Alabama Natives Go Global
From farm to foreign markets, here’s a look at the travels of the products of Alabama’s fertile fields.
Roughly 40 percent of Alabama-grown pecans are exported, and the outlook for overseas market growth is optimistic. Demand is growing, prices are good and China is one of several nations shelling out money for American pecans.
South Alabama pecan grower Gary Underwood retails about half the pecans he grows on 192 acres, selling his remaining crop to wholesalers who in turn export to China and a growing number of other countries. U.S. pecan prices increased 17 percent last year, according to the USDA, and Underwood is bullish on the idea of future exports.
“We can’t grow enough pecans right now to meet the demand,” says Underwood, known nationally for his work growing and marketing pecans. “We’ve got a great product, especially if you compare us with the other nuts. And we’re just getting this started.”
Underwood notes that groups such as the American Pecan Board and National Pecan Growers Council are actively marketing pecans overseas, and the reception has been warm.
“It’s not just China,” he says. “Turkey, Dubai, India, Europe, Canada, Israel — we sell pecans all over the world.”
Underwood says it has been important to educate those countries on the nutritional value of pecans while giving decision makers the space to make their own decisions. “In India, most of their people are vegetarians, so they need some protein to put alongside that little rice patty they eat about 80 percent of the time,” he says.
“We take pecans over there and we get with some of their well-known chefs and let them implement it in their daily menu, and then they want the product. They’re not going to eat pecan pies like we do. We’ve learned that chefs over there want to take it and give it a different flavor.”
Although Underwood retails his best pecans domestically, he has seen the global demand for what he grows. And with today’s technology, “It’s possible to text a picture of your product to someone in China, and they can blow up the picture, look at it and say, ‘Yes, I want that right now. I’ll buy it.’”
The USDA ranks Alabama fourth nationally for the value of broilers produced — $2.9 billion last year, trailing only Arkansas, Georgia and North Carolina. The state’s position in that pecking order presents definite opportunities for exporting more chicken meat from Alabama, which produces about 21 million broilers a week.
Ray Hilburn would remind you that most of the world lives off beans and rice. But as developing countries continue becoming more affluent, they want the things we take for granted.
That includes poultry meat, says Hilburn, associate director of the Alabama Poultry and Egg Association. Seven million tons of poultry, for example, is exported each month to Cuba alone. Although it would be hard to pinpoint how much of that is grown in Alabama, it’s safe to say the state is exporting its share, although exports have lagged in recent years.
“Our export outlook is good,” Hilburn says. “It failed some with an avian influenza outbreak in the spring. Several states had avian influenza incidents, so some countries wouldn’t take our meat for a while, but it’s picking back up again.
“The cheapest protein you can buy is poultry meat, and as these countries’ middle class moves up and are able to start purchasing some protein, we feel like they’re going to buy poultry before they buy beef or pork. We’re looking at a lot of South American countries, the Middle East, China and India, more so than others.”
Is Hilburn concerned that possible changes to NAFTA might impact exports? “You’re always concerned about it, but the politics change every day, so you deal with it every day,” he says. “We’re all concerned about it, but we don’t get involved with the politics. We just know that, like with Cuba, we know we can sell them the cheapest, safest poultry of any country in the world.
“But if I said the future is going to be this or it’s going to be that, I’d be lying because it changes daily. But our optimism is very good for poultry. We’ve still got a lot of room to grow. Even in Alabama, there are areas where our industry can expand.”
ABOVE Alabama’s cotton producers are calling for a return to Title 1 price supports.
There has been a significant increase in the number of cotton acres planted, and as much as 95 percent of American cotton is exported raw or as textile products. Although exports are critical to their business, however, Alabama growers aren’t exactly in high cotton these days.
“It’s really hard to make money in this market,” says Ricky Wiggins, a Covington County farmer who grows cotton on 2,250 acres.
That’s mainly because cotton growers stopped receiving support payments when cotton was excluded from the 2014 Farm Bill. Many growers reacted by converting to corn and soybeans, but the price for grains was driven so low as a result that growers reverted to planting cotton again.
Although cotton acreage increased roughly 25 percent this year, “I wouldn’t say business is good,” Wiggins says. “Cotton is in the 65- to 70-cent range. We did tie some cotton down north of 70 cents when it was up there, but where the price is right now is not that good.”
So, what’s the forecast? “I want to be optimistic, but that will all depend on the export market,” Wiggins says.
The export market is currently a big question mark. For years, China bought and stockpiled cotton, which contributed to huge demand and kept the price high. “When cotton’s above a dollar, a lot of cotton is planted around the world,” Wiggins says. “That increased the supply of cotton, but now China has quit buying, and now they’re trying to sell off their stockpiles. That has the world price depressed.”
In the meantime, American cotton producers are advocating for a return to price supports to compete with subsidized growers in other parts of the world. China, for example, supports its cotton producers by buying cotton at $1.27 per pound, almost double what U.S. producers get without subsidies.
Says Wiggins: “What the cotton industry is trying to do is get back into Title 1 of the Farm Bill and have some kind of safety net — some kind of support for the U.S. producer to be somewhat competitive with folks like India, China and Brazil. I would never say that price supports drive profitability, because they don’t. Profitability is determined by a lot of different factors. But in times like these, it helps to have a safety net until we can get back into a more profitable market.”
Through June, the value of U.S. beef exports for the year stood at $3.4 billion, up 15 percent from the first half of 2016. The picture got even better when China agreed to begin accepting American beef imports again for the first time since 2003.
Garrett Henry is part of the herd of Alabama cattlemen benefitting from a jump in beef exports. “We’re seeing strong demand in countries like China and Japan,” says Henry, owner of H3 Cattle in the Hope Hull/Pintlala area south of Montgomery. “And the middle countries, developing countries, they’re getting a taste of U.S. beef, and they demand it. They want more of it.
“I think exports over the next long while are going to be huge for the U.S. beef industry going forward. It’s a huge deal because our supplies are growing here in the U.S., and we have to find other places for the meat to go if we want to see decent prices not fall too low.”
Henry says anywhere from 12 to 20 percent of the meat produced in the U.S. gets exported. “Exports over the past year have really grown, and if they had not, well, the prices are not great right now, but they wouldn’t be good at all if it weren’t for exports.”
Henry says he is OK with China’s investing in beef-industry infrastructure in the United States. “I really don’t like foreign countries coming in, but to be honest, China is such a big player, I don’t mind them coming in, because they’re going to send it back to China, because the demand is so strong there from their people.”
He also is a proponent of free trade. “I think the more we open doors to these other countries, it’s just going to be a huge benefit for us,” Henry says. “We grow the best beef in the world, and once people eat it, they like it better than Australian beef or Brazilian beef. I’m 100 percent on board with exports. Other countries have things we like and can’t produce, so I think trade is a good thing.”
There are an estimated 58 million horses in the world, including more than 9 million in the United States. A small company in North Alabama, Life Data Labs, has been hoofing it in the equine industry for more than 30 years, hitting a healthy stride in its share of international markets.
Between 40,000-50,000 horses are fed daily with Farrier’s Formula, a supplement made by Life Data Labs of Cherokee, Alabama. A mainstay in the company’s product line, the supplement contains nutrients that enable horses to build strong connective tissue proteins that aid in healthy hoof structure and growth.
In addition to the U.S., Life Data Labs’ products are sold in Canada, Mexico, the United Kingdom, European Union, Israel, New Zealand, Australia, Japan and other Asian nations. Roughly a third of its sales are in international markets.
“In the early years, we diversified in markets rather than in products to establish Farrier’s Formula as a well-respected international hoof supplement brand in the equine market,” says Frank Gravlee, the company’s founder and owner.
Gravlee says all the company’s operations — including manufacturing, sales and research — are performed in Cherokee, which is near Florence. The company is not hindered by the fact that it has only 13 employees.
To stay competitive, Life Data Labs has increased its manufacturing efficiency through automation and has lowered energy costs with the installation of a solar array. Without such innovations, “A small company such as ours could not thrive in the international market,” Gravlee says.
“Over the years, international regulatory requirements have become more complicated and challenging,” he says. “The nationalistic push in the EU is especially aggressive at this time.
“Also, our tax structure requires the manufacturer to be taxed both in the U.S. and at the destination country. This is a double whammy that reduces our ability to compete internationally.”
The number crunching shows that U.S. peanut exports have grown steadily the past five years, increasing by 58 percent in 2016.
The numbers have been good for U.S. peanut exports. Shelled peanut exports totaled 262 metric tons in 2012, and tonnage in subsequent years has been 509, 440, 424 before a sharp jump to 672 tons last year. Such increases are not expected to continue in the short term, but that’s OK with Coffee County farmer Carl Sanders, who grows peanuts on 300 acres, along with 1,000 acres of row crops.
“That looks like a nice increase, but we’re pretty sure 2017 is going to be down,” Sanders says.
Although Georgia grows almost half the nation’s peanut crop, Alabama is among the leading states for peanut production and usually exports 10-12 percent of its production. Leading markets include Canada, Mexico and the European Union.
Alabama averages about 400 million pounds of peanut harvests annually grown on 200,000 acres in southern Alabama. Peanuts have an impact of more than $100 million each year to the Alabama economy.
Despite expecting lower production this year, Sanders is upbeat about international markets. “We’re exporting more than we were 10 or 20 years ago, considerably more,” he says. “That’s when there were changes in our government program, around 2002, that changed the program and made it more of a market-oriented program. The production controls the government had are gone, and we plant for the market now. The program has actually worked.”
Sanders typically exports about a quarter of his peanut crop. “Exports are very important because they allow not just me but other growers also to increase our acreage and become more efficient, because it gives us something more than the traditional market.”
Charlie Ingram and Elizabeth Gelineau are freelance contributors to Business Alabama. Ingram is based in Birmingham and Gelineau in Mobile.