Thursday, August 29, 2013

Commodity vs Specialty

When exporting, most inquiries go nowhere.  There are several reasons for this, but suffice it to say maybe one in ten becomes an order.  Now, it would not surprise me if the percentages are different with a commodity item, but even within commodity items there are speciality versions, and organic flax seed, say, would be one, vs. plain old flax seed.

So there is a strategic question a small farmer has to sort out...  are you in the commodity biz where the price and terms are largely dictated to you, or in the specialty business where you drive the deals?  (and you very well may decide "both" at which point you have two channels to manage: bulk and MOQ FOB.)

I'd argue if "both" you sell bulk from the field.  If anyone is a legitimate consumer of a 20' of flax seed, then they have the sophistication to connect with your FF and get the seed into the totes (or whatever) right off the field (or wherever big buyers usually take delivery) and off to Kota Kinabalu....  that is a sort of MOQ FOB style...  the bigger the risk, the less you do....  not C&F Kota Kinabalu, but "Ex my field,  Abdulla..."  And of course prepay...

And then of course you can do standard MOQ FOB to the specialty market....

Small businesses do not have the economies of scale and resources and time to support all of the business out there.  They have beautiful product, and plenty of people would like it without paying for it.  In int'l trade it is easy enough to get it without paying for it, and that is why some people rip off others in int'l trade rather than robbing banks.  It's safer.

Small business/farmers have to accept that not all potential is workable.  Business is mostly no, or "yes, on my terms."   You have the beautiful product that others can make money off.  For them to do so, they must pay you first.  If they can't, then they were never your customer.

Prepayment beats any fraud... so the time spent asking the questions and processing answers is unnecessary.... The challenge in exporting is to not get to where you must stop farming in order to process all of the information one could process associated with exporting.  You will end up with no seed and no customers...  I exaggerate to make my point, but it is a common initiative -killer, all of the processing for nothing.  With MOQFOB you don't have to worry about what you see...  you manage only the exceptions...

Now, I absolutely hate talking about scammers because they are not that common...  it is just that it takes only one 20' of seed gone or one payment held up and the business is not so charming, and you personally feel very bad.  The way you avoid them is structurally...

1. Protect your time - take it or leave it offers

Clarity

Simplicity

2. Protect your relationship with the freight forwarder

Rarity - only take solid leads to the FF

3. Protect your crops/revenue.

Prepay


The MOQ FOB assures all of the above for the small farmer, whether bulk or specialty.

A tip: Scammers spend a lot of time asking questions and telling you about themselves.  Your list above reads like a scammers talking points (not you as the scammer, but the buyer as scammer... I mean to say you are inviting them to overwhelm you with info... which tires you out, you drop defenses, etc...)

Yes, there is small business international trade to be done for farmers, but the direction is the opposite of what people expect.  If going international, you do less than in your domestic markets, not more.

Feel free to forward this by email to three of your friends.


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