Yesterday, while the US trade representative was being grilled about the massive increase in US tariffs and what was the strategy of these new cost to the American consumer, the President announced the "suspension of the tariffs". Now, what is important here is that these suspensions do not impact the tariffs that have been placed on America's three largest trading partners, China, Mexico and Canada. Who account for nearly 65% of all foreign trade with the United States.
What was interesting is that the US government's lead trade representative was unaware of the "suspension"; he knew nothing about it. That means there is no trade strategy or methodology; there is nothing to analyse, it is entirely based on the tantrums of Trump. Without a strategy, there can be no action by the participants. That means an absolute decline in capital expenditure. Do you grow your farm when there is a risk that American beef will be sold on the shelves at half the price?
For us, the decision was made in early January; we will pay overtime but not hire additional workers. Our team are fully aware of the situation, we don't want to hire people to then have to fire them. It is already hard to bring people up to speed, but to then fire them is the worst thing in the world. It is hard to keep track, but we have the equivalent of 250 full employees, a bit less than a third are part of the farm, and the rest are in our food transformation businesses. In 2024, we lost no staff, and we suspect that the same will be in 2025, although a few are maturing to a point that they need more hours and more responsibilities.
We operate in the luxury segment of the food business, we sell to restaurants and hotels via our two wholesalers, the business is steady but with the tariff we expect that segment of the business to decline a bit in 2025 and 2026 as a recession is almost certain to occur, if it has not already started, but again we are a farm, our time scale is different.
Our 10 food transformation businesses can grow a little bit more, we don't want to saturate the market, and we are happy to see that the demand exceeds current production. Again, we work at the higher end of the market, so our position is different, but our plan was to grow the transformation business by 10% to 15% in 2025 are off. We are no longer thinking about expansion, but consolidation. My wife, who runs all the non-farm businesses, tells me that she has shelved her expansion plans, instead, we are paying down debts.
We will be fine, aside from the high-end American beef that is popular in certain restaurants, our clients do not want meat or food products that have been exposed to excessive levels of growth hormones and antibiotics. 90% of our fruits and vegetables are needed because their flavor is so much more intense than what shoppers buy from the supermarkets, but that is the particularity of our market.
Anyway, even we are affected by President Trump's tantrum tariffs.
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