What was once an ice cream that was available in a 60-year old dairy in a town near New York has become a product that is being exported from the USA to 14 different nations all over the world. Mercer’s ice cream was once restricted to Boonville, a town in central New York with a population of about 4500 persons. Today, its wine-infused ice cream is being sold in China, the Netherlands, Seychelles, Trinidad and Tobago, and even Indonesia.
Conceived as a hybrid product by the attendees of a 2005 New York Farm Day event sponsored by Clinton, the makers paid attention to Hillary Clinton’s suggestion that the wine-ice cream hybrid had commercial potential. Today, exports contribute a quarter of the dairy’s $1 million sales as the once-local product popular in a 100-mile radius grew into a global brand. This small firm serving four different continents has become the focus of attention of economic development officials in the state and all over the country.
Another success story is Frigid Fluid Co., which recently began exporting its funeral products to 16 different nations after catering to Chicago area for the past 122 years. The outward expansion helped the firm prosper even as more and more Americans opt for cremation. Experts of the Commerce Department in 80 different countries helped the firm plan trips, attend meetings, and seal deals. Today, exports constitute 34 percent of the annual $4 million sales of the firm.
The idea of generating employment, export earnings, and brand goodwill through foreign sales by small companies has all the trappings of the ubiquitous American dream come true. The dream is backed by hard data too. Exports by businesses employing less than 500 employees accounted for 29.2 percent of total US exports in 2005. In 2012, this figure rose to 32.9 percent. President OBama’s 2010 State of the Union address emphasized on doubling exports in five years and led to the creation of the National Export Initiative, which focused primarily on boosting exports by small businesses.
Despite the heartening story of this small dairy, it is evident a lot more needs to be done. As compared to exports by companies, the US lags significantly behind other developed nations. Less than 1 percent of the 30 million companies in the USA ship their products beyond its borders. Of this small number, 58 percent companies export products to just one country.
Data from Commerce Department’s International Trade Administration indicates that US exports, which rose for the fourth consecutive year to a record $2.28 trillion, contributes 13.5 percent of the country’s GDP and supports 11.3 million jobs.
Small businesses will play a big role in getting the US economy back on track with an OECD report predicting middle class demand all over the globe will rise to $56 trillion by 2030, more than 250% increase over $21 trillion demand in 2010. Experts suggest small firms will have to overcome their skepticism and antipathy to the global market and focus on international competition. Small business are warned against three major obstacles—fear, financing, and lack of faith.
Credit insurers underwrite payments and step forward in event of payment default by the foreign customer. Economists associated with such companies are of the opinion that US firms often underestimate the potential of doing business in Asia or Latin America. This helps minimize risk in a situation where even a single payment default can threaten the solvency of the small business.
However, there are critics who opine that Obama’s focus on small firms is impractical considering the fact that the export market is dominated by giant corporate. They feel small businesses cannot contribute significantly to the President’s 2015 export target of $3.1 trillion.
Economists critical of the policy argue that only the most efficient firms can compete globally and such firms, by virtue of their efficiency and productivity, quickly grow into big firms.
The pioneer of wine-infused ice cream shrugs of all criticism and doubts and believes that small business can excel at exports provided they are ready to work hard for it.