Archer Daniels Midland batted away concerns over the threat
Donald Trump, the new US president, to agriculture, downplaying the chances of
a trade war with Mexico, while terming "very positive" proposed tax reforms.
Juan Luciano, ADM's Argentine-born chief executive, termed as
"premature" the "speculation" on what President Trump's administration may bring,
after early controversy over immigration curbs and verbal salvos aimed at some
major trade partners, including Mexico, a huge importer of US agricultural
It was a "big leap" to believe that Mr Trump's pledge to renegotiate
Nafta, the Canada-Mexico-US trade deal implemented in 1994 would lead to "closing
the borders", Mr Luciano said.
'No imminent trade
"I spend time in Washington. I spend time in Mexico," he
While the trade deal "has served the agricultural industry
well for the last 20 years… I would argue that both teams will recognise that,
after 20 years, there is room for improving Nafta.
"We don't think that an imminent trade war is there."
Indeed, the Trump administration was not poised to overlook
agriculture, in which the US is a big exporter, shipments which many
commentators see as vulnerable if the president pursues ambitions to curb the country's
scrutiny of "administration statements… we are optimistic that, in the end, the
President Trump and his senior advisers… will recognise that trading agricultural
commodities has tremendous benefit for farmers and other businesses in the
"When we are looking at employment and all that, we [US agriculture] are a
big part of that."
Overall, Mr Luciano said that ADM – which with Bunge,
Cargill and Louis Dreyfus is one of the "ABCD" group of leading agricultural
traders – was "cautiously optimistic given their priorities that the government
has delineated in the early days".
He termed "undeniable positives" some of Mr Trump's broader
aims, such as boosting infrastructure spending and cutting corporate taxes.
Ray Young, the ADM finance director, told investors that "bringing
our statutory tax rates from a 35% level to either the 15% level that Mr Trump
has talked about, or the 20% level that the Republican blueprint is talking
about, is very, very positive.
"And then they have also talked about a border adjustment
tax, which, for agricultural exporters like ADM, that would be a positive too
While Mr Trump's administration may scrap the US biodiesel tax
credit, worth some $50m a year to ADM, the potential for a review of levies had
opened up the potential for fresh options for the group's ethanol dry mills,
for which a sale process so far has failed to attract an offer deemed
"We are still talking with different parties regarding these
ethanol assets. We are also looking at some different structures," Mr Young
"Frankly, as we think about tax reform coming in the US, it
does actually open up some different considerations.
"We've been looking at effectively at some tax restructures
and if there's tax reform and if the corporate tax rate does come down, it does
open up the avenue for us to look at some other mechanisms in order to look
towards monetising these assets."