Several countries are raising the stakes in the global marketplace, according to a new report released by Informa Economics IEG. Particularly, the report says the European Union will increase expenditures on agricultural export promotions by 29% over three years and that New Zealand and Australia are also ramping up promotions.
The report, commissioned by the U.S. Dairy Export Council (USDEC), U.S. Grains Council (USGC), U.S. Meat Export Federation (USMEF), Almond Board of California and Wine Institute, suggests that while global competitors are making large investments to promote exports, U.S. efforts, which will be led by the Foreign Agricultural Service (FAS), may be more effective due to a collaborative approach that focuses on long-term results.
“This report is a strong reminder that competition is fierce in the global agricultural economy," said Shawna Morris, vice president of trade policy at USDEC. "Our key dairy competitors are boosting their investments in export promotion. It’s not a static game out there, and we need to make sure we are maximizing our impact on that landscape by devoting the necessary resources to put U.S. dairy exporters in the best possible position to expand sales."
According to USDEC, global competition of agricultural exports has been increasing in recent years. However, the groups said there has been a lack of credible information quantifying the extent to which U.S. competitors are investing in promotion.
As such, the study aimed to fill that informational vacuum so FAS and U.S. exporters can make effective strategic decisions.
The U.S. dairy industry's biggest export competitors are the EU, New Zealand and Australia, and all three were included in the study. The study also looked at export promotion programs in China, Brazil, Canada, South Africa, Turkey and Chile.
Like other nonprofit industry groups, USDEC receives funding from FAS to increase agricultural exports. USDEC's primary funder is Dairy Management Inc., through the checkoff program.
According to USDEC, findings from the study’s executive summary include:
EU funding for export promotion has gone up significantly and will continue to increase.
- When all sources of funding -- public and private -- as well as promotion of all commodities, including cheese/dairy, fruits, vegetables and wine, are considered, spending is projected to increase 29% between 2016 and 2019 from $748 million to $968 million.
- Great Britain’s exit from the EU, known as "Brexit," will likely have a limited impact on EU promotion.
New Zealand market promotion expenditures are increasing sharply.
- Expenditures rose from $10 million in 2011 to an estimated $51 million in 2015-16. There are some significant private-sector expenditures as well, such as $484 million in export market investment by the Fonterra dairy cooperative, the study noted. The government’s goal is to double agricultural product exports by 2025.
- Fonterra expenditures are included in the calculations because the study considered Fonterra one of several "state-sanctioned monopolies."
Australia's promotion funding has nearly tripled.
- Government promotion expenditures were estimated at $75.5 million in 2016-17, compared with $26 million for 2011.
- Government promotion programs include funding not only for traditional market promotion activities (trade shows, trade missions, etc.) but also for enhancing traceability systems and improving biosecurity surveillance.
Competitor export promotion funding from the public sector has increased 72% over five years.
- Total estimated public export promotion expenditures by the foreign countries examined in this study increased 72% from 2011 to 2016 (with dollar values from 2011 adjusted to 2016 values).
- Private expenditures by foreign competitors increased 40% over that same five-year period.
Export promotion will continue to increase, with China the biggest target.
- All nine of the foreign competitors in the study are looking to substantially growing agricultural exports through market promotion.
- All competitors are emphasizing expanding higher-value exports such as wine, meat, dairy products, fresh and processed fruits and vegetables, processed grains and oilseeds.
- China appears to be the biggest target for export expansion by many of the competitors examined.
U.S. promotions may be more effective
In the U.S., FAS links U.S. agriculture to the world to enhance export opportunities. In addition to its Washington, D.C., staff, FAS has a global network of 93 offices covering 171 countries.
While competitors are spending more money on agricultural export promotion overall, USDEC said high spending levels don't automatically translate into the most effective results. In fact, the study revealed that, as a whole, U.S. market development programs are more effective overall in promoting exports in that they encourage greater industry participation and collaboration between the government and private sector.
Additionally, it found that U.S. programs focus better on long-term export goals compared to competitors' multiyear programs and allow smaller industries to conduct market promotion activities through government funding, which they could not do alone because of limited funding or knowledge of market promotion. Last, U.S. programs include more sectors by encouraging a wider range of commodity participation -- that is, both high-value and bulk products. Many competitor programs focus primarily on high-value products.