“Regulations, Rules, and Recipes: The game of agricultural chess” U.S.-Africa Export & Import

1. “Regulations, Rules, and Recipes: The game of agricultural chess” U.S.-Africa Export & Import U.S.-Africa Business Leader’s Convention U.S.-Africa Open for Agribusiness Partnerships Forum February 14-16, 2011 Las Vegas, Nevada

2. PresentationOverview • African Growth Opportunity Act (AGOA): Ask the right questions by being empowered with the right information, • Presenting your products and services to Customers, • Effective Market Development Strategies, • What do trade regulations, standards and guidelines mean to you? • Tool kit for reaping the benefits of AGOA

3. Regulations, Rules, and Recipes: The Game of agricultural chess • In order to be successful at exporting agriculture produce to the • U.S., you need to know: • Regulations-Chess pieces, • Rules-Chess moves , and the • Recipes-Chess strategies for agriculture sustainability. • Regulations – Who to know and why. (USFDA, USDA, DoC, EPA) • Rules – WTO, TBT, SPS, TRQ (Tariff Rate Quotas), Bioterrorism, HACCP, GMP. GLP, FAO/UN (ISO) • Recipes – Business Plans; Buyers; Electricity; Road/Air/Sea transportation; Laboratories; Producers; Customs; Brokers; Market strategies; Do you have a U.S. partner? Do you have a bank-BBT, PNC or HSBC? Is good governance practiced in your country? Does both Embassies, yours and U.S. Embassy (e.g. DoC & USDA), in your country know you? How equivalent are U.S. Customs and your Customs?

4. Relevance of Agribusiness -Diversification • Agriculture accounts for 1/3 of the continent’s Gross Domestic Product • 2/3 of the Continent’s employment • 40% of the Continent’s export revenues

5. Exporters to Sub-Saharan Africa • U.S. Agricultural Exports to Region increased 312%; 326% commercial shipments. (USDA Report published May 2010) • Over past 10 years Africa is the fastest growing export market for U.S. companies, faster than its top 5 markets combined. (Canada 109%, Mexico 122%) (USDA Report published May 2010)

6. Global Picture • Global: EU exporting 32%, Brazil 12%, Thailand 12%, Malaysia 9%, U.S. 9%, Argentina 5%, Other 24%

7. What’s Selling in Africa? • Over the past 5 years retail sales among 7 leading countries in the region have grown $26 billion • Expected to grow another $24b in 5years • Dairy, poultry, rice, wheat, corn, feeds,

8. Who’s Buying U.S. Foods? • S.Africa • Nigeria • Ghana • Kenya • Uganda • Ivory Coast

9. Catalysts of U.S. Ag Exports • Growth in African Middle Class • Impressive GDP Growth in Region at 6% even during the global economic recession. This means increased per capita income. • Lifestyle Changes • Nigeria (largest importer of U.S. products) • 151 million population • Booming economy • $825 million ( 2009); $1b+ in 2008 • Second largest market for U.S. wheat (red hard winter wheat) and may become #1 in 2010 • GDP growth impressive • Food Consumption away from home is on the rise! Fast food chains opening around the nation- 1st two recently opened KFC restaurants. • South Africa (second largest in 2009): consumer-oriented imports grew $65MM 2004-08. Should continue. • Middle class • Modern supermarket chains • Strong protected economic growth 5% before recession

10. Sector Growth • More that 2/3 of regional imports consist of grains and feeds. • Impressive growth in poultry (last 5 yrs) • Dairy & horticulture exports have soared (shipments reached $240MM) • Nigeria imported nearly 60% of U.S. agricultural exports in the region. • FY2009, total exports equalled $2.2 b and commercial exports were $1.4 b

11. Challenges • Changing Import Regulations • Purchasing Power • Infrastructure Challenges (electricity, roads, warehousing, QC/QA systems) • Porous Borders • Corruption, Poverty, AIDS- “Oh My!” • Trade Financing • Lack of Information-Largest hurdle

12. U.S. Entrepreneurs Export Market Plan (Business Plan & Market Feasibility Conducted) • Find Samples on USDA website. • Utilize the Market Access Program (MAP) • Success Story of Specialty Food Company • Used the Foreign Agricultural Services Trade Services Staff (TSS) • Specializes in Trade Shows around the world & Reverse Trade Missions • Knowledge of Trade Data Banks • Knowledgeable about Country-Specific Regulations • Saved one firm from wasting a lot of time in Brazil

13. Can you go to the same source to address your product issues? • Who do you go to see about your product and who can you sell your product to? i.e.; Foods: Raw, Canned, Processed; Drinks; Spices; seafood; Franchise Outlets that allow for international operations Demand: Food Processing Equipment Country-specific customs requirements

14. Pay Me now, or Pay me Later • When all is said and done, the question boils down to whether you want to pay me now or pay me later. • Do you want to pay thousands of U.S. dollars to become “Export Ready”, or millions of dollars to recover your losses, as well as invest in bringing your facility and product into compliance?

15. African Exports to U.S. Market vs. U.S. Exports to African Markets. Variety of Products Raw and Processed for which there are U.S. and African Buyers: Whether the Buyers are Companies or Individual Consumers there are several import codes to understand and comply with, both in U.S. and African countries. SPS is universal

16. African Growth and Opportunity Act (AGOA) Congress approved the legislation of the African Growth and Opportunity Act (AGOA) in 2000. This was meant to assist Sub-Saharan Africa economies to “improve economic relations between the US and the region”. AGOA was also intended to bring with it benefits such as duty free treatment for certain articles under the US Generalized System of Preferences (GSP). Of the many developments and amendments following this Act the prominent is the AGOA Acceleration Act. This included a number of directives for the President. Some of those were the provision of agricultural technical assistance advisors to “help exporters meet US technical standards for agricultural imports”. The Act specifically directed the Presidents (Clinton, Bush, and now Obama):

17. AGOA’S PURPOSE To target technical assistance to governments To liberalize trade and exports To harmonize laws and regulations with WTO membership To engage in financial and fiscal restructuring and To promote greater agribusiness linkages  In order for goods to benefit not only from tariff-free entry into the U.S., but to be competitive in the marketplace, it is critical that they meet international quality controls and standards required of products destined for human consumption.

18. THE AGOA SISTER’S A small or medium sized agricultural growing/producing enterprise is not “export ready” if it does not know Technical Barriers to Trade (TBT) required of its products. A small or medium sized agricultural growing/producing enterprise is not “export ready” if it cannot meet what had long been considered TBT’s-U.S. regulations and guidelines for imported agricultural products. Small or medium sized enterprises in Southern Africa were unable to compete with the E.U., Asian, and Latin American enterprises historically entrenched in the agricultural market because of its TBT. With the removal or lessening of TBT barriers by the U.S., and the arrival of AGOA, African small or medium sized businesses now are being offered tangible incentives for them to have equal competitive opportunities to enter the U.S. market. Or do they? TBT has been, and continue to be confused with agriculture standards or Sanitary Phytosanitary (SPS). No business can have successful agricultural trade, if it does not know its SPS’s. Small or medium sized companies will not sustain their agricultural export trade business to the U.S., nor will they build capacity to continue to export if they do not know the difference between TBT and SPS, and how important the differences are to successful exportation of agricultural products.

19. African Growth Opportunity ActAGOA-2010 & BEYOND • A trade preference option legislated by U.S. Congress that permits over 6,000 African products duty-free access into the U.S. market. • Year 2000 President Clinton • Extended to 2012 (2015 for some products) • No barriers to trade- Are you ready to trade?

20. Overview of AGOAAccess, Capacity, Sustainability • Promises of AGOA for its 38-member constituency • WTO: TBT without SPS • U.S. Market size for food production • Statistics for imports from Africa since AGOA inception • Some discussion of the poor performance • Processing, Market Knowledge,

21. Developing Export-Ready Firms • Entrepreneurs need to be grounded in Quality Control/Assurance standards, as well as regulatory laboratory procedures of the U.S.A • site record keeping, • food inspection, • trace-back/forward documentation, • laboratory analysis, and • compliance laws of both U.S. regulatory competent bodies (i.e. USFDA and USDA) and Cameroon. • Full and complete knowledge of these standards/regulations is essential for successful export-ready sustainability, as well as capacity building. The “Pay me now or Pay me later” syndrome – Dr. Patrick

22. U.S. Agro-Imports: Regulations • Agencies Responsible for Oversight: • U.S. Food and Drug Administration • United States Department of Agriculture • Who/Where is APHIS, FSIS, CDC? • U.S. Customs • Quick Quiz: Who is Responsible for the Inspection? • Goat Meat from Senegal?; Dried Mangos from Burkina Faso?; Pears from South Africa?; Prawns from Mozambique?; Cut flowers from Kenya? • Pre-Export Documents Required • WHO-SPS • Authorization number • Certificate- Prior Notice Registration • What happens as is so often the case if a product is inspected and cited for a violation? • Case in Point: African Coffee Production

23. Compliance:FDA Import Regulations • “Hold” of Products from African countries by U.S. Customs • U.S. Customs referral to regulatory body –U.S. FDA or USDA. • Consequences • Fixing the Problem – What the exporter and their broker should know if a product is detained.

24. What your Broker should know • What questions should you ask to identify the appropriate Broker for your company/product? • Do you have access to a private laboratory? • How can you identify the appropriate private laboratory for testing your product? • Who controls the warehousing of your products in your country, in the U.S.?

25. Quality Control/Assurance • Who should have QC/QA managers? • What are GMP’s, GLP’s, HACCP? • What are the responsibilities of QC/QA managers? • What is the difference between a regulatory laboratory and a research laboratory? • Should you operate a regulatory laboratory?

26. Recordkeeping • BioTerrorism: Authorization, Registration, Prior notice, Recordkeeping & Automatic Detention, adding to existing standards and regulations such as FCE, No Processing, HACCP. • What to know, What to do, How to prevent it from reoccurring • Export-Readiness

27. Who will come knocking on your door? • Successful exporting to the U.S. for the last five (5) to ten (10) years does not mean U.S. FDA will not come knocking on your door, in your country, at your facility. Why?

28. U.S. FDA Import refusal considerations for Exports Refusal Actions by FDA (March 2005-February 2006) ProductDateReasonDistrict Smoked Fish 14-Mar-2005 Filthy BLT-DO Smoked Talapia 25-Mar-2005 Insanitary ATL-DO Fried Okra 10-Jun-2005 INSAN ATL Fanta Soda 04-Aug-2005 UNSAFE COL/ LACKS N/C /NUTRIT LBL BLT-DO Mandingo Bitters 21-Sep-2005 LABELING NYK-DO Ideal Milk 14-Jan-2006 NO PERMIT NYK-DO Canned Eggplant 13-Feb-2006 NO PROCESS NYK-DO Hot Peppers Not Ground 16-Feb-06 NO ENGLISH BLT-DO

29. Coffee #1 • No Processing • FCE • Pesticide • Insanitation • Label not in English • Weights, Ingredients not available • Word of Mouth • Approaching high-end retailers when the best outlets are economy shop (Shoppers)

30. Product #2 • Juices, Seafood and/or Processed meat. • No Hazard Analysis Critical Control Point Plan (HACCP) • Label in English • Weights, Ingredients • Hired Marketing Firm w/ Developed Marketing Strategy: Word of Mouth • Approaching appropriate retailers • Using Effective Distribution Chain

31. Africa & US Business Cultures • The Business Cultures are Different between • the two continents • African countries themselves • Language Barriers • Business Plan concepts • Time Expectations • Role of Relationships • Value of the Transaction • Restrictions of Int’l Law on Americans

32. Marketing in the U.S. • Compared to services available to assist companies exporting there are nearly no U.S. services to assist importers. • Marketing effectively to the U.S. consumer requires market intelligence. • 4 P’s of Marketing: Price-Product-Promotion-Placement • Establish Target Market, Demographics of that market: Individuals? Commercial Businesses? Income/Revenue? Geographic? Where do they shop? Zip Codes/NAIC Codes? Publications? Psychographic Profile: conservative/liberal… • Market Share? • Market Testing? • Marketing Budget: logos, Website, Agent, Collateral, Marketing Message

33. What proposition will you return home with? Proposition One: Do you return home empowered with information, know-how, can do-ism to laude it over your husband, village leaders, government? The “I know this, you don’t, so shut up and follow me.” syndrome - or – Proposition Two: Do you return home empowered with information, know-how, can do-ism to see additional wisdom, encouragement, support from your husband, village leaders, government? The “I learned this, what do you think? How my knowledge be applied to our situation” syndrome

34. Food for thought…. Get knowledge, get wisdom, but in all thy getting, get understanding

35. DR PATRICK C WILSON BIG AFRICA PARTNERSHIPS SECRETARIAT BIG PARKLAWN CHAPTER PO Box 86073, Montgomery Village MD 20886-6162 USA Email: pwilson@big-africaps.org Web: www.big-africaps.org Thank You! Office +1-347-439-6421