1. Entering the Global Marketplace: Lessons Learned David Fuhrmann President

2. A Snapshot of Foremost Farms USA Established:1995 Milk volume:4.8 billion pounds Member-owners:3,600 Revenues:$1.4 billion Employees:1,487 Ranking:No. 15 (Dairy Foods magazine) among top 100 processors

3. Procurement Area and Plants

5. Our Products Markets are grocery, foodservice, industrial and converters

6. How we got started in the export business: -Acquisition of business entity in 1984 -Have continued to grow and diversify the exports

7. Foremost Farms USA Exports Today: 40 million lbs./year – Whey Based Products 5 million lbs./year – Cheese

8. Export Destinations: - South East Asia (China, Japan, S. Korea) -Central & South America (Mexico, Puerto Rico, Columbia, etc.) -Europe -Others

9. Export Sales to: -Brokers -Distributors -Specialty company manufacturers -Multi-national corporations

10. Why We Export: -Supplier to multi-national companies -Grow our business -Profitable business

11. Requests from: -Multi-national corporations -Repeat users -USDEC inquiries -Website

12. Challenges: -Language. Shame on us: “We only know English”.Time zone differences

13. Challenges: -Cultural Differences. Negotiations are different in different cultures.Difficulty in understanding “tones” of e-mails.“Bribes” vs “the way business is done”

14. Challenges: -Negative perception of US whey products -History of “dumping inferior product”

15. Challenges: -Product Packaging. Long distances. Truck, rail & sea travel. Hot, humid conditions.Complaints on 50% of shipments

16. Challenges: -Dealing with rejected product:.Can result in major $$ impact.Can’t bring product back to U.S..Resell the product in that country

17. Challenges: -Competition from other countries. Exchange rates.“Product dumping”

18. Challenges: -Quality.“Expectations” are not the same as product “specifications”.The customer is always right

19. Challenges: Quality (cont.):.Testing methods may be different.Local regulations can vary.The rules change without notice

20. Challenges: -Quality (Cont.).International customers are concerned about the source and quality of the raw milk supply. Quality discussions are more difficult when using an intermediary

21. Challenges: -Documentation. Paperwork must be flawless.Papers must exactly match product.Codes on product must be totally legible

22. The process is tedious and time consuming with “no margin for errors”

23. Resources: -USDEC -USDA – Washington -Bank

24. Lessons Learned: -International customers have higher expectations -We have experienced some expensive lessons

25. Lessons Learned: -“Partnerships” are critical -New communication technologies have opened the world!

26. Lessons Learned: -International business has become more complex since September 11, 2001 -International business is not “lucrative”

27. Lessons Learned: -Exporting has made us much better