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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 2003, USDA will make available billions of dollars in credit
guarantees to facilitate agricultural, fish, and forestry sales to selected
countries. 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.
FY 2003 GSM and SCGP will be effective October 1, 2002 through September
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:
On September 24, USDA amended the list of commodities
eligible for coverage under the GSM-102 and SCGP. The list is being amended to
include several new products and/or to provide clarification.
This list of eligible commodities will apply to all individual country
and regional announcements unless otherwise stated in the announcements, and may
be amended again as additional commodities become available. Although the CCC
will provide coverage for products contained in this list, exporters should
assure themselves that no trade barriers exist that would prohibit the entry of
the commodity. This announcement supersedes and replaces announcement PR
0096‑0 issued March 20, 2001.
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.
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.
September 24, USDA amended the schedule of guarantee fee rates charged by the
Commodity Credit Corporation under GSM-102 to include fees for 30-day and 60-day
coverage. This notice supersedes and replaces PR 0266-01 issued Sept.
4, 2001, and is effective Oct. 1, 2002.
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.
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.
For most countries and regions that will be announced under the FY 2003 GSM-102 and SCGP, 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 0346-02, issued September 24, 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).