From the Editor
The California Leafy Green Products Handler Marketing Agreement (LGMA) was set up in the aftermath of the Great Spinach Crisis of 2006. It has been remarkably successful and has stood on its own. Yet now, the LGMA has announced that it is making recognition by the Global Food Safety Initiative (GFSI) a top priority — including staffing up to make it happen. Leafy greens are not a big export item, but the push is on by big buyers who want to standardize, globally, on one food safety scheme.
Although United States President Barack Obama claims he is focused on creating jobs and helping the economy, his actions in the free trade sphere indicate he is mostly interested in appeasing trade unions whose support is crucial to his campaign for reelection. As the Obama administration came into office, it demanded that trade agreements be renegotiated. This itself was a catastrophe for future trade agreements as it established a precedent that a deal with the United States is not necessarily a deal.
The line between political and economic freedom is a fuzzy one. Although theoretically it seems a country could allow for capitalism and remain ruled by a totalitarian government, it is not clear that it is a viable long-term possibility. We know trade increases prosperity, but does trade encourage the forces of freedom in a non-free political regime? Or does trade, by allowing for some prosperity, strengthen the regime and its hold on society?
As we approach the end of the year, we also approach the American mid-term elections. For those who have lived in parliamentary systems, the mid-term Congressional elections may produce an odd result: the Congress, or at least one house of the Congress, is likely to switch parties, but President Barack Obama still has two years left in his term. So we may have a dose of divided government.
One of the long-term negative consequences for Europe of bailing out Greece is that cultures that have been more financially successful, such as Germans, may draw the lesson that profligate living pays off.
Wal-Mart is reducing the number of national and regional brands it carries in each category and replacing some of the displaced brands with its own Private Label. If stores weaken national brands, who will do the great national advertising that encouraged the growth of these products and categories to begin with? Where will the margins come from to fund R&D efforts to develop new products?
There is an inherent tension between a government that wishes to impose costs on its domestic industries and free trade. This tension is spilling over as the debate on President Obama's proposal for a "cap-and-trade" system on carbon emission works its way through the legislative process.
It is said that "beggars can't be choosers," but the word must not have reached Haiti. When a Mexican navy ship laden with rice, fertilizer and emergency food kits reached its shores, it was turned away. Why? Fear about H1N1 - the influenza that was initially simply referred to as the Swine Flu.
Stimulus or not, the truth is the economy has enormous recuperative power and within a year or two, if the government does nothing, the recovery will commence. There is, however, real danger that governments around the world could fall into a protectionist trap that could transform a recession into a worldwide depression.
Although there were surely people who would not vote for an African-American, there were probably more who voted for Barack Obama because they saw his election as a symbol of the continuous expansion of opportunity in America.
The recent collapse of the DOHA-round global trade talks in Geneva is disconcerting. It is not so much that this particular round is so crucial; global tariffs on non-food items are relatively low and, in most cases, not a large obstacle to trade. The more important concern is that the dynamics that led to a collapse of the talks indicate we are entering a world in which international agreements will be more difficult to obtain.
On Aug. 15, 1971, President Richard Nixon severed the final connection between the dollar and gold. Growing up in a food exporting family, this columnist had the opportunity of watching one European importer after another come to visit and all had the same story: They were not sure what they were looking for, but any time a currency falls so far, so fast, there must be opportunities. And there turned out to be many such opportunities.
Traders who deal with the United States are doubtless feeling some anxiety. It is reasonable enough for businesspeople to be concerned about all this, yet it is less a cause for concern than one might think. While the suffering of individuals should never be discounted, one man's pain is another's opportunity.
As trade and consumer buyers around the world look at the American market, they have lately heard a great deal about food safety issues. We have had food safety issues on spinach, ground beef and frozen foods, among others. The headlines are deceptive though; U.S. food and ag products are safer than ever.
We are confronted with a new challenge: An army of super-sophisticated simpletons prepared to destroy world trade in the name of "food miles" and "carbon footprinting." As an industry, we now have to rise up with a voice of sanity in a wilderness of the mad and demand that good science be employed in this debate.
One of the great things about American consumer brands is that because of the ubiquity of American culture, many of these brands have instant recognition around the world. So, quite intelligently, many importers piggyback on that recognition. But on many agricultural commodities, where they come from is a brand all unto itself.
In the United States, great attention has been drawn lately to food safety issues on fresh produce. It might seem the fresh supply in the United States has suddenly developed food safety problems and that some risks exist that didn't exist a short while ago. Fortunately, nothing could be further from the truth.
When Americans went to the polls on Nov. 7, 2006, they voted for a dramatic change in government. Democrats replaced Republicans in many levels of government. This was trumpeted as big news and, indeed, a switch in the control of the legislative branch of government is big news. Yet, almost certainly, it means far, far less than most non-U.S. observers could imagine.
Few areas of commerce are assisted more readily by advances in technology than is international trade. Today, information moves at the speed of light. It is digital, and it is versatile. It links us to one another in ways we couldn't imagine only a short time ago. AMERICAN FOOD AND AG EXPORTER is part of this information revolution with two new exciting digital products.
France has created a lottery economy. If you have a winning ticket, if you get the job, then you are guaranteed good pay, generous vacation and other benefits. But if your ticket doesn't win, then you are outside the system, pounding on the door, hoping to get in. Of course, I'm being generous in calling it a lottery economy since that implies some kind of fairness - actually the lottery is fixed, and those poor Muslim immigrants don't have half a shot.
Everyone knows that getting the right customers is key to business success. Getting the right supplier is every bit as crucial, maybe more so than getting customers. A good supplier is a partner in satisfying the customer. Yet buyers of American food and ag products often make incorrect assumptions about what makes a great supplier and so miss possible lucrative business opportunities.
When the world views the horrible destruction of Hurricane Katrina and the lesser but still significant destruction of Hurricane Rita, it is understandable that the world might view the United States as out of business. Yet despite the terrible conditions and real despair caused for many people by these natural disasters, the shocking thing is how little these events actually have interfered with international commerce.
The recent battle over the Central American Free Trade Agreement (CAFTA) shows that the traditional positions of Democratic Party and the Republican Party have made almost a complete switch. Whereas Republicans were once perceived as isolationist and Democrats were seen as internationalist, the Republicans long ago shed their isolationism. Unfortunately the Democrats' neo-isolationism on economic matters is endangering future economic growth and world peace.
That Christianity is skeptical about wealth and commerce is an understatement. There has long been a flavor in Christianity implying that the poor are somehow virtuous and the rich will get their comeuppance. In analyzing the fall of communism, Pope John Paul II showed not only a more sophisticated understanding of economics but also a recognition of the connection between human rights and economic liberty.
It has not been uncommon for countries to wage war. Typically, though, it is done to gain territory or natural resources or to enslave a people. Only the United States seems to wage war, defeat its enemy, then do all it can to help its former enemy achieve economic prosperity and a successful polity.
Those who are concerned following the election should be reassured, as there is no constituency in America for making war. This is a capitalist nation and people take the opportunity to pursue happiness very seriously. But America is a nation that is prepared to do what must be done.
Those who propose requiring these high standards universally do not do so in order to help people in developing countries. In fact, just the opposite - advocates of these policies proclaim their goal is to keep jobs in the United States or, in other words, to ensure that the population of developing countries should remain without jobs and opportunity.
Numerous options and endless opportunities can complicate final decisions. What kind of supplier is best? Should you buy from a producer or from an independent exporter? Most big buyers purchase direct. Conventional wisdom would say that working directly with a producer drives costs out of the system. It seems to make sense, but isn't always so in all circumstances.
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.
It is a grave danger that America's extraordinary efforts to avoid innocent casualties could be misinterpreted as a sign of weakness. So, although distributing pictures of the dead will make many squeamish, it is a sign of a robust America willing to use its power to defend its interests. This may not make America popular. But perhaps one of the lessons of 9/11 is that it is more important to be respected than liked. And for those interested in trade, only a robust America, an America not afraid to fight and kill can keep the world open for trade and exchange.
One could point to philosophy or religion as the motivating force in American's hatred of war, but I think closer to the point is that America is the quintessential commercial republic. As Calvin Coolidge said, "The business of America is business." Though the nation is strong and the people do not fear battle, war is the most distant of thoughts to the typical American. This is a culture obsessed with acquiring and consuming.
America is strong and united now because it has extended citizenship to everyone. In trade, these practices have given the U.S. much strength. As a gatherer of immigrants, we gather in every skill, every language and every type of food. We export Swedish meatballs, Italian Sausage, Mexican taco shells, Thai soups, Chinese egg rolls and so much more. And we welcome foreign ideas and foreign people. So come and trade with us; come and be our friends.
The dollar has been weakening and is projected to continue to decline against other major currencies. The question is: What is the impact of a sustained decline on U.S. food producers and the customers around the world that buy from them? The answer: Opportunity to boost sales in the short term and to build whole categories of new business in the long term.
To one who trades with American business, it must seem almost inconceivable as icon after icon seems to get knocked off pedestal after pedestal, not just because business is bad, but because of write-offs of tens of billions of dollars, accounting irregularities, fraud and more. The aftermath, however, is showing the enormous strength and recuperative power of the American capitalist system.
President George W. Bush imposed tariffs on imported steel of up to 30%, phasing out over three years to give the U.S. steel industry time to modernize. Beyond the economics, of course, the whole issue makes the President and the country look bad. How can the United States be such a hypocrite as to urge others to open their borders to trade - while we protect steel manufacturers? And how can the United States rally the world to fight terrorism if the President of the United States is seen as just another crass politico?
Want to know how Ann Veneman, the recently appointed United States Secretary of Agriculture, will wrestle with the great dilemmas of agricultural policy? How might the Common Agricultural Policy, or CAP, be reformed by the European Union? How will Japan's government get price levels down on foodstuffs? You can look for answers to these questions by going to Qatar.
It sounds petty when one is speaking of a war that has already claimed over 5,000 lives to speak about trade in ginger root or canned fruit. Yet, it is not so petty, and understanding the stakes will influence one's attitudes toward the war.
To people around the world who worry about American power, I can put you at ease. Americans yearn to trade and travel, to farm and to forge, to import and export. Some wish to enjoy leisure, while others find redemption in work or study. But after an attack like that of September 11, 2001, there is a consensus that we have no choice but to put aside present day concerns and deal with the problem presented. After all, without security, commerce cannot easily proceed.
In an economic sense, free trade is easy to justify. If another country is desperately poor, they won't be as concerned with reduced working hours or pollution. These are luxuries that more affluent countries can choose to purchase. Less-developed countries need trade most of all as the first step to lift their countries from grinding poverty. It is later, with more prosperity, that interest in these other areas develops. That is why President Bush is right when pointing out that people who oppose trade are no friends of the poor.
Much criticism has been levied against American firms who view exporting opportunistically. These exporters aren't committed to building the market, but only to profit from it when windows exist. In a sense they abuse, rather than use, the market. Just as disturbing are those importers of U.S. products that are only interested in hitching a ride on products with already developed demand and only in those circumstances, such as a weak dollar, where the profits are immediate.
Americans are typically lazy exporters. There are exceptions, of course, but many U.S. companies view the export market principally as a dumping ground for sizes, varieties and products that the U.S. market won't buy. Other U.S. producers simply don't bother pursuing export business as long as they can sell out domestically. That is why news reports that the U.S. economy is in for a rough spot can translate into opportunities for non-U.S. buyers.
While the world's attention has focused on trade disputes between the United States and the European Union - most notably the disputes over bananas and hormone-free beef - a smaller but very important dispute has been brewing between the United States and New Zealand and Australia over lamb.
With attention worldwide focused on the U.S. Presidential election, it is appropriate for those who trade with the United States to want to understand the nature of the political battle going on inside the country. Although some might think that the United States, the mighty bulwark of continental scale and stable democracy, is unraveling into chaos. When the dust clears and the battle is over, the closeness of the contest will make this American democracy all the stronger.
In Germany, today, the leading lobbyists for the myriad of restrictions on marketing are small-shop owners. There is no groundswell of consumers demanding that stores be closed on Sunday. Indeed the restrictions on retailing have been a source of popular outrage, seen as a restriction on freedom and an inconvenience to boot. What is not popularly recognized is how severely paying homage to the entrenched interests of economic players - such as small-shopkeepers - can serve to impoverish a nation.
There is nothing wrong with buying product American companies produce in your home market, nor is there any problem with buying from a local exclusive importer or distributor. Indeed, in many cases these local exclusive relationships are really kind of "master importer" deals, and the importer functions as if he were a salesperson working for the manufacturer. Still, if one is determined to import directly, there are a variety of alternative paths to consider.
Business-to-business e-commerce - B2B in Internet lingo - is all the rage now, and few fields seem more likely to be revolutionized by the possibilities inherent in using the Internet to conduct business internationally. Yet, the interesting question is probably not whether things will change, but how they will change. Great consequences will flow from the answer.
April/May , 2000
The debate over GMO's is to a large extent a debate between world views. The United States believes it owns the future and thus is more willing to embrace change, recognizing the risks, but still willing to leap into the unknown. Europe, a group of long-established civilizations that are now only beginning to congeal around a European identity, is less certain of a beneficent future and is more inclined to hold onto the past.
The countries of the European Union barely grow bananas, and the United States of America barely grows bananas. Yet, a dispute over bananas may turn out to be the defining trade dispute of our time.
The world has around 175 different currencies. It probably needs no more than three. That in a nutshell is the problem plaguing international business. If our political leaders are paying attention, they will realize that all the hard work done on lowering tariffs and harmonizing standards stands to be for naught if we can't prevent these currency crises that are springing up with unacceptable regularity.
There are many opportunities for misunderstanding in the buying of a product from another country. The challenge is to create a value for the product that exceeds that premium and thus make even the premium-priced product a value for consumers.
Corn prices are the cheapest in memory, soy-beans sell at half the price they did a few years back, and a severe drought has simply destroyed crops in many parts of the U.S. It is a worst-of-times story for the farmers of big U.S. grain crops. It all must look peculiar to observers of the U.S. economic and political scene. In politics, the focus is always on the producer. So problems at the production level seem as disasters for the U.S. economy. But the reality is different.
American's "secret weapon" in value-added food exports is a one-two punch combining an immigrant-accepting society with an importing-accepting society. Although it is true that the Untied States has its share of trade barriers - focused mostly on large-scale crops - the U.S. market is rather open to most processed food products.
Why is the United States in Serbia? What national interest is at stake that leads to battle? These are questions Americans themselves are asking. That they feel the need to ask such questions is itself testimony to weakness of leadership exhibited by President Clinton. In choosing not to seek Congressional approval for his actions and even in choosing to not spend the time to build up public understanding of the issues, President Clinton may have made a grave mistake.
Now that the impeachment and trial of the President of the United States is over, many of my friends and associates who trade with the United States seem anxious to understand the long-term implications of the process we have just gone through. Certainly is it true that in the short term, there is a sort of collective sigh of relief.
Looked at as part of the history of ideas, the Korean imbroglio is best seen as the logical successor to the collapse of communism. The commonality is that the failure of communism, as in the failure of the Korean system, is testimony to the utter lack of viability of command-and-control economies - those in which the government tries to direct economic activity in specific directions.
The common Agricultural Policy, Europe's scheme of subsidy and protectionism, has, from the very beginning of the old Common Market, been an essential component of the drive for European unity. Often derided as a massive transfer of funds from German companies to French farmers, the fact is that it has been Germany's willingness to subsidize inefficient agriculture that has greased the way for European unity. Today, however, challenges face Europe and the common Agricultural Policy as never before.
Asia, East Asia in particular, is so large a market and so convenient for exporters on the West Coast of the United States that many got fat and lazy serving it. For years, U.S. exporters experienced solid sales and profits by focusing on this area. Now, however, with economies suffering across the region, these exporters are paying the price.
President Clinton purchased an automobile for his daughter, Chelsea, which happened to be a new Volkswagen Beetle. There is significance in the fact that the common citizenry did not take this as anything exceptional or objectionable. It shows, more than any politician's statement, how integrated into the American psyche has become an international approach.
Usually success in keeping tariffs and other barriers-to-entry low comes about only in the context of massive multiproduct agreements. These agreements often are supported because they create both winners and losers in each country, and the winners manage to out-lobby the losers. This is the story of GATT and NAFTA. What we learn, though, is that dispute resolution procedures, and indeed the very structure of what is a dispute, is inappropriate for a perishable commodity.
Business people trading with the U.S. must be concerned with how the investigation of President Bill Clinton will play out in policy terms. Can he be effective in his dealings with Congress or his negotiations with other countries? Are there implications for U.S. trade policies in the President's beleaguered status? Any President's effectiveness is impaired by controversies that reduce his personal credibility because the power of the Presidency is mostly the power of persuasion.
In looking to purchase food products from the U.S., many companies' thoughts immediately go to the national brands. Yet, for an importer, a focus on these brands can, at times, be frustrating. Fortunately, there are ready alternatives, including regional brands, trade brands and private label.
In truth, the arguments against free trade made by political opponents in the U.S. are disingenuous. In truth, few ever come out and oppose free trade. The economic consensus that free trade is a powerful force for prosperity is simply too strong for politicians to want to be on the wrong side of the issue.
Today, prosperity envelops the American heartland. Partly this is due to low interest rates and generalized growth throughout the economy. The Midwest, though, is getting an extra boost by a legal change. Officially known as the 1996 Federal Agricultural Improvement and Reform Act (FAIR), the law is better known as the "Freedom to Farm" bill.
Today, current research is indicating that lunch is one activity that Americans have found they could cut back so they could have more hours for working and family. This phenomenon is having an important impact on the U.S. food industry and the nature of food product development. This, of course, means new products, and that means new opportunities for non-U.S. buyers of U.S. food and ag products.
Concern must grow when people around the world learn that a candidate urging high tariffs and other protectionist measures has won an important primary in New Hampshire as part of the race to become the Republican nominee for President of the United States. It is legitimate; however, to wonder where Mr. Patrick Buchanan's ideas come from, why so many people are attracted to them and what the implications might be for U.S. policy toward trade.
American food and agricultural products are prized throughout the world. Yet, the truth is that Americans could do a much better job selling American products out of the U.S.A., and overseas buyers could be greeted with an even broader array of products than is currently available. So what's the problem?
Much of what Presidents Bush and Reagan call their accomplishments could not have happened without Bob Dole's help. Yet, Bob Dole is uninspiring. So, Bob Dole, this politician competent among all others, seeing his campaign struggling, sensing a yearning among the people for something more than the best legislative craftsman in the land, reached out and picked Jack Kemp as his running mate.
Today, the hot topic of discussion in the food industry here in the U.S. is home meal replacement, or HMR. All this is very important to buyers of food and agricultural products from the U.S. As the spread of American fast food chains has shown, many patterns that first manifest themselves in the U.S., the HMR phenomenon can be expected to spread. Maybe HMR is coming to a country near you!
People write us from around the world asking for help with all kinds of matters, especially finding U.S. suppliers. One of the most frequent requests is for help in locating "producer" as opposed to "traders." The letters go on to ask how they, as importers of products, can access the "good prices" that producers offer their customers. But, by and large, the letters I get show a misunderstanding of the role of a trader, an independent export company, or a wholesale distributor.
The Market Promotion Program, or 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 U.S. The program is quite controversial, but 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.
When President Nixon rejected the Bretton Woods system of fixed currency rates and, instead, allowed the dollar to float, it dropped 30% and European businessmen began visiting the U.S. looking for opportunity. In effect, a currency fluctuation opened the door for mass sampling of a product, and that, in turn, led to the development of a regular market. It is this type of unanticipated consequence that needs to be kept in mind as international traders confront the consequences of massively shifting currency rates.
Everywhere the free trade trend expands prosperity follows in its wake. Sure there are adjustments, often severe, as individuals and certain industries that have long enjoyed protection from competitors are forced to compete. But consumers everywhere are benefitting from new choices and better prices as the world uses its resources more efficiently and productively. Unfortunately, the food and agriculture industry has not been in the vanguard of this change.