Global Markets, Local Stakes

We've heard a lot about trade this year.

- By Cassidy Walter Illustration by Matt Wood

The U.S. government is negotiating with multiple countries to reach trade agreements. New tariffs and threats of new tariffs have sparked concerns of reciprocation and loss of markets for U.S. agricultural commodities. But how much does all that really matter? What do farmers stand to lose?

Roland Fumasi, head of RaboResearch Food & Agribusiness for North America, described the nightmare scenario for global trade of agricultural goods.

"Ultimately, the worst-case scenario would look something like: You have trading blocks around the world - basically, a group of countries that are friendly traders, and then you have another group of countries that are friendly traders with each other, and the two paths don't cross," he said.

"What you'd have in that scenario is major gluts of product in certain trading blocks. ... That would crash markets, ultimately could impact the value of farmland, which is critical in the food and ag space," Fumasi continued. "And then, in the other trading block, [you'd] have major deficits of the things that those consumers and the rest of that value chain [need] to stay supported."

This scenario would be so disruptive to feeding the world, Fumasi said, the probability of it happening is low.

“There's a reason that all this food and ag trade has gone on so heavily for decades,” he said. “The world needs what the world needs, and the world needs it where it needs it. So that’s the backdrop. And we're talking about food here. ...