Press Room

INsight
SUSTA's newsletter, INsight, is published every two months.

July/August 2003 INsight excerpts

Export Opportunities for Nurseries
Generic Activity Success: Singapore
Director's Corner
Canada-Opportunities for U.S. Agricultural Exports

May/June 2003 INsight excerpts

Export Opportunities for Nurseries

Many nurseries concentrate on meeting the domestic demand for their plants and never consider their potential in the international market. However, for growers to remain competitive in the long term, they should consider the advantages of exporting their plants to establish a base abroad. The blossoming horticulture market in several countries worldwide is ready for the introduction of products by U.S. growers. Countries like Japan and Greece show promise for U.S. nursery exports. By attending international industry events, companies can see their international competitors and interact with international buyers. Becoming familiar with the business practices of other countries and learning about the technical requirements for exporting, such as phytosanitary certificates, helps growers to determine an export strategy.

Why Export Plants?
Exporting benefits nurseries in a number of ways:
-Complementing Domestic Trends (varieties that lose domestic popularity may sell in other countries)
-Moving Oversupply of Product
-Utilizing Excess Capacity (such as greenhouse space and mother stock)
-Protecting businesses from downturns in the U.S. market.
Interaction with the international market also provides new and useful information that can aid nurseries abroad and domestically. Growers, who meet foreign colleagues, can learn new production techniques that can help in both markets. Nursery owners also benefit from learning about new equipment or technology from foreign markets, increasing efficiency and reducing production costs at home.

The USDA's May 2002 Floriculture and Nursery Crops Situation and Outlook Yearbook says that although the value of the U.S. economy experienced a surge in nursery exports in the mid-'90s, there has been a decline in more recent years as foreign demand weakened and the U.S. dollar strengthened. However, many foreign markets show promise for U.S. products. A decline in the value of the U.S. dollar makes U.S. products more affordable abroad.

What Markets Do I Target?
Japan is a leading market for U.S. nursery products. Japanese consumers represent the world's largest market for plants following the U.S. and are increasing their familiarity with products from the southeast and northeast U.S. After learning more about U.S. climatic conditions, the Japanese can recognize similar growing zones.

Trade associations, like SUSTA, and the U.S. government work to foster relationships between U.S. growers and suppliers with foreign buyers. For example, trade missions such as the U.S. Demonstration Garden Showcase and Trade Mission to Japan in September, sponsored by SUSTA and Food Export USA Northeast, will provide U.S. growers with another opportunity to meet Japanese buyers and showcase their plants. Another event will bring a group of representatives from the Japanese Nursery Association to the U.S. to attend a meeting of the American Nursery and Landscape Association this summer. The two groups hope to improve the nursery trade between the two countries.

One trend increasing Japan's purchase of U.S. greenery is environmental planting. A new Japanese law requires plants to cover 70% of the top of all new buildings. The Japanese government hopes the plants will reduce pollution and runoff and decrease cooling expenses. Japanese consumers are thus interested in products that are low-maintenance and conducive to protecting the environment.

Greece is another country looking to U.S. nursery products to help its environment. To reduce soil erosion, U.S. grasses have been planted along the Greek highways. However, Greece has other reasons for seeking U.S. plants - the approach of the 2004 Olympic Games in Athens. A 1998 AgExporter article cited the Mediterranean as an excellent venue for U.S. gardeners looking to expand into the foreign marketplace, mostly due to this increased need for greenery. In both the public and private sector, landscaping and beautification projects will demand more than the domestic producers can supply. Approximately 100 million shrubs and trees will be required for public works projects alone. In addition, consumers in Greece and Italy consider U.S. products and stock to be high-quality and innovative. In August 2003, SUSTA will bring buyers from Athens to the Southern Nursery Association trade show in search of plants that thrive in dry conditions and can be planted immediately after shipping. Afterward, the buyers will visit nurseries in Miami and Puerto Rico.

Like trade missions, international trade shows are another good way to assess foreign markets and a company's export potential. Attending or exhibiting at a show allows growers to see what types of plants are available, investigate price levels, and make contact with a number of companies in one trip. Jane Storrs, an International Marketing Specialist for the Maryland Department of Agriculture, is SUSTA's "plant export specialist". Storrs encourages first-time exporters to attend shows to "put a toe in the water" and "go see new plants, see the best of what they have to offer, meet people, and see what is best for you."

Is Business the Same Everywhere?
Exporters should become familiar with other cultures, according to Storrs, because return on investment takes time (up to five years). In that time, buyers and sellers establish trust. While mailing product catalogs is one way to approach foreign buyers, some exporters benefit by signing formal distribution agreements with foreign nurseries first. A simple strategy is to work directly with growers that are capable of purchasing large enough quantities to make import shipments worthwhile. However, consider working with an intermediary or sales agent, who can represent your company and sell your products to growers throughout a region. In Japan, for example, it is unusual for a buyer to directly contact a supplier. The Japanese work instead through a method known as the Madoguchi trade system, in which a middleman facilitates the communication between consumer and seller. Research the target market and outline goals to decide which is the best tactic for your company.

The U.S. provides a large number of new varieties of plants, which are the easiest types to export. "People abroad want plants that are new and different, just like they want here," says Storrs. Growers are interested in plants that are more disease-resistant and sturdy as well as new cultivars. "New" indicates new-to-market plants and products that are not available in a country. Many plants that are grown in the U.S. are not grown in Europe or appear in different sizes or forms; selling such varieties overseas amounts to introducing a new product. This practice may lead to one-time sales, however, as foreign buyers purchase some of the varieties for mother stock. U.S. growers must be competitive and use strategies to generate return business and obtain long-term profits. Patentable or difficult to grow plants can be sold on a continuing basis. To increase the long-term sales potential of a product, nurseries can patent varieties that cannot be propagated in Europe without a license or that will generate royalties when propagated under license. Yet Storrs emphasizes that patenting is not foolproof, due to the difficulty of proving a plant's uniqueness. "Given enough time and expertise, anybody can propagate just about any type of plant. You can protect to some extent, but you always have to be on the lookout for new and improved things," she advises.

A strong brand name or promotional program can help to market new varieties and provide a link between the importer and your company. Other profitable options are varieties that grow slowly or are native and grow better/more cost efficiently in your region. High-value, compact plants are shipped with minimal transportation costs, increasing earning potential. Inexpensive and abundant varieties that have decreased in U.S. popularity may also have excellent export potential. Nurseries can yield steady international sales by competing on price.

What Are the Technical Details?
An important preparation for shipping plants overseas is obtaining a Federal Phytosanitary Certificate, or "phyto." This document is issued by the USDA Animal and Plant Health Inspection Service Plant Protection and Quarantine Service. The "phyto" must accompany all shipments of plants destined outside the U.S. The exporting country issues the phyto, but the requirements are determined by the country receiving the shipment. APHIS's online database lists the requirements for most countries. State and federal inspection offices also provide this information. Local plant health officials can help interpret confusing requirements. Different countries require different shipping procedures, and certain requirements vary state-to-state due to the pests and diseases present in the production area and the exporter's ability to meet the criteria established by the importing country. State inspectors conduct physical inspection of the plants and the sites, where they are grown before writing a state and/or federal phyto. State phytos must be converted to federal documents before the plants can be shipped. The original federal phyto must be sent with the shipment. Most state inspection offices charge a fee for performing the inspection and issuing a certificate. Fees vary by state and by the value of the shipment. Shipments valued over $1,250, for federally issued certificates, cost $50. Shipments under $1,250 are charged at $23.

Who Offers Export Assistance?
SUSTA's "How to Export: A Guide for Nurseries" provides valuable information for companies expanding into foreign markets. It contains hints for exporting to Europe and supplies information regarding shipping, phytosanitary certification, and regulations. For a copy, contact SUSTA.

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Generic Activity Success: Singapore

Steak-eze and Delta Pride were just a few of the U.S. Companies that directly benefited from their involvement in the Go Southern USA promotional activities conducted at the Trader's Hotel in Singapore this past October. The ten-day foodservice promotion was designed to increase awareness of southern U.S. ingredients and to foster exports. The events, sponsored by SUSTA and the Oklahoma Department of Agriculture, centered around five unique southern dishes that were served in the hotel's trader's café. Dustin Crenshaw, an award-winning Oklahoma City chef, designed the following dishes that incorporated flavors and ingredients of the SUSTA region: Southwest Quesadillas, Bijou Crawfish Cakes, Plantation Tenderloin, Outer Banks Stew, and Key West Shrimp.

During the promotion, which was widely promoted in the Singapore Straits Times, Chef Crenshaw conducted two cooking classes that featured SUSTA products. Local expatriate consumers, chefs and restaurant operators from local restaurants and U.S. franchises, such as Hard Rock Café, attended the cooking classes. The dishes featured southern ingredients including pickles, pumpkins, chipotle peppers, and Vidalia onions. In addition, Advance Food Company supplied Steak-eze, a foodservice 'breakaway' steak product used in Philly steak sandwiches, and in this case, Southwest Quesadillas.

To further promote the event, ten journalists from leading English and Chinese newspapers and magazines attended a special media tasting. After sampling the food, three journalists publicized the event in their columns during the promotion. A trade reception was also held. Approximately 75 members from the Singapore foodservice trade, including chefs, importers and food and beverage executives attended the reception. Amerifoods representative Marie Lee, who attended the function, has discussed importing Delta Pride catfish to Singapore.

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Director's Corner

Much of SUSTA's effort is aimed at creating opportunities for our southern companies to come into direct contact with foreign buyers. To do so, SUSTA conducts Generic promotions for multiple industries including seafood, food ingredients, regional food and beverage products, horticulture, hides and skins. These industry activities help SUSTA by providing a continued presence in foreign markets. In last month's Insight issue we listed the Generic (Industry) activities proposed for FY-2003 (Sept. 1, 2003 - Sept. 30, 2004). Among the 38 proposed activities are reverse trade missions, trade missions, trade shows, promotions, training courses, market development and research.

Each activity focuses on a specific industry and geographical region, and is designed to address the varied needs of our companies. A successful strategy for new-to-export companies may include a SUSTA reverse trade mission, which is also referred to as a "buyer's mission", as an initial step to enter a foreign market. For next year, SUSTA proposed 8 reverse trade missions. Our foodservice workshops also include a reverse trade mission component; we have two scheduled for next year.

These missions bring foreign buyers to the U.S. (normally two cities). The pre-qualified buyers indicate the products they want. SUSTA schedules multiple one-on-one meetings between appropriate buyers and sellers, allotting approximately 30 minutes for each meeting. The private meetings allow the opportunity to display, sample and discuss pricing, availability, minimum orders, shelf life and payment terms. In our March BRIDGES workshop, SUSTA invited 13 buyers from Central & South America, enabling 243 one-on-one meetings between southern sellers and Latin American buyers.

This issue of INsight addresses two major opportunities for southern companies - the Canadian market and the export of ornamental horticulture trees and shrubs. This coming fiscal year, SUSTA will organize five industry activities focusing on these particular opportunities. Two of these activities are reverse trade missions, as discussed above. Also, view page 7 for information on applying to the Branded program!

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Canada-Opportunities for U.S. Agricultural Exports

In 2002, Canada replaced Japan as the #1 market for U.S. agricultural exports, taking $8.6 billion worth of U.S agriculture products. When the value of fish and forestry product exports are added to the equation, the total exceeded $10.8 billion last year. The magnitude of the Canadian market becomes apparent when looking at provinces alone: if Ontario, British Columbia and Alberta were countries, they would rank, respectively, as the 4th ($4.8 billion), 11th ($1.0 billion) and 21st ($565 million) largest individual markets for U.S. agricultural exports!

Canada is an excellent first step for new exporters due to high per capita income levels, common culture, similar lifestyle pursuits, ease of travel and the North American Free Trade Agreement (NAFTA), which has helped to liberalize the North American market.

The majority (70 percent) of U.S. agriculture exports to Canada are consumer-oriented foods. Frozen pizzas, pies, cookies, breads, snack foods, red meats and fresh and processed fruits and vegetables are demand leaders in Canada. Currently, half of all U.S. fruit and vegetable exports go to Canada.

Canadians want fresh, high-quality foods and beverages. Demographic trends that are affecting Canadians' food choices are: Aging Population: the population is aging throughout Canada. In 2002, the average age was 39 years old. New seniors are financially stable, with fewer household expenses, more free time and a health-conscious approach to eating. Ethnic Diversity: Asia, and to a lesser degree, the Middle East, are major sources of immigrants to Canada. These groups are creating shifts in demand, particularly in urban areas, for foods and ingredients. Time Constraints: Dual-career and single-parent families are constantly searching for time-saving meal preparation ideas. Prosperity: Canadians have a high per capita income, which enables them to spend more for products and services that make their lives easier. The Foreign Agricultural Service at the U.S. Embassy in Ottawa has information and activities designed to help potential exporters access the booming Canadian market.

The FAS office has prepared reports which contain specific information on various sectors of the market. These reports are valuable resources for approaching the Canadian market and are available on the FAS website, www.fas.usda.gov (click on Attaché Reports, select a customized date range and select the country "Canada" for the complete list of reports).

FAS Ottawa endorses and can facilitate participation in several trade shows, which are excellent venues to network and gain exposure for new products.

The Grocery Innovations Canada trade show will take place October 26-28, 2003 at the Metro Toronto Convention Center, Toronto, Canada. Grocery Innovations is Canada's premier retail grocery industry show, where 8000 - 10,000 members of the retail trade will search for new ideas and products. Anyone looking to enter the Canadian retail market cannot afford to miss the opportunity to participate in this show. A USA Pavilion will be organized, where U.S. companies can exhibit in a visible and cost-effective way. For more information or to become a part of the USA Pavilion at Grocery Innovations, contact Marilyn Bailey, Marketing Specialist, FAS/Ottawa, e-mail: baileym@usda-canada.com or phone: 613-688-5266.

The Canadian Food and Beverage Show will be held February 15-17, 2004 at the International Centre in Mississauga (Toronto), Canada, where over 11,000 HRI decision-makers will be searching for unique and innovative products. A newly-designed USA Pavilion will be a highlight of the international hall, and will include a Toronto celebrity chef, highlighting products of the USA Pavilion exhibitors in culinary demonstrations. This is a not-to-be-missed event for potential exporters looking to access brokers/distributors/buyers/chefs in the Canadian HRI market.

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