Agriculture’s role in US industrial policy to take center stage this fall

The passage of the CHIPS Act last week has been hailed as an important step in developing the kind of industrial policy many believe the US needs to compete with China and meet other challenges of the 21st century.

Agriculture is not the focus of the legislation, which provides more than $52 billion in subsidies for investment into high-tech industries to help boost US competitiveness. The debate the CHIPS Act has sparked around how the government should invest in other strategic sectors will, however, influence how the Biden administration carries out its announced plans to deploy billions of dollars into US agriculture.

In June 2021, the US Department of Agriculture announced plans to invest more than $4 billion into climate-smart agriculture through a combination of grants, loans and “innovative financing mechanisms.” Subsequent announcements have included $1 billion supporting partnerships among farmers, ranchers and landowners; $43 million for urban agriculture; $670 million in assistance to countries facing severe food insecurity following Russia’s February invasion of Ukraine and more than $20 billion of investment to support ag as part of the recently passed Inflation Reduction Act.

Biden administration announcements that relate to agriculture stress the dire need for investment without offering much detail about private capital’s imagined role. Some indication of how government plans to invest in the sector has surfaced occasionally, while the USDA has been unwilling to connect Agri Investor with officials involved in any of these plans to add more detail.

An event being convened this fall will hopefully provide investors with more clarity about the US government’s vision for its agricultural investments. The September Conference on Hunger, Nutrition and Health in Washington, DC will seek to identify potential actions that government, non-profit and private sector actors can take to support food security, access and affordability.

“It’s the first time in 50 years that type of meeting is being held,” Franklin Templeton’s Patrick Vizzone told Agri Investor. “Last time was during the Nixon administration and at that time, there were more than 1,600 policy adaptations that helped shape – not only the US food system – but also the global food system.”

Hong Kong-based Vizzone recently joined Franklin Templeton as head of agri-food within its APAC-focused alternatives unit, after previous ag-related positions with ANZ, COFCO, and Rabobank. He plans to travel to Washington in September, he said, to attend meetings he expects will focus on steps the government can take to increase the affordability of fresh produce.

Such steps, he said, could include subsidies, favorable tax policies or other inducements designed to improve eating habits and help control the 80 percent of US healthcare costs stemming from consumption of unhealthy food.

“I’ll be watching very, very closely as to how those policy changes could impact capital flows and the way that investors, I think, are trying to get exposure to some of those trends,” he said. “I really think we’re potentially at a tipping point, where government policy will be favorable to the industry and which could see even more investment come in, particularly as it relates to controlled-environment ag and more broadly.”

Rare bipartisan support for the CHIPS Act reflects a consensus of belief in the strategic need for domestic production of semiconductors and certain minerals. The swirl of parallel sentiment and activity surrounding agriculture suggests Vizzone will not be alone among managers in eyeing a trip to the US capital this fall.