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Global Population Growth and Liberalized Trade Laws Fuel Increased Opportunities in Processed Food Exports
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By Dwayne A. Gathers As a new year begins, the nation’s economy continues to suffer from high unemployment rates, reduced consumer demand, difficulty in accessing credit, and an uncertain regulatory environment given discussions on major policy issues in Washington, D.C. that could affect business. Closer to home, the state’s economic situation remains a challenge as the Governor and state legislature prepare to deal with another difficult budget year and the same for many cities throughout the state and our region here in Southern California. One brighter spot in the economic landscape was the continued increase in exports which has grown for seven straight months. Clearly, a weaker U.S. economy has resulted in fewer goods made for U.S. consumption being shipped. Also, a weaker U.S. dollar has made goods manufactured here a lot cheaper to foreign buyers. Therefore, a weaker dollar and stronger foreign economies are creating an opportunity for U.S. exporters. Additionally, the U.S. Department of Commerce has indicated their desire to explore new opportunities to educate companies on the benefits of "incorporating new markets to continue to boost exports and create jobs" according to Secretary Gary Locke. As one of the leading states for exports, California companies should benefit from any enhanced effort to support the promotion of U.S. exports. For the last full year where data is available – 2008 – California companies exported $144.8 Billion in products globally. Of the many categories of products exported, processed foods ranked as the seventh leading export area, at $7.5 Billion, which represented an 80 percent increase in exports over a 4 year period! Overall, processed foods have been the fastest growing segment of overall U.S. agricultural exports. In 1980, 70% of agricultural exports consisted of bulk commodities. Today, over 65% of all agriculture exports consist of processed foods. Fueling this rapid reversal, and growth in processed food exports, has been the demand driven by low and middle income countries – especially as these countries experience rising populations, increased urbanization, and rising income levels. In addition, increased exports have been aided by more open trade regimes and liberalized trade laws reducing tariffs. Of the large emerging markets, Brazil, China and Mexico are expected to represent the largest future markets for U.S. processed foods. For California exporters, Asia continues to represent the most significant market based on size of opportunity and proximity. With nearly $3.5 Billion in exports in 2008, this represented a 66% increase from 2004. However, other market opportunities cannot be ignored and also represent new business possibilities. For example, California exports of processed foods have experienced their greatest growth in sales to Sub-Saharan Africa (up over 300 % between 2004 and 2008) and to South America (nearly 400% increase between 2004 and 2008). More specifically, a number of countries are driving this increased growth in California exports. These include countries such as Brazil (up 194%), Chile (up 227%) and South Africa (up 218%), but all off of a lower base of exports, while countries such South Korea have witnessed a 140% growth in U.S. exports. It is hoped that South Korea would represent a larger export opportunity if and when the U.S. – South Korea Free Trade Agreement is enacted as this would represent a key business opportunity for California firms. While this highlights a few of the markets driving U.S. and California processed food exports, there are opportunities in every corner of the world. With the development of a strategic plan, market research, and the establishment of marketing priorities, companies of all sizes can engage the world and advance their international sales and marketing objectives. An important tool in advancing these objectives is the identification and participation in key industry trade shows and conferences. Throughout the year, these events offer the opportunity to visit a country, and region, identify local partners, and get a look at the global competition also trying to enter that market. For a look at a few of the events taking place throughout 2010, we’ve highlighted a number of important food and beverage shows in various regions of the world on the calendar of events. We look forward to being an ongoing resource to support FIBR and its members in better understanding and identifying global sales opportunities and executing new business in the global marketplace. This article was contributed by FIBR Associate Member Dwayne Gathers, of Gathers Strategies, Inc. (GSI). GSI is a business development advisory firm based in Los Angeles providing business strategy, government relations and international business development services. Dwayne previously served at the U.S. State Department in Washington, D.C. and was appointed the first ever Director of the State of California’s Office of Trade and Investment in South Africa, where he lived from 1995 to 2000. Take the Going Global 2010 Survey Now!
Going Global 2010
This list is not meant to be an exhaustive list of all food and beverage shows globally, but a representative sample of key shows in various regions. For more information about any of these trade events or international business development assistance, please contact Dwayne Gathers at Gathers Strategies – dgathers@gathersstrategies.com or 213-291-6199 |