The escalating trade tensions between the United States and the European Union have sparked significant concern within the agritech sector, particularly among compound feed and premix manufacturers. The proposed tariffs and counter-tariffs threaten to disrupt vital supply chains and undermine the long-term strategic partnerships that have been instrumental in ensuring global feed and food security.
The European Feed Manufacturers’ Federation (FEFAC) has voiced apprehension about the potential impact of these tariffs on the European feed and livestock industry. Pedro Cordero, FEFAC’s president, highlighted the decades-long investments made by both US and EU feed sector organizations in building resilient feed and livestock production systems. The impending tariffs, he warned, could jeopardize these efforts and lead to disruptions in essential feed supply chains.
The EU’s reliance on imports for protein-rich feed products like soybeans, as well as maize and other feed grains, makes the situation particularly precarious. The proposed tariffs could exacerbate the EU’s structural deficit in these areas, potentially leading to shortages and increased costs for feed manufacturers. This could have a ripple effect throughout the agritech industry, affecting everything from seed and fertilizer suppliers to technology providers and equipment manufacturers.
For investors, the uncertainty surrounding these trade tensions presents both risks and opportunities. On one hand, the potential disruption in supply chains and increased costs could lead to volatility in the market, making investments in the agritech sector riskier. On the other hand, the need for alternative trade agreements and increased domestic production could open up new avenues for investment. For instance, Cordero’s suggestion to double transatlantic trade for agricultural products could create opportunities for companies involved in feed grains and essential feed additives.
The “Trump/Juncker” agreement on soy products in 2018 serves as a precedent for how trade agreements can boost exports and reduce dependency on third-party countries like China. Replicating this model for a wider range of feed grain products and essential feed additives could not only reduce the EU/US strategic dependency but also create new markets and opportunities for agritech companies.
However, the path forward is fraught with challenges. The EU’s impending counter-tariffs on €26 billion worth of US goods could further escalate the trade war, leading to a more volatile and uncertain environment for the agritech sector. It is crucial for both the US and EU administrations to engage in direct negotiations to mitigate these risks and explore alternative trade agreements that can benefit both regions.
The agritech sector will be closely watching these developments, as the outcome could significantly shape the future of feed and livestock production systems on both sides of the Atlantic. Investors, too, will need to navigate this complex landscape carefully, balancing the risks and opportunities presented by these trade tensions.
