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Export News and Opportunities

Every U.S. exporter wants to get paid.  However, credit can make or break a deal.  It can shift the advantage to you or to your competitor.  That’s why many exporters turn to the U.S. Department of Agriculture’s (USDA) Export Credit Guarantee Programs.  With USDA’s guarantee behind the credit, you can arrange competitive financing with less risk.  Your buyers may benefit too, from longer terms and lower rates.  In FY 2002, USDA has made available over $5 billion in credit guarantees to facilitate sales to selected developing countries, Western Europe, Japan, Hong Kong, and Taiwan.  Invest the time to learn more about the Export Credit Guarantee Programs, (GSM-102) and Supplier Credit Guarantee Program (SCGP), to increase your sales and lower your risks.  Use GSM and SCGP to avoid possible importer and foreign bank defaults on payments and ensure that American farm and food products continue to move to markets around the world.  While USDA does not provide financing, it guarantees payments due to U.S. exporters in case the foreign banks’ or importers’ default.

You may learn more about GSM-102 and SCGP regulations, country specific press releases and program announcements, and a Monthly Summary of Export Credit Guarantee Program Activity on the Internet at:

                        http://www.fas.usda.gov/export.html

GSM-102 

On June 20, USDA amended the Nigeria GSM-102 program for fiscal year 2002.  The amendment changes the credit terms from 90 days to credit terms up to 180 days on applications received for guarantee coverage on or after the date of this program announcement. The total FY 2002 allocation for coverage to Nigeria under the GSM-102 program remains unchanged at $10 million.  The previous FAS announcement pertinent to this allocation is PR 0463-01.

On June 20, USDA increased the Caribbean Region GSM-102 program allocation from $220 million to $350 million.  All other terms and conditions as previously announced remain the same.  The FAS announcements pertinent to this allocation are PR 0275-01 and PR 0038-02.

Also on June 20, USDA increased the Central America GSM-102 program allocation from $250 million to $400 million.  All other terms and conditions as previously announced remain the same.  The FAS announcement pertinent to this allocation is PR 0290-01. 

Exporters may apply for credit guarantees on a first-come, first-served basis to cover sales of eligible commodities to the aforementioned markets.                                                                             
The GSM-102 program makes available credit guarantees for sales of U.S. agricultural commodities overseas.  USDA does not provide financing, but guarantees payments due from foreign banks.  USDA typically guarantees 98 percent of the principal and a portion of the interest.  The GSM-102 program covers credit terms from 90 days to 3 years.

Under the program, once a firm sale exists, the qualified U.S. exporter applies for a payment guarantee before the date of export.  The U.S. exporter pays a fee calculated on the dollar amount guaranteed, based on a schedule of rates applicable to different lengths of credit periods.  The CCC-approved foreign bank issues a dollar-denominated, irrevocable letter of credit in favor of the U.S. exporter, ordinarily advised or confirmed by the financial institution in the United States agreeing to extend credit to the foreign bank.  The U.S. exporter may negotiate an arrangement to be paid as exports occur by assigning the U.S. financial institution the right to proceeds that may become payable under the guarantee, and later presenting required documents to that financial institution.  Such documents normally include a copy of the export report.  If a foreign bank fails to make any payment as agreed, the exporter or the assignee may file a claim with USDA for the amount due and covered by the guarantee.  USDA will pay the U.S. bank and will take on the responsibility of collecting the overdue amount from the foreign bank.

Supplier Credit Guarantee Program

The SCGP is unique because it covers short-term financing extended directly by U.S. exporters to foreign buyers and requires that the importers sign a promissory note in case of default on the CCC-backed payment guarantee.  The SCGP emphasizes high-value and value-added products, but may include commodities or products that also have been programmed under the GSM-102 program. 

The SCGP encourages exports to buyers in countries where credit is necessary to maintain or increase U.S. sales but where financing may not be available without CCC guarantees.  Under the SCGP, CCC guarantees a portion of payments due from importers under short‑term financing (up to 180 days) that exporters have extended directly to the importers for the purchase of U.S. agricultural commodities and products.  These direct credits must be secured by promissory notes signed by the importers.  CCC does not provide financing but guarantees payment due from the importer.

GSM-102 and SCGP

The following tables present the FY 2002 GSM-102 and SCCP for which USDA has allocated credit guarantees for sales of U.S. horticultural products.  The table also includes horticultural sales (exporter applications received) that have been registered under GSM-102 and SCGP.  For most countries and regions, exporters may apply for credit guarantees on a first-come-first-served basis to cover sales of any of the eligible commodities published in FAS program announcement PR 0096‑01, issued March 20, 2001 or as superseded.  The following horticultural products are eligible under the export credit guarantee programs:  dried fruit; fresh fruit; frozen fruit; canned fruit; 100-percent fruit juices; fruit and vegetable concentrates, pastes, pulps and purees; honey; hops or hops extract; beer; tree nuts; fresh vegetables; canned vegetables; dried vegetables; wine; and brandy.  The General Sales Manager will consider requests to establish an SCGP and/or GSM Program for a country or region or amend an authorized program to include horticultural commodities and products that are currently not eligible.

(For further information on the SCGP or GSM-102 Program for horticultural commodities, contact Yvette Wedderburn Bomersheim on 202-720-0911).

         FY 2002 SCGP COVERAGE

         FY 2002 GSM-102 COVERAGE

Last modified: Wednesday, July 21, 2004