Rallying behind export initiatives
February 16, 2010
In his State of the Union address on Jan. 27, President Obama announced, as a component of his initiative to create more jobs in the United States, the National Export Initiative, which has the goal of doubling the nation’s exports within the next five years. The goal is laudable and an effort that food and beverage manufacturers as well as farm commodity groups should stand solidly behind.
“We have to seek new markets aggressively, just as our competitors are,” Mr. Obama said. “If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores. But realizing those benefits also means enforcing those agreements so our trading partners play by the rules. And that’s why we’ll continue to shape a Doha trade agreement that opens global markets, and why we will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia.”
Exporting has been a longstanding source of frustration for many U.S. manufacturers. For a variety of reasons, most notably the fluctuation of the value of the U.S. dollar, existing trade agreements that exclude specific products or commodities from some markets, as well as bare-knuckled politics have hindered market access.
The announcement by China two weeks ago that it was imposing duties ranging from 43% to 105% on chicken imported from the United States underscores the difficulties some U.S. manufacturers face. The Chinese government has accused U.S. poultry processors of selling product in China at prices below the cost of production. The U.S. poultry industry disputes that allegation.
It should also be noted that China’s move on poultry coincides with U.S. pressure on Beijing to revalue its currency, and when it was announced that Mr. Obama would meet with the Dalai Lama. Both are highly sensitive issues for the Chinese government.
China is the second largest importer of U.S. chicken products, importing approximately $800 million worth of U.S. chicken this past year. Regardless of the reasons why the new duties have been imposed, they sting an industry that already has suffered due to volatile feed costs, the recession and the decline in consumer spending at food service.
Yet despite the many great challenges, some sectors of the food and beverage industry, most notably dairy and meat processors, are in positions to gain more prominent market positions internationally. The global recession combined with other international developments have created unique opportunities abroad for U.S. food manufacturers.
Australia and New Zealand, for example, two chief competitors to America in the dairy export market, face internal difficulties. Australia has experienced a series of droughts that have forced many dairy producers out of business. Much of the land that once was used for dairy farming has been shifted to new uses and affected milk production. In New Zealand, expansion of the nation’s dairy industry has slowed because available land with which to pasture dairy cows is becoming limited.
Meat processors are in a similarly favorable situation. While the recession has led to a dramatic reduction in the U.S. flock and herd sizes, similar reductions have occurred in the countries that compete for a share of the global meat and poultry export market. The European Union, Canada and even Brazil have reduced production in the wake of the financial setbacks of the past year.
These situations present new advantages and opportunities to companies interested in exporting and form the foundation for why the food and beverage industry should embrace the president’s export initiative. While it primarily is seen as a jobs creation program, it is also a stepping stone to help processors grow their businesses in burgeoning markets abroad.