Ten Things U.S. Exporters Can Be Thankful for This Year

by Eric Van Chantfort

What are you thankful for this year–in business terms, that is? Perhaps you’ve doubled your sales or finally won over that new customer you’ve been wooing. Or maybe you’ve ventured into a new foreign market, solved an annoying shipping problem, snagged an aggressive distributor or expanded your product line.

Although 2000 won’t rank as a banner year for U.S. food and agricultural exports, it hasn’t been a bust either. Export sales are on the upswing despite the strong dollar, intense competition, formidable trade barriers and other obstacles to better sales. And, around the world, new opportunities continue to emerge, ripe for resourceful traders.

Catching the spirit of the approaching Thanksgiving holiday, AgExporter has compiled a list of 10 things exporters can be thankful for in this first year of the new century. Our selections may not apply to everyone, so feel free to quibble.

And what if you haven’t met your export goals this year? Well, there’s one thing you can still be thankful for when you sit down at the holiday table: Unlike the turkey, you get another chance next year. Happy Thanksgiving and bon appetit!

(1) Year of Dragon Awakens Asian Markets

There’s only one right time to celebrate a crisis. When it ends, of course. Although after-effects linger, the financial crisis that swept across East Asia beginning in late 1997 is over. Some countries that had slumped into severe recession are now enjoying economic growth rates of 5-7 percent, and trade with the region has finally started to pick up again.

During January-June 2000, U.S. agricultural exports to Asian Pac Rim countries reached $10.2 billion, up 16 percent compared with the first six months of 1999 (see chart). Exports were up 10 percent to South Korea, 11 percent to Taiwan, 184 percent to China, 21 percent to the Philippines and 24 percent to Indonesia. Even sales to Japan, our largest single market, rose 9 percent in the first half of 2000, despite that country’s continuing economic doldrums. For U.S. exporters, the Chinese Year of the Dragon seems to be living up to its auspicious reputation.

Exports still have a long way to go. The last few years took a big toll, as some currencies crashed and the Asian economic "miracle" slipped into reverse.

Between 1996 and 1999, U.S. agricultural exports to Asian Pac Rim countries fell by nearly $8 billion or 30 percent. Exports dropped 25 percent to Japan, more than a third to South Korea and Taiwan, 59 percent to China and 30 percent to Southeast Asia. It will take time to recover to prior highs.

The importance of East Asian markets is undeniable. They account for about 40 percent of total U.S. agricultural export value worldwide. Before the crisis hit, they had been generating nearly half of U.S. export growth.

(2) Global Economy Revs Up

Economic growth is the engine of trade. The math is simple: Economic growth equals income growth, which, in most cases, yields greater demand for domestic and imported goods and services. The inverse is also true: Slowing economic growth generally portends a slowdown in trade.

Over the last two years, global economic growth–not just in Asia–has accelerated. According to estimates by Standard & Poor’s DRI, an economic research and forecasting service, real growth in world GDP (gross domestic product) climbed from 2.0 percent in 1998 to 2.8 percent last year. And the mid-year forecast for all of 2000 is a hearty 3.8 percent (see chart).

Two years ago, both Japan and Russia were stuck on the negative side of the ledger, with downward-spiraling economies marked by declining GDPs. Although anemic, this year’s forecast for Japan has a plus sign, while the still-struggling Russian economy is growing again–a projected 3.8 percent this year.

Forecasts for other regions include an impressive 5.5 percent for Asia (excluding Japan), 5.2 percent for the Middle East and 3.8 percent for the Americas (North, South, and Central America, and the Caribbean, excluding the United States).

Numbers to be thankful for? You bet. When economic growth accelerates in key markets, trade growth generally follows.

(3) Neighbors Make Good Customers

Sharing with neighbors is a Thanks-giving tradition. It’s also a core idea behind the North American Free Trade Agreement (NAFTA)–sharing products and services across open borders through freer trade. 

The continued strength of NAFTA markets has been one of the brightest spots for U.S. exporters. When Asian markets retreated, sales to our two NAFTA partners, Canada and Mexico, helped offset the losses. Despite the trade issues and irritants that arise, export opportunities have steadily expanded as tariffs and other barriers have been reduced or eliminated.

Between 1995 and 1999, U.S. agricultural exports to Mexico increased by $2.1 billion or 60 percent; exports to Canada rose by nearly $1.3 billion or 22 percent (see chart). In 1999, our exports to Canada topped $7 billion for the first time, exceeding our combined exports to all 15 nations of the European Union.

This year is shaping up as a winner, whether you look north or south. While sales to Mexico weakened a bit in 1999, both markets were buying bigger in the first 6 months of 2000. U.S. export value was up 10 percent to Canada and 16 percent to Mexico, compared with the same months of 1999.

Canada is the leading market for a wide range of U.S. consumer foods, including fruits, vegetables and snacks. Mexico is a major market for U.S. coarse grains, soybeans, cotton, red meats, poultry meat and other products.

For many U.S. exporters, our two closest markets also count among our best ones. In fact, among all the world’s countries, Canada and Mexico rank as our No. 2 and No. 3 largest agricultural export markets.

(4) Market Trends That Keep on Trendin’

They’ve been around for many years and are still going strong. What are they? Some basic market trends that continue to fuel growth in global food trade.

These trends include a growing desire for convenience, variety, healthfulness and new tastes. They often include, as well, an attraction to things American or to foods associated with popular U.S. culture, lifestyles or well-known regional cuisine, such as Tex-Mex or New Orleans style.

Behind the trends are higher incomes, further urbanization, more women in the work force, consolidation in food retailing, more travel and the pervasive influence of Western media around the world. Today, these trends continue to shape markets in ways that tend to favor innovation, efficiency, choice and responsiveness to changing consumer demands–all strong attributes of the U.S. food system.

It is little wonder then that many U.S. exporters have been making the most of the resulting opportunities. And although these trends didn’t begin and won’t end this year, they’re surely something to be thankful for.

(5) Sweeping Away Ag Trade Sanctions

For obvious reasons, most exporters take a decidedly dim view of trade sanctions--the fewer, the better. So when you’re chalking up successes, make sure the scoreboard reflects the recent moves to lift longstanding U.S. agricultural trade sanctions.

Under the reforms announced this year and last, U.S. agricultural commodities (along with medicines and medical equipment) can now be licensed for commercial export to Iran, Libya, Sudan and North Korea. This is true even though U.S. sanctions continue to prohibit exports of most nonagricultural products to these countries.

The easing of sanctions has already resulted in sales of U.S. wheat to Sudan and Libya, and U.S. corn to Iran and Libya. The new policy also exempts agricultural products from future unilateral embargoes.

It’s a sweeping change from the past. When the United States was provoked to cut off trade with another nation, food was generally included–in fact, food trade was sometimes viewed as the sector for applying the greatest pressure. Well, that was then; this is now.

As this article was being prepared, the Administration and Congress were working on legislation to codify the new policy, which generally exempts both food and medicine from U.S. trade sanctions. This legislation would provide similar exemptions for the trade embargo on Cuba, so keep an eye out for future developments.

(6) Consumer Foods Show New Spark

For more than a decade, consumer foods were at the center of the action–the fastest growing component of U.S. agricultural trade. This broad-ranging category includes meats, fresh and processed fruits and vegetables, snack foods, breakfast cereals, dairy products, tree nuts, wine, beer, pet foods and similar products targeted to consumers.

In 1985, exports of consumer foods amounted to less than $5 billion and made up only about 15 percent of the total value of U.S. agricultural exports. In a dozen years of sharp and steady gains, these exports quadrupled to $21 billion, accounting for 35-40 percent of total agricultural export value.

But the charm was finally broken in 1998 (see chart). Consumer food exports dropped slightly, and then remained stagnant in 1999. Much of the blame goes to weakened Asian markets and the collapse in Russia poultry meat purchases.

The good news is that the consumer foods category is growing again. Exports in the first half of 2000 were up 11 percent in value compared with the same months of 1999. The gains were well distributed, with pluses outnumbering minuses by two to one among the different product groups within the category. Trade analysts project that U.S. consumer food exports will finish the year at a new record high.

Admittedly, it’s too soon to tell if this year’s upward turn represents the full-scale resumption of a sustainable trend. But a few hundred million dollars in additional sales here, and a few hundred million there–pretty soon it adds up to some real money for a lot of U.S. exporters.

(7) Tearing Down Trade Barriers

No matter how good your products, competitive your pricing or fastidious your paperwork, virtually every exporter hits a lot of stone walls in impenetrable, and often unjustified, trade barriers. U.S. government policy is on your side, pursuing the steady work of talking down or tearing down the maze of trade barriers around the world.

This past year featured its share of successes and encouraging developments.

At the top of the list is the launch earlier this year of the World Trade Organization (WTO) agriculture negotiations. The U.S. goal in these negotiations is to secure an agreement that will maintain or accelerate progress toward global agricultural trade reform.

The U.S. proposal unveiled in June calls for the elimination of all export subsidies in world farm trade, reduced tariffs, strict limits on state-related trading monopolies, a reduction in domestic farm supports and rules to ensure fair market access for products using new technologies. The United States is urging the 137 other WTO members to set the end of 2002 as the deadline for reaching an agreement.

Trade policy successes come in all shapes and sizes. Like every year, there were also a number of new bilateral protocols, understandings and agreements improving access for specific products in specific markets, such as U.S. nectarines to Japan and U.S. corn to South Africa.

And certainly not to be overlooked are a few major agreements, such as the agricultural cooperation and WTO accession agreements reached with China last year and the new bilateral trade agreement with Vietnam this past July.

According to USDA trade analysts, these agreements promise significant, long-term benefits for U.S. exporters.

In addition, there are the ongoing negotiations toward a Free Trade Area of the Americas and the continuing trade discussions under the Asia-Pacific Economic Cooperation umbrella–in other words, a lot of activity on many fronts in the pursuit of freer trade and a level playing field.

For more information on agricultural trade negotiations, agreements, and trade policy issues, go to the Foreign Agricultural Service (FAS) web site at and click Trade Policy.

(8) Putting Government To Work for You

Perhaps you’ve put government to work for you more directly this year, through the various state and federal programs designed to boost agricultural exports and assist exporters. And since it’s your government anyway, you don’t even have to be grateful.

Many state departments of agriculture offer programs to assist local exporters– everything from providing information to arranging trade missions to sponsoring state pavilions at international trade shows. For information, contact your state department of agriculture or visit its web site.

FAS offers programs to help share the costs of eligible overseas promotional activities, facilitate credit for U.S. agricultural products, and counter subsidized competition for some products. The Supplier Credit Guarantee Program, for instance, may be useful to exporters who want to provide short-term credit (180 days or less) directly to their overseas customers, while limiting the risk that some customers may not pay.

This year, FAS also began a Quality Samples Program to help U.S. exporters introduce new products to foreign buyers.

Although each program has specific requirements based on its purpose and its funding, these export programs have a significant overall impact. In fiscal year 2000, USDA export credit guarantee programs were used to help support about $3 billion in private commercial sales of U.S. agricultural products.

In addition, an estimated 4.8 million metric tons in U.S. commodities were provided under USDA’s fiscal 2000 food aid programs, helping to relieve American surpluses of grains and oilseeds, and, in some cases, introducing U.S. products in potential new markets.

Of course, FAS also offers a wealth of information on foreign markets and trade trends, as well as an array of services to assist exporters. Examples include trade leads collected from foreign buyers, advertising for U.S. products overseas, FAS-sponsored trade shows and a free listing on the FAS web directory of U.S. suppliers–a directory often used by foreign importers.

For more information about USDA export services and programs, go to the FAS web site (http://www.fas.usda.gov) and check out the selections labeled Exporter Assistance and Export Programs.

(9) Clicking Your Way to Global Markets

Since we’ve mentioned web sites, we have to acknowledge the ever-growing role of the Internet. Whether for research, communicating across oceans by e-mail or setting up a business site on the web, exporters are finding more uses each year for the Internet.

Breaking into the export market–at least in a small way–has never been easier. Today, small businesses with limited budgets are entering the global marketplace by presenting their products and making e-commerce sales, including foreign sales, on the web. Some startup companies may have little more than a kitchen, an air freight account and the ability to accept credit card charges.

Many larger, well-established commercial exporters are joining the brick-and-click crowd. They are finding a web site useful to advertise and display their products, create an image, list prices, differentiate themselves from the competition and often accept orders as well.

(10) Thanking the Farmer

Last but not least on our Thanksgiving list is the gratitude due to the productive, hard-working and often low-paid folks who made the first and every subsequent Thanksgiving possible.

We’re talking, of course, about roughly 2 million American farmers and ranchers who feed the nation and still provide enough abundance to make the United States the world’s largest exporter of agricultural products.

But then, most food exporters–many of whom were or still are farmers–probably don’t need a reminder.

Last modified: Thursday, October 14, 2004 PM