplied by Chinese factories. Replacing those with higher-cost US products – the logic of his protectionist words and tweets – will hurt those he claims to most protect.
Back to the US itself, where a deportation of immigrants working on dairy farms could cause major disruption. The industry has long claimed and demonstrated that immigrants play a vital role filling jobs that can’t be filled from US residents in farming regions.
The peak farm lobby, National Milk Producers Federation (NMPF), surveyed farmers in 2015, concluding the effect of reducing immigrant labour supply would be catastrophic, as more than half of US dairy farm jobs are held by immigrant workers.
NMPF says farms retail prices of milk (and presumably cheese) will lift and export incomes would be gutted with a fall in output. Again, hurting all consumers and many other jobs.
Trump’s line on the issue has softened a little, but he shows little interest or attention span to take on board evidence from reports or experts. Industry is not convinced any rational attitude will be held or that agriculture will be favoured.
Maybe buddying up to Vlad Putin could offset damage to dairy. The former EU’s cheese pipeline to Russia was worth more than 250,000t per annum before Russia banned western dairy products, and then went broke. Getting paid would be a new challenge, even if US products were exempted from the embargo.
It’s hard to know how far this will go. The new White House resident seems intent on picking fights with most major countries and blocs in the interests of “America First”.
Trump has shown little interest in observing conventional political process in the US, bypassing legislators where possible, surrounding himself with a tight group of compliant ministers of state, and firing senior bureaucrats that disagree with opinion and process. Control of the highest courts is on his agenda, clearly with little respect for the separation of powers of judiciary, legislative and the executive that is central to the constitution.
Many Republicans in Congress are just as alarmed, but torn between the opportunity to govern and the destruction of societal and party values. This period is redefining power and influence and given the role of the US economy, its foreign interests and its currency, it’s not an option to tune out of Trump’s latest series of reality TV.
As a former head of the CIA told the US dairy audience this week – buckle up, you’re in for a rough ride.
Steve Spencer is a director of Melbourne-based firm Freshagenda, a specialist food analysis, advisory and consulting business which provides a range of clients with insights on market trends and developments, strategy development and implementation, supply chain analysis, and project evaluation.