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The Ag Ex Files: Avoid These Trading Troubles
By Jill Lee
What follows are five strange stories,
part of the Ag Ex files. And in some cases, they involve
ex-exporters. Other instances offer living proof that even pros
sometimes make mistakes.
The names remain classified. But the losses are in full disclosure, in hopes that others may avoid these costly errors.
Case # 1: Asparagus Madness in Milan
Lessons learned: Check importers’ financial references; be wary of new companies; when things go wrong, seek legal help immediately.
Friday evening, the Agricultural Trade Office in Milan, Italy gets a frantic call from a first-time asparagus exporter. The importer claims the product is undersized and refuses to pay for it.
Milan has already issued a warning. The state departments of agriculture and the Freight Forwarders Association know that this company searches world trade leads for victims. Its method of operation: they receive a few air shipments, reject the shipment because of ostensibly poor quality, then sell the product on the street, and make the exporter eat the cost.
The novice exporters beseech ATO Milan to size their asparagus and beat the importer at his own game. Milan has a better idea: call a lawyer, now! The company says no, because it would cut into their profits in the end, a sadly ironic decision.
On Monday, ATO Milan negotiates for three hours to make the best of a deteriorating situation. The importer at first agrees to sell the vegetables, deduct his costs, and send the rest of the money to the exporter. But then–again–the importer reneges.
Ultimately, the exporter goes out of business.
Case # 2: Third Time’s a Bummer
Lessons learned: Don’t ship unless you know all the documentation is in place to be cleared upon arrival.
Some things done right: Store perishables for the long haul; be patient if you feel your importer is working in good faith.
The Caribbean Basin ATO gets a distress call from an importer in Barbados. His shipment of pork sausages from a Midwestern manufacturer is stuck in customs. Why? Because he doesn’t have a government import permit.
Twice before, this importer got his permit without a hitch and brought the sausages into Barbados. They were a local hit.
Exhilarated by his success, the importer placed a third order and simultaneously applied for another permit. But this time, the government said no.
The ATO immediately called Barbados officials, who, while sympathetic to the importer’s plight, were annoyed at his assumption that two previous permits guaranteed him a third. Pork is a product with a complex history in Barbados.
Four months after their arrival at port, the sausages are finally liberated. They are still in good condition because they were properly frozen. The sausage company only breaks even on the deal because of the high storage costs. Graciously, its managers allow the importer to defer payment until the buyer succeeds in selling the product.
Case # 3: Hassles in Ho Chi Minh City
Lessons learned: Pay attention to what the importer tells you about labeling requirements. To be extra sure, confirm with FAS’ office of Agricultural Export Services.
A West Coast consolidator sends a shipment of canned goods to a major Vietnamese retailer. The cans will be featured products in a store-wide USA Food promotion. More good news: the country’s main holiday, Tet, is fast approaching. Sales should be great.
But the consolidator has missed a critical import specification: the product needs a best-used-by date on the label. Result: the whole shipment is trapped at customs while extra documentation from the consolidator, and the food manufacturer it represents, are rushed to the scene.
The importer’s staff make heroic efforts, slapping stickers on cans to provide the missing data. But by the time the faxes, phone calls and label-slapping sessions are complete, Tet, and the food promotion, are history.
Case # 4: Taking a Powder in Holland
Lessons learned: The European Union has changed many of its import requirements. Keeping up with trade regulations is better than catching up with them.
It’s May, and 42 bags of a powdered food additive worth $10,000 are stuck in customs at the port of Rotterdam. The U.S. exporter, the Dutch importer, and the Dutch food company that uses the powder feel bewildered and helpless.
The three companies have been working together for years. Nothing like this has never happened to them before. And the customer, a food processor, needs the powder–pronto.
The importer calls FAS’ Agricultural Affairs Office in The Hague, for advice, staaff there explain that since 1997, the European Union has required health certificates for any product containing milk–like this food additive. It has taken some time, but the new regulations have finally caught up with these long-time associates.
The FAS office in The Hague calls the Dutch Inspection Service for Livestock and Meat to find out what to do.
The shipment needs an Annex B certificate–no exceptions. But to get one, the company making the powder must be a certified USDA-European Union exporter. It is not.
Throughout the summer, the company’s trade with the Netherlands gets put on hold while a three-month approval process takes place.
Two years ago enduring the tedious approval requirement might still have caused a business slowdown.
But back then, the U.S. company could have asked its Dutch customers for a hiatus to get its house in order prior to the regulation change. This would have bought time for the customer to make arrangements–like ordering extra powder in advance. It would also have prevented an embarrassing surprise at Rotterdam.
Case # 5: Hung Up in Hong Kong
Lessons learned: All U.S. exporters should check their travel documents carefully before coming to the airport. At the gate, it’s just too late. And, although you do not need a visa to enter Hong Kong, you must carry one for mainland China.
A major steak house chain was opening a
restaurant in Hong Kong. ATO Hong Kong, the U.S. Meat Export
Federation and the restaurant owner planned a grand opening. The
Consul General was invited.
On the day of the owner’s arrival ATO got a distress call. The owner had remembered to renew her passport, but inadvertently packed her old one instead. She was stuck in immigration.
ATO Hong Kong worked the entire day, and in the end did manage to get the restaurant owner a new passport. She made it to the opening ceremony on time. She had, after all, done the right thing in enlisting help. But the time would have been better spent enjoying the city–not trapped at the airport.
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The author is a public affairs specialist with the FAS Information Division, USDA, Washington, D.C. Tel.: (202) 720-7939; Fax: (202) 720-1727; e-mail: leejill@fas.usda.gov
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