Biden and post-covid goals present ag with policy shifts

The G20’s Matera Declaration is one of three recent announcements impacting agriculture that seeks to reimagine the relationship between the public and private sectors.

Opinions vary as to whether agricultural investment requires particular attention to government policy.

Some managers point to the complicated thicket of crop support, trade and environmental interventions by government as reason to take note. Others claim that same complexity is an advantage, as they make the counterpoint that ag is far from alone in being a market shaped by its rules.

Agriculture currently finds itself at the center of various proposals for a post-pandemic re-imagining of the relationship between the public and private sectors, with an eye towards systemic challenges such as climate change, cyberattacks and rivalry between the US and China. Three recent proposals deserve attention for their potential to influence ag’s role within US domestic spending and anti-trust priorities, as well global efforts to harmonize approaches to mitigating climate change.

Last month, the USDA announced plans to invest $4 billion into the US food system as part of the Build Back Better initiative. Livestock and meat processing were the only markets highlighted specifically in what was described as a “whole of government” effort that will employ grants, loans and “innovative financing mechanisms.”

It described an upcoming search for investments across food production, processing and distribution that can “spur billions more in leveraged funding from the private sector and others,” while integrating ag into the Biden administration’s broader social and economic agenda.

The “whole of government” framework was evoked a second time when the administration identified agriculture as one of four sectors of focus within its Executive Order on Competition. Immediate changes to wide-ranging labor and “right to repair” regulations with direct implications for farm operators were among 72 direct government interventions across industries disclosed in the statement.

The order also described negative effects of consolidation within seed, equipment, feed and fertilizer markets and underlined the administration’s ability to challenge prior “bad mergers” as part of its enforcement of anti-trust law.

Similarly, ambitious proposals for changes to global carbon and tax regimes that could shape multiple industries including ag surfaced this week in anticipation of the G20 summit set to be held in October in Italy. But it was the Matera Declaration on Food Security Nutrition and Food Systems adopted by foreign ministers that made clear agricultural investments are of distinct focus for the G20’s  policymakers.

The declaration notes that the world is unlikely to reach hunger-related SDGs and calls for an increase in “catalytic investments” into food, soil and water to help accelerate climate change adaptation.

“Public policies and resources such as procurement and public development banks’ funds can help address market failures and provide greater risk tolerance than what other financial institutions can, thus also stimulating responsible private investment and blended finance,” the foreign ministers noted.

Recent sentiment in agriculture has been driven by the potential of carbon markets, where expectations of pivotal government spending are widespread, as well as the anticipation of a post-covid boost for local food production.

The Biden administration does not need to establish the USDA as the default buyer of carbon credits, nor does it need to reverse key ag industry mergers or focus its outreach to the developing world on food market failures in order to influence LP sentiment around ag.

The very real possibility of such initiatives under an evolving “whole of government” framework should be enough to attract the attention of managers; even those long convinced they can afford to ignore policy.