15 December 2016
James Wilde / Business Development Manager / North Amercia
The decision to break into the US market is a classic case of risk vs reward. For the NZ agribusiness sector, the scope of opportunity is so compelling that more and more companies are taking the leap every year. And who can blame them? In 2014 alone, the US agriculture market contributed USD$985 billion to the US market’s GDP. While a marketplace of that magnitude is appealing, market value is not sufficient on its own to justify allocating the time and resource a company will require to successfully enter, establish, and grow a business in America. You have to find a fit.
To that end, a growing number of NZ agribusinesses are effectively carving a place for themselves in America. For many of them, the journey to success began the moment they validated their existence. In America, validation starts with understanding the agricultural landscape.
The first lesson brings frustration; the American agriculture industry is fragmented –the 50 states are more like 50 markets. But understanding the relevant ways US states differ from one another can enlighten a company to undervalued opportunities and empower them to capture market share. The United States Department of Agriculture employs a very powerful database known as the National Agricultural Statistics Service (NASS). NASS provides the most in-depth and interactive agriculture data available. NZ agribusiness companies established in the US -advise that the maps and state-by-state comparisons from NASS shed new light on where they needed to visit during their market exploration phases.
The next step in validation is translating your value proposition into American terminology. To begin, you must ask yourself, “Is this needed in America?” You’ll need to very clearly communicate where in the US your product is needed and why it is needed there, otherwise you’ll never get over the hump. You must resist making assumptions. Instead, go straight to the source by taking farm tours and attending regional conferences. If you get in front of your target end-users, you can learn to say what they say. Articulating the problem and its solution using the local language is essential to validation.
If a problem exists, and you can solve it, all you have to do is prove it. Farmers are sceptical by nature and they rarely look beyond the horizon of their own market so they won’t be impressed by your market share in New Zealand. You should accommodate this, don’t challenge it. You can arrange trials, conduct field demonstrations, or simply lend out your products in exchange for feedback –do whatever it takes to validate your solution in the US.
One clever way that NZ companies address validation is by partnering with a University Extension Programme in their target market. Extension programmes are economic development farm stations affiliated with university agriculture departments. The sites are managed by farmer-researchers who are intimately connected to the agriculture producers in their communities. The mission of an extension programme is to conduct practical, real-world research that will empower local farmers to grow the agriculture economy. In order to do this, extension programmes employ a range of tools and services, including model farms, new product trials, farmer field days, and data collection efforts. They are not commercially driven, they are information driven, and that makes them the ultimate validators. Get to know an extension service and you will have a powerful channel to the market.
A Kiwi agribusiness company’s decision to enter the US market should not be taken lightly. But when the decision is made, there is a proven path that can greatly increase the chances of success. The knowledge is there for the taking. NZTE is New Zealand’s international business development agency. Its role is to help New Zealand businesses grow into international markets. www.nzte.govt.nz