Join the Global Marketplace With Your Ag Products
John Fleming can sell all the soybeans he grows in eastern North Carolina to local markets for feed right now, but he’s not sure about the future. “North Carolina is a deficit state with all the hogs and chickens, but that could change with all the lawsuits,” he explains. Juries in nuisance lawsuits brought by neighbors living near hog farms have found in favor of plaintiffs so far, with more cases on the docket. Fleming wants to learn more about export markets, not only for his soybeans but also for stevia, a new crop he began growing commercially two years ago.
Farmers must understand the global market, says Sandy Stewart, assistant commissioner of agricultural services, North Carolina Department of Agriculture & Consumer Services. In the next three decades, the Earth will house nearly 3 billion more people than it does today, he explains. “The global challenge of feeding those people will take U.S. exports.” With 95% of the world’s consumers outside the U.S., an export strategy makes sense for many farmers, says Stewart. He and a panel of experts shared opportunities and risks at a recent export seminar in North Carolina designed to showcase opportunities, point out pitfalls, and connect producers with resources and people well versed in exports. Following are six key takeaways.
Build a network. “The personal connections are the ones that are so important,” stresses Stewart. An important starting point if you are considering exports is to touch base with your state’s department of agriculture. In North Carolina, for example, a team of five international marketing specialists work with different agricultural sectors, lead inbound and outbound trade missions, facilitate meetings with international buyers, help identify new markets, and help connect producers with other helpful resources.
Team up with an exporter. Stan Carroll, of Prometheus Consulting, who has worked with major food brands including Kraft, Borden, and Heinz, stresses the importance of working with an exporter who can research best possibilities for your crop or product. You need someone to be your mouthpiece in a country, someone who understands local culture, and someone who knows which area of a country may prefer certain products, he says.
You also need to be aware of the litany of things you have to do to export to another country. In addition to looking at all angles of the culture, there is extensive paperwork and legal aspects to consider.
Market it. Jose Abad with Lomi Global Foods, LLC, specializes in the development of dairy products. “Consider the world as a huge supermarket,” he says. “There are a lot of steps to get products to other countries. You are good at producing and making the product. You need someone who can help get it into other markets.”
Just because another country may produce a certain product, it doesn’t mean there may not be a market for your product. As a success story, Abad cites helping get a U.S. cheese product into Mexico, which is a large producer of cheese. “One of the benefits the U.S. has is that the products are looked to as high quality, being of additional value.”
Get the best value. As you look toward working with exporters, being aware of how they structure fees can be helpful. Some charge a commission on sales; others buy the product from you and then sell it in the market. “Our job is to get the best value for you. If you grow, we grow,” says Abad.
When looking for an exporter, find a company that will handle the shipping, preferably door to door. “Work with someone who knows the intricacies of logistics, especially when dealing with ports and other countries,” advises Carroll. “After you have created a relationship, it sails through pretty easily, especially if you have an exporter who is taking care of things for you.”
Protect your brand and your rights. Registering intellectual property and writing contracts are two areas that require assistance from a well-versed export attorney. Reinhard von Hennigs, an attorney and foreign law consultant with BridgehouseLaw LLP, stresses the importance of filing for international trademark protection for your product’s name or brand.
“If you have an American trademark, you still need a European Union trademark. The U.S. trademark is only good in the U.S.,” he says. After filing in the U.S., you have two years to file through the World Intellectual Property Organization, an international intellectual property system.
Terms and conditions and limitations of liability can be outlined in contracts, but that may not always guarantee they will be respected in a foreign country. Albert Guarnieri, an international business attorney with Parker Poe in Charlotte, North Carolina, says payment terms and establishing ways to protect your rights are critical. One arrangement may be to request 50% payment upon placement of the order and the other 50% when the product is shipped.
While a distributor based in another country can be an important piece of the puzzle, check references carefully before you sign any document. “In many foreign countries, agents and distributors have protection under the law, and that can limit your ability to terminate a distributor,” Guarnieri explains. “Do not give sales agents or distributors any authority to bind you. When they facilitate a contract, make sure you sign it in the U.S.”
Connect with resources. The world of exports requires you to do your homework, build a reliable network, and understand that you likely will have to navigate pitfalls. Even so, David Robinson, special counsel with Nexsen Pruet’s international group in Raleigh, North Carolina, and honorary consul for Japan in North Carolina, says don’t let the pitfalls discourage you. “People want to buy things we grow and produce. There is a marketplace out there. Look for certain red flags and manage them.”
That includes adhering to compliance regulations, working with state agricultural officers and commercial officers overseas, and having an attorney who has connections with attorneys in other countries.
et the following be your starting point in gaining knowledge and building the network you need to enter the export world.
• The international marketing team with your state’s Department of Agriculture. This should be a first stop.
• State Regional Trade Groups. They were established as a cooperative effort between the state departments of agriculture, USDA, and Foreign Agricultural Service to facilitate trade between local U.S. food companies and international buyers. Check out the respective group for your region: Food Export Association of the Midwest; Food Export Northeast; Western U.S. Agriculture Trade Association; and Southern United States Trade Association. Cost-share funding for a portion of eligible marketing expenses, international travel expenses for trade missions, and more may be available.
• U.S. Commercial Service. The trade promotion arm of the U.S. Department of Commerce’s International Trade Administration has trade professionals in more than 100 U.S. cities and more than 75 countries. This service helps U.S. companies get started in exporting or increasing sales to new global markets.
• State Trade Expansion Promotion (STEP) Grant Initiative of the U.S. Small Business Administration. Matching-fund grants are made to states to help eligible small businesses succeed in the international marketplace. Money for trade missions and trade shows may be available.
• World Bank’s “Doing Business 2019.” The report (available online) ranks best places to do business in the world. It includes information on regulations that both enhance and constrain business activity in 190 countries.
• International Chamber of Commerce. ICC publishes Incoterms, a set of rules that are incorporated in contracts for the sale of goods worldwide. It provides rules and guidance to exporters, importers, attorneys, and others.
• U.S. embassies overseas. Attorneys and other embassy staff may be helpful.