In this Issue:
 Findlay's Organics meeting with the international buyer from Hong Kong.
On August 1, the
Midwest Buyers Mission, hosted by the International Marketing Program and Food
Export Midwest, brought 18 international buyers to Lansing to meet
one-on-one with 25 food and agricultural companies from Michigan, Ohio,
Florida, Indiana, and Wisconsin. The Lansing stop was the first of three for
the international buyers, as they later traveled on to Madison and Chicago for the
final parts of the Midwest Buyers Mission. While in Michigan, the buyers
participated in a retail tour visiting Target, Kroger, Gordon Food Service, Meijer, Foods for Living, and Fresh Thyme.
The Lansing portion of the Midwest
Buyers Mission resulted in great success for all involved. There were more than 200
one-on-one meetings between buyers and companies, which resulted in actual sales
of $320,000 and expected export sales of $2,038,000. The companies were pleased
with their ability to promote their products, make sales, and connect with
international buyers. Dan Klein, from T.M. Klein and Sons, stated that the
Midwest Buyers Mission gives companies the “chance to broaden their horizons in
one day.”
The buyers mission also gave
companies the opportunity to learn about specific markets firsthand. Food Export Midwest's in-market representatives from Guatemala, India, United Arab Emirates,
Indonesia, and Taiwan were available for meetings, provided companies with insight into their market, and helped the companies determine plans of action
for successfully entering that market. Companies also had the chance to learn
about exporting more broadly by having meetings with exporting
consultants from Food Export. This wide variety of available meetings gave
companies the ability to learn about exporting as well as make actual
export sales to grow their business.
Companies interested in
participating in future buyers missions and expanding exports should visit www.michigan.gov/agexport as
well as www.FoodExport.org to find a
variety of available opportunities.
Chris Bower is the Vice President of Global Capital Markets/FX at Comerica Bank where he has worked for over 14 years within the Global Markets Arena. He spent 5 years working with audits for the Global Capital Markets team, and has worked at the FX trading desk for the last 9 years.
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Q. How can my small to medium sized business effectively mitigate the negative effects that a strong U.S. dollar has on our export profitability?
A. There must be a willingness on your company’s part to price your goods in the foreign vendors working currency. This would not mitigate the negative effects of a strengthening U.S. dollar. It would, however, mitigate the currency fluctuations for your vendor, which would be paid in their working currency and eliminate the need to worry about conversion swings. Furthermore, the same can be said about allowing your vendors to pay you in their working currency. Be aware that this would switch the currency fluctuation risk to your company. You can consider hedging this risk by entering into forward contracts with your financial provider.
Q. In order for my small to medium size business to be competitive in an international market, should I create a foreign currency account or are there alternatives?
A. Opening an
account denominated in a foreign currency is certainly an option. Is it the
best option? That depends on the makeup of your international payment flows. Currency accounts may be a viable solution if
you have both payables and receivables denominated in the same currency. If you
do, then a currency account might be a good solution because it allows you to
keep foreign currencies that are received until the time comes to make payments
in those same foreign currencies. Therefore, conversion costs are not a
concern.
If,
however, your company is only receiving payments, or only making payments, in
foreign currencies, then a foreign currency account may not be a good solution
for two reasons. First, a currency account offers no protection from currency
rate swings while balances are maintained in this account, and at some point
your funds will have to be converted into U.S. dollars. Second, the fee
structure of foreign currency accounts may be costly.
Again, currency accounts may be a viable option if your
company runs a natural hedge position between receivables and payables. For
example, you have a currency account in Canadian dollars to support your
Canadian operations. Because revenue from your sales in Canada is deposited
into the account and payments are also made from that account – all in Canadian
dollars – there is no currency conversion.
For more Q&A's with Chris, visit http://bit.ly/2bESOTT
*****Although the information contained in this report has been obtained
from sources believed to be reliable, its completeness or accuracy is not guaranteed or warranted and is subject to change without notice.
 According to the
latest U.S. Customs data, the U.S. reached its highest number of exports
to Saudi Arabia in 2014, at $1.37 billion, an increase of 16% from 2013. In the
coming years, those numbers are expected to continue to rise as population and average incomes increase.
Saudi Arabia’s
population is expected to increase from 30 million in 2014 to 40 million in 2025. Combined
with the fact that Saudi Arabia relies on foreign suppliers for 80% of their food
supply, this increase in population will help fuel the demand for imported
foods.
In addition to the
increasing population, the per capita income in Saudi Arabia grew to $25,400 in
2014. As the income level has risen, so has the number of Saudis traveling to Western countries, returning with a demand for Western food products. This, along with a stronger purchasing power, creates
a growing market for Michigan companies to capitalize on the evolving food
culture in Saudi Arabia.
Products of
particular interest in Saudi Arabia include savory snacks, sweet biscuits,
snack bars and fruit snacks, and confectionary. Also expected to rise in
popularity are ready to eat foods, home meal replacements, fast foods and
“take-away” (USDA Gain Report). In
addition to knowing the growing markets, it is important to be aware that some
products are restricted from entering Saudi Arabia. These include but are not
limited to beef, poultry, eggs, and alcoholic beverages.
Michigan companies that are interested in making connections with buyers in Saudi Arabia are
encouraged to explore the resources offered by the International Marketing
Program and Food Export Midwest. For direct access to the Saudi market,
companies can register for an upcoming trade mission to Saudi Arabia, which will
provide interested companies an opportunity to engage with the Saudi market and
connect with highly-qualified buyers.
Focused Trade Mission to Saudi Arabia for Retail
and Food Service Products: December 6-8, 2016 | Jeddah, Saudi Arabia | Registration closes September 13,
2016
Source: USDA Gain Report, Saudi Arabia;
Euromonitor http://bit.ly/2aRYk8H
It’s hard to believe, but 2017 is right around the corner, and companies are now able to register for Food Export’s 2017 activities! Visit Food Export’s website to view the 2017 Activity Calendar for a complete list of available programs and activities.
Food Export’s Branded Program year is also now open. The Branded Program provides 50 percent cost reimbursement for a variety of approved overseas marketing and promotional expenses, such as label changes and trade show costs. The first step in the application process is to submit a free pre-qualification, which can be done at http://bit.ly/2a6qTBn.
Not sure which programs or activities are the best fit for your company? Contact Allie Fox at 517-284-5737 and foxa1@michigan.gov or Jamie Zmitko-Somers at 517-284-5738 and zmitkoj@michigan.gov from the International Marketing Program for help planning your export success for 2017.
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The International Marketing Program knows
that time is of the essence during busy work days. With that in mind, we’ve
been working to make our website more user friendly. Companies are now able to
access market research, export assistance tools and resources, educational
materials, and much more with just a few clicks. Take a moment to browse the remodeled website and experience the updates firsthand! Visit www.michigan.gov/agexport.
Focused
Trade Mission to Dubai for Retail and Food Service Products
December 4-6, 2016 | Dubai, UAE
Registration closes Sept. 13
Focused
Trade Mission to Saudi Arabia for Retail and Food Service Products
December 6-8, 2016 | Jeddah,
Saudi Arabia
Registration closes Sept. 13
Specialty Food Buyers Mission at the 2017 Winter Fancy Food Show
January 21-23, 2017 | San Francisco, CA
Registration closes Dec. 9
Food Show PLUS! at SIAL Canada 2017
May 1-4, 2017 | Toronto, Canada
Registration closes Feb. 6, 2017
"Brew Export, located in the 11th
Congressional District of Michigan, is experiencing export success resulting
from their participation in programs and services offered by Food Export
Midwest and the International Marketing Program of the Michigan Department of
Agriculture and Rural Development (MDARD)."
To learn more about Brew Export's success, click here.
 Jamie Zmitko-Somers
zmitkoj@michigan.gov
517-284-5738
Allie Fox VanDriel
foxa1@michigan.gov
517-284-5737
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