7 Reasons Why Food Export is a Booming Business in 2023

Food export is the process of selling and shipping food products from one country to another. It is a lucrative and growing industry that offers many benefits for both the exporters and the importers. In this article, we will explore seven reasons why food export is a booming business in 2023, and how you can take advantage of this opportunity.

1. Increased demand for food diversity and quality.

Consumers around the world are becoming more aware of the nutritional value and the origin of the food they eat. They are also looking for more variety and exotic flavors in their diets. Food export allows them to access a wide range of food products from different regions and cultures, such as fruits, vegetables, spices, dairy, meat, seafood, and processed foods. According to a report by the World Trade Organization (WTO), the global trade in agricultural products reached $1.8 trillion in 2019, an increase of 3.3% from 2018. The report also predicts that the demand for food products will continue to grow in the coming years, especially in emerging markets like Asia, Africa, and Latin America.

2. Improved logistics and technology.

The advancement of logistics and technology has made food export more efficient and cost-effective. Modern transportation methods, such as air freight, refrigerated trucks, and containers, enable faster and safer delivery of perishable and frozen food products. Technology also helps with quality control, traceability, packaging, labeling, and certification of food products. For example, blockchain technology can provide a secure and transparent record of the origin, movement, and condition of food products along the supply chain. This can enhance trust and confidence among the exporters, importers, regulators, and consumers.

3. Reduced trade barriers and tariffs.

The globalization of trade and the emergence of free trade agreements have reduced the barriers and tariffs for food export. This means that exporters can access more markets and customers with lower costs and fewer regulations. For example, the United States-Mexico-Canada Agreement (USMCA) has eliminated most tariffs on agricultural products among the three countries. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has also reduced tariffs on many food products among 11 countries in the Asia-Pacific region. These agreements can create new opportunities for food exporters to expand their businesses and increase their profits.

4. Increased income and purchasing power.

The economic growth and development of many countries have increased the income and purchasing power of their populations. This means that more people can afford to buy imported food products that are considered high-quality, premium, or specialty. For example, China is one of the largest importers of dairy products, wine, beef, and seafood from countries like New Zealand, Australia, France, and Canada. According to a report by McKinsey & Company, China’s middle class is expected to grow from 430 million in 2019 to 780 million in 2025, accounting for 55% of the population. This will create a huge demand for imported food products that cater to their preferences and lifestyles.

5. Enhanced food security and resilience.

Food export can also enhance food security and resilience for both the exporting and importing countries. For the exporting countries, food export can diversify their income sources, create jobs, and reduce food waste. For example, India is one of the largest producers of fruits and vegetables in the world, but it also loses about 40% of its produce due to poor storage and transportation facilities. By exporting its surplus produce to other countries, India can generate more revenue, employ more people, and prevent food loss. For the importing countries, food import can supplement their domestic production, increase their food availability, and reduce their dependence on a single source. For example, Japan is one of the largest importers of food products in the world, as it only produces about 40% of its own food needs. By importing food products from different countries, Japan can ensure its food security and resilience in case of natural disasters or supply disruptions.

6. Increased social and environmental awareness.

Consumers are becoming more conscious of the social and environmental impact of their food choices. They are looking for food products that are ethically sourced, fair trade, organic, sustainable, or animal-friendly. Food export can cater to these preferences by offering certified or verified food products that meet these standards. For example, the Rainforest Alliance certification program helps farmers produce crops such as coffee, cocoa,
and bananas in a way that protects biodiversity, improves livelihoods, and reduces carbon emissions. The Marine Stewardship Council certification program helps fisheries manage their stocks sustainably, prevent overfishing, and protect marine ecosystems. These certifications can help food exporters gain a competitive edge, build customer loyalty, and enhance their reputation.

7. Increased innovation and competitiveness.

Food export can also stimulate innovation and competitiveness in the food industry. Exporters have to constantly adapt to the changing needs and preferences of their customers in different markets. They have to develop new products, improve their quality, differentiate their brands, and market their products effectively. For example, the Impossible Foods company has created a plant-based burger that looks, smells, and tastes like meat. The product has been exported to several countries, including Singapore, Hong Kong, and Canada, where it has received positive feedback and high demand. The company has also partnered with local restaurants and food chains to offer its product in different cuisines and formats.

Food Export Trends in the Global Market

Food exports are an important source of income and food security for many countries, especially developing ones. According to the World Bank, food exports accounted for 8.6% of the total merchandise exports in 2020, down from 9.3% in 2019. This decline reflects the impact of the COVID-19 pandemic on global trade and demand for food products.

Factors Affecting Food Export Demand

The demand for food exports depends on various factors, such as income levels, population growth, dietary preferences, exchange rates, trade policies, and environmental conditions. Some of these factors have positive effects, while others have negative effects on food export demand.

Income levels: As income levels increase, consumers tend to demand more and higher quality food products, which boosts the demand for food exports from countries that can supply them. For example, China’s rapid economic growth has increased its demand for meat, dairy, and fruits from other countries.
Population growth: As population grows, so does the demand for food products, especially in regions where domestic production is insufficient to meet the needs. For example, Africa’s population is projected to grow by 1.3 billion by 2050, which will increase its demand for food imports from other regions.
Dietary preferences: As consumers become more aware of the health and environmental impacts of their food choices, they may change their preferences and demand more or less of certain food products. For example, some consumers may shift to more plant-based diets and reduce their demand for animal products, while others may increase their demand for organic or fair-trade products.
Exchange rates: As exchange rates fluctuate, they affect the competitiveness and profitability of food exports. A depreciation of the domestic currency makes food exports cheaper and more attractive to foreign buyers, while an appreciation makes them more expensive and less attractive. For example, the depreciation of the Brazilian real in 2020 increased its competitiveness in the global market for soybeans and coffee.
Trade policies: Trade policies, such as tariffs, quotas, subsidies, and sanitary measures, can affect the supply and demand of food exports by creating barriers or incentives for trade. For example, the US-China trade war in 2018-2019 imposed tariffs on various agricultural products, which reduced the trade volume and value between the two countries.
Environmental conditions: Environmental conditions, such as climate change, weather shocks, pests, and diseases, can affect the availability and quality of food exports by affecting crop yields and livestock production. For example, the locust invasion in East Africa in 2020 threatened the food security and export potential of several countries in the region.

Future Outlook for Food Export Demand

The future outlook for food export demand is uncertain and depends on how these factors evolve in the coming years. However, some general trends can be expected based on historical data and projections.

The global demand for food exports is expected to increase in the long term as income levels and population growth continue to rise in developing regions, especially Asia and Africa.
The global demand for food exports is expected to diversify in terms of product types and quality standards as consumers become more sophisticated and demanding in their preferences.
The global demand for food exports is expected to face challenges from trade tensions, protectionism, and geopolitical uncertainties that may disrupt trade flows and create market volatility.
The global demand for food exports is expected to be affected by environmental risks that may reduce supply or increase costs of production and transportation.

References:

http://www.nationalaglawcenter.org/wp-content/uploads/assets/crs/RL33499.pdf

https://books.google.com/books?id=Yu8NAAAAQAAJ&q=food+embargoes+kissinger+state+department&pg=PA27

https://en.wikipedia.org/wiki/Food_power#CITEREFPaarlberg1982

https://data.worldbank.org/indicator/TX.VAL.FOOD.ZS.UN
https://www.fao.org/faostat/en/
https://www.fao.org/statistics/en/