By the time president-elect Donald Trump is sworn in in January, the global food industry, including producers with a presence in Ireland, will already have taken protective action to Trump-proof their business.
But will it be enough? Mr Trump has said he is “totally flexible on very, very many issues” and the food industry here will still be hoping his pre-election rhetoric will not be translated into actual policies. Regardless, it is a time for agile leadership for many Irish firms.
There is no doubting that Mr Trump’s stance on free trade will have deep implications for the food and beverage sector, with his clear intent to protect jobs in the US.
“As president, I will be an aggressive proponent for defending the economic interests of American workers and farmers on the world stage,” he has insisted.
“I will fight against unfair trade deals and foreign trade practices that disadvantage the United States.”
But equally worrying, he has also thrown his weight behind the bio-tech sector and said he does not support the labelling of genetically modified organisms.
Key Irish food giants such as Glanbia, Kerry Group, and the Irish Dairy Board (Ornua) are extensively exposed to the US.
They have combined sales estimated at €4bn a year in that market. Most exposed is Glanbia with 55% of its revenue in the US, but Ornua is close behind with 50% of its sales, while Kerry Group has the least exposure, with 16% of its sales generated in the US.
However, as most of these revenues is generated by factories in the US, the directors and shareholders in these companies will still feel relatively safe in the aftermath of the presidential elections.
Conversely, for food and beverage companies manufacturing abroad and importing into the US, the situation could get ugly.
Coca-Cola and Pepsi Cola, which manufacture the secret ingredient here in Ireland and then ship to bottling plants across the US, may come under pressure to move production back there.
Spirit producers such as Pernod, whose prime market for Jameson whiskey is the US, could find themselves facing more pressure. They may perhaps have to countenance switching bottling to the US to appease the protectionist regime.
While managing these production location challenges will continue to be of concern to food and drink makers for some time, there has been a welcome upside in the foreign currency management.
Contrary to expectations, currency markets did not shift to the traditional safe havens. Instead, they have weighed the prospects of a Trump-led Republican government driving jobs and growth at home, and pushed the dollar back to its strongest for a year.
With the expected slump in the dollar not materialising, companies who report their earnings in euro have the added prospect of a currency translation gain when they repatriate their profits. All three of the large Irish food companies should be buoyed.
The currency gain can have a major impact on trading results, as was seen last year at the Glanbia annual general meeting, when its chief executive officer, Siobhán Talbot, talked of the favourable translation effects. Kerry Group also reported gains from the stronger dollar in 2015.
A continued strong dollar under the administration of Mr Trump will help offset expected losses on the UK market from the Brexit debacle and the associated sterling collapse.
However, the big losers from the potential policies of Trump as president are likely to be the wide range of smaller food and beverage businesses who produce in Ireland and who have the US as the second largest market after the UK, with exports growing to €755m last year.
They will be caught in the trade war that will inevitably follow the Trump administration’s protectionist moves.
John Whelan is an expert on Irish trade
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