Outlook on Ag 2016 Q4 with Philippe de Lapérouse [+WEBINAR]

November 14, 2016

On Tuesday, November 15, 2016 at 2:00 PM, Managing Director of HighQuest Partners LLC Philippe de Lapérouse delivered a webinar looking back on the ag sector in 2016 and looking ahead to the anticipated drivers in 2017.

How will a Trump administration effect the ag sector in 2017?
I don’t think that the Trump administration will have ag as a top priority, but there are two policy initiatives that it might undertake that might have an impact on agriculture, particularly North American agriculture. One is, if they decide to pursue punitive tariffs on trading partners, which could result in retaliation, in which case the U.S., as a major exporter of oilseeds and grains and other commodity products, that could have a negative impact on exports. Another area that there may be an impact on agriculture is if there is a major clamp down on illegal immigration. That could impact the collection of food at harvest, particularly of permanent crops in the western states like California. That could dramatically increase food prices.

What do you think Brexit means for ag profitability in the U.K. and in Europe?
I think that Brexit has already had a rather negative impact on farmland values in the U.K. It has put pressure on the values of farmland. It has decreased interest in investing in farmland in the U.K. I don’t know that it will have the same effect on Europe, but I do think that Brexit might end up resulting in an increase in prices for food commodities. That would cause political concerns in Europe. In the U.K., food prices are definitely going to rise, because the U.K. is a big importer of food products.

How will political upheaval that we’re currently seeing in the Western world influence the ag market over time?
I think like any industry the ag sector is going to be subject to some of the vicissitudes of that upheaval: increased nationalism, closing of borders, focusing on promoting domestic production, and probably raising trade barriers. While I think that raises risk for the sector, I think that there are ways of mitigating those risks, and I think that the canny, savvy investor can address those without too much trouble. We need to remember that food is a basic necessity, and with this state of upheaval, many governments are going to ensure that their countries have adequate access to sufficient food.

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