REPORT #25 1998
BELIZEAN TROPICAL PRODUCT EXPANSION INTO NORTH AMERICA


Produced by the Belize Development Trust
To continue on the subject of niche food processed tropical product markets in the USA & Canada.

Due to the high cost of shipping bottles and containers empty to Belize and then returning them to North America, it leaves Belizean producers of tropical foods in the supplying bulk raw commodity situation. This is never a good position to be in, with Africa and Asia and South America able to compete in such nich markets.

At the moment, the expansion and development of specialty tropical foods for the growing hispanic markets in the USA and Canada is still relatively young and a good time to get into the field. However, to secure the growers and suppliers of Belize with a steady market for their produce, what cannot be processed, packaged and shipped to be sold in North America from Belize should be tackled somewhat differently. Belizeans and their government have to think in different terms. Essentially Belizean growers have to think in terms of owning the whole line of production, processing and marketing sales. This means for many products, the advantage of bulk shipping of raw commodities, such as powdered papaya for juices should be processed in the USA at a processing facility OWNED BY the Belizean producer/growers. In order to lock in the benefits of a piece of the profit chain at each level of distribution. The growers in Belize are going to have to think in terms of opening their own processing, packing and marketing plant in the USA in different locations, for different food products. This because of the impracticality of costs when trying to package a product in Belize and paying the shipping costs at the finished product level.

In looking at this problem, one becomes aware there are a number of different target markets in the USA for instance. Los Angeles, Phoenix, Houston, New Orleans, Miami, Chicago, New York and so on. Perhaps to get their feet wet in Belize, efforts should be made to start a pilot project processing, packaging, marketing wholesale operation in New Orleans.

The government in Belmopan already has considerable contacts in Louisiana with banks, brokerage houses and the political establishment. This goes back over a hundred years when there was a large colony of Confederates with sugar plantations in Belize during Re-Construction in the Southern States after the Civil War. There was for many years a regular passenger paddle wheel steamer service to Belize from New Orleans.

Probably Belizeans either from Belize with the experience, or Belizeans in New Orleans should be financed and guided into setting up a competitive operation with the Louisiana Hot sauce people. A small warehouse operation would not be too expensive to learn the ropes, problems and get things started.

This always comes back to finding the money to do so. My own thoughts along this line, are more of an investment banker, than that of the typical Belmopan government, civil servant and politician loan funded routine. Such a processing operation for Belizean raw products in New Orleans should be set up not with loans, but with speculative investment by the sale of shares. How this is done is important. The growers in Belize should always stay in control of the whole chain of such an operation. In essence, what is needed is a corporation for processing and marketing, in New Orleans, but controlled, if not owned, by the growers in Belize. How to do this with speculative capital, or venture capital and not lose control is the trick. Here the contacts the Belmopan politicians have with the Louisiana investment brokerage community could play important parts. But in essence, any such corporation in New Orleans should be 60 % owned by the Growers of Belize, to cement their production and growing regimen. In order to do this, the corporation should be set up, in such a way that 60% of the voting stock of the company is owned by a growers organization in Belize. This does not mean putting up any money, it just means a lock on the product produced in Belize. This could be done for instance by issuing two types of shares. A class A share set, that would always represent 60% of the voting rights of the said corporation. Then a Class B set of shares sold to raise capital for investment bankers, or brokerage firms. Such an operation in New Orleans is likely to be too small to interest any real money operation, but through the influence of the government in Belmopan, just perhaps it could be done as a sort of joint venture goodwill gesture.

The Class A shares would never be sold, or reduced in the ability to represent 60% of the voting rights of the corporation, no matter how many Class B shares are issued. It is not dollar value here, it is voting control that is important. Belizean growers will get their return from having guaranteed markets, jobs for families and children in the chain of supply and other travel expenses and minor profit sharing. This is the setup I have always used in my own funding situations. Voting control is all important. There are always proxy fights and venture capitalists and banks trying to take over such a company by mortgage and loan defaults and such instruments otherwise.

You can issue $5 million in Class B shares, or if you need more money you sell more shares, another $10 million or whatever. You let the investors get a decent dividend return, which is as good or better than the interest they could make in other fields. What Belizean growers get is an expanding market guaranteed to take all the product they can produce and jobs and travel expenses back and forth for their families.

The feasability study, should try to figure what it would cost to start up a simple low cost beginning pilot operation, with the costs figured in to handle later on, what it would take to expand with rents, warehouse space, trucks, delivery systems, increased staff and other equipment needed as you grow. Probably an estimated 5 year timeline should be figured in. With graduated investments, with what would start for the first five years as a losing investment. Once it turns profitable in New Orleans, you then copy cat in Los Angeles and elsewhere in the USA.

One of the beauties of this way, is that, should there be a production shortfall in Belize, you can then buy from other countries in South American to keep the Belizean owned facility in North America running. You are not going to lose your business due to a temporary hurricane, or pest disaster.

The Belizean Growers would be like a cooperative and have a Board of Directors in charge of the whole thing, similar to Fishing Lobster Cooperatives. You just seek your technical processing and sales expertise within the USA. This the Belmopan Government could arrange through Louisiana contacts, and other international agencies with experts available for consultation.

Something to think about, a guaranteed market for all the products that Belize can produce, solely because you own the whole chain from production, shipping, processing and wholesale distribution in target market countries and areas. It is the next logical step for Belize to establish stability in what is otherwise a free for all, competitive raw commodity market. Guava, mango, papaya, cashew, the tropical products needed by the growing Latin food markets in the USA is endless.

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