Global leaders convened at Davos, Switzerland, last week for the 2026 World Economic Forum, with major government officials, like Canada’s Prime Minister Mark Carney, proclaiming an end to the old-world order amid increased geopolitical tensions.
However, the direction of world governments might have been on the path towards industrial policy and away from globalised and free trade, regardless of current politics, due to a combination of geographic, economic, and demographic factors, Erik Hoegemeyer, assistant professor of agribusiness and economics at Midland University, shared at the Illinois Fertilizer & Chemical Association conference in Peoria, Ill. on Jan. 21.
Global powers are adopting industrial policy to support domestic business sectors, like agriculture, as many countries face falling birth rates and high levels of debt, Hoegemeyer explained in his session.
For instance, the U.S. revealed $12 billion in financial assistance to farmers impacted by market volatility and took a 10% ownership stake in chipmaker Intel over AI dominance and national security matters, the administration shared.
“You are not hearing anything about climate change [at Davos]. Some people are coming out and saying, ‘We need more coal.’ Well, I mean, that is industrial policy. That, in my opinion, proves it is the trendy thing right now,” he elaborated.
Industrial policy comes into vogue again
Over the years, the U.S. has gradually embraced industrial policy, whether through tariffs or farm subsidies, Hoegemeyer explained. These actions tend to have more bipartisan support than politicians will admit, as President Joe Biden supported many of the tariffs enacted by the first Trump administration, he noted.
The purpose of industrial policy is to shift production from overseas to domestic consumption, Hoegemeyer explained. Over time, the U.S. ag economy will become more stable, as “usage is the path forward for agribusiness,” he added.
“We are going to see more industrial policy. We are going to build more plants, more soybean crushers. We are going to use more of this crop at home and subsidies to get us where we are because we cannot lose having a strong farm economy,” Hoegemeyer told AgTechNavigator.
This also comes as threats mount to the current global food system, which will make ag stakeholders rethink investments abroad, Hoegemeyer noted. For instance, bad actors can use drones to quickly and cheaply strike cargo ships, with the U.S. already playing a major role in securing maritime supply routes and boats, he added.
“You think Cargill is going to rebuild that elevator in Ukraine that got blown up? Probably not. ... You think a 20,000-to-30,000 nautical mile global passage to produce and ship commodities is going to work? Is that going to be cost effective when you cannot buy freight insurance anymore because an African pirate or Yemeni pirate blows up a couple of ships? It is not going to work. Countries are going to need more commodities,” Hoegemeyer emphasized.
What about the current state of the ag economy?
As the U.S. embraces more industrial policy, this will create short-term volatility and challenges for the ag economy but will set the sector for long-term growth, Hoegemeyer explained. U.S. farmers are facing the prospect of “a negative cash flow year” in 2026, with more government support expected to keep farmers afloat, he noted.
The U.S economy also started 2026 with a shock, as corn production estimates came in larger than expected, shocking the commodity market. “Economics is all about expectations,” Hoegemeyer pointed out.
Despite short-term challenges, Hoegemeyer is bullish on the long-term health of the U.S. ag economy, given the country’s position as the largest market in the world and advantages in terms of supply chain, infrastructure, and demographics.
“No country is better positioned for growth, prosperity, and geopolitical dominance like the U.S. Our agribusiness sector is going to be a key part of that, making sure we can always have our own food is in the utmost national security interest, and making sure we are a commodity powerhouse — and can trade with the rest of the world and use these massive energy and food commodities as collateral — is of extreme importance,” Hoegemeyer elaborated.
