Atradius recommends three steps agricultural exporters should keep in mind
The recent crackdown by the Chinese government on imported food and consumer goods has highlighted how quickly government policy changes in international markets can directly impact local agricultural product exporters.[1] Local producers should take steps to minimise risks when considering exporting to new markets.
Just days after the Chinese government announced it was tightening regulations and raising taxes on products bought from foreign websites, the share prices of several Australian companies fell. Those affected included dairy producers Bellamy’s Organic and a2 Milk.[2] Meanwhile, Murray Goulburn’s Devondale-branded milk products have been excluded from China’s biggest e-commerce site, Alibaba’s Tmall.[3]
Mark Hoppe, managing director, Australia and New Zealand, Atradius, said, “Despite the moves to restrict local agricultural exporters, there remains great opportunity in exporting to foreign markets.
“Policy changes are a fact of life for exporters but, with the right planning and preparation, Australian producers can make the most of exporting to international markets without being dangerously exposed to risk.”
Atradius recommends three steps agricultural exporters should keep in mind:
1. Manage risk
Actively develop and implement a risk management plan. A comprehensive risk management plan could include an established hierarchy of trade credit terms, depending on the market or the individual buyer. It might also include additional risk coverage in the form of trade credit insurance, which can help manage cash flow in the event of non-payment.
2. Seek advice
Building a network of advisors is a consistently reliable way to garner inside information about a prospective market. Both local and international advisors should be sought for a comprehensive mix of experience and perspectives.
3. Ask questions
Asking the right questions is essential. This includes making sure the target market is genuinely a good fit for a particular business, finding a good distributor, and understanding how best to market products in the target market.
[1] http://www.afr.com/it-pro/chinas-policy-honeymoon-on-foreign-goods-could-be-over-20160410-go2t39
[2] http://www.smh.com.au/business/blackmores-bellamys-organic-a2-milk-shares-plunge-on-china-customs-crackdown-20160412-go4447.html
[3] http://www.afr.com/news/world/asia/blackmores-and-bellamys-hit-by-china-customs-crackdown-20160411-go3gjt