7 Reasons Why Agriculture Products Export is Booming
Agriculture products export is a lucrative business that has been growing steadily in recent years. According to the World Trade Organization, the global value of agricultural exports increased by 3.1% in 2019, reaching $1.8 trillion. What are the factors behind this trend and how can you benefit from it? Here are seven reasons why agriculture products export is booming and some tips on how to succeed in this sector.
1. Rising demand from developing countries.
As the population and income of developing countries grow, so does their demand for food, especially high-quality and diverse products. This creates opportunities for exporters who can offer products that meet the preferences and standards of these markets. For example, China is the largest importer of agricultural products in the world, accounting for 11% of the global total in 2019. Some of the products that China imports include soybeans, meat, dairy, fruits and vegetables. To tap into this market, exporters need to understand the consumer behavior, culture and regulations of China and tailor their products accordingly.
2. Improved logistics and transportation.
Thanks to advances in technology and infrastructure, transporting agricultural products across borders has become faster, cheaper and more reliable. This reduces the costs and risks for exporters and increases their competitiveness and market access. For instance, cold chain logistics is a system that maintains the temperature and quality of perishable products throughout the transportation process. This allows exporters to ship products that would otherwise spoil or lose value over long distances. To take advantage of this technology, exporters need to invest in equipment, training and certification that ensure the safety and efficiency of their cold chain operations.
3. Increased trade liberalization and integration.
Trade agreements and regional blocs have facilitated the flow of agricultural products between countries by reducing tariffs, quotas and non-tariff barriers. This has opened up new markets and expanded existing ones for exporters who can comply with the rules and regulations of these agreements. For example, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade pact that covers 11 countries in the Asia-Pacific region, representing 13% of the global GDP. Some of the benefits that this agreement offers for agricultural exporters include lower tariffs, greater market access, simplified customs procedures and enhanced sanitary and phytosanitary measures. To benefit from this agreement, exporters need to be aware of the requirements and opportunities that it entails and adjust their strategies accordingly.
4. Enhanced quality and safety standards.
Consumers around the world are becoming more aware and concerned about the quality and safety of the food they consume. This has prompted exporters to adopt higher standards and certifications that ensure the quality, traceability and sustainability of their products. This not only increases consumer confidence and satisfaction, but also adds value and differentiation to their products. For example, organic food is a type of food that is produced without synthetic chemicals, genetically modified organisms or irradiation. This type of food is in high demand in many markets, especially in Europe and North America. To export organic food, exporters need to obtain certification from accredited bodies that verify their compliance with organic standards.
5. Diversification of products and markets.
Exporters are no longer limited to selling traditional commodities such as grains, oilseeds and meat. They can now offer a wide range of value-added products such as processed foods, organic foods, specialty foods and niche products that cater to specific segments and niches of the market. These products have higher margins and lower competition than commodities and can help exporters increase their profitability and market share. For example, quinoa is a grain-like crop that originated in South America and has high nutritional value. It is considered a superfood by many consumers who seek healthy alternatives to rice or wheat. To export quinoa, exporters need to identify the potential markets and customers for this product and promote its benefits and uses.
6. Innovation and adaptation.
Exporters are constantly innovating and adapting their products, processes and strategies to meet the changing needs and expectations of their customers. They use technology, research and development, marketing and branding to create new products, improve existing ones, increase efficiency, reduce costs, enhance quality, expand distribution channels and reach new customers. For example, plant-based meat is a product that mimics the taste, texture and appearance of animal meat but is made from plant ingredients such as soy or pea protein. It is aimed at consumers who want to reduce their meat consumption for health or environmental reasons. To export plant-based meat, exporters need to develop a product that meets the sensory and nutritional expectations of their target market and communicate its advantages over animal meat.
7. Government support and incentives.
Many governments recognize the importance and benefits of agriculture products export for their economies and societies. They provide various forms of support and incentives for exporters such as subsidies, tax breaks, credit facilities, insurance schemes, technical assistance, market information, trade promotion and facilitation. These measures can help exporters overcome some of the challenges and barriers that they face in the international market and enhance their competitiveness and performance. For example, the Export Market Development Grant (EMDG) is a program that provides financial assistance to Australian exporters who incur expenses in promoting their products overseas. To access this program, exporters need to meet the eligibility criteria and submit an application with the relevant documentation and evidence.
These are some of the reasons why agriculture products export is booming in today’s world and some tips on how to succeed in this sector. If you are interested in joining this sector or expanding your existing business, you need to be aware of the opportunities and challenges that it entails. You also need to have a clear vision, strategy and plan that will guide you through the process.
Trends in global demand for agricultural products export
Agricultural products are among the most traded commodities in the world, accounting for 8.5 percent of the total merchandise trade value in 2020. The value of global agricultural exports in 2020 was 3.7 times higher than in 2000, reaching USD 1 492 billion. The main drivers of this growth are the increasing population, income and urbanization, as well as the changing dietary preferences and trade policies of different countries. In this blog post, we will examine some of the trends in global demand for agricultural products export, focusing on three categories: fruit and vegetables, cereals and meat.
Fruit and vegetables: the largest share of food exports
Fruit and vegetables accounted for 22 percent of the total value of food (excluding fish) exports in 2020, making them the largest category of agricultural products export. The main exporters of fruit and vegetables were Spain (USD 18 billion), the Netherlands (USD 17 billion) and Mexico (USD 15 billion). The main importers were Germany (USD 24 billion), the United States of America (USD 23 billion) and France (USD 15 billion). The demand for fruit and vegetables is driven by their nutritional benefits, diversity and availability throughout the year. However, fruit and vegetables are also highly perishable and require adequate infrastructure, logistics and quality standards to ensure their safety and freshness.
Cereals: the most volatile prices and trade flows
Cereals and preparations accounted for 16 percent of the total value of food (excluding fish) exports in 2020, making them the second largest category of agricultural products export. The main exporters of cereals were the United States of America (USD 32 billion), Russia (USD 25 billion) and Canada (USD 19 billion). The main importers were China (USD 36 billion), Egypt (USD 10 billion) and Indonesia (USD 9 billion). The demand for cereals is driven by their role as staple food for many people, as well as their use as feed for livestock and biofuel production. However, cereals are also subject to price fluctuations and trade disruptions due to weather shocks, crop failures, policy interventions and geopolitical tensions.
Meat: the fastest growing category of food exports
Meat and meat preparations accounted for 12 percent of the total value of food (excluding fish) exports in 2020, making them the third largest category of agricultural products export. The main exporters of meat were Brazil (USD 21 billion), the United States of America (USD 19 billion) and Germany (USD 14 billion). The main importers were China (USD 34 billion), Japan (USD 14 billion) and South Korea (USD 9 billion). The demand for meat is driven by the rising income, urbanization and dietary diversification of consumers, especially in emerging economies. However, meat production and consumption also pose challenges for animal welfare, human health and environmental sustainability.
Agricultural products export is a dynamic and complex sector that reflects the changing patterns of global demand and supply. Fruit and vegetables, cereals and meat are the three main categories of agricultural products export, each with its own characteristics, opportunities and challenges. Understanding these trends can help producers, traders, consumers and policymakers to make informed decisions and to foster a more efficient, resilient and sustainable agri-food system.
References:
http://faostat.fao.org/Portals/_Faostat/documents/pdf/FAOSTAT-Forestry-def-e.pdf
https://www.fao.org/faostat/en/#data/QCL/visualize
https://www.cbs.nl/en-gb/news/2022/03/agricultural-exports-exceeded-100-billion-euros-in-2021
https://www.fao.org/3/cb9928en/cb9928en.pdf
https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20220325-1
http://www.fao.org/trade/en/
https://www.wto.org/english/tratop_e/agric_e/agric_e.htm
https://www.intracen.org/itc/sectors/agriculture/
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