The second part of just-food’s 2018 Confidence Survey asked our readers for their thoughts about Trump and Brexit – and how they saw these geopolitical earthquakes affecting their business. Ben Cooper reports.
Has the first year of Donald Trump’s Presidency in the White House been good for your business?
The destabilising impact of the Trump presidency has remained one of the most significant external factors weighing on food companies both within and outside the US since his election in late 2016.
After a year in office, just 3.9% of respondents to the just-food 2018 Confidence Survey say Donald Trump being President has been good for their businesses, with 17.7% asserting it has not been good and 76.5% assessing the effect has been neutral.
The 2017 survey was conducted just after Trump was elected and the outlook was slightly different. Then, 13.9% said Trump being President would be good for their business, while 20.3% said it would not, with 51.9% forecasting a neutral effect.
Among the factors that may have increased industry concerns during the year was Trump’s decision to pull the US out of the Paris climate accord, a move that was opposed and then criticised by many food industry CEOs.
Trump’s decision earlier in the year not to take the US into the Trans-Pacific Partnership (TPP) was also widely criticised. Now, attention is focused on the protracted North American Free Trade Agreement renegotiation, with Trump also threatening to withdraw from the tri-partite accord with Canada and Mexico if the US does not get the renegotiated terms it is looking for. US food and agricultural organisations have warned withdrawing from NAFTA could cost 50,000 jobs in food and farming and reduce gross domestic product by US$13bn.
The NAFTA talks have now been extended into the first quarter of 2018. In spite of the Trump rhetoric, withdrawing from NAFTA has generally been viewed as a less likely outcome but the delay in reaching a new deal has added to food sector anxiety in relation to Trump trade policy. Indeed, while there is little support among international drinks firms for Trump’s protectionist ideas, the unremitting uncertainty over what might or might not happen to US trade policy under Trump is in itself a troubling and disruptive factor.
Speaking at the International Dairy Federation World Dairy Summit in Belfast in November, Dr Michael Dykes, president and CEO of the International Dairy Foods Association, the trade body representing the US dairy sector, was critical both of the direction of US trade policy and the “significant uncertainty” that also persists in relation to US trade arrangements.
Do you think Donald Trump in the White House will be good for your business?
The views on whether the Trump presidency will be good for businesses in the coming year suggest increasing dissatisfaction and disquiet.
Some 38% believe Donald Trump being US President will not be good for their businesses in 2018, markedly higher than both the forecast and retrospective view for 2017. Meanwhile, 56% believe it will be neutral, with 6% expecting the Trump administration to be good for their businesses.
When asked to identify the biggest challenges and opportunities under the Trump Presidency, respondents highlight the impact stricter immigration controls would have on the migrant labour market that is so important to both agriculture and food manufacturing.
There is criticism of the protectionist ideas Trump espouses and support for encouraging competition in the food market on the grounds it fosters quality improvement.
The prevailing uncertainty surrounding US trade policy is in itself a troubling issue for some respondents. Trump’s approach to environmental policy is also seen as negative for the food sector by some respondents. On the other hand, there is also support for deregulation which is a key plank in Trump’s agenda.
What impact has the UK’s vote to leave the EU had on your business?
While the UK economy has performed better since the referendum than many experts were predicting in the event of a vote to leave, latterly the economy has slowed, with the UK Chancellor of Exchequer Philip Hammond delivering a sobering Budget in November.
One particularly tangible impact is the rise in inflation caused principally by the devaluation in sterling immediately after the vote. Food prices have risen particularly sharply, putting pressure on manufacturers’ margins and creating a challenging pricing environment.
Another concern of particularly UK food manufacturers has been about the impact Brexit could have on the workforce. A survey co-ordinated by The Food and Drink Federation, the lobby body for food and soft drink manufacturers operating in the UK, and published in August said more than a third (36%) of businesses said they would become unviable if they had no access to EU workers.
Moreover, almost a third (31%) of businesses surveyed had already seen EU nationals leave since the EU referendum.
What trade arrangement would you like to see the UK have with the EU?
UK food and farming will be among the sectors most fundamentally affected by Brexit – and in particular by the country’s plans to leave the EU Single Market and the EU Customs Union.
While some 24% say they would prefer the UK to remain in the Single Market, 50% say they would like to see the UK in some form of free-trade area with the EU.
The news in early December sufficient progress had been made in the first phase of the Brexit negotiations to allow the discussions between the UK and the EU to move on to future trade arrangements was welcomed by the Food and Drink Federation but it stressed time is “desperately short” to get the details of the future trading relationship and the transition period in place.
Thinking about the UK’s scheduled exit from the EU in March 2019: out of ten, how confident are you about the prospects for your business following the decision of the UK to leave the EU?
Brexit will clearly present food companies, particularly those operating in the UK and the EU, with some fundamental challenges and significant upheaval.
Asked to rank on a score of one to ten how confident they are about the prospects for their businesses following the decision to leave the EU, the survey was split fairly evenly between more and less confident.
When asked to identify the biggest challenges and opportunities Brexit poses for the UK food industry, respondents highlight both the risk to existing EU markets and the impact on the domestic food sector of new suppliers entering the UK from non-EU countries.
Some raise concerns about a further devaluation in sterling and rising costs of raw materials. The opportunity Brexit offers as a catalyst for improving the resilience and increasing self-sufficiency of domestic UK food production is also highlighted. The impact new immigration controls may have on the labour market in both agriculture and food manufacturing is also a prominent concern.