Agribusiness to the United States

Trends and opportunities

The market

The United States (US) is the third largest agricultural producer in the world (behind China and the European Union). During 2016, the industry produced total revenue of US$2.5 trillion and featured more than 2.2 million agricultural related businesses (Source: IBISWORLD Agribusiness in the US Industry report). While in 2015, exported products exceeded US$133 billion. Australia was the fourth largest exporter of agriculture and food related products to the US, valued at approximately US$4.6 billion (Source: USDA, Economic Research Service/USDA Foreign Ag Service).

With a growing population of 324 million (Source: US Census bureau, October 2016), the US has continued to grow its demand for food leading to higher demand for farm products which benefit the entire industry. Activity and presence of large multinational corporations in farming and agricultural business increases every year. Due to mounting corporate involvement, businesses are vertically integrated across the supply chain, owning everything including farmland, processing plants, wholesaling and transportation operations (Source: IBISWORLD Agribusiness in the US Industry report).

The US agribusiness industry is increasingly looking to new technologies, crop science and advanced agricultural practices to improve productivity. Additionally, more than a third of the top 50 global food and beverage processing firms are headquartered in the United States, including Australian investors General Mills, Mondelez, PepsiCo, Campbell’s and Mars. Food manufacturers are increasingly focused on implementing greater automation in the manufacturing process to drive productivity.

Opportunities

Opportunities exist for Australian exporters to the United States to add value to food processing supply chains as well as research and development in agribusiness, food and animal science. Australia is also widely recognised as being a reliable and safe supplier of beef in North America amongst the trade sector (Source: Meat & Livestock Australia, and United States Department of Agriculture)). Additionally, Australia’s speciality food sector has gained recognition with a reputation for quality in packaged food, organic products, speciality cheeses and confectionary. US specialty food sales reached US$120.5 billion during 2015 and offers potential for Australia’s input (Source: Specialty Food Association and Mintel).

Some agribusiness and food processing sectors that are building traction in the US include:

  • precision ag
  • agtech/big data
  • food processing, food science, innovation/value add
  • animal health sciences
  • aquaculture.

Competitive environment

In the last decade, US imports came primarily from Canada (US$22.2 billion), Mexico (US$20.6 billion), the European Union (US$19.6 billion), Australia (US$4.6 billion) and China (US$4.3 billion). The top import sources have not changed a lot since 1990. However imports from the European Union have slowed down, while imports from Canada, Mexico, and the rest of the Americas have increased. Imports from China have been rising steadily since 2001 (Source: USDA, Economic Research Service/USDA Foreign Ag Service).

Australian companies that have found success in the agribusiness and animal health space in the US include NuFarm, Parnell, Jurox and SmartVet.

Tariffs, Regulations and Customs

The Australia-United States Free Trade Agreement (AUSFTA), which came into effect on 1 January 2005, ensures greater access to the United States market for Australian products.

This agreement also enhances prospects for Australian services, trade and investment, improves the regulatory and investment environment between the two countries, and promotes increased business mobility.

Please visit the Department of Foreign Affairs and Trade website for comprehensive information on the AUSFTA.

US tariffs are not unusually high by world standards. The US Customs Service and a number of government agencies regulate goods imported to the US. Non-compliance may result in delays, extra costs, litigation and even prohibition.

Tariffs and duty rates are constantly revised and are subject to change without notice. Comprehensive information on US tariffs can be obtained from the website of the US International Trade Commission.

Customs brokers are licensed by the US Department of the Treasury and assess tariff classification, quota compliance and anticipation of difficulties in the entry of products you export to the USA. Austrade can help you find a customs broker to suit your exporting needs.

Industry Standards

The US Department of Agriculture imposes extensive regulatory controls on agricultural markets. Some regulations are intended to promote safety and reduce disease, while others restrict commodity supplies and raise consumer prices. The Code of Federal Regulations includes 10,720 pages of the USDA rules [Source: Downsizing the Federal Government and Code of Federal Regulations/title 7 (Agriculture)].

The Harmonized Tariff Schedule of the United States includes 364 pages of tariff listings for agricultural imports.

The United States is the world’s largest producer of beef. The US also imports more beef than any other country. US producers specialise in raising high-value, grain-fed cattle. Imported beef from other countries is mainly lower-value, grass-fed, lean product that is processed into ground beef. Overall, imports accounted for nearly 14 per cent of US beef supplies in 2015 (Source: USDA, Economic Research Service/USDA Foreign Ag Service).

Australia was the leading supplier of US beef imports in 2014 and 2015, while Canada and New Zealand were a distant second and third. Shipments from Australia and New Zealand are composed primarily of frozen boneless beef for processing, while shipments from Canada and Mexico are typically higher-value, fresh or chilled beef sold as cuts (Source: United States Department of Agriculture).

Marketing your products and services

Market entry

The majority of Australian companies doing business in the United States are small operations with a small number of employees and limited budget. The key to success is to have a strong product or service and having the ability to articulate a competitive advantage which will distinguish your product or service from those that already exist.

The United States has an expansive agriculture, food and ag tech market which adheres to strict regulations particularly for safety and intellectual property. It is important to research the market to understand the protocol.

The US has clusters of Agribusiness ecosystems where there is more advanced infrastructure for agriculture and food science innovation and growth due to their proximity to funding and research institutions. Key states for agricultural innovation include California, Illinois, Missouri, Minnesota, New York/New Jersey, Indiana, Kansas, Ohio, and Iowa.

Industry associations and ag technology/food sciences conferences are key to growing a US network. Events are a productive way to meet partners, collaborators and learn about current trends in the industries various subsectors.

Distribution channels

When looking at the United States, exporters can distribute directly to the market or through third party distributors. Given the distance to the US, due diligence and ongoing communication is key when working with third parties.

Transport

Using a good customs broker and freight forwarder is the most efficient way to ship your goods. These companies are experts in documentation, freight rate negotiations and finding the most economical way to get your product to the buyer.

There are a number of ports on both the east and west coasts of the United States. The largest ports (by tonnage) in the United States are in Louisiana, Texas, New York, and California. Total transit time between Port Botany in Sydney and Lost Angeles Port is between 25-43 days (19 days on the sea) with an approximate cost of US$1350 (Source: SeaRates.com, 24 October 2016). Air freight is also available but can be more expensive.

Links and resources

Key events

Animal Health Corridor
Chicago Pack Expo
Danforth Plant Science Ag Innovation Showcase
Expowest (Natural products)
InfoAg Conference, St Louis Missouri
NY Food for Tomorrow Conference, Tarrytown
PEI Agri Investor Summit
Silicon Valey Ag Tech Conference
Specialty Food Show
World Ag Expo

Governemnt and industry

American Farm Bureau Federation
American Feed Industry Association
Insitute of Food Technologists
National Agrimarketing Association
National Corn Growers Association
National Grain and Feed Association
U.S. Department of Agriculture

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

  • develop international markets
  • win productive foreign direct investment
  • promote international education
  • strengthen Australia's tourism industry
  • seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.