OSU study: Small companies benefit from support when entering export markets
Published 12:45 am Tuesday, November 29, 2022
- The Port of Portland’s Terminal 6. A new Oregon State University study found that larger businesses with more resources are likelier to export than small businesses. However, small businesses can more easily enter the export market with support, including through government assistance programs.
CORVALLIS, Ore. — A new study found that Oregon food and beverage companies are more likely to export if they are larger and have been in business longer, while smaller companies and startups may need — and could benefit from — assistance programs to enter export markets.
The study could give farmers insight into which factors increase the likelihood of a business being able to export and could inform officials on how to better support it.
The study, conducted by researchers at Oregon State University, was published in the Journal of the Agricultural and Applied Economics Association.
OSU researchers analyzed survey data from 95 food and beverage businesses across the state. Those surveyed fell into five categories: beverage (47%), fruit and vegetable (16%), meat (4%), seafood (4%) and dairy (4%). Of those, 32% had annual sales in the $1 million to $5 million range and 53% had annual sales above $5 million.
According to the research, even among successful exporters, exports generally account for less than 25% of total company shipments, and the cost of establishing a relationship with a foreign partner is a major barrier to getting into export markets.
“What we really found is, it’s just hard to export,” said Jeff Reimer, a professor of applied economics at OSU. “Languages are different. The right distributor is needed.”
Reimer co-authored the study with Christian Langpap, another OSU economist.
Half of exporters said it was “very difficult” or “moderately difficult” to start exporting. Another 21% said it was at least “slightly difficult.” Respondents said the top factors that make exporting challenging include finding and vetting the right distributor, finding the right international markets for the products and wading through regulations and paperwork.
Surveyed respondents — especially those in smaller firms — said state and federal assistance programs are helpful. Budding exporters cited a resource as simple as a list of potential vetted trading partners as helpful.
“(Small and medium firms) are making high-quality products that are sought after overseas, but what can our policymakers and business leaders do to help them export those products?” said Reimer.
The study found that other factors also predict a food or beverage company’s likelihood of exporting.
One factor is the type of organization. Businesses registered as limited liability corporations are more likely to export compared to those set up as cooperatives or sole proprietorships.
Another factor is a company’s workforce size. About 36% of exporters surveyed had more than 20 employees. About 25% had between 11 and 15 employees. Businesses with fewer employees were less likely to export.
Some elements of the export market, however, are beyond any company’s control. The COVID-19 pandemic, for example, dramatically altered export markets worldwide. Of exporters surveyed, nearly 54% said COVID-19 led to a decrease in exports, about 36% indicated exports remained approximately static and 11% said exports increased during the pandemic.
Although Reimer said Oregon’s food and beverage industries are “dynamic, entrepreneurial and successful,” the study illustrated that businesses and governments can take steps to make entering export markets easier.
“So, it is successful, but how can we do better?” said Reimer.