Technical Assistance for Food Exporters
Systematic Market Research
A Step-by-Step Approach to Market Research
Screen Potential Markets
Assess Targeted Markets
Tariffs and Harmonized System Codes
Locating a Foreign Buyer
Benefits of Trade Show Participation
Preparations and Budgeting for Trade Show
Technical Assistance for Food Exporters
Now that you have decided to commit valuable resources to exporting, it is time to research and make the necessary,
technical changes to your product so that it may enter foreign markets. Your product may only require a label change;
however, it could require ingredient modification and new packaging. Due to the variety and number of enforcement
and regulation requirements, exporters of agricultural products must address certain technical issues to ensure the product's
One way to determine what the import requirements are is via the FAS Foreign Agricultural and Import Standards
(FAIRS) reports, which can be found at www.fas.usda.gov under Market and Trade Data.
Besides obtaining required certificates prior to the export of certain products, changes to the product itself and its packaging
may also be necessary. You should fully research the technical changes needed for each market. Modifications add
The Product — Will
it need adaptation? Regulations for food additives differ from country to country. The U.S.
"Generally Recognized as Safe," or GRAS, additives may have maximum content levels or may be prohibited altogether
in foreign countries. Documentation is important not only for the amount of additive, but also the source of the
product; secondary or indirect additives are also regulated in most countries. Many times, additives must appear on the
label in the list of ingredients.
Exporters must assure the safety of their products. Pesticide tolerance or maximum residue levels (MRLs) of the import
country must be met. Documenting pesticide use and residues throughout your entire production process will increase
your knowledge of your product and assist your compliance with the regulations. The best method of monitoring
pesticide applications is to follow the established state or national guidelines. The national guidelines require that for a
period of two years, the producer must record within the span of 14 days the brand or product name of the pesticide, the
EPA registration number, and be aware of any contract requiring that certain residue standards be met.
Good sanitation procedures are a must! Give special care to microbial growth during the shipment and storage of
products since the distribution time is longer than that for domestic sales. Also, fresh foods must be pathogen-controlled,
while processed foods should be pathogen-free. Countries may differ on their bacterial standards, so once again know
the regulations before the contracts are signed.
Another aspect of your product may need modification. The product formula or recipe may have to be modified to
satisfy tastes of the local population of the target country. For instance, a new flavor to which the locals are accustomed
may need to be developed.
The Label — What
changes will be needed? The product label is an important element in the promotion of your
product. Labeling provides required information and a further opportunity to position the product in the market
through attractive graphics. To present your product favorably to a foreign buyer, your label may need certain alterations.
Product and brand names as well as label colors must be carefully considered for their cultural significance in each
country. For example, in Japan, white signifies death, while green is a favorable color in Saudi Arabia.
Like the United States, each country has label standards designed to inform and protect its consumers. The gravitation
toward a more nutritionally informed consumer has caused global labeling requirements to become more stringent.
Even though this move toward higher standards exists, there is not one standard set of requirements; rather, the particulars
differ from nation to nation. Some nations will allow "stickering" of your U.S. label in order to comply with their
requirements, whereas other nations will not. Every label should include certain elements: the common name of the product, the net weight or volume in metric units, the brand name, the name and address of the packer or shipper, the
country of origin, the recommended storage temperature, special handling instructions, and the name of officially approved
fungicides or bactericides used in the packaging process. It is also beneficial, and many times required, to include
all information in the native language of the country to which you are exporting. Remember that these as well as other
changes will result in additional costs, which should be calculated in your selling price. In addition to these items your
company should calculate the cost of registering your brand name or trademark in the foreign country. It is possible
your exact brand is already in use in the foreign country. Do this research before investing lots of money. You can search
at the U.S. Patent office to find out if your trademark is already registered in the USA: www.uspto.gov.
The Package —
What needs to be modified? Depending upon the product(s) shipped, companies will encounter varied
constraints based upon the type, size, condition and environmental impact of the container/package utilized. Be aware of
the regulations before a contract is signed, because an adaptation of the packaging will increase your production costs.
The portion size of the package may also need changes to conform to local eating habits. Additionally, the package may
need to be changed so that the product has an adequate shelf life for the new market to which it will be shipped.
In today's world of environmental concerns, the environmental impact of packaging has become a major issue regarding
packaging requirements. Many countries have established mandatory recycling programs, packaging bans, and solid
waste reduction programs. Many of these laws, such as the German Waste Recycling Ordinance, require the importer of
a product to return the excess packaging to the exporting country or recycle/reuse all transportation package material.
In conclusion, agricultural exporters need to prepare themselves for the technical requirements of each target market.
Know which questions to ask and to whom these questions should be directed. For answers to technical questions, ask
your foreign customer, your freight forwarder or the Foreign Agricultural Service of the USDA.
Most countries require a sanitary certification that ensures that the imported plant or animal product meets certain
health and quality standards. USDA's Animal and Plant Health Inspection Service (APHIS) provides this inspection for
plants. USDA's Food Safety and Inspection Service (FSIS) conducts inspections for meat and poultry products. USDA's
Grain Inspection, Packing and Seed Administration (GIPSA) manages inspections for U.S. grains. The U.S. Food and
Drug Administration (FDA) manages the seafood inspection program, while the U.S. Department of Treasury's Bureau
of Alcohol, Tobacco and Firearms (ATF) registers exporters of alcoholic beverages. Additionally, you might contact the
consular office of the country to which you wish to export.
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A systematic method of market research should involve a preliminary screening of potential markets followed by a
careful assessment of the targeted markets. Exporters engage in market research primarily to identify their marketing
opportunities and constraints within individual foreign markets and also to identify prospective buyers and customers.
Results of this research should inform the company of the largest markets for its product, the fastest growing markets,
market trends and outlook, market conditions and practices, and competitive firms and products. Based on all the
information gathered, a company must decide which markets are the most promising and the number of markets the
company is prepared to enter. Even if the firm plans to use an export intermediary, it should select its markets before
selecting the intermediary, because many EMCs and ETCs have market-specific knowledge and strengths.
Markets may be researched using primary or secondary data sources. Primary market research consists of a company
collecting data directly from the foreign marketplace through interviews, surveys, and other direct contact with representatives
and potential buyers. Primary research has the advantage of being tailored to meet a company's needs and
provide answers to specific questions, but this data collection is very time-consuming and expensive. Most companies
employ secondary data sources, such as trade statistics for a country or a product, to focus their marketing efforts. This
type of research is a valuable and a relatively easy first step for a company to take. Many times, it may be the only step
necessary if the company decides to utilize an export intermediary and export indirectly.
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Approach to Market Research
1. Screen Potential Markets
Step 1: Obtain export statistics that indicate product exports to various countries. The Foreign Agricultural Service
(FAS) compiles historical data on the value and volume of agricultural exports to pinpoint trends in exports of particular
commodities and products in specific markets. The agency also analyzes and tracks the U.S. agricultural trends
worldwide for both the calendar and fiscal years.
A starting point is the FAS "BICO" (Bulk and Intermediate COmmodity) Reports, which quantify sales of agricultural,
fish and forest products to a given country. After you have isolated countries of interest, detailed information on
country-specific issues can be found in Attaché Reports. Attaché Reports provide both commodity-specific as well as
country-specific data. These reports are available at www.fas.usda.gov.
Both the Department of Commerce and Small Business Administration (SBA) have many services that can assist with
the process of market research. Many cities have U.S. Export Assistance Centers (USEAC) containing both offices.
Companies may also purchase PIERS data, which includes detailed information on shipments from many major seaports.
PIERS can be contacted at www.piers.com.
Companies should also consult USA Trade® Online for current and historical trade related releases, international
market research, trade opportunities, country analysis and access to their trade library. Provided by the U.S. Census
Bureau's Foreign Trade Division, USA Trade Online provides current and cumulative U.S. export and import data on
more than 18,000 export commodities and 24,000 import commodities worldwide. Companies can subscribe to this data
through the USA Trade Online website, www.usatradeonline.gov.
If you are still encountering problems with your research after consulting these sources, pursue other avenues. There
are several questions to consider that may lead you to the information you are seeking. Do your domestic competitors
export to certain countries? Could demographic, government expenditure, health, investment, labor and employment
data of foreign countries help you?
Step 2: Identify 5 to 10 large and fast growing markets for your company's product. Look at the performance of that
product during the past 3 to 5 years. Has market growth been consistent year to year? Did import growth occur even
during periods of economic recession? If not, did growth resume with economic recovery?
Step 3: Identify some smaller but fast-emerging markets that may provide ground-floor opportunities. If the market is
just beginning to open up, there may be fewer competitors than in established markets. Growth rates should be substantially
higher in these countries to qualify as up-and-coming markets, given the lower starting point.
Step 4: Target 3 to 5 of the most statistically promising markets for further assessment. Consult with the Southern
United States Trade Association (SUSTA), the Foreign Agricultural Service, your state's Department of Agriculture, the
U.S. Department of Commerce, Small Business Development Centers, business associates, industry associations, freight
forwarders, the National Trade Data Base (NTDB) and others to help refine targeted markets.
After completing the preliminary research assessment of the possible target markets, use the Market Research and
Assessment Appendix E and Market Factor Assessment sheet included in Appendix F to compare the possible market
- Select two countries in which you think your product has the
best market potential;
- Review the market factors for each country;
- Research data/information for each country;
- Rate each factor on a scale of 1-5 with 5 being the best;
- Select a target market/country based on your ratings.
2. Assess Targeted Markets
Step 1: For each country, examine trends for your company's product, as well as trends for related products that could
influence demand. Calculate overall consumption of the products and the amount accounted for by imports. To obtain
the reports of this service of the Foreign Agricultural Service, visit www.fas.usda.gov. Additional services are available
from the U.S. Department of Commerce providing the economic background and market trends for each country.
Additionally, demographic information (population, age, etc.) may be obtained from the Bureau of the Census and the
Statistical Yearbook published by the United Nations.
Step 2: Ascertain the sources of competition, including the extent and quality of domestic industry production and the
major foreign countries the company is competing against in each targeted market.
Step 3: Analyze factors affecting marketing and use of the product in each market, such as end-user sectors, technological
developments, local pricing practices, channels of distribution, cultural norms for the market, and business practices.
Step 4: Identify any foreign barriers (tariff or non-tariff) for the product you are exporting. Identify any U.S. barriers
(such as export controls) affecting exports to the country. To find out more about barriers to trade of agricultural products,
Step 5: Identify any U.S. or foreign government incentives to promote exporting the product.
3. Draw Conclusions
After analyzing the data, your company may conclude that its marketing resources would be better utilized if applied to
only a few countries. In general, a company's efforts should be directed to fewer than 6 markets if the company is new to
exporting, but in many cases one or two countries may be enough with which to start. The company's internal resources
should help determine its level of effort.
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Tariffs and Harmonized
In order to export your product it is necessary to determine your product's Harmonized System or Schedule B code.
The Harmonized Code System classifies transactions under the categories of approximately 8,000 different products
leaving the United States. Globally, every item is assigned a unique six-digit code. In the U.S., the six-digit classification
is driven to a 10-digit code providing greater levels of detail, which can then be re-aggregated into the broader categories
of 6- and 4-digit codes. The HS code is part of a global system in which tariffs are levied by harmonized code. For
help in determining your product's harmonized code, contact the U.S. Bureau of the Census.
Once you have the harmonized system or HS code for each of your company's products, visit the Trade Information
Center home page or contact FAS to find the tariff rate for your product in the country to which you want to export.
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a Foreign Buyer
Once you have determined that your company is in a position to export and the target markets have been selected,
locate customers. You should employ any and all avenues which seem appropriate for your product.
Foreign Agricultural Service: The Foreign Agricultural Service is an excellent contact for initiating the search for foreign
buyers. The website www.fas.usda.gov includes information on many services under "U.S. Exporter Assistance": lists of
foreign buyers of food and agricultural products, market research resources, assistance in presenting your products at
international trade shows, and many more services.
USDA Export Development Cooperators: The cooperator program is one of the oldest FAS market development efforts
abroad. The Cooperators International Offices provide the contact points for foreign representatives of industry
associations, according to market sector and country. These international offices can assist you to develop your channels
of distribution and contact with potential buyers. A list of cooperators is available on the FAS website under Market
State Departments of Agriculture: Many state Department of Agriculture offices have means for obtaining trade leads
and connecting suppliers with foreign buyers. Services vary from state to state, so you should consult them to learn
what assistance may be available in your state. For contact information for state Departments of Agriculture in the SUSTA
region click here.
State Regional Trade Groups: SUSTA is one of four state regional trade groups, which serve all 50 states. These state
regional trade groups offer many services, including advice and assistance in the process of locating foreign buyers.
Agricultural Trade Officers (ATO's): The agricultural trade officers or attachés are the official representatives for the
U.S. Department of Agriculture overseas. They are in frequent contact with foreign buyers and overseas representatives
of U.S. companies and associations. Additionally, ATOs help exporters establish contacts with government officials and
participants in foreign trade. Agricultural trade officers are responsible for compiling reports about their respective
markets, which may be obtained through the FAS website. Requests for assistance from the ATOs should be as specific
as possible. For general information about a country, utilize reports available through the FAS website.
Trade Shows: Trade shows are one of the most effective means of introducing and promoting food and agricultural
products overseas. Trade shows offer the opportunity to contact a great number of companies in one trip without incurring
the expenses of numerous visits to the market. There are trade shows aimed at many different sectors of the food
industry. Your company should look carefully at the type of buyers that will be attending a show before deciding to
participate. For information about international shows visit the FAS website at www.fas.usda.gov. Another source of
foreign buyer contact is the International Buyer Program sponsored by the International Trade Administration of the
U.S. Department of Commerce. In this program, qualified buyers and prospective representatives and distributors from
all over the world are recruited to participate in U.S. domestic trade shows.
- The International Divisions of Commercial Banks
- International Freight Forwarders
- State Port Authority Offices
These three sources all possess a vested interest in exporting. By promoting U.S. products, these sources are increasing
the chances that their services will be needed. In addition to their interest, these sources can be extremely helpful
because they have ongoing contact with international trade representatives.
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of Trade Show Participation
As previously mentioned, trade shows are an excellent opportunity to introduce and promote food and agricultural
products overseas. Because so many buyers and sellers are convened in one location, participation in a trade show has
many benefits, including:
- Trade shows are one of the least expensive methods of conducting in-country market research and testing to
gauge customer attitudes
- Trade shows provide face-to-face contact with buyers
- Trade shows permit product demonstrations, which is an excellent way to promote and sell your product
- Trade shows provide cost-effective direct sales opportunities
- Trade shows offer opportunities to meet important agents and
- Trade shows provide a positive sales and public relations environment.
Also, they provide the opportunity for members of your staff to
meet other companies' personnel.
- Trade shows offer the opportunity to conduct market intelligence
and monitor the activities of competitors
- Trade shows can be useful for staff training, education, and
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and Budgeting for Trade Show Participation
Thorough planning for participation in a trade show is essential for the success of the exhibit. Unfortunately, many companies
overlook the essential preparatory step of adequately budgeting for the show. While budgeting is more difficult
for the first trade show, the costs of future shows should be easier to ascertain. To help you construct your budget for
participation in a trade show, we have included a Budget Framework for Trade Show Participation in Appendix G. On
the most basic level, the expenses involved in trade show participation are:
Space Rental — Prepayment of booth space is vital. Having paid in advance, your company is more likely to obtain a
prime location at the show and will benefit from early payment discounts. In addition, late payments could result in the
cancellation of your booth reservation or additional late charges.
Exhibition Booth Design and Construction —
At FAS-sponsored trade shows, booth rental cost includes booth construction
and basic furnishing for the booth. However, in most trade shows, rental space does not mean that you will
receive a constructed booth. Thus, your company will have to make arrangements for the design and construction of a
booth. In such instances, booth fittings will also need to be rented. Such fittings include shelves, tables, chairs, telephone,
water, plants, carpeting, electrical fittings and a chiller or freezer, etc. Due to these additional rental needs, this component
is often the most expensive portion of trade show participation costs.
Promotion — Effective promotion both before and during the trade show is necessary to ensure your success. While the
organizers' promotion will bring visitors to the trade show, your company must carry out its own promotion in order to
attract visitors to its booth. Your company will benefit most from trade show participation if you do research and contact
potential customers prior to the show.
Shipping and Customs — The costs of shipping samples and booth materials to the show should be well planned.
Depending upon the location of the show, your company needs to allocate the adequate amount for shipping expenses.
Forethought and careful scheduling are vital in order to avoid additional charges, which can be incurred from delays in
shipping, improper completion of customs documents, or storage charges.
Personnel Costs — The costs incurred by the company representatives who attend the show are considered personnel
costs. The major components of these costs would include accommodation, airfare, ground transportation and meals. In
addition, one may hire an interpreter in-country for the trade show. FAS or show organizers may have excellent suggestions
as to a firm that can provide industry-knowledgeable interpreters. If hiring an interpreter, determine their level of
industry knowledge: each industry has its own jargon and structure. An interpreter who brings industry knowledge to
the interpretation task is invaluable.
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