In the United Kingdom, the Utilized Agricultural Area (UAA) is about 17.6 million hectares. This means up to 72% of the land in the UK is used for agricultural activities. These agricultural produce serve both local consumption and international markets.
In the past few years, the trading of agro products has continued to grow. Over the past two decades, trade has reached almost 7% annually in real terms. Trading of agro-food products isn’t just growing locally, it is increasing globally as well. In 2019, food, feed, and drink exports were estimated at around £23.6 billion. This represents an increase of £0.7bn (2.9%) in real terms compared to the previous year.
The situation is similar in many other countries all over the world with a thriving agricultural economy. In India, agriculture is the primary source of livelihood for up to 58% of the country’s population. A good number of these people make their income from the country’s increasing contribution to global food trade. India’s total food grain production in 2020 stood at 296.65 million tonnes (an increase of over 11.44 million tonnes from the previous years. The sector’s growth is not only driven by India’s large population, but also by growing external demand.
Farmers in the United States produce and sell a wide variety of agricultural products. California alone contributes an overall crop value of more than $30 billion to the $1.055 trillion that agriculture, food, and related industries add to the country’s GDP. In the US, agriculture serves several domestic demands as well as numerous agro-based industries.
Why trading agricultural produce internationally is necessary
Without question, the growth in agri-food trade is taking place not just locally but also in global value chains (GVCs). This refers to agricultural and food processing value chains that exist in several countries of the world. There’s an existing link between local agro-food sectors and other sectors of the economy of many countries of the world.
Between year 2000 and 2018, the monetary value of global food exports has multiplied by 3.6 in nominal terms with the Americas as the highest exporter and China as the higher importer. This shows that international trade of agricultural produce is on an upward trajectory. It presents an immense opportunity for producers and suppliers of farm products across various countries of the world. Recent changes in international legislation have led to trade liberalization between many countries, providing even bigger market opportunities for many local products.
It is a total misconception to assume that only large-scale agricultural producers and suppliers can succeed in international agricultural produce sales. These days, many small and medium companies now have a competitive edge thanks to eCommerce platforms like ProduceMart that make international trade possible.
ProductMart provides a secure platform where suppliers can connect with buyers and sell agricultural produce to them online. The cross-border nature of online interactions means they can seamlessly participate in the international trade of agricultural produce. The following are 4 reasons why taking advantage of an international platform is absolutely necessary for your business.
4 reasons why you need to trade your agricultural produce internationally
Increased Sales
No matter how high a country’s population is, it is only a tiny fraction of the total population of people in the world. The implication of this fact is that trading internationally presents an additional opportunity to grow sales beyond whatever amount you currently sell.
Basically, participating in the international market increases your sales potential and if your strategy is solid enough, it can effectively increase sales as well. Businesses with a vision to meet demands for agricultural produce in regional and global markets stand a chance of earning more money than they would by selling to their local market.
Expanding into the international market is particularly great for medium and large-scale businesses that have already expanded and solidified their grip on the local market. Most businesses reach a point of saturation in their local market beyond which they can no longer make sales to new customers due to population limitations and pressure from competition. Rather than struggle with this, exporting their produce abroad presents an opportunity for such businesses to increase sales.
Economies of Scale
With international expansion comes an increase in demand for your produce. For most suppliers, local orders for farm produce typically come in small units sold to small retailers or even direct consumers. International buyers don’t just buy a few products, in most cases, demand is usually in the form of large containers of produce. Even when orders are not up container-loads, they still come in substantial quantities.
On one hand, this leads to increased profits. But one also has to consider the impact, of making sales on such a bulk scale, on the economics of production. When you receive more orders, you’ll have to start scaling up your operations to meet growing demands. In the long run, this leads to a reduction in the fixed cost of production per unit. In essence, you’ll spend less on each unit of produce you sell and this boosts your profit margin quite significantly.
Suppliers that market and sell their produce on an eCommerce platform like ProduceMart for instance, will be selling to a readily available international market. This helps them to save cost on marketing, leading to a higher profit margin in the long run.
Reduced Risk
Many local producers and suppliers of agricultural produce offer products that may not be very popular at home, but are unique and in high demand overseas. Many countries of the world are more dependent on certain commodity imports than others.
The usual culprits are agricultural products that cannot be grown in their own country. To an international supplier, opening up yourself to a new market ensures that you’re selling to people that are always in need of your produce instead of grappling with domestic slowdowns. Consequently, you’re more likely to sell for a higher price since demand is ever-present and there’s less competition for the produce you offer.
Diversifying your market also helps with seasonal products that are only needed during a particular period in some countries but you are capable of producing all year round. Similarly, it helps during periods of economic downturns at home since you get to sell to growing markets with a thriving economy instead of being stuck to the local economy at home.
More Opportunities
Exporting your agro produce to international markets comes with plenty of opportunities for your business. Connecting with international buyers is one of the ways to scan for overseas opportunities for expansion, partnerships, or franchising for your business. You’re selling to people with real roots and connections in your target country. Every successful trade consolidates your position in the international market you’re exporting to.
A lot of good comes from making successful trades internationally, think of the PR benefits that come to your business as well. Your company can finally add a “global” or “international” supplier tag to your name which increases your reputation locally as well. But much more than bluff and fancy words, you gain real knowledge and experience from exporting to other countries. This knowledge can be applied at home as well as in other countries of the world you intend to expand into.
Conclusion Without a doubt, there are plenty of benefits to being able to sell agricultural produce to a ready international market. Fortunately, doing so is now easier than ever. By connecting with buyers online, suppliers of agricultural produce can receive orders from international markets and take advantage of all the benefits that come with such trades and connections.