Agriculture Business

Agriculture Business: Types of import/export businesses

There are three basic types of import/export businesses. Starting out, it’s a good idea to pursue the one that most interests you.

Export management company

An export management company (EMC) helps a company in the US export its agricultural goods. It manages the details of hiring distributors, developing marketing materials and preparing shipping logistics.

Export trading company

An export trading company (ETC) researches the needs of foreign buyers and finds domestic companies to meet those needs.

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Import/export merchant (or free agent)

Import/export merchants buy merchandise from a manufacturer — foreign or domestic — then resells that merchandise around the world. Although there’s heavier risk involved in being a free agent, you can potentially earn higher profits when you cut out the middlemen.

Startup costs for an agriculture import/export business

You can start your own import/export business with little upfront cost. At a minimum, you’ll need a phone and reliable Internet connection. You may also want to invest in business cards, a website and a fax machine. It’s helpful to hire somebody to take care of branding, including creating a unique business logo.

Narrowing your market focus and target customer

Once you’ve decided the type of agricultural import/export business you want to run, and you’ve figured out the startup costs, it’s time to narrow your market focus. By niching down, you can concentrate on a market you can serve best.

As you spend time researching profitable niches, think about:

The customers you want to serve.
Areas of the world you’ll target.
Types of agricultural products you’ll offer.

Your target customer will be someone who wants to trade globally by either selling or buying fruits, vegetables and other agricultural goods overseas or from international sources.

Types of agricultural goods

To meet the needs of your target customer, you need to choose the type of agricultural products you’ll offer. Choose something that you have the most experience with. For instance, do you know about the dairy industry? Have you worked with cereals, spices or coffee? Do you know about packing, storing and transporting meat or live animals?

Existing experience with your target area is a plus, but having passion for it widens your advantage. You’ll understand the jargon of your niche and you may already have contacts.

The agriculture market

Fruits, vegetables and fibers.
Food and live animals.
Meat and meat preparation.
Fish, crustaceans and mollusks.

Dairy products and eggs.
Cereal and cereal preparations.
Coffee, tea, cocoa and spices.
Animal feed.

Narrowing down target countries

Identify the countries you want to do business with by thinking about your competitive advantages:

Do you speak a foreign language?
Do you have connections abroad?
Have you lived overseas before?
Have you traveled extensively to a particular country?
Do you love the culture of a certain country and know a lot about it?

Once you’ve narrowed your list of target countries, investigate each country’s requirements for conducting business — such as tariffs, registration and other documents.

Educating yourself before making a final decision can affect your competitive edge. Ask questions of your target country’s foreign embassy or consulate, and visit the US Department of Commerce to learn more.

2016 top agricultural
export destinations

Canada
China
Mexico
Europe
Japan
South Korea
Hong Kong
Taiwan
Colombia
Philippines

2016 top agricultural
import sources

Canada
Mexico
Europe
China
Australia
Brazil
Indonesia
New Zealand
Chile
India

Information courtesy US Department of Agriculture.

How do I register my import/export business?

To register your import/export business, you’ll need to complete the US Department of State’s SNAP-R company registration.

After you submit your registration, the Department of State will email instructions about obtaining a Company Identification Number (CIN). A CIN is used for tax purposes and registration with the US Department of Commerce.

Import and export licenses

Typically, the US Customs and Border Protection (CBP) doesn’t require a license to import or export goods from the US. However, other government agencies or departments or local governments may require them. If you’re exporting goods, ask your local port of entry about any required licenses.

Incorporating and forming an LLC

You don’t have to incorporate in order to start an import/export business. But incorporating or creating an LLC can provide key benefits that include:

Benefit	Explanation
Separation of personal and business assets.	Creating a corporation or a limited liability company (LLC) can help protect your personal assets. For example, you’ll have less personal liability for business debts.
Expense deduction.	Through a corporation or LLC, you can deduct business expenses before income is forwarded to you.
Enhanced credibility.	Clients often prefer working with incorporated businesses, seeing them as more legitimate.

Is specific paperwork required for the agricultural import/export market?

The US Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) ensures the free flow of agricultural trade by certifying products the US ships and receives. Learn more about APHIS.

For more information about specific lines of business within the agriculture industry, visit the US Small Business Administration’s Business Guide to Agriculture.

Because regulations and requirements change, also consider seeking the help of an import/export specialist to determine the exact certificates, licenses and other clearance documents for your fruits, meats or other agricultural products.

Charging for your services

Import/export businesses typically charge based on commission or retainer.

Commission structure

With a commission structure, you’re paid a percentage of any trade deal you close — usually around 10%. For example, if you sell animal feed for $1,500, you’ll make a $150 commission. On top of your commission, you’ll also want to charge for expenses like packaging and shipping.

Retainer model

On a retainer model, your clients pay you a monthly fee to be on call when they need your services. To find the right amount for your retainer, consider your costs. These may include labor, supplies and overhead.

An alternative model

Beyond a commission or retainer structure, you can simply buy dairy products and sell them. In this case, your revenue will come from the profit you make from selling merchandise.

Which business model should you choose?

A rule of thumb is to pick a commission model if you think a product will be easy to sell. However, if you think a product will be difficult to sell, price your business based on a retainer.

The thinking is if you’ll sell a lot of product, you want to be paid based on performance. On the other hand, if you believe sales will be slow, using a retainer model could ensure that you’ll be paid even in the downtime.

Finally, if you’re confident in your ability to sell products, you don’t have to negotiate a payment structure with manufacturers. All you’ll have to negotiate is how much you’ll buy product for and then find a way to profit from the merchandise.

International billing and payments

Your new business will require you to make and receive international payments, which means you’ll make transactions between currencies and across borders.

You can safely and affordably manage your business payments — with lower fees and stronger exchange rates — by comparing the services of a money transfer specialist.
More information on sending money to the US

Compare international money transfer options for importing and exporting agricultural products

This table lets you compare the services you can use to send money abroad. Compare services on transfer speeds and fees, then click Go to site when you’re ready to send.

Shipping the goods

You’ll be sending and receiving goods from other countries, so you’ll need to arrange shipping details.

First, contact a freight forwarder, a company that helps you transport agricultural goods safely and efficiently. They will help you handle the logistics of completing shipping documents, finding cargo space and securing cargo insurance.

Risks and how to avoid them

Unpredictable shipping logistics

Needless to say, your success hinges on whether you can ship goods safely and efficiently. If you’re exporting fruits and vegetables, for example, you’re responsible for ensuring they leave your local port and arrive at the correct destination on time.

You’ll also need to account for anything else that could go wrong, such as damage to the cargo. Staying organized and partnering with a reputable freight forwarder will help you ship goods without a hitch.

Not knowing enough about the agriculture market

It’s a good idea to thoroughly research the market before entering this business, though even that may not be enough.

Consider hiring experts who understand the tastes and cultures of your specific markets. You’ll need to sell products that resonate in countries you’re unfamiliar with.

Running into problems at the border

Customs rules aren’t uniform throughout the world. Instead, you’ll encounter a mass of different regulations while transporting agricultural goods. To avoid drowning in a swamp of border regulations, hire experts in customs law and trade compliance.

Bottom line

The agricultural import/export business is for people who love building relationships in other countries, and success requires an organized mind that can handle logistics. When dealing with these types of products, a willingness to thoroughly comply to relevant regulations is a must.

If you have these qualities, take the plunge into creating a thriving agricultural import/export business.

Bywealthinfo