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On The Scene: Global food for thought

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On the Scene
Monday, September 14, 2009

Deciding whether to take your food product into the global market could have more at stake than just the success of your company. It could also be a matter of making Oregon the fulcrum of the Pacific Rim, or holding the state back as “California’s Canada.”

Jeff Deiss, business and cooperative program director of USDA Rural Development Oregon, jokingly kicked off a presentation Friday with these comparisons, but the point was clear: Oregon is at an important crossroads to take advantage of global food-market opportunities. The presentation, “Emerging Global Food Markets: Opportunities and Challenges for Oregon,” was a talk by Tom Reardon of Michigan State University, an expert on international food trends. Nearly 100 people packed the World Trade Center auditorium in downtown Portland, and as the country commemorated the eighth anniversary of 9/11, Deiss pointed out that it was an appropriate time to discuss how Oregon can contribute its resources to help create a more integrated global economy.

Reardon was fresh from a months-long visit to India, just one of the many places he’s visited that has given him a unique perspective on food trends. His biggest observation: The massive growth of emerging markets, primarily in Asia, Latin America and Eastern Europe, whose incomes and economies have grown so rapidly over the past decades that they essentially added 1 billion middle-class consumers to the market. What’s more, the food market in these emerging areas is growing 500% to 700% faster than the U.S. market. “I’m going to argue that the emerging markets will be the centerpiece of your thinking in 10 or 15 years, because they’ll be the main market in the world,” Reardon said.

What’s causing these markets to boom so quickly? Fast growth in global food trade (up 200% over 20 years), for one thing. But often, Reardon said, these parts of the world are still seen as fragmented, backwards and difficult to access. “That would all be true, but for the supermarket revolution that’s occurring in emerging markets,” Reardon said.

Indeed, supermarkets are growing at astonishing rates around the world; China’s supermarket sales grew from zero in 1990 to $100 billion 18 years later, while supermarkets in Brazil increased their market presence from 10% in 1990 to 70% today. Reardon said supermarkets are a key motor driving U.S. exports to foreign consumers because these stores seek product differentiation in quality and price, which U.S. companies can offer. To top it off, there is a significant amount of foreign direct investment taking place in emerging markets, with U.S. companies either setting up shop in other countries or establishing partnerships with local businesses in those countries. In fact, the number of U.S. companies going into foreign investment vs. the number of U.S. companies operating internationally from within the states is about 6-to-1, Reardon said.

So how can Oregon get in on the action? The competition is huge and unprecedented, especially in commodity products that compete with each other in volume and price. But taking the niche road and offering unique food products could be particularly beneficial for Oregon, which has a highly valuable level of health-consciousness and local-food commitment that gives it a comparative advantage in the world market. In addition to other Beaver State blessings Deiss mentioned – its resources, its innovation, its initiative – it’s part of what Reardon believes will keep “Think Tank Oregon” on the shopping lists of cart-pushing consumers around the world for years to come.

Kevin Manahan is the online editor for Oregon Business.

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