EXPORT NEWS AND OPPORTUNITIES
USDA Announces 1998 GSM-102 Programs for Horticultural Products for Argentina and the East Caribbean
As of September 22, the United States Department of
Agriculture (USDA) has authorized credit guarantees for sales of
U.S. agricultural products to Argentina and the East Caribbean
Region under the Commodity Credit Corporation's Export Credit
Guarantee Program (GSM-102) for fiscal year 1998. USDA should
announce 1998 GSM-102 programs for other countries in early
USDA authorized $16 million in credit guarantees for sales of U.S. agricultural commodities to Argentina under the 1998 GSM-102 program. Exporters may apply for credit guarantees on a first-come-first served basis to cover sales of potatoes and fresh fruit. Coverage up to 98 percent of the principal is offered on credit terms from 90 days to 3 years for horticultural products.
USDA has also authorized $60 million in credit guarantees for sales of U.S. agricultural commodities in the East Caribbean Region--Barbados, Grenada, Guyana, St. Lucia, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago--under the 1998 GSM-102 program. Of the $60 million authorization, $30 million of operational credit guarantees are available to U.S. exporters for sales of eligible commodities on a first-come-first served basis. Specific details for the unallocated amount of $30 million will be issued later. Canned vegetables and fresh fruit are the horticultural products eligible under the East Caribbean GSM-102 program. Coverage up to 98 percent of the principal is offered on credit terms of 90 days to 3 years for the eligible horticultural products.
The GSM-102 program makes available financing for the 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 amounts 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.
The table below presents FY 1998 allocations by country as of September 22 for various horticultural commodities and products.
USDA Announces 1998 Supplier Credit Guarantee Programs for Argentina and Jamaica
On September 10, USDA authorized $3 million in credit
guarantees for sales of U.S. agricultural products to Argentina
under the CCC's Supplier Credit Guarantee Program (SCGP) for
fiscal year 1998. The allocation does not assign dollar amounts
to any of the eligible commodities and provides buyers and
sellers maximum flexibility in arranging the size of their
transactions within the overall allocation. Exporters may apply
for credit guarantees on a first-come-first-served basis to cover
sales of eligible commodities. The following horticultural
products are eligible under the Argentina SCGP: tree nuts, fresh
fruit, canned fruit, dried fruit, wine and brandy, fresh
vegetables, frozen vegetables, and potatoes. Coverage up to 50
percent of the principal is offered on credit terms of 15, 20,
30, 45, 60, 90, 120, 150, and 180 days. No interest coverage is
On September 15, USDA also authorized $5 million in credit guarantees for sales of agricultural commodities to Jamaica under the SCGP for fiscal year 1998. Exporters may apply on a first-come-first-served basis to cover sales of the following horticultural products: fresh fruit, fresh vegetables, canned fruit, frozen vegetables, wine and brandy, dried fruits, tree nuts, and potatoes. Coverage up to 50 percent of the principal is offered on credit terms up to a maximum of 180 days.
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 table below presents FY 1998 allocations by country and product as of September 22, 1997.
Cautionary information for use of the accompanying GSM and SCGP tables: The tables reflect only exporter applications for guarantees that have been entered into the GSM and SCGP computerized system. At any given time, exporter applications are in process, and not all of those received have been entered into the system. Moreover, all applications are initially entered into the system on a provisional basis until price reviews have been completed, the guarantee fee has been received, and the written guarantee has been issued. Thus, some applications now in the system may in the future be removed, and the commodity balances correspondingly increased.
Note: The GSM will consider requests to establish a SCGP and/or GSM Program for a country or region or amend an authorized program to include horticultural commodities and products which are currently not eligible. (For further information on the SCGP or GSM-102 Program for horticultural commodities, contact Yvette Wedderburn Bomersheim, 202-720-9903).
1/ Coverage is detailed in FAS Program
Announcements for all commodities, including those not listed as
of September 22, 1997. FAS news releases are available on the
Internet at http://www.fas.usda.gov. Unless otherwise noted,
terms are FOB, 90-days to 3 years. 2/ Barbados,
Grenada, Guyana, St. Lucia, St. Vincent, and the Grenadines,
Surinam, Trinidad and Tobago. 3/Apples,
apricots, avocadoes, blueberries, cherries, grapes, grapefruit,
kiwifruit, lemons, melons, nectarines, oranges, pears, plums,
peaches, raspberries, strawberries, tangerines. 4/ Asparagus,
beans, carrots, corn, peas, tomatoes, and tomato paste.
is detailed in FAS Program Announcements for all commodities,
including those not listed as of September 22, 1997. FAS news
releases are available on the Internet at
http://www.fas.usda.gov. 2/Almonds, hazelnuts,
pecans, pistachios, and walnuts/. 3/Apples,
apricots, avocados, blueberries, cherries, grapes, grapefruit,
kiwi, lemons, melons, nectarines, oranges, pears, plums, peaches,
raspberries, strawberries, and tangerines. 4/ Cocktail, peaches,
pears, and tart cherries. 5/Raisins, prunes,
dates, and figs. 6/ Wine and brandy. 7/ Asparagus,
beans, broccoli, carrots, cauliflower, celery, corn, garlic,
lettuce, onions, peppers, potatoes, and tomatoes. 8/ Asparagus,
beans, carrots, corns, peas, tomatoes, and tomato paste. 9/
Beans, broccoli, carrots, corn, and spinach.