Georgia Exporter Spotlight: Front Porch Pecans

A Q&A interview with R.G. Lamar, Founder of Front Porch Pecans

County: Pulaski

Industry: Agriculture

How long has your company been exporting?

Our family farm, established in 1975, has been exporting wholesale pecans since 2008. Front Porch Pecans, our consumer packaged product that I developed primarily for export, was launched in 2015.

What motivated your company to start selling internationally?

Around 2007, the wholesale pecan market had a breakout year. Pecans became less expensive than walnuts, so customers who normally purchased walnuts switched to pecans in order to save a little money. There was some initiative on our side, as we were certainly interested in expanding to new markets, but many buyers from China also came to the U.S. looking to buy pecans. Pecans did not remain cheaper than walnuts in subsequent years, but this initial opportunity introduced the product to the market, and customers loved it. Customers in China began to buy bags of roasted unshelled pecans because they enjoyed shelling them by hand. That was good for us because it meant we didn’t need to shell the product before exporting. This opened up a huge opportunity for us (and other pecan farmers as well) because it meant we could sell our product directly to consumers rather than as a commodity for the processing industry. The combination of these factors presented an opportunity for our farm to start exporting, and it ramped up quickly. Prior to the boom, pecan exports to China, Hong Kong, and Vietnam were between 100,000 and 200,000 pounds per year. By 2012, the United States was exporting 100 million pounds per year to those countries – tremendous growth for in-shell pecans in just a decade – and our farm was exporting close to 80% of our crop. That’s a testament to how much these overseas customers love pecans.

I had made six or seven trips to Asia at that point, developing customers and building relationships. As I talked to them and learned more about the market, I realized that there was a lot of concern in China about food safety. Middle and upper middle class consumers in China were looking for products that were produced and packaged in countries with rigorous food safety standards. By packaging our pecans in Georgia, we were able to sell our pecans at a premium to customers seeking safe food products. That was the genesis of Front Porch Pecans.

What is the biggest lesson your company has learned about exporting?

When exporting, there are a lot of unique factors that can affect your business. One of them is, of course, tariffs. Through diplomatic channels and through cooperation with nut trade organizations in China, we were able to lower the Chinese tariff on pecans to 7% in 2017. That tariff increased to 47% in 2018. Combined with the value-added tax (VAT), the effective tax rate grew to over 50%. This completely shut down all pecan exports to China. We had no more purchase orders from supermarkets in China as soon as the tariffs went into effect. We had to completely change our strategy for the export market, focusing instead on Hong Kong, Taiwan, Singapore, and other markets that were still open to us. The biggest lesson I’ve learned is that you have to be nimble and willing to adapt quickly.

A second lesson I learned is that it takes a lot of effort to figure out the way a particular market works. For example, we also sell into Canada. In Canada, distributors push your product to as many stores as possible, so the key there is selling to the distributor. But in Hong Kong, you need to get the stores to request the product from the distributor before the distributor will consider carrying your product. So in Hong Kong, it's more important to get commitments from stores. Each market is a little different in how it’s structured, so you need good allies and you need to be willing to spend the time and money. There’s nothing quick or simple about it.

How has GDEcD’s International Trade Team helped your company? What outside resources have been helpful in achieving success internationally?

The Georgia Department of Economic Development has been great for introducing us to potential customers. At SIAL Canada 2016, we exhibited with GDEcD and worked with them to connect with interested buyers. We had some productive meetings at the show as a result. SIAL China 2018 was another good experience exhibiting with GDEcD. The booth was in a great location and GDEcD’s international reps in China allowed us to gain valuable insight even though we had experience in the market.

The Southern United States Trade Association (SUSTA) has also been helpful with funding and organizing trade missions. For example, we took a trip to Taiwan last year as part of a joint effort between SUSTA and the Georgia Department of Agriculture. This was a successful trip for us because it gave us an opportunity to educate manufacturers and distributors about pecans, which is necessary in a market where other nuts like almonds and walnuts are more popular. SUSTA and the Georgia Department of Agriculture also put us in contact with buyers who already knew the landscape of the Taiwanese market, which is important.

It’s indispensable to have partners in-country who are familiar with the language, culture, politics, and consumption habits. These partners can help you navigate the market. A good in-country partner is often worth the money. I don’t think we could have entered a market like China ourselves without help from all of these resources.

What has been your biggest export achievement?

I’m proudest of the way we were able to pivot and find new markets when the tariffs went into effect rather than losing what we had built in Asia. If we had abandoned Asia altogether, I believe it would be difficult to get back into China in the future. It also helps to have a firm footing in other East Asian countries from a logistics and distribution perspective. This might even put us in a better position when we go back into China.

What business/export challenges have you faced during COVID-19 and how have you responded/been forced to respond? How has the global COVID-19 crisis affected your company and your international business? 

COVID-19 has affected us on many different levels. For example, we source our packaging from China. We had an order that was manufactured and ready to ship to us, but when the lockdown started, the Chinese supplier could no longer ship out of the country. We had to find local suppliers to fill that gap.

Furthermore, the Chinese New Year (which takes place in January or February) is typically the biggest season for both our wholesale and Front Porch Pecans business. This year’s sales were impacted by COVID-19 because public celebrations and festivals were canceled. Future sales might also be affected because the shipments that were not processed due to the pandemic could create a surplus of pecans next year and therefore decrease demand.

COVID-19 also impacted our domestic business. We sell pecans to foodservice companies in Atlanta – restaurants, ice cream manufacturers, fudge manufacturers, and a lot of artisanal shops. That business came to a halt as these shops and restaurants shut down as well. The Paycheck Protection Program was helpful to keep employees on the payroll even as these sales channels closed entirely.

Do you have any advice on how exporters can re-evaluate their international strategy to adapt to the changing global landscape?

The global pandemic has affected our business on both the supply and demand side. On the supply side, it’s been helpful to develop relationships with local printers for our packaging as an alternative to our overseas suppliers. Though the cost is higher, the minimum quantity is lower and the process is quicker. Developing some redundancy in your supply chain can help build resilience and bridge periods of disruption like this one. On the demand side, it makes sense to reevaluate product offerings. For some companies, it may make sense to serve their customers by developing products that help them deal with COVID, since COVID is now a significant part of many consumers’ lives.

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Are you a Georgia business looking for help growing your international sales? Find out how Georgia’s International Trade Team can help at www.Georgia.org/Trade.