Lingering populism considered ongoing threat to trade


Rabobank says conditions remain ideal for populist leaders to thrive, one of many challenges faced by world’s exporters

The defeat of former U.S. president Donald Trump and the fading fortunes of a few populist heavyweights isn’t the same as the decline of populism, says a Rabobank macro-economics strategist.

In fact, while some populists fade, populism itself around the world could grow and become stronger, while struggling populists turn more extreme rather than moderate to seek popularity.

“Just because the current generation of populists may not (remain in control of their countries), I don’t think it means we’re going back to the middle,” said Jan Lambregts of Rabobank, the global investment bank, speaking at the virtual Canadian Crops Convention.

“I think it means people are still unhappy, they’re willing to roll the dice even more and get people in more radical ideas, to try them out. What could possibly go wrong if you’re already losing?”

Populist politics have roared into trade politics in recent years, upending many assumptions about how global trade would develop in the 2020s.

Instead of a general support for free markets and ever-greater globalization of production and trade, many countries have seen protectionism thrown up to block imports of foreign products and domestic controls to protect domestic food production.

The onset of COVID-19 has accelerated and exacerbated the trend, with fights over vaccine supply and control being widespread.

“Whereas we previously thought … ‘my own country first’ is a terrible term, this is fairly acceptable in the context of COVID, and I think in the context of food it is also something that is reasonably acceptable to say,” said Lambregts, pointing to Russia’s export taxes on grain this year.

“That’s quite an amazing change from say 10 or 15 years ago.”

Don’t expect to see much lessening of U.S.-China friction.

“I don’t think this is a Democrats versus Republicans type of story. I think both are tough on China and both try to outdo each other on that front and try to defend American interests, after a long period in which they neglected that,” said Lambregts.

In general, concern over domestic food supplies is going to preoccupy many nations, especially those with insecure governments.

“(Food security) is for these governments crucial. If they get food prices wrong, in many of these countries they have an immediate backlash for them. If they are seen to allow exports to occur of food that is rising too much for domestic consumption, that is devastating I think for many governments.”Other macro trends Lambregts expects to see dominate the remainder of 2021 include:

  • Economic recovery from the pandemic shock, but lingering after-affects.
  • Debt burdens becoming a bigger issue for households, companies and governments.
  • Populations continuing to grow in places like Africa and the Middle East but flattenning and subsiding in China and advanced countries.
  • Various asset and investment bubbles to float around the markets, spurred by government spending and ultra-low interest rates.
  • More unorthodox central bank activities, following the years of “quantitative easing” and the recent popularity of “modern monetary theory.”
  • More political “isms” as various alternative forms of political and economic organization challenge the supremacy of capitalism.
  • Bitcoin and other alternative currencies.
  • Climate change politics and green policies will be part of the “build back better” focus in many places.
  • Trump will continue to disrupt U. S. politics.
  • China’s economy will have major impacts on global supply and demand of almost everything.

Food, farming and agriculture are uniquely political areas, and that reality is showing up around the world today. Lambregts said this is highlighted by the situation in India, where the government is trying to deregulate its massive farm economy but facing relentless opposition from small farmers and opposition politicians.

“I think it is indicative … of how sensitive things about agriculture can be, how it affects people’s livelihood, and … just how quickly this can become a national security concern when the government intervenes,” said Lambregts.