The U.S. Dairy Exporter Blog: Market Analysis, Research & News

  • Study: Global Promotion of Ag Exports Rising 

    By Mark O'Keefe January 11, 2018

    A new report analyzes rising investments in export promotion by nine countries, including U.S. dairy competitors EU, New Zealand and Australia.

    A new economic study projects the European Union will increase expenditures on ag export promotion by 29 percent over three years and that New Zealand and Australia are also ramping up promotions.

    While big investments in export promotion are being made by global competitors, the study says U.S. efforts, led by the Foreign Agricultural Service (FAS) may be more effective due to a collaborative approach that focuses on long-term results. 

    The 177-page report released Wednesday was conducted by Informa Economics IEG, a global agribusiness research and consulting firm. It was commissioned by the U.S. Dairy Export Council, U.S. Grains Council, U.S. Meat Export Federation, Almond Board of California and Wine Institute.

    “This report is a strong reminder that competition is fierce in the global agricultural economy," said Shawna Morris, vice president of trade policy at the U.S. Dairy Export Council.

    "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."  

    Global competition of agricultural exports has been increasing in recent years. But there has been a lack of credible information quantifying the extent to which U.S. competitors are investing in promotion.

    The study aims to fill that informational vacuum so FAS and U.S. exporters can make more strategic decisions. 

    USDEC members can download the entire report by clicking the button below. Your USDEC login is required to access. 

    USDEC members only Download (password-protected) full report 

    The full report is not being released to the general public at this time. A summary is below. Informa analyzed the export promotion programs of nine nations that have upped the ante.    

    Informa5.jpg

    Cover page (above) of Informa study available for download.

    U.S. Dairy's biggest export competitors are the European Union, New Zealand and Australia, and all three are 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, the U.S. Dairy Export Council receives funding from FAS to increase agricultural exports. USDEC's primary funder is Dairy Management Inc. through the checkoff program.

    Findings from the study’s executive summary include: 

    The European Union’s 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 forecast to increase 29 percent between 2016 and 2019 from $748 million to $968 million. 
    • Great Britain’s exit from the EU, or Brexit, will likely have a limited impact on EU promotion.

    New Zealand market promotion expenditures also 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."

    Australian promotion funding has nearly tripled.

    • Government promotion expenditures are estimated at $75.5 million in 2016/17, compared with $26 million for 2011.
    • Government promotion programs not only include funding 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 public sector has increased 72 percent over five years.

    • Total estimated public export promotion expenditures by the foreign countries examined in this study increased by 72 percent from 2011 to 2016 (with dollar values from 2011 adjusted to 2016 values).
    • Private expenditures by foreign competitors increased by 40 percent over that same five-year period.

    Export promotion will continue to increase, with China biggest target. 

    • All nine of the foreign competitors in the study are looking at 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.

    Despite competition, U.S. promotion may be more effective

    In the United States, the Foreign Agricultural Service (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, high spending levels don't automatically translate into the most effective results. In fact, the study suggests 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.
    • U.S. programs better focus on long-term export goals compared to competitor multi-year programs.
    • U.S. programs 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.
    • 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.

    Common cheese names studied in previous report

    Informa Economics IEG is the same firm that conducted a study in 2016 on the negative economic impact of EU's aggressive geographical indications policy. Among other things, that report quantified what the loss of common cheese names might mean to the U.S. dairy industry.

    Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.

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    The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.  

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