Entering the Global Marketplace: Lessons Learned

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Entering the Global MarketplaceLessons Learned

• David Fuhrmann
• President

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A Snapshot ofForemost Farms USA

• Established 1995
• Milk volume 4.8 billion pounds
• Member-owners 3,600
• Revenues 1.4 billion
• Employees 1,487
• Ranking No. 15 (Dairy Foods
• magazine) among top 100
• processors

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Procurement Area and Plants
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Our ProductsMarkets are grocery, foodservice,
industrial and converters
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How we got startedin the export business

• - Acquisition of business entity in 1984
• - Have continued to grow and diversify the
  exports

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Foremost Farms USA Exports Today

• 40 million lbs./year Whey Based Products
• 5 million lbs./year Cheese

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Export Destinations

• - South East Asia (China, Japan, S. Korea)
• - Central South America (Mexico, Puerto Rico,
  Columbia, etc.)
• - Europe
• - Others

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Export Sales to

• - Brokers
• - Distributors
• - Specialty company manufacturers
• - Multi-national corporations

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Why We Export

• - Supplier to multi-national companies
• - Grow our business
• - Profitable business

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Requests from

• - Multi-national corporations
• - Repeat users
• - USDEC inquiries
• - Website

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Challenges

• - Language
• . Shame on us
• We only know English
• . Time zone differences

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Challenges

• - Cultural Differences
• . Negotiations are different in different
• cultures
• . Difficulty in understanding tones of
• e-mails
• . Bribes vs the way business is done

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Challenges

• - Negative perception of US whey
• products
• - History of dumping inferior product

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Challenges

• - Product Packaging
• . Long distances
• . Truck, rail sea travel
• . Hot, humid conditions
• . Complaints on 50 of shipments

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Challenges

• - Dealing with rejected product
• . Can result in major impact
• . Cant bring product back to U.S.
• . Resell the product in that country

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Challenges

• - Competition from other countries
• . Exchange rates
• . Product dumping

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Challenges

• - Quality
• . Expectations are not the same as product
  specifications
• . The customer is always right

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Challenges

• Quality (cont.)
• . Testing methods may be different
• . Local regulations can vary
• . The rules change without notice

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Challenges

• - Quality (Cont.)
• . International customers are
• concerned about the source and quality
• of the raw milk supply
• . Quality discussions are more difficult
  when using an intermediary

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Challenges

• - Documentation
• . Paperwork must be flawless
• . Papers must exactly match product
• . Codes on product must be totally legible

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• The process is tedious and time consuming with
  no margin for errors

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Resources

• - USDEC
• - USDA Washington
• - Bank

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Lessons Learned

• - International customers have higher
  expectations
• - We have experienced some expensive
• lessons

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Lessons Learned

• - Partnerships are critical
• - New communication technologies have
• opened the world!

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Lessons Learned

• - International business has become more
• complex since September 11, 2001
• - International business is not lucrative

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Lessons Learned

• - Exporting has made us much better