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What will the Trump administration mean for the food industry?

January 18, 2017
Consumer Packaged Goods

When Donald Trump becomes the 45th president on Friday, some of his priorities will be clear.

But what his priorities and plans are for the food industry is not yet clear. Except for a bold — and immediately retracted — statement during the campaign about getting rid of the Food and Drug Administration’s “food police” with their “inspections overkill,” President-elect Trump hasn’t said much of anything that would impact the food industry. He still hasn’t nominated someone to head the U.S. Department of Agriculture, with the potential nominees running the gamut from food safety experts to champions of fried food.

“The only thing that’s certain about Trump is uncertainty,” Michael Cromwell, a business litigation attorney at Womble Carlyle and member of the American Bar Association’s Committee on Food, Cosmetics & Nutraceuticals, told Food Dive.

Michael Jacobson, co-founder and president of the Center for Science in the Public Interest, anticipates the next four years will be grim for consumers. The combination of Trump’s brash statements, poor personal diet, and his pro-business, anti-regulatory administration coupled with a Republican Congress are harbingers of bad things to come, he told Food Dive.

Jacobson, who has been working with consumers, policymakers and the food industry for many years, said that this transfer of executive power is the most ominous he has ever seen.

“First, we have a president who knows nothing about any of this stuff. It’s like you or I becoming president with just nothing, just a big wallet,” he said. “The Tea Party and the really reactionary members of Congress have much greater power than they’ve ever had. …I thought [President Ronald] Reagan was a disaster, and I think our problems started with Reagan when he said, ‘Government is the problem, not the solution.’ I think our country’s been in bad shape since then, but Trump is in a whole other league.”

Sean McBride, founder and principal of DSM Strategic Communications, has seen food policy through many administrations. He told Food Dive he cannot speculate now on whether Trump’s presidency is good or bad for the food industry.

“I think to the extent that, if you believe that the president-elect, that his philosophy of limited government may benefit you in some way, shape or form — potentially on tax policy, potentially on some of these regulatory and legislative issues on nutrition and health — then you may be happy with that,” he said.

Trump’s general pro-business philosophy — coupled with that of the Republican Party — could be seen as beneficial for the industry at large. After the initial Wall Street fallout following Trump’s election, the stock market has been surging. Confidence is high in the agricultural sector, with some economists citing optimism among farmers following Trump’s election.

But if regulations on food safety, labeling and trade are rolled back or delayed, many believe it will put the food industry in a strange place.

“The food industry is going to be in this weird situation where part of it will be cheering for what he’s doing and part of it will hate what he’s doing if he lives up to his promises,” Cromwell said. “So it’s an odd mix, because normally with a Republican president, you would have someone who wants trade and [is] pro-business, and then have de-regulation as part of that. …The problem with that is … he doesn’t hold all of those beliefs, at least that’s what he said during the campaign, particularly with regards to trade.”

Jeff Nedelman, CEO of Strategic Communications LLC, sees Trump taking a very different approach to the food industry than President Barack Obama — especially with first lady Michelle Obama’s special interest in promoting healthy food.

“Much of what the Obama administration has tried to achieve will either be rolled back, curtailed, slowed down or eliminated, either by executive order, lack of funding or legislation,” he told Food Dive.

Existing laws and regulations

The president-elect’s only major statement on food thus far was about deregulating FDA, but does that mean he will?

“That’s everyone’s million dollar question at the moment,” Cromwell said. “I don’t think he’s out to attack the food industry in general, just given how much the food industry makes up the major import and exports of the country. I just don’t see anything yet that [suggest he’s] going to kill it. But are there things that could make it less safe? Sure.”

The House Freedom Caucus has called for the end of several food-related policies in a document listing government programs it believes the new administration should look into ending.

But McBride — and most other analysts — aren’t expecting major shifts in existing policy. The FDA’s responsibility is in place, and there are major legislative and regulatory items that are coming to fruition. The Food Safety Modernization Act is being rolled out, with compliance dates for small manufacturers coming up in the next months. The revamped Nutrition Facts panel is in progress. Efforts are in place to reduce salt in food. And after a long battle, a new law passed last year to require labeling for genetically-modified organisms in food.

​Though all of these initiatives may not have been popular with industry, McBride said that considering how much consumers care about the underlying issues, it seems unlikely that Trump will simply do away with them.

“I just cannot imagine either unilaterally the administration trying to shut that down or industry advocating to shut it down,” McBride said about GMO labeling. “I think they’ll go through with it. I think they’ll shape the legislation. They’ll work with the administration to do that. It will look substantially as Congress envisioned it, with maybe some changes or tweaks. Because at this point, given the consumer trust issues, they can’t really be seen as saying, ‘We’re going to just shut this down now that we have the political power,’ allegedly.”

However, McBride said he could see the implementation of those policies getting slowed down during the next four years. People in the industry or others who want to see changes could work with the Office of Management and Budget, the Domestic Policy Council, the USDA or FDA and Congress to get deadlines delayed, funds slashed, or regulations tweaked.

Nedelman expects budgets to get a lot tighter for the government departments that regulate the food industry. This would be a function of Republican-favored budget cuts, but would also show where the administration’s priorities are.

Jacobson has similar expectations.

“For the food side of the Food and Drug Administration and the Food Safety and Inspection Service of the Department of Agriculture, it would be very easy to shrink the budgets,” he said. “That would mean they would do less enforcement of food contamination, even fewer reviews of food advertising, food labeling. … Less scrutiny of food additives, so just budget cuts could really suffocate the FDA, USDA, and these other government agencies.”

New policies, on the other hand, are not quite as likely to get off the ground. Jacobson said it is very possible that Trump will opt out of an international initiative the FDA is taking on to try to reduce sodium in food. Meanwhile, newer food labeling initiatives that are in the discussion phase right now may never go anywhere.

Revisiting the ‘worst trade deal ever’?

While Trump’s stance on the food industry remains murky, his opinions on trade are pretty well known. He has been bullish on keeping manufacturing jobs in the United States, and has talked about more heavily taxing imports. During the campaign, he rallied against the North American Free Trade Agreement and promised to get to work renegotiating the deal on his first day in office. Trump even called NAFTA the “worst trade deal ever” during a debate.

However, trade and jobs move both ways. While Trump vilified Mondelez during the campaign for moving jobs to Mexico (anger he seems to since have forgotten about), the food industry also does a lot of exporting — especially agricultural products. According to the USDA, agricultural exports were worth $133 billion in 2015. In the same year, World Bank statistics showed food products made up about 10% of total U.S. exports.

“Unlike most Republicans… he talked a lot about trade and at one point ripping up NAFTA and not agreeing to the TPP [Trans Pacific Partnership], so that’s kind of a mixed bag for the food industry,” Cromwell said. “You’re going to have restaurants and growers who are going to think less regulation is going to be better for them and then you’re going to have… packaging companies who are exporting the stuff who are going to be, if his trade promises stay as he promised … significantly impacted in their ability to trade outside the U.S.”

But, McBride noted, regardless of how Trump feels about NAFTA, it won’t just go away.

“Free trade agreements are negotiated by presidents, and they’re ratified by Congress,” he said. “Your ability to sign executive orders changing them is virtually zero. You can request to Congress, or send legislation to Congress to say, ‘I’m cancelling it,’ but they have to vote for that.”

The other countries involved also need to come to the table and agree as well.

Cromwell said that repealing NAFTA altogether would create new tariffs on imports, which would in turn make products more expensive. And other countries like Mexico would be likely to hike their tariffs in retaliation, meaning it would cost more for the U.S. to export agricultural products like corn.

“Despite him insisting he is a jobs person, [that] would almost assuredly lead to less and fewer jobs in the food industry,” Cromwell said. “I think repealing NAFTA, particularly with how things are set up now, would be disastrous.”

​Nedelman said that digging into NAFTA would bring the current trade dispute over sugar between the U.S. and Mexico to the forefront — and it would likely be one of the bigger stumbling blocks to a successful renegotiation.

However, Nedelman does not foresee a NAFTA renegotiation having a large impact on the food industry. Many large U.S. food companies have had a manufacturing presence in Mexico for a long time, he said.

Besides, Nedelman said, what Trump said as a candidate on the campaign trail about trade agreements might not be what Trump as president will actually do with them.

What next?

Industry analysts will continue to watch and wait to see what Trump actually does — and be ready to spring into action if need be.

In the weeks after the election, CSPI conducted fundraising campaigns to prepare to fight the Trump administration. Jacobson said the consumer group has seen an increase in donations.

“Regardless of the philosophy of the administration, we’re going to continue to push for those kind of [consumer policy] things and challenge the Trump administration to do the right thing, or contribute to a record of harmful actions or non-actions,” Jacobson said.

While many may be waiting to see what official actions Trump and his still-unknown USDA secretary will take, some said the administration’s stance on food may become clear soon after Trump moves into the White House. First lady Michelle Obama has cultivated a large vegetable garden on the South Lawn, and Trump’s reaction to it will be telling. After all, Jacobson said, Ronald Reagan started his time as president in 1981 by ordering the removal of solar panels that Jimmy Carter had installed on the White House roof.

“It will be interesting to see whether Trump chooses to plow under Michelle Obama’s garden,” Nedelman said. “I really can’t see him pulling vegetables out of the ground.”

By Carolyn Heneghan, Megan Poinski and Emma Liem

Source: FoodDive

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