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- Winter 1997 "Update" Newsletter Article -
Food processors focused
Study shows California companies place top priority on sales in domestic market
From CATI Publication #970101
Copyright © 1997. All rights reserved.
California processed food manufacturers have the capability, but perhaps not the desire, to produce a larger share of U.S. food products for export, according to a pair of Fresno State researchers who recently queried a sample of the state's food processing firms.
While agencies such as the U.S. Department of Food and Agriculture have touted the world consumer market as a potential gold mine in increased sales, most California food processors are apparently content, or perhaps simply too busy, with sales in the domestic market to place much emphasis on exporting, according to results of a survey of 162 firms.
The study was directed by Fresno State agricultural economics professors John Hagen and Juan Batista. Funding came from the USDA's Agricultural Marketing Service, in addition to the California Agricultural Technology Institute (CATI). One of the study objectives was to determine how the USDA can better assist California and the nation's food processors in promoting foreign exports of value-added products.
Expanding food exports not only benefits the firms that do the business; it also "contributes to the economic viability of American agriculture and reduces the nation's negative balance of trade," the authors note in their published report containing details of the survey.
But sales figures provided by the firms indicate that most of the companies devote far less energy to exporting than to domestic sales. Of those queried, for example, nearly 70 percent export less than 10 percent of their products overseas, and more than 90 percent export less than 25 percent.
Reasons given for not exporting varied, according to results of the survey. But the barrier most often mentioned was simply the difficulty in finding potential customers. For those that overcame that barrier, there still were problems obtaining necessary information, such as product packaging and labeling requirements, and country-specific market information.
Another common barrier was meeting the lower prices of foreign competitors, the survey respondents said.
A different phase of the survey suggests that perhaps it is simply the issue of priority - or lack of it - that most affects the export sales of California food processing firms.
In spite of incentives offered by federal and state agencies, survey respondents indicated that exporting is a below-average priority. Of 106 companies that export to places such as Canada, the Pacific Rim and Western Europe, more than 55 percent reported they place less emphasis on exporting than they do on domestic sales. Nearly 23 percent said they place more emphasis on exporting, and about 22 percent said they place about the same.
"Exports are not considered an important activity for these firms, and therefore marketing activities are usually given a low priority among the objectives," the authors observe.
To help encourage companies to raise exporting priorities, Hagen and Batista have recommended that the USDA make its promotional tours, trade shows and trade leads as "user-friendly" as possible; that it promote packaging, labeling and product specification requirements for processed food exports; and that it recruit the assistance of freight forwarders, steamship carriers and tracking firms to promote foreign sales.
Details of the survey and results are available in the report, which is available from CATI. It is entitled, "An Analysis of California's Exporters of Processed Food Products." Copies are available and may be viewed or requested from the Research Publications page.
For more information about the authors or their work, call CATI's Center for Agricultural Business at (559) 278-4405, or visit the CAB World Wide Web site at http://cati.csufresno.edu/cab/.
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Copyright © 2000. All rights reserved.
CALIFORNIA AGRICULTURAL TECHNOLOGY INSTITUTE - CATI
College of Agricultural Sciences and Technology
California State University, Fresno
