10 tips for doing business with European oilseeds buyers
The European oilseeds market is multi-channelled and multi-segmented. Oilseeds are used for many purposes, from crushing for oil, to bakery toppings, pet food, cosmetics and even pharmaceuticals. There are different types of buyers too, from manufacturers buying direct, to agents, brokers, importers and supply chain managers. The tips below can help you do business on the European oilseeds market. Make sure to know your buyer, his requirements and way of doing business to target the right buyer in the right market segment.
Contents of this page
- Understand buyer requirements
- Keep your promises and tell your customer that you are reliable
- Know your costs, shipping charges, transit times and documentation
- Innovate to meet buyers’ requirements
- Understand the factors that influence price
- Ensuring correct packing and transport
- Provide clear product information and communicate on time
- Make the most of your business story
- Manage your customer relationships
- Make sure you have good market information
A key to success in the European oilseeds market is understanding the requirements of buyers. The more closely you can match the buyers’ requirements the more likely sustainable business is to follow and the higher the price you can ask.
The European Union (EU) leads the world in food safety legislation which is intended to protect consumers from contaminated food or residues of dangerous chemicals.
In addition to food safety laws, buyers have requirements on aspects such as quality, packaging and documentation which are not covered by the law but with which conformity is essential for sustainable export business to Europe.
Requirements may differ from buyer to buyer depending on the segment. For example, bakery companies may want high purity whitish sesame seed whereas crushers may buy mixed colour natural seed.
In oilseeds most European buyers have clear requirements relating to the appearance, aroma, taste, oil content and purity of the product. The most common problem on the legal requirements is aflatoxin content where the EU has strict standards but pesticide and other harmful residues are also covered by the law.
Buyers are concerned that their supplier or their products will not meet their requirements. If the importer/food manufacturer fails to comply with legal requirements or food safety practices it can have serious repercussions. For example, loss of business, product recall, destruction of product and fines are some of the risks associated with failures to meet legal requirements.
Example – Meeting buyers quality testing requirements
- Select a target market segment in which you believe you can meet the requirements.
- Ensure that you can comply with them; for example, you should have groundnuts tested for aflatoxin.
- Build a database that shows compliance by keeping a record of all tests and shipments.
- Test each shipment for compliance.
- Turn this knowledge into a sales advantage by incorporating it into your website, brochures and product sheets.
- Read our study about buyer requirements.
Adhering to the terms of a contract is very important for European buyers. They will honour their commitments and expect that you will too.
In oilseeds, due to volatile prices, default of contract has become a common occurrence. For example, the reputation of sesame seed suppliers in some East African countries is poor among European buyers and imports from those countries have fallen sharply as a result. Some exporters have realised this and taken steps to rebuild their reputation.
Once you lose the trust of a buyer, it is very difficult to rebuild it.
In oilseeds, a reputation for honouring contracts is a competitive advantage. It can result in better prices and more flexibility from buyers on other requirements. Defaulting on contracts may be a short term gain but can have long lasting consequences for an export business.
- Bear in mind when you approach an oilseeds buyer that he may have had a bad experience with your country or product in the past.
- Think carefully about the terms before you enter into a contract.
- Negotiate or compromise on price, quality and other factors before making an agreement. Once the contract is agreed it is difficult to renegotiate.
- Make sure you can supply product of the right quality, within the timeframe of the contract.
- Also make sure that you are not entering into a contract that you cannot afford to carry out.
- Make sure to tell your customers that you are reliable. Back it up with reviews from satisfied customers.
Many new oilseeds exporters are poorly informed about how logistics work. This damages buyers’ confidence creating fear of delays, defaults and quality problems. Exporters must know the shipping options, the costs, the transit times and the documentation required. This will make it easier for you to negotiate and make your case stronger.
An Ethiopian exporter for example should know the difference in transit time and cost between shipping via Djibouti and Port Sudan when talking to his buyer. He should be clear about the expected shipping dates and duration for example: 5 days to clean the product, 5 days to truck to the port, 3 days allowed for loading and a 20 day transit to Rotterdam.
Export documents are important. Poor documentation can delay shipments and payments and can cause additional inspections/delays in customs clearance. For example, in 2014 a shipment of Indian groundnuts was refused entry to the European Union because it lacked proper documentation. The entire shipment was returned to India at the exporter’s cost.
- Ask a forwarder or customs agent what documents are usually prepared for shipments to the European Union.
- Discuss documents with your buyer.
- Understand and make sure your logistics staff understand the importance of getting the documents right.
Concentrate on process innovation.
If you want to be a successful exporter, you must develop a quality management system.
Primary processors (products exported just with cleaning, grading, and packing) must ensure that the product complies with European Union Food Law and buyers specifications.
Exporters of processed products, for example tahini must have a Hazard analysis and critical control points (HACCP) system in place.
Which one are you – a primary processor or an exporter of processed products?
Buyers are increasingly concerned about the management and risk control systems which are in place. More and more oilseeds buyers require primary processors to have a HACCP system. If you have a more advanced quality management system in place buyers will give you preference.
Exporters with food safety and quality management systems find it easier to engage buyers and tend to obtain higher prices. Determine if your business is classified as a processor or not, and start a HACCP training system.
If product innovation is part of your process, buyers will expect access to new products, methods or technologies that may arise. An existing customer would for example expect to be offered new higher quality material, even on an existing contract, if that became available.
Innovate in your process and products, make it policy and do not forget to tell your customers about it.
- Read more about HACCP in our study about buyer requirements in the European oilseeds sector.
- Understand HACCP and other quality standards at International Standards Organisation
Oilseeds like sesame, groundnut and sunflower can be volatile in price. Prices are often influenced by events that are taking place far away. Exporters often say that the “market” is causing a problem or that someone, somewhere is keeping prices down. Clearly the supply and demand position influences price as does the harvest, the economies of importing countries, currency and many more. No one can control these in a large, diverse market like oilseeds.
However, there are some factors which may be in the control of the exporter. You need to assess these factors when you consider which products, customers, markets and segments you will target as they will influence the price you can ask:
- Quality and specification: colour, size, purity and production method for oilseeds or kernels.
- Quality management, certification and supply chain management.
- Location: Product located far from where it is needed is worth less due to cost of shipment.
- Payment & delivery terms: Credit terms affect the price, delivery costs money.
- Order size: Large deliveries often command premium prices due to the risk involved. Many buyers have a minimum order size ranging from a single container to a large bulk volume.
- Delivery position: Forward delivery (delivery in a future month) often commands a premium price.
- Risk/Confidence: If a buyer or seller sees more risk in a transaction he will try to negotiate a better price to manage the risk.
European buyers want to have the product delivered in standard, uniform packaging which is the same throughout the shipment and the same from shipment to shipment.
If you offer non-standard packaging, you can expect to receive a lower price or face more difficulty obtaining an order.
Typical standard options in oilseeds are:
- 50kg jute sacks;
- 25kg paper bags with liner;
- cartons from 10kg-25kg;
- bulk bins depending on the product and buyers handling facilities.
- Research the standard packing options.
- Add packaging options and cost to your Product Sheet and specification.
- Giving a buyer choice can be a valuable sales tool. Ask which packaging he prefers.
- Make sure that your shipments will not be delayed whilst you wait for a delivery of packaging material.
The international oilseeds trade is often characterised by a lack of easily available market information and poor communication.
Oilseed exporters work in a complex sector both in terms of product use and buyer types but the products themselves are often very similar to each other. It can for example be difficult to see the difference between a good quality Indian Niger seed and an Ethiopian Niger seed but it is very obvious to the buyer which exporter communicates well.
You can stand out by making sure that you communicate in a professional way at all times.
Many European buyers buy many different oilseeds from a range of origins. They expect that their telephone calls will be returned and their emails answered within 24 hours. If it isn’t possible to meet those deadlines, then let your customer know that you are working on the issue and that you will respond and make sure to do so. Buyers in the sector have choices and often the order goes to the exporter who responds in good time.
Professional presentation of emails, samples, product sheets and quotations is also very important. Your buyer may receive many emails in any given period. What makes yours stand out?
Most oilseeds have no risk hedging mechanism; no futures or exchanges where buyers can manage their risks so they rely on their relationships with suppliers. If you have a problem with a contract or a shipment always communicate it to the buyer at the earliest possible opportunity. Never hide from the problem.
Most European buyers will try and work out a resolution if they see that you are genuinely trying to resolve the issue. Communication is essential for sustainable relationships; relationships are essential for sustainable exports to European buyers.
- Make sure that emails have a signature giving your name, organisation and contact details.
- Make sure that samples are clearly labelled with the product description, your organisation, date and a reference number.
- Make sure that quotations cover all aspects - product, origin, quality, specification, packing, shipment terms, shipment month, ports of origin and destination, method of shipment, payment, price, documents and expiry time/date of the quotation.
- Read our tips about doing business with European buyers of vegetable oils, to see the perspective of oilseed processors.
Consumers in Europe have become more and more conscious of the products they consume. They ask for the stories behind the oilseeds.
Nowadays oilseeds are often marketed as healthy, “good for you” or functional foods. New products like chia have become mainstream and traditional seeds like linseed have made a comeback. In many cases these “healthy” products are mixed with staple ingredients (ingredients for food that is eaten routinely, such as cereals, wheat, barley, maize or rice), to give them a healthier profile for example chia with oatmeal or in smoothies.
For consumers the story does not end with the quality, taste or health claims. They also want to know about social and environmental impact of the value chain.
Many oilseed exporters from developing countries already have great stories of social impact to tell but they often do not realize the power of these stories. Do you buy from small holders? Do you pay a fair price? How well do you treat your workers? Do you have a child care facility or do you pay education fees? Are you an entrepreneur with a great idea? What have you done to develop the sector in your country or region?
Do you have a great story to tell? If you do it could be the difference in making a breakthrough in the European market and not just in the conventional food ingredient segment but even more so in the organic, ethical trade or cosmetics sector.
- You can formalise your impact in the supply chain by working toward a certification based on environmental, social or ethical standards such as organic or fair trade. Check ISO Standard 26000 - Social Responsibility.
Customer relationship management starts with the first meeting. Right from the start you’ll want to collect information on people, products and business practice.
Your customer relationship management should be customer oriented, focussed, proactive and relevant. This means:
- Collect customer information;
- Collate it;
- Analyse it;
- Use it in your decision making.
Keep in mind that Europeans are diverse in their approach to business. This is especially relevant for oilseeds, where some countries buy to manufacture foods they have been making for generations and others are dealing in ingredients that are new to them.
Notice the differences in business approach between countries. If possible, select countries where you feel comfortable and make sure that you have a customer management system that responds to people according to their own needs and expectations.
Also keep in mind that dealing with a giant multinational oil crusher is very different from dealing with a local organic certified importer. Yet both can be customers for oilseeds from developing countries. Local importers may be less formal and more flexible, allowing the relationship to develop over time. When dealing with a multinational you should be fully prepared from day one.
- Find out more about different business cultures in European countries on Passport to Trade 2.0 website.
- Read our study about finding European buyers of oilseeds.
Finding good market information is one of the most difficult aspects of your task as an oilseeds exporter from a developing country.
Markets for products such as sesame, chia, groundnuts and linseed are not widely reported, have no international exchanges, come from a wide range of origins and can be volatile in nature.
It is therefore important to have a system for the collection and analysis of market intelligence which can be used as a tool in decision making.
Having good market information helps you:
- Evaluate the risks when doing business, which in this market is mostly related to prices (the market is volatile).
- Time your sales. When can you get the best price for your product?
- Understand the perspective of buyers, especially related to their risks. Buyers will for example be more worried about contracts if market prices are going up.
- Build your confidence. Make sure to know what you are talking about with your buyers.
- Build the confidence buyers have in you. Buyers will test you on your knowledge of the market.
- Have a look at ITC Trade Map for statistical information.
- Read our study about the demand for oilseeds in Europe.
- Read about the latest trends on the European oilseeds market.
- Have a look at our factsheets for market information related to specific products. For example have a look at our factsheet about the European market for sunflower seeds, chia seeds, groundnuts and linseeds. We also have factsheets about the sesame seeds market in the Netherlands, Germany, Greece and Poland.
- Don’t forget that trade associations can have relevant information. See our tips about finding buyers for more information about sector associations.
- The websites of competitors can be a good source of market information too, especially if you look at successful exporting countries like India, USA and Canada. Look for the issues discussed on these sites and you will have a good idea of the current issues in the sector.
- Fast changing information such as prices and weather trends needs a network of contacts. Other exporters and buyers are in the same position as you. They will gladly discuss the market once you can bring some interesting facts about your market to the discussion. You can exchange or “trade” information with competitors, buyers and brokers.