Winter, 2004

From the Editor

Capitalizing On Currency

The year ahead looks like a banner one for food and ag exports from the United States of America. How could it be otherwise, especially with the dollar declining so dramatically against the Euro and other currencies? Indeed the decline would be even more dramatic except for substantial intervention in the currency markets by both Japan and China to stem the trend.

Now in many manufactured goods, any boost exports might receive from a weakening of the dollar is mitigated by the increase in cost of imported components. But in most food and ag products, the imported components are minimal or non-existent. As a result, a weakening of the dollar makes U.S. food and ag products more competitive and affordable, typically leading to a substantial increase in exports.

One positive for the importer looking around for opportunities is that the decline of the dollar has much of U.S. industry more sensitized to opportunities to export than is typically the case. So importers looking to buy from the United States should receive a more positive reception.

Still, the tendency in each nation is for a decline in the dollar to simply lead to additional sales in products already being bought from the United States. This is a kind of “no-brainer” as lower prices, passed on to consumers, typically lead to higher consumption.

But the real opportunities are often hidden. They can be found in two ways: competitive supplying of third countries and identifying new product opportunities.

On many food and ag products, other countries compete as exporters with the United States, so the decline of the dollar tends to make U.S. products more competitive vis-à-vis these other exporters. This creates a big opportunity for importers in countries that are buying food and ag products produced in the United States, but sourced from other countries. This is a great moment to solicit U.S. suppliers to see if they can’t be more competitive on products you’ve grown accustomed to buying from third countries.

Ask your current suppliers if they also carry the product you are looking for. Also seek out new suppliers who specialize in the lines you are pursuing. Always feel free to drop us a line here at AMERICAN FOOD AND AG EXPORTER magazine if you need some help securing suppliers for any item.

Perhaps the biggest opportunity of all may be to seek new products that are produced in the United States but are not currently being sold in your market. The decline of the dollar opens a “sampling window” in which many products are reasonable enough that they can be given a trial.

Nobody knew that the French loved red grapefruit until an earlier decline of the dollar led to frequent shipments. Then a funny thing happened. The French kept buying red grapefruit even when the dollar went back up. This points to a lesson: The real obstacle to expanded trade is probably not the currencies; it is probably a limited imagination.

Robert Zwartkruis has written a column in this magazine for many years. He has successfully sold loads of American product in Europe, a region of the world that can grow most things itself.

How did he do it? Sure he is knowledgeable, smart and hard working. But I would also credit him with a sense of vision. Most people look to just trade what is already selling well. But when he brought Iceberg lettuce to Europe, scarcely anyone on the continent ate such an item.

Most people look at a continent full of people who don’t eat a particular item and declare there is no market and just go home. It takes a man of both vision and fortitude to stand before a continent and say: “I will bring them Iceberg lettuce.”

Of course a unique temperament is often required to trade internationally for, inevitably, one’s most successful products – those that have really caught on – are the products that people emulate domestically.

Sometimes it’s a company that was content to let its export division ship some product or brand to some market where they never ate the product or brand. Then, when it really catches on, they build manufacturing plants right in the country and cut out the export division.

Same thing applies to lettuce in Europe. When Robert Zwartkruis started importing hundreds of containers, every farmer in Spain started looking for seeds. And in time what was a constant import became an opportunity play when there is bad weather or quality. But America is a big country and visionaries don’t lack for visions, so Robert Zwartkruis went on to the next opportunity.

The challenge is for all importers to stand before their own countries with the vision Robert Zwartkruis stood before Europe.

We have 300 million people gathered from every race and religion in the world. That means we produce food and ag products to satisfy everybody. With the dollar low, now is the moment to find your piece of the pie.  EXP