The dollar has been weakening and is projected to continue to decline against other major currencies. The question is: What is the impact of a sustained decline in U.S. food producers and the customers around the world that buy from them? The answer: Opportunity to boost sales in the short term and to build whole categories of new business in the long term.
My father was an exporter for almost forty years. He specialized in fresh produce but over the years sold a wide range of food products, from fresh eggs to frozen poultry, from gourmet cheeses to frozen French fries.
In the Sixties, his business was divided in two. He had one group of customers, mostly in the Caribbean, who bought from him every single week. Because these countries are small, the business was small, but it was steady.
On the other hand, he also had customers which he served sporadically. These were often European customers who bought only when weather or a natural condition stripped them of their local crop. So Europe, for example, grew loads of apples, but would sometimes have a short crop. When they did, my father often filled in the gap.
In the Seventies, after President Nixon severed the final link between gold and the dollar, the dollar depreciated rapidly. And all of the sudden, many European importers came to visit my father. When my father asked what he could do for them, the response was often that they didn’t really know. But they knew that in a situation where a currency had declined so substantially, there must be opportunities and they were there to find them.
My father proceeded to provide a series of tutorials, depending on the interests of his visitors. One was an apple importer, and my father gave details on the varieties the U.S. raised and the geographic region’s apples come from, our growing, packing, shipping and grading standards. Another traded potatoes and got a different lesson, on and on down the cornucopia of U.S. production.
In the fullness of time, many of these visitors became my father’s customers. But something else happened as well.
Although the currency devaluation was the proximate cause of a burst of interest in buying from the United States, once the business started and once European consumers became accustomed to red grapefruit from Florida, Washington State apples and dozens of other products, they found they enjoyed them. The European consumer began appreciating the varieties, the quality and the taste of U.S. produce.
That initial currency decline in the Seventies functioned as a kind of worldwide sale in which consumers around the globe became familiar with American foods. After the sale ended, many new customers had been gained who were willing to pay higher prices for the products they wanted. It is in the same spirit of seeking a new opportunity that importers around the world should view today’s ongoing decline of the dollar.
Yes, it is obvious that if you are trading a true commodity, currency changes may make purchasing from one country rather than another more advantageous. And it is equally obvious that if you are already purchasing an item from the United States and if you transfer these price declines to your customers, you can attract more business to your current product line.
But the real opportunity is for those who go beyond these simple steps; the gold ring goes to those who use this moment to actively seek new vendors and new products to introduce back home. Indeed even countries that don’t import much food from the United States now have a chance to reassess the situation.
Not only will these new lines boost business right away, but also the successes in these product introductions will become a kind of annuity, and each importer’s business will continue selling many of these products long after currency fluctuations have moved the other way.
Of course producers in the United States must do their part as well. It is so easy, and all too common, to be dismissive of inquiries from certain parts of the world or for certain products — all based on the long experience that it is impossible to do export business with these countries and with these products. But new currency ratios mean new possibilities and all the things we know for sure now must be reexamined.
My father has settled into his second career as a finder of unrecognized opportunities in the stock market, and so his wonderful tutorials on the food business are no longer available. But we have the next best thing. We’ve dedicated this entire issue to the ramifications and opportunities of a declining dollar. We explore some major food categories, and we give an overview of the changing times.
The decline in the U.S. dollar is creating a tidal wave of opportunity. Those who will lead food trading in the decades to come will set their minds to ride this wave to fortune.