3 steps to a successful agricultural export business

Atradius news

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

 

Disclaimer

The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation, advice or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person. Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.