Without specifics, a major force

by Morton Sosland
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Enough noise as well as vacuous pronouncements have emerged from this year’s presidential election contest to prompt the opinion that steps directly affecting agriculture, much less grain-based foods, are missing. Even when earlier campaigning for primary votes came to states where food and agriculture are important, it was difficult to detect any issue covered by multiple debates that had to do with prices or incomes relating directly to food. That is not just different from the arguing that marked presidential elections of the past three of four White House occupants but is odder when it is realized that agricultural operators face incomes sharply below levels ruling a few years ago. This situation is due to sharp falls in market prices for a whole range of food ingredients.

Neither Donald Trump nor Hillary Clinton has chosen to address the past year’s collapse in agricultural markets and its direct effect on incomes. That is probably due to “farmers” comprising such a small part of the electorate that their well-being does not deserve attention. Declining political power of agriculture has been under way for some time. It is this year’s near total absence of questions about how the federal government could reverse the plight of farmers that emphasizes how far this has gone. It would be a real shocker to hear someone suddenly advocate an increase in support prices offered by the federal government or steps to pay farmers to cut crop acreage. At one time not so far in the past such policies were central to party platforms.

While the absence of direct farmer assistance as an issue is notable, it is important for an industry like grain-based foods to grasp that the vacuum does not block steps that could dramatically affect prices. While large crops and record supplies weigh on prices of commodities like wheat, an equally bearish influence is created by poor export demand. In years past, solutions to doldrums in foreign demand for U.S. wheat centered on export programs, including subsidies raised to levels that made prices of U.S. wheat competitive in the global market. Special financing and direct negotiations with foreign countries, omitted largely from the current debate, often have been promised by candidates for high office.

Yet, it is in possibly spurring exports that this year’s political contest is addressing steps that could have a dramatic effect. Hardly anything has made U.S. offerings less desirable for foreign buyers than strength of the U.S. dollar and tight credit to finance deliveries to foreign destinations. Steps that could bring about dollar weakness, thus making U.S. wheat more attractive, are being bantered about as the two candidates vie with one another on steps believed desirable for the domestic economy. While views of the dollar have varied, sight should not be lost of moves precipitated by nations seeking to achieve a competitive edge by cheapening their currencies.

Trade policies have been at the center of intra-party debating, especially in the case of Mr. Trump. He has espoused a radical change in U.S. trade programs to eliminate disadvantages he attributes to efforts he believes have opened American markets to imports without any gains in the other direction. Mrs. Clinton’s State Department experience probably means that she would focus on negotiation in contrast to her opponent’s threats to nations he views as unfair trade partners.

Some thoughtful observers have cited uncertainty about Mr. Trump’s course as the principal economic effect from the current political campaign. Uncertainty derived from reluctance to advocate specific economic steps means that executives of industries like grain-based foods need to maintain awareness of what seems the likely outcome in the race between these two very different people. Knowing how wheat prices may be affected by developments outside conventional analysis, the best advice at this stage of the election cycle is not to relax due to the absence of direct market actions, but to be on alert for huge surprises.
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