Introduction U.S. exports of high-value and consumer-oriented agricultural products have increased steadily in recent years, but face stiff competition in major importing markets. Many exporting countries have ambitious export goals and orient their programs to attract more small- and medium-size firms to exporting. Competitors use direct export subsidies, export promotion programs, export credit and credit guarantee programs, and statutory marketing boards.

This report focuses on competitors’ market development programs and activities that are similar to those of the U.S. Department of Agriculture’s (USDA’s) Market Access Program (MAP) and the Foreign Market Development (FMD) Program. These programs support export sales of agricultural, forestry and fishery products.

Major Export Promotion Activities Developed and-–to a lesser extent-–middle income countries use export promotion activities. In many countries, governments work as partners with agricultural producers, food processors, and the timber and fishery industries. In some countries, producers finance the bulk of the promotions; in others, the government is the more active financing partner. Statutory fees on sales or exports generate the funds for producer financing. Government assistance to export promotion is not subject to discipline under the WTO Agreement on Agriculture.

Export promotion includes a wide range of activities. These are:

1. Advertising on radio, television, and in print media. This includes generic ads, designed to reinforce an image for all products from a country, such as New Zealand’s campaign promoting its food as natural, and ads for individual commodities and products.

2. Trade Show participation at major international shows such as ANUGA or FOODEX, as well as smaller exhibitions sponsored by individual countries in a foreign market. Trade shows are an important way to introduce new products to a large number of buyers and to make new contacts. Most countries help their exporters and producer associations participate in trade shows, often absorbing some of the costs.

3. Public Education and Media Campaigns are designed to increase familiarity with the product among potential consumers, show how the product is used or fits into the local cuisine, and generate demand.

4. National Branding promotes a national brand name, such as Australia Fresh, which independent exporters may use on their products, usually for a fee. National brands often are associated with specific standards, which must be met before the brand name can be used.

5. In-store and Menu Promotions and Tastings, geared to food retailers and wholesalers or restaurants in the importing country, include promotional and display materials and recipe guides. Samples are often given out in supermarkets. Wine tastings are a common promotional tool.

6. Trade Missions and Reverse Trade Missions introduce foreign media and businesses to a country’s products. Trade missions are visits by exporters to the importing country. Reverse trade missions invite foreign buyers, including trade delegations and the media, to the exporting country to visit producers, processors, or packers, and to visit with public or private sector officials.

7. Technical Assistance can range from invitations to specialists to attend training courses or related technical seminars in the exporting country to demonstrations in the importing country to increase the use of a specific commodity. Examples include baking or meat cutting seminars.

Countries Chosen for the Study Twenty-seven foreign countries were chosen for this study. The traditional exporters of the European Union were included: Denmark, France, Germany, Greece, Ireland, Italy, the Netherlands, Spain, and the United Kingdom. Also included in the study are the Cairns Group countries of Argentina, Australia, Brazil, Canada, Chile, Malaysia, New Zealand, South Africa, and Thailand. Other competitors included in the report are China, Hong Kong, India, Japan, Korea, Mexico, Norway, Taiwan, and Turkey. Japan, Hong Kong, Mexico and Taiwan are major importers and are included to provide insight into competitor practices in the marketplace. Most of the country reports contain a section that describes competitor activities in that market. Finally, a section on the United States, which highlights key USDA programs, is included.

Estimated Market Promotion Expenditures The 27 nations studied spent an estimated $1 billion in 1998 on market promotion activities. Government allocations account for about 22 percent of promotion expenditures; producer and industry assessments and other fees make up the remaining 78 percent ($792.5 million). We estimate European Union market promotion at $378.8 million in 1998. The Cairns Group expenditure was $592.9 million. Funding by other countries totaled an estimated $51.5 million.

EU Export Market Promotion Expenditures This year’s report shows a similar distribution between government and industry financing as last year’s report-- about 40 percent government and 60 percent industry. Total export promotion funding, not including export subsidies, is also similar-- $378.8 million this year, compared to $364.6 million last year.

Cairns Group Export Market Promotion Expenditures Export promotion expenditures for 1998 are estimated at $592.9 million, with 92 percent of this amount ($542.6 million) coming from industry sources. The biggest spender was New Zealand ($355.4 million), followed by Australia ($109.9 million), and Brazil ($58.3 million).

Chief Countries and Commodities Targeted for Competitors’ Promotions The EU has a long-standing tradition of producing some of the world’s highest quality foods, and many of its industries are protected by the Common Agricultural Policy (CAP). Other European countries are the United States’ major competition for consumers’ expenditures on food in Western Europe. Australia, Canada, and New Zealand join Europe as the chief competitors in Japan, Korea, Hong Kong, and other major Asian importing countries. Regional trade also expanded in Asia throughout the 1990's, and many Asian countries have become noteworthy competitors. European competitors promote a wide range of products in Europe and overseas. Meats, grains-based products, wine, fresh fruits, and seafood are the most important products promoted in Asia. European countries, Australia, and New Zealand have directed more export promotion resources toward Asia and Latin America for over a decade.

Recent Developments in Export Promotion New Zealand continued to increase its export promotion expenditures, with the majority of funding coming from industry sources. Changes to the laws governing New Zealand’s corporations and promotion boards encourage the boards to be more accountable to their producers. Among Latin American countries, Brazil implemented a national export strategy, and government and industry export promotion funding increased dramatically in 1998. European countries continued their promotion activities in Asia, Latin America, and North America, as well as in Eastern Europe.

Export Marketing Boards Producers in Australia, Canada, and New Zealand sell many of their agricultural products through marketing boards. Many of these boards have exclusive control over the export marketing of their designated products. Some boards also are authorized to make long-term sales contracts with the governments of importing countries, and are authorized to enter into joint ventures with firms in importing countries. Most of the statutory marketing boards conduct advertising and promotion activities and are particularly effective at combining generic promotions with the typical sales activities such as retailer discounting, negotiation of shelf space in retail stores, sales agreements with millers and processors, and credit financing.

Competitor market promotion expenditures, by country, are summarized in the table included in this report. Market promotion expenditures presented in the table are designed to replicate U.S. expenditures for USDA’s Foreign Market Development (FMD) and Market Access Programs (MAP). Unless stated otherwise, the market promotion expenditure estimates exclude expenses related to the operation of overseas offices and staff costs for foreign government agencies involved in export promotion. Market promotion expenditures generally do not capture the costs associated with regional or provincial government promotions.

Last modified: Monday, August 29, 2005