Trump Policies Add Uncertainty to Farm Sector’s Gloomy Outlook

(Bloomberg) -- Some of the biggest US agriculture companies already struggling with a weak farm economy are facing a fresh challenge in 2025: uncertainty over President Donald Trump’s policies.

Companies from crop trading giants Bunge Global SA and Archer-Daniels-Midland Co. to tractor makers AGCO Corp. and CNH Industrial NV this week have given gloomy outlooks for the new year. While deteriorating demand amid lower crop prices continues to be a main culprit, uncertainty tied to US farm policies is popping up across financial statements and earnings conference calls.

Trump, an avowed fan of both farmers and fossil fuels, has the $1.5 trillion US agriculture industry on edge as he pursues a trade war with tariffs on China and planned levies on Mexico and Canada. The president also hasn’t said how he will deal with crop-based fuels, including a Biden-era clean-fuel tax credit.

“We definitely are in an environment that has less visibility than normal with the trade disruptions and some of the uncertainty around US biofuels,” Bunge Chief Executive Officer Greg Heckman said during a call with analysts. 

Bunge expects profits this year to shrink to the lowest level since 2019, as earnings from trading and processing soybeans into meal and oil have been under pressure due in part to the lack of clarity on tax credits for renewable diesel production. ADM, which is cutting jobs and weighing asset sales, said those same concerns will weigh on its results for the first half of the year.

“The problem is that it would be so easy to make a business decision today that is very wrong in a few weeks or month,” said Scott Irwin, a biofuel and agriculture economy expert at the University of Illinois, speaking broadly about the murky outlook for US renewable fuel. “I think the reaction is to pull back production and reduce exposures.”

The lack of insight on the impact of Trump’s policies is making it difficult for companies to assess the timing for a recovery in the farm economy. Growers across the US have been dealing with challenges including lower crop prices from a year earlier on top of steep input costs, extreme weather and higher borrowing rates. All these issues are weighed by producers in planning how much they are willing to spend on seeds, crop protection and storage. 

FMC Corp. saw its shares fall as much as 37% on Wednesday — the most ever — as the maker of insecticide said sluggish sales from Brazil to India will lead to sharply lower-than-expected profit. CEO Pierre Brondeau said the company needs “a stronger reset than what I thought initially.”

On the trade front, farm machinery maker AGCO is monitoring potential impacts from tariffs in North America, China and the European Union. However, its somewhat downbeat outlook for 2025 doesn’t include any impact from the threat of new tariffs.

“There are an array of scenarios being run by this company, but we want to make sure we have some clarity before we actually execute any of those things,” Chief Financial Officer Damon Audia said in a Thursday call with investors.

Tyson Foods Inc. said it is working to weather Trump’s potential trade war as tariffs threaten to curb the company’s pork exports to Mexico, saying the company will find alternative export destinations, if necessary.

Still, there are some positive signs for 2025. The US Department of Agriculture is projecting a modest bump in farm income — the first in three years. Tightening corn supplies have grain prices rallying recently, while there’s hopes that China, the world’s top commodities market, may start buying billions worth of farm goods to fulfill its promises under the phase one trade agreement with the US.

And some even see an upside to a potential trade war. CNH Industrial, one of the largest manufacturers of farm machinery, said Trump’s proposed tariffs could help shake the tractor market out of a slump, as growers would likely try to get ahead of price increases by boosting purchases. 

“So North America might see a little bit of a special demand here,” CEO Gerrit Marx told investors on a Tuesday conference call, even as he said challenging market conditions will continue at least through the first half. 

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