GOING GLOBAL THROUGH THE BACK DOOR WITH ACDI/VOCA
When two officials of Farmers Commodities Corporation went to Egypt in July 1998, it was to participate in a U.S. foreign aid project. However, besides educating Egyptian grain traders on hedging and tendering, the pair also landed risk management contracts for their company. After further service with nonprofit-aid-provider ACDI/VOCA, the Des Moines, Iowa, firm opened an office in Cairo to take advantage of promising opportunities.
FCC's alignment with a development organization is an instructive example for U.S. agriculture. It represents a low-risk way for U.S. companies to scout business. In fact, combining aid with trade has become commonplace for many U.S. agribusinesses involved with ACDI/VOCA.
U.S. agriculture is vitally dependent on overseas markets. However, one segment looms large: developing nations that will provide virtually all of the population-based growth in food demand. Their economic growth will be double that of industrialized nations.
The challenge is how to establish a gainful presence in these foreign places while minimizing risk. It helps to have a friend in Frunze.
THE TIME IS RIGHT
Emerging economies need private-sector development assistance and partnerships with U.S. firms. Fortunately, our government actively sponsors mutually beneficial foreign aid efforts that can give American agribusiness a leg up.
ACDI/VOCA's AgLink, the project that gave FCC its entree into Egypt, is funded by the U.S. Agency for International Development to stimulate binational agribusiness relationships. Thus far, AgLink has created more than $7 million in Egypt-U.S. trade in equipment, livestock, pharmaceuticals and supplies. In 1998, 20 companies from 13 states participated.
A WORLD OF OPPORTUNITY
ACDI/VOCA has worked with McDonald's in Indonesia to explore how 4,000 new restaurants can be supplied with local potatoes, chicken and other food products. Ray Cesca, McDonald's managing director of world trade, says, "I can't stress enough the importance of economic development. Programs like ACDI/VOCAís are examples of U.S. involvement in building corporate ties for U.S. agriculture in foreign markets."
Likewise, ACDI/VOCA has collaborated with Monsanto in Georgia to introduce improved potatoes, and with Koch Supplies Inc. of Kansas City to build meat-processing facilities. An ACDI/VOCA project in Hungary matched 57 U.S. and 67 Hungarian companies, resulting in 25 trade transactions, several distributing and licensing agreements and two joint ventures.
A complex and inconstant set of variables - including customs requirements, tariffs, quotas and quarantines -confront the would-be trader.
Smaller U.S. companies lack in-house expertise to pursue global opportunity. Some believe they are going global when they ask existing staff to cover international business responsibilities. In reality, they are dallying and diluting company focus. Of course, dealing with differing languages, cultures and business habits is naturally daunting.
GETTING AHEAD GLOBALLY
First, support foreign aid, especially when it is devoted to agriculture. It is well established, though counterintuitive, that broad-based agricultural growth in developing countries boosts their ag imports.
Be resolute but careful, and start small. Take it product by product, country by country, and treat every new territory as a distinct entity. Use product samples to gain credibility. Get grounded in the cultural context.
Finally, look for ways to align with value-added market development partners such as ACDI/VOCA. As an aid provider, ACDI/VOCA is a welcome guest in 33 developing nations. It is well-positioned to provide access and insight into local markets on behalf of U.S. partner companies. Encourage your employees to volunteer and, as a company, look for opportunities to do good that can ultimately be good for business. AM
Perry Letson is assistant vice president for communications for ACDI/VOCA.