December 2016

2016 Elections: The election of Donald Trump went against the conventional wisdom of pundits and the general public, and sent political shockwaves across the country and around the world. In the early morning of November 9, America experienced perhaps the greatest electoral upset in its history and tried to peer through the dense fog of uncertainty. The democratic process is not pretty or easy – it wasn’t meant to be.  Many voters in both parties wished that they had been given the choice of different presidential candidates, but the long primary schedule provided ample time and opportunity to sort through that process. For those who have lingering anxiety and are seeking comfort, google the lyrics of the singer-songwriter Steven Stills-- “And if you can’t be with the one you love, honey, love the one you’re with.” The fact is that we have a new President-elect, and we must get behind him.  ​

The impact of the “rural” vote:  “Rural” areas represent about 20% of the U.S. population and 17% of the electorate.  Clinton lost that vote by a 3-1 margin.  The USDA breaks counties down into nine groups with varying degrees of urban and rural characteristics.  In counties categorized as “Rural with fewer than 2,500 people not near a metro area, 70.6% of the votes went to Trump.  In counties characterized as “Rural with fewer than 2,500 people near a metro area,” 66% of the vote went to Trump.  In 2012, rural areas supported the Republican presidential candidate 59%-39%; in 2016, it was 62%-34%.  
Here are the things to watch prior to inauguration day.
1) Who will Trump choose to lead the agencies within his Administration? While it is too soon to speculate on individual names with any relative certainty, he will want people who are extremely knowledgeable, strong and confident leaders who are results-oriented and fiercely loyal, and with private sector experience. Shedding unneeded and burdensome regulations that stifle productivity and innovation is welcomed by the business community and should be helpful for farmers. Repealing regulations such as the Waters of the U.S. is a good example of an anticipated and welcome change.
2) Trump has majorities in both the House and Senate that will allow him to be more productive with Congress. His coattails helped keep the Senate Republican majority and reduced the number of losses in the House – so members owe him their gratitude, whether they like it or not. Whatever differences he had with congressional leaders before the election, members of Congress — whether Republican or Democrat — know that they must perform to avoid public wrath. With both chambers and the White House in alignment, key reforms in various areas are achievable.  Most members of Congress did not help him get elected so he owes them little, but he needs them to get the changes that he and conservatives want. While he has the Republican affiliation, he will operate more like an Independent in pressing both parties to perform.  This should be evident in his first State of the Union address.
3) Trump knows how to multitask many initiatives and is intolerant of delay. Those are the natural qualities of CEOs. Expect many decisions to be made on his first day of work that show that he is a no-nonsense person and a change agent. He will expect expediency and proficiency from his cabinet members.
4) On the trade front, Trump understands the ruthlessness of foreign competitors that threaten American industry. While understanding the importance of trade to expand our economy, he will push to improve our trade agreements and demand compliance with agreements that are not changed. His particular distain for Mexico will create important leverage to address some threats against American industries.  This bodes well for the domestic sugar industry.
5) Fiscal responsibility will be key for his agenda to work to reduce the annual budget deficits and strengthen our economy. Trump understands the time value/cost of money and debt and perhaps will use that knowledge to educate the general public.  A no-cost sugar policy is clearly in line with that philosophy.

The 2016 crop: A huge crop was harvested this year with incredible tonnages but often lower sugars. A big crop plus a surplus of imports along with stagnant demand give us burdensome stocks that will keep market prices depressed. Our targeted stocks levels are 13.5 percent. The stocks ending 2015/16 were at 17%, and USDA’s November projection for the end of 2016/17 fiscal year is at 15.6%. So we have at least between 250,000–350,000 tons of surplus sugar depressing our market.  This problem continues to press for urgency to resolve the problems related to the suspension agreements of the antidumping and countervailing duties against Mexico. Those agreements are not working as they were intended.

The 2017 ASGA Annual Meeting will be held at the Hilton Downtown in Miami, Florida on January 29-31, and will examine the key issues facing our industry in 2017.  It will be a great opportunity to hear about the many challenges and efforts underway in the turbulent and rapidly-changing political, scientific, economic and market environments. Getting ready for the 2018 farm bill, biotech disclosure issues and attacks on sugar consumption will be major topics, and this will be one of the finest programs ever presented at an annual meeting.   Go to the ASGA website - www.americansugarbeet.org – to view the program activities, topics and speakers, make hotel reservations, register online for the meeting, and get an idea of the many things to do and see in Miami.

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