Should Oregon food and beverage companies export their products?

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The answer could be “yes” for many companies.  Almost by definition, many potential customers reside in other countries.  Exports could substantially increase company revenue.  Yet there are reasons why some Oregon companies may not need to or may not want to.

First let’s consider some of the benefits of exporting.  Many Oregon companies produce a unique, high-quality product.  If the product is popular in the U.S., it will be popular in many other countries as well.  You can find, for example, Oregon craft beer and wine for sale in Australia and Japan, just as you can find it for sale in Ashland, Astoria, and Baker City.  Selling the product overseas can increase company profits.

A bonus is that exports help local economies.  Economics research shows that regions with lots of exporting firms have greater prosperity than regions with few firms that export.  Exporting is associated with faster economic growth and more innovative firms, all of which leads to greater regional prosperity.  Exporters tend to employ more workers and pay better wages.

Yet exporting will not be the right decision for every company.  Recent research in the OSU Department of Applied Economics examined the decision to export among Oregon food and beverage companies.  Survey respondents included beverage producers like wine and beer companies (47%) and producers of dairy products, fruit, vegetables, meat, and seafood (53%).  Surveyed companies were evenly split between companies with annual sales above $5 million, and below $5 million.

Thirty percent of the companies told us that they currently export some of their products.  Yet even for them, exports generally accounted for less than 25% of total sales.  Clearly the U.S. market will remain of primary importance for most Oregon food and beverage exporters.

So why didn’t 70% of the companies export anything?  The short answer is that exporting can be challenging.  While 21% of exporters said it was “not at all difficult” to start exporting, 50% said it was “moderately difficult” or “very difficult” to start.  Sometimes it is hard to find a reliable export partner.  There are extra costs from exporting, as exporters need an average 1.6 more employees to handle the exporting side of the business.  Languages may be different, and other countries may have unfamiliar packaging and food safety standards.

What role, if any, is there for government?  Exporting can create economic opportunities for a whole region, so policymakers may well want to support exporting.  A number of Oregon exporters said that state- and federal-assistance programs were helpful to them, particularly when starting out.  Trade missions and lists of potential trading partners can be very helpful.

If you like this topic, there is more information.  Please check out this publication:

https://onlinelibrary.wiley.com/doi/full/10.1002/jaa2.5

Contact:  Jeff Reimer, 541-737-1415, jeff.reimer@oregonstate.edu

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