EXPORT TRADE IS A VIABLE NICHE FOR PRODUCERS

by: Clifford Mitchell

Developing a marketing program for any business sometimes takes many man hours to make sure all the details have been covered. Delivering the product that is promised in the advertising campaign has claimed more than one firm in this almost never ending process.

Cattlemen have to think out of the box to get the most dollars from their product. However, most producers face a different challenge, than the corporate world, because they usually do not have a problem producing what they promise. Figuring out a way to differentiate themselves from the next guy to establish market supremacy has always stumped even the most knowledgeable operators. Conquering the daunting task of marketing the product is a stiff test and most producers look for every outlet to diversify the customer base. Just like production scenarios that bring in factors operations have no control over, even the most well thought of marketing programs are undoubtedly going to face pressures that have nothing to do with getting live calves and cows rebred.

“The majority of the borders remain closed to live animals. It is still a challenge to get live cattle into some foreign lands. New regulations and other barriers have changed the way my export partners operate,” says Pat Simmons, Genetic Leaders International, Advance, North Carolina. Simmons has not only exported genetics to foreign countries, but has also worked for ranches abroad.

“There are some opportunities in the export market. In 2008, quite a few borders were opened to live cattle and our low dollar made it attractive for some countries to buy our cattle,” says Renee Strickland, Strickland Ranch & Exports Inc., Myakka City, Florida. At the time of this interview, Strickland was delivering a load of cattle to the Port of Mobile (Alabama) to be exported to Belize.

Some breeds of cattle depend on an open door policy to export their genetics because it can be an opportunity to increase returns. Mad cow discoveries, political leaders fighting like school boys and changes in the world economy have all had a role in affecting the flow of U.S. seedstock to international destinations.

“Live cattle and agricultural products are my main export items. The doors are opening up to these other countries. A lot of it depends on the value of our dollar and fuel price is a major limiting factor. Freight was astronomical at one point and it was hard to sell cattle to buyers who were going to have to pay more in transportation costs than actual purchase price for animals,” Strickland says. “Some countries will never open their borders to U.S. cattle because it's caught up in world politics. Unstable governments have also delayed border openings.”

“There is a lot of potential for U.S. genetics, particularly Brangus in Latin American countries. The attributes of the Brahman and Angus genetics have led to success in many different environments,” Simmons says. “Some areas have experienced drought or as grain prices get higher some of the traditional grazing areas have gone under the plow, limiting some of the areas foreign countries have to graze cattle. Everything is slow around the world because of the economy. With transportation costs being the limiting factor, I have seen a big demand for semen and embryos.”

Obviously, falling under the realm of what producers can control are the stringent health regulations that must be followed to participate in this market. Certain locations are doomed from the start because of health problems traditionally associated with that area. Costs and paper work also can be stressful times for most producers.

“One of the first steps for producers looking to diversify into export markets, is to look at the USDA web site on health protocol for the importing country. Restrictions brought forth could automatically eliminate cattle in certain parts of the U.S.,” Strickland says. “Sometimes it's the buyer who gets cold feet. There are some who have aspirations of buying seedstock, but don't have a clue what it costs to get them there and it causes sticker shock.”

“The export market can be viable to breeders who explore their opportunities in other countries. They have to travel to these countries. The biggest complaint I hear is we bought from them one time and we have never seen them again,” Simmons says. “Health testing can be somewhat cost prohibitive. For instance, to sell semen to Argentina, your bull has to stay quarantined for 45 days pre- and post collection date. That is pretty costly and most breeders can't afford to have their herd bull in stud that long because of costs or they need him on the ranch. Knowing the export rules will let you know some of the expenses.”

Cattlemen are always looking for that next logical step in a breeding program. Most producers of different species of livestock have a plan formulated to accomplish a production goal. Outcross genetics play a significant factor for some in the realm of genetic improvement.

“The international breeders I deal with are very progressive cattlemen and they are looking for every avenue to improve their herds and improve the quality of the beef product,” Simmons says. “Most of the countries I am familiar with also look to diversify their gene pool. Adding U.S. genetics is a good way to improve native cattle.”

“It has been my experience breeders are looking for something new. They are branching out and crossing their native cattle to achieve a goal. Usually, they build a nucleus herd first and then use the offspring of these cattle to cross with the existing genetic base,” Strickland says. “There is a lot of competition in Central and South America and they want to improve their herds.”

For our neighbors to the South, they are following the path of the U.S. beef business. Stock shows play an important role in purchase decisions. They serve as gathering places for many Southern Hemisphere ranchers. Livestock events in Denver, Houston and Miami have also been a way to introduce them to American producers.

“In July, I will travel to a large cattle show in Nicaragua. There will be a large gathering of Central and South American producers that I can network with,” Strickland says. “For producers looking to expand into export sales, the shows in Houston and Miami are important events. Potential buyers come to the show to see a lot of breeds of cattle competing in one location. This is a good venue to showcase the different breeds of livestock.”

“Some of our breed associations do a really good job of getting out and traveling to these countries. With challenges to staffing and travel expenses, some have been very successful appointing representatives to attend events and livestock shows,” Simmons says. “Travel to the National shows in some target countries. This is a great way to network with potential customers. For a long time the old Chicago International was the best livestock show in the U.S., maybe even the world, because it played host to many dignitaries. The livestock show in Palermo has the same atmosphere as Chicago did, but the national events are important marketing tools for South American cattlemen.”

Testing the market in foreign lands is a difficult thing. Like most things associated with the cattle business in today's high cost environment, breeders are going to need to work together to build marketing interests for the breed. Target audiences in foreign countries and have a product that is ready for delivery.

“During Houston, Brangus breeders set up a location near the fairgrounds to showcase cattle that for some reason due to age or other reasons weren't at the show. International breeders were invited to this event and it is a very useful tool to market cattle because guests can view live animals,” Simmons says. “Get some semen qualified for export to your target country. Some of the health tests to market semen into certain countries aren't that cost prohibitive. These breeders are very progressive and a good way to advertise international semen sales might be to add the flag of every country that bull is eligible for export to web site promotions. Advertise in certain countries to see if there is a demand. Print fliers in different languages or add this material to your online arsenal. It is very difficult to market semen if it's not qualified for export.”

“I recently had the opportunity to take a group of Guatemalan cattlemen on a ranch tour to different producers here in Florida. I try to help some of my fellow cattlemen and cattle in our area are well acclimated to many Southern Hemisphere climates,” Strickland say. “Hopefully, they will purchase cattle during one of these visits and we can have an opportunity for repeat sales. Understanding the process is key for anyone trying to take advantage of this market.”

For a variety of reasons, exporting cattle to foreign lands is a tedious process. Timing plays a huge role in meeting deadlines for health requirements and quarantine periods. This aspect of marketing must be carefully planned and executed to see desired results.

“Everything has to come together just at the right time and can be tenuous for some, especially, when they're trying to manage a ranch. Exporting cattle is a step-by-step process and continued education, for buyer and seller, if they have never done it before,” Strickland says. “There is a synopsis of how the export process goes. Timing is everything. Exporting genetics or products is not an overnight deal. There is an order things have to be done and producers need to price their product so they get paid for the extra work.”

Bottom line, marketing efforts often do not come cheap to showcase the product. Sometimes CEO's realize their products do not fit the niche they had originally planned. Many times a trip back to the drawing board can refine the plan.

Buyers and sellers often try a show of smoke and mirrors to emphasize intentions of the day. Fact is personal relationships carry the weight, when it comes to marketing genetics. An honest approach and firm handshake are true qualities of the seedstock operator intent on market diversification. Personal touch will usually gain loyal customers and create a bond that goes far beyond the borders of one country.

“I don't think the export market is for everyone. Breeders have to carve out the time and be consistent about seeing customers. It's just like your customers here, you have to build relationships. Treat it like planting a tree, instead of a crop. It is a long term process,” Simmons says. “These relationships will last forever as long as you continue to treat your customer right. I have been doing business with some operations for more than 30 years and it's a very rewarding experience.”

“My business is to partner with the seedstock producer to eliminate some of the headaches that go with this type of marketing. I visit seedstock producers to try and identify cattle that fit potential customers,” Strickland says. “Export markets aren't for everyone. You have to be extremely patient and give the buyer the best product available because that will create future opportunities.”







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