Exporting Can Lead to Higher Paying Markets for Producers
Are you a local producer who has been selling through the same channels for years? Researching other markets, including selling oversees may provide greater profit margins. Trade planning and utilizing available marketing tools will allow you to assess the best paying markets.
Honey is a great example of a local product that is flourishing. It is also an excellent export commodity. According to the Florida Department of Agriculture and Consumer Services, the success is due to smaller, less commercial beekeeping operations. Many of these small businesses sell at the local farmer’s market, while others find better paying markets overseas.
Honey, a high value agricultural commodity, is traded globally. In Florida, hives are healthy and producing the quantity needed to be an export leader. Annually, the state produces 17 million pounds according to the Department of Agriculture, and this number is growing. In 2014, Florida ranked fourth in the nation in honey exports, sending $1.7 million worth of honey overseas according to WISERTrade. Florida honey is exported all over the world. Canada, Vietnam, and Panama are the top three markets by export volume for Florida honey.
World-wide, the majority of honey exports go to Germany. I am well aware of the impact this trade flow has on small-scale producers. Prior to joining the Florida SBDC at University of South Florida, I directed a honey program for a large non-profit called Amextra. I was charged with making honey sales from the Mexican southern state of Chiapas profitable. In my analysis of the commodity, I learned that the majority of Chiapas honey did go to Germany. There, it is mixed with local honey to create a darker color and richer flavor. In tracking the export price, I found it to be lower than the national price for the same type and quality of honey.
For this reason, it is good to know not only who is demanding commodities globally, but also who will pay more. To confirm my findings, I met with a science foundation called FUMEC. This organization forms honey cooperatives to negotiate higher prices for export. They advised that though exporting from Chiapas can be profitable, the best price for that specific type of honey was attained through in-country retail sales.
Here in Florida, small-scale producers have the support needed to identify top markets. Resources are available to market products in ways that command higher export prices. The Florida Department of Agriculture and Consumer Services allows members to use the Fresh From Florida logo on product packaging, signage, and advertising.
The Southern United States Trade Association (SUSTA) promotes exports of food and agricultural products. Their Market Access Program (MAP) helps small businesses export successfully through reimbursements of up to 50% for international marketing and promotion expenses. These include tradeshows, in-store displays, and required label changes. If you are considering exporting to Canada, this program reimburses expenses to meet the country’s bilingual labeling laws.
Another point to consider is how to add value to what you produce. For Amextra, we sold 5 tons in bulk to Mielmex for export to Germany. I had 800 kilos delivered to Mexico City for packaging and retail sales. Of that amount, I reserved 80 kilos for an organic beauty line. The line I create consisted of 10 types of soaps, a shampoo, conditioner and lotion. It does not take much honey to make beauty products. The organic honey ingredient along with the proper presentation commanded an organic boutique price, yielding a 180% retail markup versus a 66% retail markup for the honey alone.
For Amextra, the Honey Commercialization Program became profitable once I established the correct sales strategy for the honey. Understanding the global market conditions allowed me to negotiate the best price for the type and quality of honey we sold. The sale to Mielmex paid all program investment costs and project employee salaries. The first two months of retail honey sales paid for the beauty product investment. Those proceeds were reinvested in the non-profit’s nutrition and economic development programs in Chiapas.
Whether you are a beekeeper or a citrus producer, the world has an appetite for Fresh From Florida products. However, what consumers desire may not be the same product that sells at the local farmers market. You may have to adapt your business plan to meet the needs of the global marketplace. Being willing and able to make strategic changes to your product, will allow your business to access higher paying markets.