By Jacob Bunge
Cargill Inc. hopes for "intelligent" trade policy and more flexibility around biofuels under the incoming Trump administration, the top executive of the agribusiness conglomerate said Wednesday.
The company, which has been a proponent of trade deals like the Trans-Pacific Partnership, said such policies help ensure food security around the world and support the economic livelihood of U.S. farmers, who are struggling with low crop prices after a string of bumper crops.
"We need intelligent policy for trade," said David MacLennan, Cargill CEO and chairman, speaking at a Food Tank event in Chicago. "Our farmers grow great food that can feed the world."
From corn farmers to meatpackers and apple pickers, the U.S. agricultural industry has much at stake as President-elect Donald Trump prepares to take office. He has been critical of U.S. trade policies, saying they have put U.S. manufacturers and workers at a disadvantage on the world stage.
Trade policy helps detail the global road map for commodity traders like Cargill, which does business in around 70 countries around the world. Such companies buy crops to process and ship to foreign-based buyers, navigating currency fluctuations and tariffs that can determine how grain from the world's breadbasket countries compete on price.
China and Mexico -- both frequent targets of Mr. Trump's campaign criticisms on trade relations with the U.S. -- are the first- and third-largest customers for U.S. agricultural products, according to J.P. Morgan Chase & Co. While many farmers applauded Mr. Trump's pledges to relax some environmental regulations, his rhetoric has fueled concerns in the Farm Belt that a more aggressive U.S. policy on trade could trigger reprisals that may slow overseas sales of U.S. crops when supplies are running high.
Mr. Trump has also vowed opposition to the Trans-Pacific Partnership, and the Obama administration last week acknowledged there was no path forward for the pact after Republican and Democratic leaders in Congress said they wouldn't advance it after the election.
Mr. MacLennan also said Wednesday that he hoped for more flexibility around the U.S. Renewable Fuel Standard, which requires refiners to blend ethanol into gasoline. The policy, enacted in 2005 and expanded in 2007, consumes around one-third of the U.S. corn crop and produces a grain byproduct that can be incorporated into animal feed.
While the U.S. now boasts a massive grain surplus, Mr. MacLennan said that leaner years, such as a 2012 drought, leave less grain to go around for both food and fuel production.
"There's got to be flexibility in the policy that says we need this to go into food, and less into the tank because we're tight on supplies," he said. "The mandate is not unchangeable, it has flexibility."
The issue could become more critical as climate change threatens to make crop production more volatile in years ahead, Mr. MacLennan said.
Mr. Trump has voiced support for ethanol as he campaigned across farm states like Iowa. Despite comments about loosening regulations for U.S. energy companies -- which some investors have seen threatening the requirement to blend ethanol into gasoline -- ethanol makers consider Mr. Trump an ally that they helped put into the Oval Office.
"He's not going to walk in and decimate the program," said Todd Becker, chief executive of Omaha-based ethanol producer Green Plains Inc., in an interview this week. "He was delivered rural America and the hard-working people of this industry helped to do that."Write to Jacob Bunge at email@example.com
(END) Dow Jones Newswires
November 16, 2016 16:25 ET (21:25 GMT)
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