World agricultural industry investment in export market development for grain

An analysis of competitor countries' market

development programs

Summary report

Prepared for:

Cooperator Organizations led by U.S. Wheat Associates

May 2013

Agralytica

333 North Fairfax Street, Suite 202

Alexandria, VA 22314 USA

Tel: (703) 739-9090

Fax: (703) 739-9098

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Competitor countries’ market development programs

and expenditures

Summary report

Prepared for

Cooperator Organizations led by U.S. Wheat Associates

TABLE OF CONTENTS

EXECUTIVE SUMMARY .............................................................................. I

INTRODUCTION .................................................................................... 1

Objectives and scope ..................................................................... 1

Objectives ......................................................................... 1

Geographic coverage ............................................................ 2

Scope of issues .................................................................... 2

Methodology ............................................................................... 2

PART 1: COMPARISON AND ANALYSIS OF EXPORT PROMOTION EXPENDITURES 4

1.1. Estimated expenditures for agri-food export promotion ................... 4

1.1.1. Investing in export development promotion ........................ 4

1.1.2. Comparison of agri-food export promotion expenditures ........ 6

1.1.3. Export promotion expenditure by sector ........................... 6

1.1.4. Trends in export promotion spending ............................... 7

1.2. Approach to export promotion ................................................. 9

1.2.1. Institutional frameworks for export development/promotion ... 9

1.2.2. Export market development models ................................10

1.2.3. Industry centralization of export development/promotion .....10

1.2.4. National branding .....................................................11

1.2.5. Target markets ........................................................11

1.2.6. Building capacity: support to individual companies ..............12

1.2.7. Activities undertaken .................................................12

1.2.8. Assessing programs impact ...........................................13

1.3. Conclusions .......................................................................13

1.4. The implications for export market development/promotion in the US 15

1.5. How the US compares ...........................................................16

1.6. Looking forward .................................................................18

PART 2: COUNTRY SUMMARIES ......................................................... 20

2.1. Europe ............................................................................20

2.1.1. The European Union (central funding) .............................20

2.1.2. France ...................................................................21

2.1.3. Italy ......................................................................22

2.1.4. The Netherlands .......................................................22

2.1.5. Spain ....................................................................23

2.1.6. Turkey ...................................................................24

2.2. Americas ..........................................................................24

2.2.1. Canada ..................................................................24

2.2.2. Brazil ....................................................................25

2.2.3. Chile .....................................................................26

2.3. Asia, Oceania and Africa .......................................................27

2.3.1. Australia ................................................................27

2.3.2. New Zealand ...........................................................28

2.3.3. China ....................................................................28

2.3.4. South Africa ............................................................29

COMPETITOR COUNTRIES' MARKET DEVELOPMENT PROGRAMS

Executive summary

i

EXECUTIVE SUMMARY

Exports have become a primary growth vehicle for many agricultural sectors in the United States and are

of major strategic importance. However, the US is facing increasing competition. Traditional

competitors, as well as new international players, have been changing the trade playing field and gaining

market share. The US exporter community needs to understand how its competitors approach export

promotion to help develop its own effective strategies and programs. This study has been completed to

help fill this knowledge gap.

The study analyzed market development programs in a sample of 12 competitor countries: France, Italy,

Spain and the Netherlands in the EU, Canada, Brazil and Chile in the Americas, as well as Australia, New

Zealand, China, South Africa and Turkey. These countries represent about a third of world agricultural

trade.1 In addition to the individual countries, the European Union’s central public funds available for

promotion were reviewed as well.

The analysis focused on competitors’ export enhancing activities, similar to USDA’s Market Access

Program (MAP) and Foreign Market Development (FMD) program; it excluded other programs such as

export finance, tax policy or farm support programs.

Most reviewed countries report their expenditures in sufficient detail that combined with information

collected through interviewing government and industry executives allowed the calculation of robust

estimates of export promotion expenditures. However, China, Turkey and, to some extent, South Africa

had little or no published information. Desk research and interviews provided some information, but

could not fill all gaps. For these countries, the export promotion expenditures presented in the report

are best estimates based on the information gathered. Despite this lack of comprehensive information,

the estimates are believed to be within the right order of magnitude.

Key findings

The competition is real and active. Collectively competitors outspend the United States to

promote their agri-food production internationally.

As a whole, the sample of 12 countries, including four EU countries, plus the remaining

23 EU central fund allocation and required Member State and industry match, spent an

estimated US $0.7 billion in public funds and US $1.1 billion in industry funds for a total

of US$1.8 billion in 2011.

The partial EU-27 estimate (excludes any investment above the required EU central fund

match of the 23 EU countries not included in the study) exceeded US$460 million in

public funds and nearly US$350 million in industry funds, totaling over US$800 million in

2011.

The EU-27 central funds alone allocated an estimated US$360 million of public funds in

2011 to Member States for export promotion of agri-food products and wine.

For comparison, in 2011, US public expenditure on export promotion was US$256 million

and industry expenditures were US $394 million, for a total of US$650 million.

Relative to GDP or agricultural production, the US public spending for market development

is among the lowest of the countries examined.

1 Source: Food and Agriculture Organizations of the UN Statistics (FAO Stats)


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ii

Public spending on export promotion by the 12 countries reviewed increased by an estimated

103 percent since 2002, while total funding has risen 38 percent. Spain’s total expenditures

alone more than doubled and Canada’s quadrupled.

Evidence suggests that investment in export development/promotion is likely to continue to

grow:

EU promotion funds are projected to increase significantly in the 2014-2020 budget.

EU funding for wine promotion alone was US$116 million in 2010 and US$155 million in

2011. The 2013 budget is almost double that, at close to $300 million.

Canada recently announced three new federal programs to better address innovation,

competition and market development.

Australia is considering initiating industry funded market development for wheat.

Commodity export promotion groups are being established in Turkey with the sole

objective to promote exports suggesting that more focused investment in export

development and promotion could be expected in the coming years.

Trade shows are universally recognized as effective and essential activities requiring

government support. National pavilions are typically supported by public funds and are

considered critical showcases that demand priority funding. Meanwhile, the US direct

government investment in trade shows and national pavilions is about a quarter of what it

was in the mid-1990s.

Public support to small and medium-sized enterprises (SMEs) is a key objective of competitor

programs.

Other key findings of competitor activities include:

Trade missions, both outward and inward, are viewed as an effective tool and are

widely used by most.

Focus on market access is growing. In general, monitoring trade policies and securing

market access are seen as essential components of market development.

Most of the countries studied have invested in developing a national brand that projects

differentiated attributes of their products; however the concept is not universally

appropriate to all markets or products.

The eligibility of different types of organizations to receive government support varied

considerably among the countries reviewed:

Some countries follow a model similar to that in the US, industry organizations compete

for available government funds to support export promotion. Typically one

representative industry organization per sector receives funds (e.g. Canada and Brazil).

Some allow more flexibility. Chile allows individual companies to form consortiums and

apply for government funding for generic export promotion. The various EU regulations

that provide funding for promotion allow for different types of industry organizations

and producer groups to apply for funding.

Some EU regulations limit eligibility on the basis of product sectors and/or target

markets.


Executive summary

iii

Some countries allow industry organizations to receive public funding for multi-year

export promotion programs (e.g. all Brazilian and EU funded programs, and some

Canadian cases).

There is wide acceptance of the value of investment in export promotion; the US will

continue to face the full force of competitors’ promotional activities that seek to draw

consumers and users toward their products.

The study suggests that the current US market development programs provide an effective

solution to many of the issues faced by competitors in developing export market

development programs. The US model:

Provides government oversight without major strategic restrictions;

Does not exclude sectors due to top down imposition of priorities;

Provides clearly stated objectives and measures due to the Results-Oriented

Management framework;

Provides encouragement and support to SMEs that are new to export;

Through the State Regional Trade Groups, assists and coordinates the efforts of

individual States on export development; and

Encourages export promotion groups to work together to capture opportunities that they

all seek or address situations that are best handled collaboratively.

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Competitor countries’ market development programs and expenditures

Summary report

INTRODUCTION

This is an abbreviated version of the full report which in its entirety consists of the following two

volumes:

1. An analysis of competitor countries’ market development programs

2. Detailed country reports

Objectives and scope

Several organizations, led by U.S. Wheat Associates, representing a range of agricultural commodities

commissioned Agralytica to research the export promotion programs and expenditures of 12 countries plus

the EU centralized promotional funds.

Objectives

The main objective of the project was to provide an understanding of the scope and content of some of

the key US competitor countries’ export development programs, the level of investment and policies.

The specific objectives were as follows:

Catalogue each country’s current (2010 or 2011) export development programs that fund a

wide variety of trade promotion, market access, retail, foodservice, and technical assistance

activities as well as overseas representation and offices. These should be comparable but

not limited to programs like the US programs (e.g. MAP, FMD).

Identify the sources of funding, the organizations involved, and the monetary investment

allocated to supporting trade show participation.

Compare and illustrate changes between current organizations and programs and those in

2002-04 when another similar study was completed.2

The study covers all food, feed and fiber products traded in unprocessed or processed forms, collectively

referred to as agri-food products. This includes the products of all conventionally classified agricultural

and horticultural products, aquatic products, forest products, and biomass products (based on grains,

oilseeds and other renewable raw materials). Finished non-food processed products such as textiles and

furniture were excluded.

2 A similar study titled ‘The Competition in 2002’ was published by the USDA Foreign Agricultural Service

(FAS) in 2004. That study covered more countries (29 vs. the current 12), but in less depth. Comparisons are provided for the countries covered by both studies.


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Geographic coverage

Coverage for this study included the following 12 countries and EU centralized promotional efforts:

In the EU:

France;

Italy;

Spain;

Netherlands; and

EU 27 central funding;

Australia;

Brazil;

Canada;

Chile;

China;

New Zealand;

South Africa; and

Turkey.

These countries have been selected as a subsample of the countries covered in the FAS study published in

2004. The current sample of 12 countries accounts for about one-third of the world’s total agricultural

trade; there are many large agri-food exporters that are not included: Germany, the UK, Japan, South

Korea, and Mexico, to name a few.

Scope of issues

This study focused exclusively on measures to promote agri-food products internationally, whether

through market development activities or product promotion efforts. It did not include any other

measures that governments might take to directly or indirectly support exports such as funding of export

sales through subsidies, the provision of export credits, export credit guarantees, tax concessions, or

activities to improve the productivity of an agri-food sector (even if that was directed to improve export

performance).

Methodology

Agralytica conducted the research between June and December 2012. It involved desk research, 160 in-

person interviews with senior executives at government agencies and industry organizations, and

consultation with officers at the US Agricultural Trade Offices in the target countries and with US industry

organizations involved in export development.

For most countries, published information on promotional budgets for both government and/or sector

programs was obtained. In many cases the interviews provided at least some of the information missing

from published documents. However, a few countries did not publish expenditure information and the

interviews could not fill all gaps. This was the case for the following:

In South Africa, information on budgets was sparse. For most key organizations, either the

industry match or the government contribution was assumed, based on the government’s

50/50 co-funding program, or agency budgets.

In Turkey, no expenditure data were available. Consequently, trade show attendance data,

along with documented activities eligible for government support, were used to develop

expenditure estimates.

In China, only information on national government support was available; provincial and

local support was not. Trade show participation and funding was estimated based on

information about China’s participation in international trade shows most of which appears

to be funded at the provincial level.


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Level of confidence in results

For most countries the methodology has resulted in high confidence that the overwhelming majority of

promotional programs and expenditures for agricultural exports have been captured. This confidence

stems from the quantity and quality of published materials as well as confirmation through interviews.

Data were scarcer for South Africa and even more so for Turkey; consequently, the confidence level is

lower. However, the estimates are believed to be within the right order of magnitude.

For China, support could be provided by the central government level as well as by provincial

governments and at various local levels. Not all of these sources have been captured. This compounded

with the lack of transparency, leads to relatively low level of confidence that the country’s export

development effort has been captured in its entirety. However, although the degree of confidence in the

China estimates is lower, even if the estimate was doubled, the differences would not significantly alter

the total combined competitor promotion budgets, as it is but one among many. Furthermore, China is

not noted for intensive export promotion, although its agriculture industry does participate in many trade

shows, sometimes with a large presence.


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PART 1: COMPARISON AND ANALYSIS OF EXPORT PROMOTION EXPENDITURES

1.1. Estimated expenditures for agri-food export promotion

1.1.1. Investing in export development promotion

Competition is real and active. Competitors recognize the importance of market development, consider

it effective, and spend significant funds to promote exports. Collectively, the 12 competitors in the

study, as well as the partially reviewed EU-27, outspend the United States.

The 12 countries reviewed, including four EU countries, and the European central funds

allocated to the remaining 23 EU Member States and their required public and industry

match, totaled an estimated US$0.7 billion in public funds and US$1.1 billion in industry

funds, for a total expenditure of US$1.8 billion for export promotion of agricultural, food,

and fiber products in 2011.

A partial EU-27 estimate has market development investment exceeding US$460 million in

public funds and nearly US$350 million in industry funds, totaling over US$800 million in

2011. The European Union presents a unique situation in that three funding sources are

utilized for export promotion and market development. These include EU central public

funds, individual Member State public funds and industry funds. The EU-27 estimate is

partial because it is based on total EU central funds and the member state government and

industry match, and all-source funding for the four EU countries covered in the study. For

the 23 EU countries not included in the study, only the minimum match required for EU

central funds is assumed for the Member States public and industry contribution

components.

The EU central fund alone allocated an estimated total of US$360 million in 2011 to Member

States for export promotion of agri-food products and wine. The largest share was allocated

to wine promotion.

For comparison, the US spent an estimated US$256 million in public funds and US$394million

in industry funds, for a total of US$650 million for export promotion in 2011.3

Of the 12 countries reviewed, public funding was the largest in France, Italy, Spain and

Canada. In the three European countries, a major share (over 50%) was derived from the EU

central fund, primarily for wine promotion.

Public funds accounted for over 50 percent of the total estimated promotion expenditure in

all countries except the Netherlands, Australia, and New Zealand where the governments

have largely withdrawn from direct funding of generic export promotion. New Zealand had

the largest overall spending due to over $500 million in international marketing and

promotion spent by two for-profit farmer owned cooperative companies, Fonterra (dairy)

and Zespri (kiwifruit), which account for most of the country’s exports.

3 Source: US Department of Agriculture, Foreign Agricultural Service


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Estimated EU-27 expenditure for agri-food export promotion, 2011

Country Confidence

ratinga Public funds Industry funds Total Public funds Industry funds

---------- US $ million --------- ---------- share ---------

France b High 74 45 119 62% 38%

Italy b High 123 75 198 62% 38%

Netherlands b High 5 39 44 12% 88%

Spain b High 66 49 115 57% 43%

Remaining 23 EU States c High 195 137 332 59% 41%

EU27 (partial) d High 463 345 808 57% 43%

a/ High: high transparency, availability of public information and good industry response allowed for precise estimation.

b/ Public funds for the four countries researched in the study include EU central funds, the required individual government match for EU funds and any additional public funding. The industry estimate includes the required EU match and any additional industry funding.

c/ For the 23 EU countries not included in the study, public funds include the EU central funds and only the required individual government match. The industry estimate includes only the required EU match. No funds beyond the required match to receive EU central funds are included.

d/ The EU27 estimated expenditure is partial because only four of 27 countries were included in the study and researched in detail.

Total estimated expenditure for agri-food export promotion, 2011

Country Confidence

rating a Public funds

Industry funds

Total Public funds

Industry funds

---------- US $ million --------- ---------- share ---------

EU27 (partial) High 463 345 808 57% 43%

Australia High 35 68 103 34% 66%

Brazil High 31 17 48 64% 36%

Canada High 83 45 129 65% 35%

Chile High 18 13 31 57% 43%

New Zealand b High 12 551 563 2% 98%

South Africa Medium 12 10 21 55% 45%

China Low 31 20 51 61% 39%

Turkey Low 19 19 38 50% 50%

Total estimated expenditure 703 1,089 1,791 39% 61%

a/ Confidence rating is defined as follows:

High: high transparency, availability of public information and good industry response allowed for precise estimation.

Medium: some publicly available information and reasonable industry response; export promotion expenditures were estimated on the basis of available information and some informed assumptions about fund availability and allocations had to be made in order to fill the gaps.

Low: limited information available at various levels; export promotion expenditures were estimated on the basis of informed assumptions about funds required to complete known activities (e.g trade show participation).

b/ New Zealand’s expenditures are higher than other countries because of two unique cases. Its dairy and kiwifruit industries are each represented by a single farmer-owned cooperative company that accounts for over 90% of the country’s entire output. These companies, Fonterra (dairy) and Zespri (kiwifruit), are for-profit entities that invest heavily in international marketing. They are included in this review because they are the near exclusive exporters of their nation’s products and are granted some government privileges, such as special antitrust legislation provisions.

Note: Numbers may not add up due to rounding

COMPETITOR COUNTRIES' MARKET DEVELOPMENT PROGRAMS Summary report

6

Estimated export promotion spending per US$1,000 agricultural production, 2011

Source for GDP: International Monetary Fund Source for agricultural production: FAO Stat

Estimated export promotion spending per US$1,000 GDP, 2011

Note: New Zealand’s expenditures are higher than other countries because of two unique cases. Two for-profit farmer-owned cooperative companies, Fonterra (dairy) and Zespri (kiwifruit), are included in this review because they are the near exclusive exporters of their nation’s

products, invest heavily in export marketing of their products, and have special antitrust legislation provisions.

1.1.2. Comparison of agri-food export promotion expenditures

There are many ways to compare the level of agri-food export promotion of different countries. Two comparisons are illustrated in the following figures. They show that the US spends relatively low amounts of public funds for export promotion in relation to GDP and agricultural production. In terms of public investment in export promotion as a share of GDP, the US was below nearly all of the countries examined, including New Zealand, Chile, Italy, Spain, Canada, South Africa, France, Turkey and Australia. In terms of investment in promotion as a share of value of agricultural production, again, the US was among the lowest; below Italy, Chile, Canada, Spain, France, and New Zealand.

1.1.3. Export promotion expenditure by sector

The total expenditure for promoting dairy products and horticultural products is skewed because of the high export marketing investment of New Zealand’s Fonterra

and Zespri, US$469 million and US$67.5 million respectively. As seen in the figure, with these excluded, wine promotions accounted for by far the largest share of promotional expenditure. All countries that produce some wine also promote it generically in international markets. Specifically:

Three of the four reviewed European countries are major wine producers and exporters and the beneficiaries of considerable EU funds. Wine accounts for about 70% of the total promotional spending in Italy and Spain, and almost 50% in France.

Total estimated export promotion expenditures by sector, 2011

Note: Expenditures for dairy and horticultural products are skewed because of the inclusion of New Zealand’s Fonterra and Zespri.


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Wine promotion is also important in the remaining wine producing countries included in the

study: Australia, New Zealand, Chile, and South Africa. However, their expenditures are

dwarfed by the EU countries.

The next most important recipient of promotional funds was horticulture. All reviewed countries

promoted horticultural products.

It was the single largest sector in the Netherlands. Horticulture represented over 90% of the

total, although the expenditure on generic promotion was almost all from the private sector.

Most of South Africa’s and Chile’s export promotion funds were allocated to horticulture,

over 55% and 30% respectively.

Significant funds were spent on horticulture by France and Spain.

Proteins (animal products and genetics) were particularly important in Australia, Canada, New Zealand,

and Brazil. Red meat represented one third of the total promotional spending in Australia.

Processed food and beverage funding was significant in Brazil, Canada, and Chile. Italy, Spain and France

also spent significant funds for food and beverage promotions, primarily of products with geographic

indications, such as Parma ham, Parmigiano Reggiano cheese and many other products from EU countries

that are protected by their specific geographic origin or method of production.

Of the remaining product sectors:

Australia was the only sampled country that invests in wool promotion, which accounted for

25% of its total promotional spending;

Close to 40% of Canada’s promotional funds were spent on wood products. New Zealand,

France and Chile also invested in wood promotion, but less than US$1 million per year;

Canada invested about 13% of its promotional funds on grains and oilseeds. The only other

country with documented spending on grain and oilseed promotion was France, but it

accounted for less than 3% of the country’s total spending. However there are indications

that more countries may get involved in grain promotion in the future:

Turkey has recently set up a specific group focused on the export promotion of flour;

Australia has not been promoting wheat overseas since the privatization of the statutory

commodity board. However, recent evidence suggests that the industry is considering

funding some export market development programs in the coming years; and

In South Africa, there is an organization, Grain SA, which has an objective to work on

export development. Although not currently spending funds on planned export

promotion, it might do so in the future.

1.1.4. Trends in export promotion spending

This review enabled comparisons with the earlier study reporting 2002 export promotion expenditures. It

had broader geographic coverage (29 countries vs. the current 12) but focused primarily on the

expenditure, while the current study examines each country in more depth.

The changes that have occurred since 2002 for the twelve countries covered by both studies are shown in

the following table. It does not include the EU public funds for the additional 23 EU member states which

were not studied in detail.


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Comparison of estimated export promotion expenditure in 2002 and 2011

2002 2002 (real 2011 dollars) a 2011

Public funding

Industry funding

Total Public funding

Industry funding

Total Public funding

Industry funding

Total

------------------------------ US $ million ------------------------------

Australia $31 $18 $49 $38 $22 $61 $35 $68 $103

Brazil $50 $70 $120 $62 $86 $148 $31 $17 $48

Canada $13 $13 $25 $16 $16 $31 $83 $45 $129

Chile $13 $13 $27 $16 $16 $33 $18 $13 $31

China - - - - - - $31 $20 $51

France $43 $47 $90 $52 $58 $111 $74 $45 $119

Italy $11 $11 $22 $13 $13 $27 $123 $75 $198

Netherlands $7 $45 $52 $8 $55 $64 $5 $39 $44

New Zealandb $1 $352 $353 $1 $434 $435 $12 $551 $563

South Africa $2 $57 $59 $2 $71 $73 $12 $10 $21

Spain $32 $21 $53 $39 $26 $65 $66 $49 $115

Turkey $1 $4 $6 $2 $5 $7 $19 $19 $38

Total (12 countries) $203 $652 $855 $250 $804 $1,054 $508 $952 $1,460 a/

The 2002 figures have been inflated to show their inflation adjusted value in 2011. b/ Expenditures are skewed because of the inclusion of New Zealand’s Fonterra and Zespri.

Note: Numbers may not add up due to rounding

Total estimated export promotion expenditure of the 12 countries reviewed in both studies

has increased by 38 percent. Public funds spent on export promotion have increased by 103

percent and industry funds, by 18 percent.

Export promotion expenditures in France and Chile have remained almost unchanged.

The largest increase is observed in Italy; this is accounted for almost exclusively by wine.

Spain’s expenditure has more than doubled; again, this is attributed to the increased EU

funding for wine promotion.

In Canada, export promotion expenditure has quadrupled due to a significant increase of

both public and industry funds.

In Australia, public funding levels have not changed but industry spending has tripled.

The increase in New Zealand is accounted for by the expenditures of Fonterra and Zespri.

Public funding in the Netherlands has remained unchanged, but industry funding has

decreased as commodity sectors have turned their backs on compulsory levies (check-offs).

The reduced expenditure in Brazil is surprising, but the suspected reason is some differences

in the products included, or the methodology of collecting data in the 2002 study. The

current methodology results in high confidence in the 2011 figure.

Similarly, South Africa seems to be spending less now than 10 years ago. It is possible the

earlier study captured export promotion expenditures that have carried over from the pre-

deregulation period. Deregulation was followed by almost a decade of virtually no export

promotion, which has only begun to pick up in recent years.

As a reference point, US export promotion expenditures have also increased during this

period, from US$330 million (or US$410 million when adjusted for inflation to reflect 2011


9

All reviewed countries engage in generic export promotion and will continue to do so.

values) to US$650 million. This is a 59% percent increase, less than Canada, Italy, Spain, Australia, and Turkey.

1.2. Approach to export promotion

1.2.1. Institutional frameworks for export development/promotion

In all countries under review, the government provides some support for export development. Government co-funding of generic export promotion programs undertaken by not-for-profit industry organizations is common in many countries. A few governments have mostly withdrawn from providing direct monetary support to such efforts. For some countries the institutional framework is the child of the country’s institutional history. For example, France relies on producer groups and inter-professional organizations, Italy on the profusion of regional and local organizations, and Spain on a prominent and powerful central agency. In other countries, it is strongly influenced by recent political sentiment and the need to rein back the commitment of public funds. For example, Australia, New Zealand, and the Netherlands have reduced their direct funding of export promotion largely in response to broader political forces that have reduced government participation in many sectors of the economy. Canada and the European Union are in the process of realigning their export promotion policies. They will continue to rely upon close public/private partnerships. Those countries that had substantial experience of export market development programs have developed a solid legislative framework. In some of the countries, it was less easy to identify a clear, unambiguous legislative framework that defined the nature of partnerships or eligibility. This was particularly the case in Turkey, China, and to some extent, South Africa. In Italy, the activities of a patchwork of regional and local institutions obscure full understanding of its approach to export market development. In Europe, the introduction of legislation on geographic indications (GI) in the European Union has strengthened the position of products in higher value food markets without giving direct subsidies (although some GI organizations could bid for EU promotional funds). This innovation sidesteps the constraints introduced by internal EU market regulations that restrict generic Member State promotional activities.


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Models of export market development/promotion

1.2.2. Export market development models

The following figure illustrates a model to classify the character of export promotion by the countries under review, excluding China. The horizontal axis represents the extent of government co-funding of export promotion and the vertical axis represents adherence to ‘generic’ promotion. The countries in the bottom left quadrant of the matrix have the strongest public/private relationship and the strictest generic approach. The US has this approach as well. France, Italy, and Spain appear once in the bottom left quadrant of the matrix because the EU rules for promoting in other Member States using EU funds are very strict and do not allow differentiating on the basis of country of origin against other EU origins. However, these countries also appear in the top left quadrant of the matrix because, a large number of EU products are registered under some geographical indication (GI) scheme that protects products from competition based on location or method of production. Due to the limited number of producers in a GI consortium (e.g. Parma ham) and restrictions on where/how the product should be produced, GI product promotions are closer to branded than truly generic. Australia and New Zealand appear in the top right quadrant because for some commodities they apply a strong branded and industry funded approach. The Netherlands is in the bottom right quadrant as the government is minimally involved in funding export promotion programs, but some industry groups undertake programs that can be classified as generic. South Africa is in the same quadrant as the Netherlands, although the government there is moving in the opposite direction, from almost complete withdrawal of direct funding for export promotion after deregulation in the 1990s to beginning to provide some support. South African industry organizations undertake typical generic programs. China is not represented in this matrix because the concepts and programs for export promotion are still evolving. Industry organizations representing agricultural sectors are little developed and government and provincial support is uncoordinated. 1.2.3. Industry centralization of export development/promotion

The term ‘industry centralization’ as used in this section refers to the number of industry organizations

per sector that are involved in export development and promotion. In most countries reviewed, the generic export development effort is relatively centralized, typically with one industry organization per sector involved (e.g. dairy, poultry, red meat, etc.). This is also the US approach. These organizations either receive some public co-funding, or are solely industry funded; they can be umbrella organizations unifying multiple industry associations, organizations with memberships comprising either producers, processors, exporters, or all of these groups. Chile represents a variation of this approach; in addition to industry organizations there is the option for several individual companies (at least five) to get together


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and apply for public funds to promote their common ‘generic’ brand. There are also some notable

exceptions. For example:

In Spain, the management of export promotion programs is in the hands of ICEX, the national

trade development agency. Industry organizations pay contributions to ICEX to run the

programs.

In Italy, all attempts for some unified approach seem to be failing. Most sectors are

represented by multiple layers of regional and industry organizations which are involved in

export promotion. Products with geographic indications feature prominently and offer some

focus to promotional efforts.

Multiple EU regulations and programs for export promotion provide options for different

industry organizations and groups, sometimes promoting the same type of product, to

receive funding.

Industry organizations do not currently play a significant role in export promotion in China.

The evolution of the Chinese model remains uncertain, although some anticipate a greater

role for industry organizations as the marketing system matures.

In Turkey, several industry sector promotion groups have been set up with the sole purpose

to promote exports (poultry, seafood, fresh fruits & vegetables, citrus, hazelnuts,

pistachios, confectionery, and flour). However, exporters are organized in regional Exporter

Unions which engage in some promotional activities (trade shows, trade missions, etc.); thus

some product groups can be represented by several unions.

1.2.4. National branding

Most countries have put some effort into developing a national brand that projects the attributes which

differentiate their products (e.g. quality, flavor, sustainability, diversity, fair trade, etc.). Only the

Netherlands, Turkey, and China are not involved in national agri-food product branding.

However, branding is used selectively by some. For example, in Canada a national brand was developed

following research which showed positive consumer perceptions about Canada and concluded that the

Canadian image would sit comfortably with Canadian food and beverage promotions. But, not all export

groups use the Canada brand. Some reported the concept is not appropriate to all markets and some

noted that reputations can change (e.g. Canadian oil and greenhouse gas emissions have impacted

Canada’s ‘sustainability’ credentials). Clearly, the development of a national brand has to be carefully

researched and risks being blown off course by unexpected events.

Others, such as New Zealand and Australia have developed and used for some years a national brand for

promoting tourism. They now use it whenever appropriate to link the promotion of tourism to food and

agricultural products.

1.2.5. Target markets

It is difficult to generalize about the target markets because they depend very much on the specific

product category and targeted market segment. But, there are some common trends:

China features prominently on every country’s radar for the full range of products promoted.

Most consider the BRIC countries (Brazil, Russia, India, and China) to be the new target

markets, but market access challenges in India have reduced its immediate attractiveness.


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Mature markets such as the United States, the European Union, Japan, Taiwan, and South

Korea are also important but are more likely to be targeted by exporters of higher value

products within the countries reviewed.

Latin America is seen as an opportunity.

Geography, tradition, and/or cultural ties also play a role (e.g. Brazil gives priority to

Portuguese speaking markets).

1.2.6. Building capacity: support to individual companies

Most reviewed countries provide support to small and medium-sized enterprises with a focus on those that

are inexperienced in developing export markets. Support comes in a number of different forms such as

grants to reimburse some export promotion related expenditures, or technical assistance, and training.

Australia, Canada, Spain, Brazil, and South Africa have dedicated programs for small companies. France,

Italy, and the Netherlands were the only reviewed countries for which no specific programs to assist small

and medium size agri-food businesses were identified.

1.2.7. Activities undertaken

The specific strategies carried out by export development organizations depend on the type of product

promoted. However, these involve a similar toolbox of activities used by all competitor countries.

Organizations representing higher value products are more involved in typical market

promotion activities such as retail and consumer promotions or public relations (PR).

Bulk product promotion involves more market building activities like education and technical

assistance mainly with users rather than consumers. However, only a few of the reviewed

countries are involved in promoting bulk products and consequently few are involved in

market building strategies at this time.

The Canadian model follows that of the United States with a major focus on market

education and development of close relationships with potential buyers.

The promotion of Australian bulk products followed a similar path before privatization.

Today, there is evidence that some of these sectors seek to re-establish institutions that

will allow them to compete on equal terms in export markets with their competitors.

Trade shows are universally recognized as effective and essential activities requiring support

from available government funding sources. National pavilions are typically supported by

public funds and are considered critical showcases that demand priority funding. Ironically,

the US direct investment in trade shows and national pavilions is only about a quarter of

what it was in the mid-1990s. It was not possible to fully identify all competitor investment

in trade shows.

Trade missions are also viewed as very effective and were the next most utilized activity

after trade shows.

There is increased attention by industry and governments to provide certification that will

enable access to higher value markets (e.g. organic, ‘responsibly managed’, non-GMO, etc.).

Focus on market access is growing. In general, departments to monitor trade policies and

secure market access are seen as essential components of market development.


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1.2.8. Assessing programs impact

Irrespective of evaluation results that support investment in export promotion, all reviewed competitors

are convinced of its value. In very broad terms, several approaches to impact assessment and evaluation

were encountered. These ranged from the formal to the informal and included the following:

Some countries required reviews of government policy initiatives undertaken by third parties

(consultants or academics). This was the case in the European Union and Canada.

A few countries estimate cost-benefit ratios for promotional expenditure on export market

development. This has been undertaken by several Australian commodity organizations in

the past.

Other countries measure pre-and post-promotion sales. For example, this was conducted by

some Brazilian organizations and was also applied in Canada, Australia, and in the reviewed

EU countries.

Some countries undertake consumer or trade research to assess awareness. There was

evidence of this in several countries where consumer or trade promotions were used. It was

often difficult to assess whether or not this was to evaluate past work or as preparation for

upcoming market development programs.

A few countries collect very informal and subjective assessments. These could be based on

sales or immediate feedback from activities such as seminars or workshops.

1.3. Conclusions

The rationale for engaging in export market development/promotion

Those organizations that have published evaluation results report positive returns on investment in export

promotion. In general, the US competitors that have been reviewed are convinced of its value. This

confidence exists even though few trace the causal links between programs and increased sales. Export

development programs exist because export growth is closely associated with economic stability.

Duration of funding

Several reviewed countries allow industry organizations to receive public funding for export promotion

based on multi-year contracts. The common sentiment is that this approach allows for better long-term

planning. The central EU funds allocated for export promotion programs typically extend for three years,

Brazil’s contracts fund industry organizations for two years, and Canada, in some but not all cases,

provides multi-year funding.

Eligibility

Countries such as Canada follow the US model in allowing open competition for available government

funds to support export market development and promotion. It was normal to fund only one

representative organization per industry sector. Any appropriate representative organization could apply

for funds. As in the US, some organizations had specific responsibilities for supporting small businesses

with their food export promotion activities.


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14

Some countries are more flexible. For example:

In Chile, in addition to industry organizations, five or more individual companies can form

consortiums and apply jointly for government funding of their generic export promotion

plans.

In some countries (e.g. New Zealand and Australia), industry organizations encourage

individual companies, regardless of their size, to participate in industry funded promotion.

Indeed, in these countries, larger companies are recognized as having greater capability of

developing markets, although it must be underlined that no public funds are involved.

Under some EU regulations a wide range of organizations can benefit. For example, the

common organization of the wine sector allows ‘producer organizations’, private companies,

industry organizations, and other ‘public entities’ to apply for funds for third country export

promotion.

Other countries may limit eligibility. For example:

The EU Regulation 3/2008 (the program that is the closest equivalent of the US MAP) limits

eligibility in two ways. First, the European Commission limits access to funds to product

sectors that it identifies. Unlike the US MAP, this means that some sectors with export

ambitions are not eligible to receive funds from this Regulation. Second, this Regulation

also limits funding to those applying for support focused on European Commission identified

target markets.

In the same way, countries such as Brazil have provided government funded support to a

relatively narrow range of product groups. In Brazil, for example, funding is restricted to

twenty closely defined sectors, most of which are producing high value agri-food products.

Promotion as part of market or crisis management

There are several examples of export market promotion resulting from concerns about the state of the

domestic market. These concerns may relate to longer term structural problems or to short term crises.

The EU, uniquely among the countries reviewed, provides funding for promotion as part of

some of its ‘common organization of markets’. In other words, it considers promotion as

one of the tools it can use to modify market forces to improve farmer incomes. These

measures apply specifically to fruit and vegetable and wine markets.

In addition, the EU allocates funds for promotion to sectors that suffer a serious market

crisis. This applies to events such as animal disease outbreaks that have reduced consumer

confidence in products, although promotional funds also have been allocated to sectors that

have suffered more general market difficulties. Such funds were allocated for dairy and

fruit and vegetables promotion during the reviewed period.

Canada has also provided similar assistance with funding for promotion (domestic and

export) being directed to the pork and beef sectors to help them recover from disease

issues.


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Allocation of public funds for export promotion

A variety of different methods is used to allocate public funds. Most are based on competitive bids

although few have sufficient transparency to make sound comparisons.

In general, it is very difficult to identify a fund allocation process based on an empirical approach. Those

countries that were willing to discuss the allocation methods suggested that proposals were evaluated by

exposing them to a panel of ‘experts’ who contributed their subjective response. Undoubtedly, in some

countries with a reasonably long history of supporting export market development and promotion, the

historical level of funding also played a role. In countries that were newer to export market

development, there was relatively little history to rely upon and consequently allocations were more

likely to be based upon the nature of plans. In Canada, the major market development program is

reviewed every five years which means that new criteria could be applied in the review of competing

programs, although there is little evidence to suggest that this results in a significant readjustment of

funding.

Measuring program impact

The questions on evaluation often revealed an awareness of the complexities in quantifying the linkage

between promotional expenditure and sales progress. Some interview respondents specified the

difficulties in quantifying the return on their investment by listing the many variables that impact sales of

agricultural products – unpredictable supply, changing exchange rates, changing competitors’ supply and

price, emergence of unexpected trade or quarantine restrictions, or changing government policy. Others

were quite happy to simply highlight a growth in export sales without fully understanding the true

contribution of their export promotion expenditure.

Nowhere was there a comprehensive approach to assessing whether progress had been achieved as a

result of export market development programs. The USDA/Foreign Agricultural Service Results-Oriented

Management (USDA/FAS R-OM) procedures are integrated into the annual review of funding of export

organizations programs and are used as evidence that the program is going in the right direction. In this

respect USDA/FAS is ahead of most other countries.

1.4. The implications for export market development/promotion in the US

US exporters will continue to face the full force of competitors’ promotional activities that

seek to draw consumer and user behavior toward their products. The study underlines the

wide acceptance of the value of investment in export market development and promotion.

The allocation of public funds for export market development brings a number of

responsibilities.

Funding should be made available only to those organizations that have developed

prudent, realistic, and coherent plans.

The continuing allocation of funds should be based upon clear evidence of progress or

appropriate change of direction.

Access to funding should be available in a transparent manner.

Funding should be allocated in a manner that is coordinated and avoids overlap between

different organizations.


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There is no single model that shines through as being more attractive than another and the

US model stands up well in comparison. Clearly, there are many ways to arrange the

institutional framework for export promotion programs; each country has developed and

adapted its institutions to meet perceived needs.

Some features of other countries’ approaches have merit.

Multi-year programs adopted by several countries guarantee funding and assist the

planning of programs. Also, the considerable cost of preparing, assessing, scoring, and

approving annual plans is reduced.

Formal evaluation is closely integrated into some programs in the EU and this

management function is strongly institutionalized (in some case closely linked to funding

commitments). While this study has not reviewed this feature in detail, it appears to

underline the importance of formal program evaluation procedures.

There are also features of other countries’ approaches that are less attractive

The very centralized approach seen in some EU Regulations is inappropriate to US

circumstances. Centrally determined strategies or priorities can result in considerable

inefficiencies. Individual industry sectors, not government agencies, are best positioned

to identify their own target markets and best export potential.

And some strategies have merit for the US but need to be pursued with caution.

A national brand must be very carefully developed with assurances that those who use it

are appropriately selected and supervised. The concept is not equally appropriate for

all countries, products, and/or markets. The evidence from this review would suggest

that national branding would not add much value to US agri-food export development

unless tied to a closely supervised product and service quality package. Also, a US

brand would not be equally well accepted in all markets. In many countries ‘Made in

USA’ will mean high quality and safety, but in some countries it might not be welcome

for one reason or another, including politics (e.g. in some Middle Eastern countries).

For regions with strongly differentiated attributes, regional approaches have shown to

elicit positive impact among key targets in some cases (e.g. promoting the attributes of

states such as Alaska, California, or Florida). On the other hand, promoting individual

states’ products can confuse foreign target audiences and dilute messaging of positive

characteristics that are usually national in nature (e.g. food safety).

1.5. How the US compares

It is not the objective of this study to directly compare the US export market development and promotion

system for agricultural and food exports with other systems. However, this review has stimulated a listing

of some broad strengths and weaknesses of the US system. In very broad terms, this review suggests that

the current institutional arrangements in the US provide, in some cases, an effective solution to many of

the issues faced by countries in developing export market development programs.

Some major strengths are listed below:

The strategic approach of agri-food exporters co-funded by US public funds is largely

determined by the needs of the sector rather than by top-down imposition of priorities. It

offers oversight without major strategic restrictions. For example, all agri-food sectors can

seek funding from the USDA’s Foreign Agricultural Service (FAS). Unlike the EU and several

other countries, no sector is specifically excluded from eligibility and USDA/FAS actively


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encourages new groups to apply for support. Also, each agri-food sector can decide priority

target markets without coercion from the funding agency. The main restrictions on

USDA/FAS funding relate to ensuring that groups do not stray outside the authority granted

by the legislation or overlap with activities undertaken by other government agencies (e.g.

the US Trade Representative).

The UES procedures adopted by USDA/FAS, underpinned by adherence to Results-Oriented

Management, help to develop export programs funded by the government that contain

clearly stated objectives and performance measures.

In administering the agri-food export development system, USDA/FAS have made an effort to

ensure that export market development is part of a wider strategic effort by the various

industry sectors participating.

Within the US the various legislative initiatives helped foster a community of organizations

that can share their knowledge of export market development. This agriculture and food

exporting community meets regularly to discuss a range of common issues, new concepts,

and procedures.

The US system is organized to provide encouragement to small and medium-sized companies

that are new to export. It does this primarily through regional organizations (SRTGs - State

Regional Trade Groups) that provide a specialized service to small and medium-sized

companies to increase their confidence in export markets.

SRTGs serve as a mechanism to coordinate and focus the efforts of individual states on

export market development. While states may fund some of their own export promotional

activities, most operate with the SRTGs.

The export market development activity is coordinated with action to promote market

access through the USDA/FAS.

The USDA/FAS uses MAP-funded Global Broad-based Initiatives (GBI) to encourage export

groups to work together to capture opportunities or address situations that are best handled

collaboratively. However, there are examples of this in other countries (e.g. in the EU’s

export promotion regulation 3/2008).

On the other hand, there are some deficiencies:

The US system is based upon annual budgets that are increasingly disrupted due to

authorization and apportionment delays, undermining planning and implementation. Annual

budgets do not offer the security of multi-year funding that some other countries provide to

their export oriented industry organizations. This inevitably focuses attention on shorter-

term ambitions.

The annual procedure for applying for government funding is resource intensive and time-

consuming, both for the applicant and for the USDA/FAS. This may be particularly daunting

to smaller export market development organizations with limited staff. However, it is

important that public funding is carefully allocated and accounted and a balance must be

sought between supervision and effective and efficient delivery of export market

development programs.

The importance and necessity of measuring progress are continually underlined, and given

more emphasis than in several of the other countries reviewed. However, the procedures to

both monitor and evaluate programs are relatively open ended allowing export groups to

adopt a wide range of approaches. While this provides a necessary degree of flexibility, it


18

Investment in export development/promotion is likely to continue to grow in the future.

results in an uneven or irregular application of monitoring and evaluation procedures among agri-food export groups.

1.6. Looking forward

While it is difficult to forecast exactly how export promotion spending will change in the future, there is little doubt that countries will continue to invest public funds in foreign trade development maintaining at least the current levels of spending.

The EU has increased funds allocated to Member States for agri-food export promotion. Furthermore, these funds are projected to increase significantly in the new 2014-2020 budget. Whether this growth is sustainable remains a key question as no consensus has been reached on the new budget. Funding for export promotion is highly unlikely to be reduced.

The development of geographic indications is a strong feature of the EU system. The growth of the number of products with approved geographic indications will continue. The influence will increase as more bilateral trade agreements facilitate international acceptance of this concept and provide access of high value EU products to a wider range of export markets.

In Canada, a major review of agri-food export programs is being completed at the time of writing. It covers the overall approach, major markets, and budget pressures. Some major changes have occurred in the organization of the agricultural sector that have reduced the longer term commitment of the Canadian government to key organizations. However, we anticipate that the level of funding will probably be at least maintained if not increased, albeit with a greater share falling on the shoulders of the industry sectors. The Canadian Agricultural Minister has just announced (mid-December, 2012) three new federal agriculture programs that will focus on innovation, competitiveness, and market development. Within the latter, there is increased emphasis on the development of Canada’s capability to respond to the growing need for certification of production practices.

The Chinese export marketing system is relatively immature. There is a serious intention to formalize its institutional framework for export marketing. However, the organization of commodity sectors is poor, regional autonomy is significant, and there is considerable reliance on individual entrepreneurial activity. Progress in developing a coherent institutional framework is likely to be slow. While there is interest in the US model, the prospect of this appears distant. Instead, and probably appropriately, China is likely to continue to build its approach around providing opportunities for its food industry entrepreneurs to reach out to potential customers through trade shows and other events that put together potential buyers and Chinese exporters.

Several new industry sector export promotion groups have been established in Turkey, with the sole objective to promote exports. These associations are closely linked to the central government and they benefit from assistance that lacks transparency. It is difficult to forecast how they will develop, although it is reasonable to forecast more focused investment in foreign trade growth.

No significant changes are expected in Brazil or Chile. Brazil will continue to focus mainly on high value sectors (primarily processed products) and Chile might facilitate broader direct


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funding of private companies’ initiatives. Existing programs are likely to continue and the

level of financing is likely to be maintained.

Neither the Australian nor New Zealand governments are deeply involved in direct funding of

export promotion. The work of industry organizations reflects the wishes of their

stakeholders. The only new development observed in Australia is that there may be

renewed industry efforts to promote grain exports collectively.

The South African government support for export promotion has been uneven and

inconsistent and the industry questions its commitment. An example was the withdrawal of

support to trade show participation and its subsequent reversal. The major government

focus in recent years has been on empowering black farmers and businesses. It is reasonable

to expect a more focused effort to support export trade development in the future.

Trade show participation is a core activity in competitors’ market development investment.

As trade increases worldwide and new exporting countries emerge, they focus primarily on

trade shows. In particular, considerable investment is focused on National Pavilions.

However, the US government has decreased direct investment in trade shows, and in

particular USA Pavilions. This investment has fallen to US$0.7 million, about a quarter of

what it used to be in the mid-1990s. This may be short-sighted as the US is likely to face an

increasing competitive presence at trade shows worldwide.

As noted above, the current US institutional framework is well equipped to deal with this competition.

However, it should also be noted that the funding for the MAP and FMD programs has remained unchanged

(FMD since 2002 and MAP since 2006) at a time when competitors’ investment in export development has

been growing. Also, authorization and apportionment delays disrupt fund allocations and market

development planning and implementation processes.

It is clear that the efforts of other countries will grow despite the continuing financial crisis affecting

government budgets. The US needs to be able to respond.


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EU27: Estimated agri-food export promotion funding, 2010 & 2011

PART 2: COUNTRY SUMMARIES

2.1. Europe

2.1.1. The European Union (central funding)

The EU allocated a total of US$260 million in 2010 and US$360 million in 2011 to Member States for export promotion of agri-food products and wine. Based on estimates of required matching Member State and industry funds for compliance, the total funding of these promotions was close to US$500 million and US$700 million respectively. These figures represent only EU central funding and required Member State and industry matching funds. No funds beyond the required match are included.

The largest beneficiaries of EU funds were France, Italy, and Spain. These countries were also among the countries with the most active export promotion programs. They are reviewed separately.

Total promotional expenditures of the EU Member States would be larger because Member State and industry sectors also may invest in export development/promotion programs on their own. For example, in 2011, the four EU countries reviewed in detail, France, Italy, Spain, and the Netherlands spent over US$100 million in addition to those required to match EU funds. This additional funding beyond the required match resulted in a partial EU 27 estimate of over US$800 million in 2011.

The vast bulk of EU-funded promotional expenditure was through the Common Market Organization of the wine sector (about US$135 million on average for 2010 and 2011); the allocation was specifically for promoting in non-EU countries. This sum was budgeted to increase substantially. In 2013, the budget is close to US$300 million.

The funding for promotion through the Common Market Organization of the fruit and vegetable market amounted to roughly US$48 million on average for 2008/2009 (more recent data are not available; a similar level of funding is assumed for the subsequent years). This was allocated to ‘recognized’ fruit and vegetable producer organizations. Most of this was spent in the EU27 markets,

including in Member States domestic markets.

Council Regulation 3/2008 funds export market development in the internal EU market and third countries. Roughly US$74 million was allocated on average in 2010 and 2011; some intentions to increase this have been expressed. Only generic promotion programs are funded. The regulations forbid any promotional claim that compares attributes of one Member State against similar products in other Member States.

Measure 133 of the Rural Development Program supports producer groups with funds for promotion in the EU27. Roughly US$40 million on average per annum has been allocated, of which more than 40% has been directed to Italian organizations. Some of the promotion activities have been in the Member State’s domestic markets.

In addition, the EU co-finances promotions to help sectors recover from disease or other disasters. In 2010/2011, it approved US$15 million for international projects to promote fresh fruit and vegetables in non-EU countries over three years to help it recover from the E-coli crisis and contributions of US$4


21

France: Estimated agri-food export promotion expenditure, 2011

G & O = Grains and oilseeds

million over three years for international promotion projects to help the dairy sector as it was in a ‘difficult market situation’.

2.1.2. France

France invested US$119 million in agri-food export promotion in 2010/11. Of that, approximately US$74 million was public funds and US$45 million was industry funds.

Close to 50% of the promotional funds were spent on wine market development. These promotions were almost exclusively in non-EU countries and half of the funding came from EU resources.

When promotional programs are co-funded by the EU, France must adhere to very strict rules of generic promotion. However, the campaigns for products registered under geographic indication schemes are similar to branded promotion because of the clear definition of the product’s origin and

limited number of producers. The EU Regulation for the geographical indications (GIs) can greatly support market development efforts even though there are no specific financial transfers for export promotion.

Inter-professional organizations represent large segments of the agri-food business. These are umbrella industry organizations that typically represent an entire sector, from the farmer to the distribution trade. For example, Interfel represents all growers and distributors of all French fruit and vegetables. Similarly, CNIEL is the national inter-professional organization for all milk and dairy products. The export programs of their organizations are financed, at least in part, by parafiscal levies (check-offs).

France AgriMer, the national agency for agricultural and seafood products, had a budget of almost US$10 million for 2011-2013 to promote French wine in 10 key markets, but at the same time the wine regions promoted their own wine either alone or in a consortium with other products.

Since 2008 all French agri-business promotions have been carried under the national branding logo ‘France Bon Appétit’.

Typically the French presence at trade shows is organized and funded by the government (France AgriMer). Indeed, a significant portion of the public funds allocated to export promotion is used for international trade shows, usually for organizing the French pavilion. These activities are mainly run by Ubifrance or Sopexa (the two main marketing agencies involved in managing export promotion programs).

Some regional organizations may be involved in trade show participation. The Sud de France Développement (South of France Development Agency) is the most prominent of these.


22

Italy: Estimated agri-food export promotion expenditure, 2011

The Netherlands: Estimated agri-food export promotion expenditure, 2011

2.1.3. Italy

Italy’s export promotion effort is characterized by fragmentation at all levels - no government strategy or consistent approach to export development and promotion, multiple regional agencies following their own agenda, and multiple industry organizations within any sector.

Italian agri-food promotion tends to focus on individual regions and products, and not on the country as a whole.

Most export promotion programs were funded on a matching basis by the EU. The EU provided up to 50% of the project cost with the rest being matched by the national/regional government and the participating industry organizations.

The budget of the Italian Ministry of Agriculture has been reduced by over 20% since 2009. Agricultural promotion funds have been reduced from US$157 million in 2009 to US$75 million in 2011.

Total agricultural export market development expenditures by all levels of government (EU, national, regional) were estimated at US$141 million in 2009 and US$198 million in 2011. The increase is mostly due to an increase in EU funding (primarily for wine promotion).

Domestic funding sources have proven unstable over the years, with a substantial portion of planned funding never materializing.

EU funded projects often involve consortiums of organizations representing multiple products and countries jointly promoting in both non-EU countries and EU member countries.

2.1.4. The Netherlands

The Netherlands invested US$44 million in agri-food export promotion in 2011. Of that total, about US$5 million were public funds, most from the EU, and the remainder was industry funds.

The Netherlands has a small domestic market, and relies heavily on exports and their contributions to the economy. Europe has traditionally been the main destination for Dutch agricultural products, accounting for 80% of total exports. Germany is the largest market for exports.

The government does not provide financial support for export promotions. It believes that businesses should be responsible for their own promotion. The only exception has been funding for participation


23

Spain: Estimated agri-food export promotion expenditure, 2011

in the Gulfood trade show in Dubai and occasional contributions required for compliance for EU co-funded projects.

Product boards (Productschappen) are in charge of promotional activities. Each product board represents one industry, with no overlap.

The Netherlands utilizes only very limited funds from the EU for generic export market promotion. The fruit and vegetable sector is the only one that received any EU funding during the reviewed period.

Horticulture was the single largest sector with over 80% of the export promotion expenditures. Key products included potatoes, onions, tomatoes, and cucumbers.

The Holland Pavilion at international trade shows and events is operated by the Netherlands Council for Trade Promotion (NCH). The Dutch government was not involved except for the support to Gulfood, Dubai.

2.1.5. Spain

Spain’s total funding for generic agri-food and beverage promotion in 2011 was estimated at US$115 million. Over two-thirds of this sum was spent on wine promotion.

The EU allocated US$34 million in 2010 and US$53 million in 2011 to Spain for promotion of agri-food products in EU Member States and non-EU countries. Most of this was for wine promotion in non-EU countries.

In Spain, unlike many other countries including the US, the government does not provide direct funding to representative industry organizations or individual companies for export development/promotion. ICEX, the national government organization responsible for international trade initiatives (all sectors) is the key player involved in export promotion. It develops and implements the export promotion strategies and programs in collaboration with industry groups and organizations that contribute to the planning process.

Very few industry bodies were independently involved in export development/promotion. Some industry organizations that used to have activities of their own, no longer did so because of lack of funds.

The Spanish Ministry of Agriculture, Food and the Environment (MAGRAMA) collaborates with ICEX for some activities, primarily multi-sector activities and some trade shows. For these it bears some of the costs. It is also the recipient of EU Common Market Organization (CMO) funding, part of which is allocated to export promotion (wines and fruits and vegetables).

Sixteen out of the 17 regional governments have their own export promotion department, funded through their devolved regional budget. These departments collaborate with their local Chambers of Commerce, ICEX, and industry organizations to develop their own regional export development plan. Six have established a network of offices abroad to provide low cost services to companies wishing to trade and invest in foreign markets.


24

Canada: Estimated agri-food export promotion expenditure, 2011

G & O = Grains and oilseeds

2.1.6. Turkey

Total generic agricultural export promotion funding in 2011 was estimated at US$38 million, of which roughly half came from the government and half from the private sector.

The government co-funds eligible export organization activities, usually with a 50/50 match.

The government of Turkey does not publish its promotion expenditures; neither do the agri-food sector promotion groups nor the regional Exporter Unions. Expenditures have been estimated based on documented trade show participation, a sample of trade show specific attendance data, and a compilation of promotional activities.

Of the estimated US$19 million government expenditure, US$17 million were spent on trade shows, national pavilions and subsidizing company participation. These were matched by an estimated US$15 million spent by private companies to attend trade shows and US$2 million industry funds to set up national pavilions.

Export groups engaged in few other formally organized activities; these were estimated to total at most US$4 million.

Turkey’s Exporter Unions typically represent all exporters (not just agri-food) in their respective regions. Membership is mandatory. They are funded through membership fees. These organizations are involved in some export promotion activity.

There are also a handful of industry sector promotion groups – for poultry, hazelnuts, fruit, and other products – these typically are comprised of multiple Exporter Unions, one of which takes the lead in coordinating sector promotion activities.

2.2. Americas

2.2.1. Canada

Total generic agricultural export promotion funding in 2011 was US$128.5 million, of which US$83.2 million came from government sources, and US$45.3 million came from the private sector in the form of matching funds.

Generic export promotion and development in Canada is based on a public-private partnership with the federal government co-funding many export promotion programs undertaken by industry organizations. It also supports some small and medium size companies’ (SMEs) efforts. The recipient of promotional funds in most cases must provide a full match.

Many of Canada’s producer associations use levies as a source of funds; in several cases, however, producers can request refunds of these levies. Where available, refunds are typically 5-8% of the total collection.

Some government fund allocations are made to sectors on a multi-year basis.


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Brazil: Estimated agri-food export promotion expenditure, 2011

SME applications in 2010 requested funding for efforts in East Asia (24%), Southeast Asia (9%), West Asia (8%), South-central Asia (4%), Europe (27%), Central America (9%), South America (9%), and others. Companies are not eligible for matching funds for their efforts in the US; access to the US market is considered straightforward for exporters.

In addition to industry and individual company project support, Canada funds other initiatives such as the national (Canada) branding effort and one time efforts to help a given industry sector recover from some crises (e.g., assistance to the beef industry to recover from BSE and special help for the pork industry).

The sectors receiving the highest levels of public funding included forest products (US$34.7 million) meat, poultry and seafood (US$16.2 million), grains and oilseeds (US$8.3 million), and processed food (US$5.3 million).

The US was the most important market for Canadian agricultural exports; other important markets include China and growing markets in the Pacific Rim.

Budgets for Canada’s agriculture department, Agriculture and Agri-food Canada (AAFC), have been dropping. However, funds for Trade and Market Development, a program within AAFC, are set to grow slightly; also, the AgriMarketing program, one of the key sources for Canadian agriculture export promotion, was reauthorized for a five-year stretch running to 2018. Thus, while budgets in general are under pressure, funds for agricultural export promotion will persist in some form for the foreseeable future.

2.2.2. Brazil

Brazil spent an estimated US$48 million in 2011 to promote agri-food exports. Of this total, approximately US$31 million came from public funds and US$17 million came from industry.

Generic export promotion and development in Brazil is typically co-funded by the government. It funds the export promotion programs of 20 industry organizations, each one representing a specific agri-food sector.

Each agri-food sector is represented by only one industry organization that collaborates with the government and receives support for export promotion, usually on a 50/50 basis.

The Brazilian Trade and Investment Promotion Agency (APEX-Brasil) is the primary government agency in charge of supporting exports (all sectors) and promoting foreign direct investment in Brazil. APEX directs just over US$15 million per year in matching funds to agricultural exporters. It spent an estimated additional US$11.5 million per year on efforts of its own, especially trade shows, in 2010 and 2011.

The Ministry of Agriculture (MAPA) also promotes agricultural exports, though to a lesser extent. Its promotional budget was estimated at US$3.8 million in 2011.

The government support focus is on high value sectors. Export support for the bulk products, even for important commodities (e.g. oilseeds, grains, cotton, wood) is considered unnecessary because


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Chile: Estimated export promotion expenditure, 2011

trade in these products is dominated by major global companies that are expected to develop their own markets and thereby expand sales of Brazilian origin.

The export training function (carried out by the State Regional Trade Groups in the US) is conducted by APEX and MAPA.

There is no single national strategy regarding agricultural export development (although there is an effort toward national branding). Each organization follows its own agenda.

Typical target markets for Brazilian agri-food exports included the EU, Japan, China, the US, and Russia, though Brazilian exporters sell to a very wide range of countries.

2.2.3. Chile

Estimated total generic agricultural export promotion funding in 2011 was US$31 million, of which US$18 million came from government agency ProChile, and US$13 million from industry matching funds.

Chile has negotiated more free trade agreements than any other country, leveraging them to become the world’s 16th largest agricultural exporter.

Export development in Chile is supported by the federal government which co-funds the generic export promotion programs of industry organizations in 11 food sectors, and covers more than 20 sectors through matching funds provided to private companies and consortiums.

Consortiums of five or more private companies can apply for government funding to jointly promote a common brand.

The government, through ProChile, has an established international infrastructure to support agricultural exports, and through which it can sponsor activities at major events overseas.

ProChile manages projects of its own and provides support to company and sector projects. Over the past several years, it launched a ‘Flavors from Chile’ umbrella brand and provided support for sub-branding (i.e., ‘Walnuts from Chile’).

Sectors receiving the highest levels of public funding for export promotion were fresh fruit (US$4 million) and wine (US$2 million). Combined, fresh and dried fruit, wine, and seafood accounted for almost 80% of the funds allocated to competitive promotional projects.

Five target markets accounted for almost two-thirds of project funding: the US (23%), Canada (18%), China (11%), the UK (7%), and Brazil (6%).


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Australia: Estimated agri-food export promotion expenditure, 2011

2.3. Asia, Oceania and Africa

2.3.1. Australia

Australia invested about US$103 million in agri-food export promotion in 2010/11. Of that approximately US$35 million was public funds and US$68 was industry funds. Over 80% of these funds were invested by two industry organizations representing meat and livestock and wool.

Prior to the 1990s, all major Australian agricultural producing sectors (except sugar) involved a statutory body established under Australian Government legislation. In the 1990s the government began to privatize these statutory bodies, establishing them under the same laws that govern companies. The new industry organizations are financed by compulsory parafiscal levies (check-offs) collected by the producers.

The federal and state governments are not involved in generic export development. The government can provide some matching funding for research and development (R&D) but does not fund export development and promotion. All generic export development work is financed and implemented by industry organizations representing the major agricultural producing sectors.

The government provides some assistance to small and medium sized companies (all industries) to develop export markets and to get the companies export capable. To access such government grants, companies are required to produce strategic plans and annual operating plans and budgets. Companies receiving grants must be independently reviewed every three to five years.

Some industry organizations, Meat and Livestock Australia in particular, support company promotions regardless of size; there is a presumption that large companies can make a bigger difference. No public funds are involved in this support.

Australia is a major wheat exporter and used to conduct market development activities for wheat. However, since the privatization of the statutory commodity board it has not been promoting wheat overseas. There is evidence that the industry is considering funding some export market development programs in the coming years.

Key markets for Australia include Asia and Europe.


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New Zealand: Estimated agri-food export promotion expenditure, 2011

2.3.2. New Zealand

New Zealand’s estimated agri-food export promotion expenditure was about US$563 million in 2010/11. Of this, approximately US$12 million was public funds and the rest were industry funds.

The New Zealand agri-food sector is highly dependent on exports as it has a relatively small population. It exports in excess of 90% of its dairy production, 80% of its lamb production, and 70% of its beef production.

In the early 1980s, the government of New Zealand withdrew direct support to the agriculture sector. It now focuses on providing policy support and ensuring market access rather than offering monetary support for export promotion.

Currently five industry organizations representing beef and lamb, wine, deer (venison and antler velvet), avocadoes, and wood products engage in export development promotions.

The two cooperative companies, Fonterra (dairy) and Zespri (kiwifruit), are owned by the majority of the country’s producers. Ownership is restricted to farmers and former farmers. They have been constituted under legislation granting them special antitrust provisions. These companies account for almost the entire dairy and kiwifruit exports and both invest significant funds in international marketing.

Fonterra and Zespri accounted for over 95% of the estimated total industry expenditure for agri-food export development/promotion. However a portion of this expenditure promoted their production in other countries.

Key markets for New Zealand are Australia, the US, Japan, China, the UK, South Korea, Indonesia, Germany, Hong Kong, and Malaysia.

2.3.3. China

China’s lack of transparency and multiple sources for potential funding of export promotion (state,

provincial and local government agencies) constrained the precise assessment of its export promotion expenditure.

Government support for export development has been mostly inward oriented focusing on raising domestic standards to help products produced in exportable supplies gain access to overseas markets, nurturing processing and trading enterprises, disseminating technology, and achieving safety and quality certifications. While China has many domestic programs, this study focuses only on export promotion programs; these are evolving.

A conservative estimate is that the total expenditure for generic export promotion in 2010 and 2011 was just over US$50 million per year. Of this, US$30 million were public funds and the remainder was private funds, primarily for companies’ participation in trade shows.


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The Ministries of Commerce and Agriculture are responsible for agricultural promotion and international trade development. The Ministry of Agriculture has recently taken some initiatives and is assuming the lead on these plans. Provincial governments also provide modest support but limited information was available for their involvement.

The largest public investment was in supporting the participation of Chinese companies in international trade shows. China actively participates in most major international shows, often with multiple pavilions that appear to be mainly funded at the provincial level.

2.3.4. South Africa

Trade is an important part of South Africa’s economy: exports in 2011 were US$81 billion out of

US$408 billion in GDP. Agricultural exports were estimated at US$8 billion.

Total agricultural export promotion spending in South Africa was estimated at US$21 million for 2011; of this total, an estimated US$11.5 million came from government and US$9.5 million from industry.

South Africa provides matching funds for agricultural export promotion through Trade and Investment South Africa (TISA), part of the Department of Trade and Industry (Dti). Funds are provided for activities ranging from trade shows, to trade missions and a variety of other promotion initiatives.

Opening up new markets in East and Southern Africa is an important objective for TISA. It is also pushing preferential trade agreements between the Southern African Customs Union and India; export groups are carefully tracking developments on this front.

There are two key types of export promotion groups in South Africa, both of which are eligible for 50/50 matching government funds for export promotion activities:

- The first is Export Councils, which are industry associations funded by membership fees; four of South Africa’s 20 Export Councils are agriculture-related (fresh produce, flowers, wines, and canned fruits and vegetables).

- The other type is known as Section 21 companies. These are nonprofit producer groups funded by levies. Of South Africa’s 13 Section 21 companies, four engage in export promotion: deciduous fruit, wine, table grapes, and citrus.

The most important export sectors in terms of agricultural export promotion are horticulture (US$12 million in total funds) and wine (US$5 million).

Prominent industry groups coordinate member/sector attendance at major trade shows; however, individual company attendance is not subsidized.

Traditional target export markets for South Africa have been the UK and other EU markets; however, most export-oriented organizations are now targeting markets in Asia (China, Southeast Asia, and Japan).

South Africa: Estimated agri-food export promotion expenditure, 2011

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World agricultural industry investment in export market development for grain