The developing world has a demand for breeding goats from the United States. The most frequently requested breeds are Alpines, Saanens, and Nubians. Our goat industry has marketing advantages over many other countries by offering records from organized programs such as DHIR, Linear Appraisal and our competitive shows, which do not exist in most other countries. These programs help us to identify animals that can provide improved genetics for the countries desiring to purchase our breeding stock. Participation in these programs provides an edge for the breeder wishing to export stock and establishes them as an excellent source of breeding stock.
General Information Regarding Exporting
There are many complicated steps involved in exporting so it is a business to approach carefully. Even experienced exporters can lose significant amounts of money when problems occur. Delays in shipping, unexpected results from required health testing, quarantine requirements, delayed payments, and unexpected expenses are just a few of the issues that may surface. However, the potential for profit and the rewards of selling quality stock to a grateful buyer can outweigh those concerns. Therefore, it is important to follow guidelines that will ensure success.
Cost Factors in Pricing Export Sales
- Setting or accepting the purchase price that will cover your costs is one of the first necessary steps. The obvious costs include:
- Purchasing additional animals
- Transportation (freight)
- Personnel and equipment needed
- Translation costs
- Fees charged by consultants and freight forwarders (individuals or companies that arrange transporting and delivery of animals to foreign buyers)
- Health testing
- Payments to regulatory agencies such as the Animal Plant and Health Inspection Service
- Loading and unloading animals (including overtime for weekend and holidays)
- Air conditioning for loading during summer months
- Quarantine facility charges
- Commissions for agents in other countries
- Additional feed and veterinary costs for keeping the animals longer than anticipated.
Somewhere in the price quotation a profit factor should be in place. If you are selling your own breeding stock, you have to consider your own level of profit desired. If you are marketing for others, the acceptable margin could be less depending upon the quantity of animals purchased.
Terms of Sale
It is very important to understand the delivery terminology.
FOB is “Free on Board.” If your price is FOB to the port of export of JFK, it would include all costs of getting the animals to the quarantine station at JFK. If you have FOB to a named port and aircraft, it would include prices of delivery upon an aircraft provided by the buyer. This would then include costs of quarantining at the port of export.
C and F or CNF . This means the cost and freight to a named overseas port of import. This would include the price for the animals (and all incidentals) and the cost of transportation to the named port where the animals are delivered.
CIF. This means cost, insurance and freight. Using this term means the seller quotes a price for everything. The insured value is 100% or 110% of the total net invoice value. This could include insurance that is either Farm to Farm or Farm to Farm plus 30 days after delivery. This should also specify whether mortality or abortions are included.
Proforma Invoice. This is the official name of the “quote” and would specify the buyer/seller names, status of insurance, method of shipping, method of payment, description of animals, specific charges, period of validity (how long your offer is valid) and approximate shipping date.
Methods of Payment
CIA or Cash in Advance. This is the most desirable and is the usual method for domestic sales. However, unless it is a small order, it would probably not be acceptable to a foreign buyer.
Letter of Credit. This is the most common method of payment. A document is issued by a bank, at the buyer’s request in favor of the seller. It promises to pay the specified amount upon receipt by the bank of certain documents. This is usually an “irrevocable” Letter of Credit, but these can actually still be revoked! To “confirm” the Letter of Credit means that a U.S. bank accepts responsibility to pay regardless of the financial situation of the buyer or foreign bank. This is desirable but also carries a charge.
Once the buyer and breeder/seller have agreed on the terms and specifics of the sale, the buyer may want to come to your farm and personally select the stock. This has advantages and disadvantages. As a seller, it is helpful when the buyer sees the animals and is satisfied with them. However, as an organizer of a sale of many animals from other herds, this can mean tremendous organizational efforts to coordinate the travel plans to visit other herds if numerous buyers and sellers are involved. This could mean spending a great deal of time on the road as an escort, and could be an important factor in your pricing scheme. Once a buyer has established working relationships with you and is satisfied with what you have located, it can sometimes mean that future deals can be conducted without his having to personally select. Therefore, it is important to maintain the level of quality expected by the buyer.
Animal Health Issues
With an average of 10-25% of the animals being rejected due to animals being eliminated based on undesirable health test results; it is wise to prescreen animals before putting them into quarantine. This is yet another risk and cost. You could work with an approved facility for quarantine at some site away from your farm, or perhaps you feel that you have a facility that meets the requirement. However, an accredited USDA veterinarian must inspect the facility each time a quarantine begins. During this time, no visitors are allowed in the facility, and cleaned and disinfected boots and coveralls are expected to be worn by those working with the animals. As well, bringing new goats onto your farm will increase your risk of disease within your own herd.
On the specified day, an accredited veterinarian draws the blood samples for the necessary testing (which varies by country). Within a few days, the results will be known. If there was a statement in your Letter of Credit that prohibited partial shipment, then you cannot ship the animals or collect the money if there is even one animal less than the number specified. This possibility underscores the importance of testing a sufficient number of animals, and for requesting to remove any prohibitions or penalties for partial shipment.
Even if all goes well with the blood testing, there can be delays in the shipment from the buyer’s end. This could mean feeding and caring for the animals much longer than you planned and, if the time limit for the health testing expires, you may have to start all over.
Transportation & Final Inspection
Once animals are finally ready to be shipped, transportation to the port of embarkation is only after the animals are again inspected by the USDA veterinarian. One animal with a sign of disease could prohibit the entire shipment from leaving.
All paperwork must be absolutely complete, accurate, and endorsed by a Federal Veterinarian. The animals need to be identified by tattoo and sometimes by ear tag as well. Here is a link to the health protocol for various countries. In some countries, there is no agreed upon protocol, and a permit will be necessary from the importing country, that states the specific tests required: http://permanent.access.gpo.gov/lps3025/index-82.htm
Here is a link to a glossary of export terms: http://www.aphis.usda.gov/export/vsgloss.html
Working with a Broker
Most breeders prefer to simply work with a broker who is putting together an order, and just sell them goats. This certainly has the least risk.
Under this type of arrangement, deals can vary significantly. For example, health requirements vary by country. Tests could include CAE, Bluetongue, Johne’s, Vesicular Stomatitis, Brucella abortus, Brucella ovis, and Leptospirosis. The tests must be conducted within specific time frames, such as within 15 or 30 days of shipment. Some countries require vaccinations for diseases such as Soremouth, and some require 4 weeks or more of isolation. Frequently, a TB test is conducted at the farm, and a prescreening test for CAE is done at the same time. Then, those that pass these tests are eligible to be purchased. At the specified time, the animals are either picked up or the owner delivers them to the quarantine area. Sometimes the broker will cover part or all of the prescreening lab work, while the owner covers the cost of the TB and blood drawing. This can vary, but is generally specified in information provided to the seller, along with other instructions. It is important to weigh these costs and risks when considering whether or not the offered price is worth the time and money you will receive.
If you decide to market your animals for export, here are some suggestions:
- Don’t expect export sales to be a “dumping ground” for animals of poor quality. Selling poor animals hurts all breeders and could reduce export markets in general.
- Expect delays. Often there is a “hurry up and wait” situation. We hurriedly work to identify and locate animals according to the buyer’s or the broker’s wishes and then the usual delays happen. One must be patient with the process.
- Realize that deals aren’t guaranteed sales until the animal leaves the farm. Many things can happen that could jeopardize the final closing of a sale.
- Be willing to accept reasonable prices. In some cases you may be given a deposit first, and final payment only after you provides all the appropriate documents (such as registration papers, interstate shipping papers, production and appraisal records, etc.). Final payment may also be held until animals are actually shipped.
- Follow directions carefully. Thoroughly read and understand all documents provided. If you have questions, ask them. If you are told to have your veterinarian draw blood on a specific day, make sure this is followed carefully. Otherwise, it could risk your potential to sell animals and put the entire shipment in jeopardy if the expected number of animals cannot be sent.
- Check tattoos. If the papers and tattoo do not match, the animal cannot be sent.
- Trim feet.
- Be willing to be flexible in delivering or having your goats picked up at all hours of the day and night.
- Participate in DHI and Appraisal programs. Many buyers require DHI dam records on purchased stock or signed testimony that the dams have produced milk at a particular level. Generally, there are minimum levels stated and sometimes the levels are based on ME’s (Mature Equivalents).
Being part of a successful export program can be satisfying to the goat breeder. Handling the comprehensive and complex details of working directly with foreign buyers certainly isn’t for everyone. Even with years of experience in anticipating potential risks, there will be problems. All of us can work together and benefit by marketing our quality breeding stock to buyers in other countries who see the potential for the industry. It can be a great deal of work, but the satisfaction of seeing the goat used effectively for her products can be immensely rewarding, and the income can help sustain one’s farm operation.
Disclosure: ADGA is providing this document as information to assist members with understanding more about the process of exporting their dairy goats and assumes no responsibility for information that may change or no longer be applicable. Please consult appropriate legal counsel for specifics of contracts that might be used for export marketing.