Editor's Note: Food Processing's Power Lunch column features topics on issues that are important to food and beverage processors. This month's column was contributed to Food Processing by Jim Burrows, Senior Vice President in 2013, of EXIM Bank. Read more about Jim in his Author Profile below.
Many food processors are not aware of the best kept secret within the federal government. Thousands of U.S. businesses have benefited from U.S. government financial support for selling their products and services internationally.
The Export-Import Bank of the United States (EXIM) enables American businesses to grow through exporting. EXIM, America’s official export credit agency, empowers U.S. companies to compete and win more international sales. Demand for U.S. food products is expanding, and EXIM is here to make sure they can appear on grocery shelves around the world.
With its insurance and lender loan guarantees, EXIM can assume the risks that the private sector is unable or unwilling to accept. This peace of mind will keep your company’s focus where it belongs — on creating and selling “Made in USA” quality foods and beverages.
The agency’s export credit insurance is designed to take the inherent worry out of exporting so your company can enter new markets and boost sales with new or existing customers. This growth in U.S. global sales fulfills EXIM's mission of maintaining and increasing jobs here at home.
EXIM Export Credit Insurance comforts exporters against their greatest fear – not being paid. If foreign buyers don’t pay, there is very little recourse for the U.S.-based company, and the financial hit can be significant. The insurance covers up to 95 percent of the sales invoice against commercial (e.g., bankruptcy) and political (e.g., currency freeze or war) nonpayment risks.
Cash is king. But insisting on cash-in-advance is also a great way to give your competitors an advantage. EXIM support also enables your company to extend “open account” credit terms to customers (typically up to 180 days). Foreign buyers often press exporters for longer payment periods to improve their cash flow. This credit extension is more common outside the U.S., and buyers expect it. Thus, U.S. food and beverage sellers who are reluctant to extend credit may face the possibility of losing sales to their competitors.
A third benefit of EXIM’s insurance is improved liquidity. The policy allows U.S. companies to accelerate their cash flow by being able to borrow more from lenders against these insured receivables.
Processed food exports are growing! The processed food industry is increasingly turning to exporting as a source of growth. U.S. processed food exports climbed 52 percent from 2009 to 2016, according to USDA. The driver is America’s small-town and homegrown companies.
Specifically, more than 66 percent of U.S. food processors are small businesses. EXIM is contributing to this growth as it supported nearly $12 billion of food and beverage processing exports over the past 10 years. Of interest, 90 percent of the number of authorizations is for small businesses.
A few success stories. Preferred Popcorn of Nebraska, with 40 employees, sells microwave popcorn, popcorn, concessions supplies and coconut oil. It was wary of foreign buyer nonpayment until it obtained an EXIM insurance policy in 2007. The bank has supported $100 million of Preferred Popcorn’s export sales to India, China, Mexico and Indonesia in the past five years alone.
Bassetts Ice Cream appears in Chinese supermarkets and is a regular feature of hotel and buffet chains. EXIM’s insurance allows the company to extend credit to overseas customers with the assurance Bassetts will be paid. It also gives the company's domestic bank the assurance it needs to provide Bassetts with a vital line of credit. Exports now make up more than 20 percent of its total revenue. The Philadelphia company intends to employ more people as it enters new overseas markets with EXIM’s support.
Fuller Foods of Oregon is the only micro-manufacturer of handcrafted cheesy puffs made with all-natural, non-GMO ingredients. The company has grown 100 percent every year since its founding in 2014. Fuller Foods also was concerned about getting paid when it considered selling internationally in 2016. This four-person company now exports to Canada, Australia and United Kingdom with EXIM support. Today, exports account for up to 20 percent of Fuller Foods overall sales.
Lund’s Fisheries also has been able to expand into global markets. As a family-owned business since 1954, Lund’s offers the highest quality land and sea frozen seafood. EXIM’s insurance has covered nearly $26 million of Lund’s Fisheries international sales since 2012. The company has grown its sales, increased the number of U.S.-based jobs and built a globally recognized brand.
Boost your sales now and reach the 95 percent of customers that live outside U.S. borders. To learn more contact Elizabeth Thomas at Elizabeth.Thomas@exim.gov.