EXPORT NEWS AND OPPORTUNITIES
USDA Authorizes GSM-102 for the Southern Africa Region and Amends the FY 1998 GSM-102 Programs to Include Additional Horticultural Products
On October 21, the United States Department of Agriculture (USDA) authorized $50 million in credit guarantees for sales of U.S. agricultural products to the Southern Africa Region for FY 1998. The Southern Africa Region includes Angola, Botswana, Burundi, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Swaziland, Democratic Republic of Congo (formerly known as Zaire), Zambia, and Zimbabwe. Canned fruit, dried fruit, frozen vegetables, potatoes, and tree nuts are the horticultural products eligible under the Southern Africa Region GSM-102.
USDA has amended the Turkey GSM-102 program to include canned vegetable as an eligible horticultural product. Also, fruit juices have been added as an eligible product under the GSM-102 program for the Philippines, Russia, China, and Indonesia.
Specific dollar amounts are not assigned to commodities in order to provide buyers and sellers maximum flexibility in arranging the size of their transactions within the scope of the overall allocation. Exporters may apply for credit guarantees on a first-come-first-served basis to cover sales of any of the eligible commodities.
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 following tables presents FY 1998 GSM-102 allocations by country as of November 21 for various horticultural commodities and products.
Horticultural Sales Registered Under the Supplier Credit Guarantee Program
As of November 14, fresh fruit sales under the Supplier Credit Guarantee Program (SCGP) totaled $50,000. Horticultural products are the first sales registered in the FY 1998 SCGP.
Approximately $150 million has been allocated in credit guarantees for sales of U.S. agricultural products to more than 30 different countries. Exporters may apply on a first-come-first-served basis to cover sales of over 55 different horticultural products, such as fresh fruit, fresh vegetables, canned fruit, frozen vegetables, wine and brandy, dried fruits, tree nuts, potatoes, etc.
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.
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. Information on the FY 1998 GSM-102 and Supplier Credit Guarantee Programs is available on the Internet at http://www/fas.usda.gov.
(For further information on the SCGP or GSM-102 Program for
horticultural commodities, contact Yvette Wedderburn Bomersheim,
1/Coverage is detailed in FAS Program
Announcements for all commodities, including those not listed as
of November 21, 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/Raisins,
prunes, dates, figs, and apples. 3/Apples,
apricots, avocadoes, blueberries, cherries, grapes, grapefruit,
kiwifruit, lemons, melons, nectarines, oranges, pears, plums,
peaches, raspberries, strawberries, and tangerines. 4/Strawberries,
blueberries, apples, cherries, plums, raspberries, and
blackberries. 5/Asparagus, beans, carrots, corn,
peas, tomatoes, and tomato paste. 6/Beans,
broccoli, carrots, corn, spinach, onions, peppers, mushrooms, and
zucchini, including combinations thereof. 7/Almonds,
pecans, pistachios, walnuts, and hazelnuts. 8/Cocktail,
peaches, pears, and tart cherries.