Summer, 1995

From the Editor

Backing For Bold Endeavor

Readers of this magazine will find frequent references to MPP, an abbreviation for the Market Promotion Program. MPP is funded by the federal government, in Washington, D.C., and is designed to increase the export of food and agricultural products from the United States. It attempts to do this by funding promotion of such products in countries outside the United States.

The program is quite controversial in the U.S., and its budget has been declining in recent years. The controversy divides proponents – who argue that the program is necessary to counterbalance export subsidies of other nations and is effective in boosting sales of U.S. products – and opponents – who argue that the plan unfairly subsidizes certain companies and industries. Opponents also question the effectiveness of the spending, alleging that much of the promotion would have occurred without the program.

MPP works on two levels. The broader program provides money to commodity promotion boards for example, the California Table Grape Commission, to use in generic promotion of these commodities in target markets. The other part of the program gives money to individual companies, either directly or via a network of U.S. regional organizations, for these companies to use in promotion of their products.

MPP is the largest of many programs of this type. Some states and individual commodities within the states have programs designed to promote export. For example, Florida citrus has its own export promotion funding.

Whatever the controversy over these programs in the States, the programs represent a substantial opportunity for non-U.S. buyers of American food and agricultural products. This is because these funds can make it possible for the importer and the importer’s customers to increase sales through promotion without either paying for it all themselves or placing the burden on a supplier, with the attendant danger that the supplier might raise prices to cover promotion costs.

The funds can generally be used for almost any legitimate promotional purpose such as sampling, demonstrations, advertising, etc. Verification must be provided for all expenditures. Although trade promotion can be included, very often consumer promotion is favored.

There are two ways to take advantage of these funds. The simplest way is to see if the suppliers you deal with, or the commodity boards whose products you sell, are already approved and funded for a program in your country. In other words, if a commodity already has targeted your country and gotten funding for a program there, you can ask to have your operation included in the program.

Alternatively, you can work with your suppliers to get a program funded specifically for your needs. This can take some time so plan ahead. Basically, your supplier will have to show that your market has potential and that the proposed program will help boost sales. If he can also show that U.S. products face unfair competition in your market because of a competing country’s subsidies, the program has a better chance of being funded. Very often, matching funds are required from either the exporter or importer.

A word of caution: If you get the funding through a supplier – as opposed to a commodity group – make sure you have pricing issues settled with the supplier up front. After all, if you are going to be promoting one particular brand, you are not in a position to buy from someone else mid-stream if you are unhappy with the price.

One of the great things about this type of funding is it gives exporters and importers alike a chance to, as we say in America, “think outside the box,” which means to think in unconventional ways. After all, if you are spending your own money on promotion, being conservative is usually the order of the day. You want to be certain you will get a return. This leads most private promotion to focus on already-existing markets. With MPP funds, however, you have the freedom to try more daring approaches and to attempt to convert populations that have never used a particular item into regular customers.

Over the years, MPP-backed programs have introduced products to populations that had never eaten them before. It may just be a matter of entering new geographic areas, or it may mean attempting to change tastes, as in introducing new sizes or varieties or labels to unfamiliar populations. Whatever the case, these funds are ideal for the larger, more ambitious attempts to build new markets.

So be bold and use the bounty of America to build your business.  EXP