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USDA Makes Available $2 Billion to Assist Sales of U.S. Agricultural Commodities to Southeast Asia and the Republic of Korea
The United States Department of Agriculture has allocated $2 billion in credit guarantees to assist sales of U.S. agricultural commodities to Korea and Southeast Asia. USDA has authorized credit guarantee packages to help the Republic of Korea and five countries of Southeast Asia (Indonesia, Malaysia, Philippines, Thailand and Singapore) stabilize and rebuild their markets after the recent financial crisis. The credit guarantees should help ensure that Korea, Indonesia, Malaysia, Philippines, Thailand, and Singapore remain key markets for U.S. horticultural exports.
On December 29, 1997, USDA announced the detailed allocation of its $1 billion credit guarantee program to assist sales of U.S. agricultural commodities to Korea under the Commodity Credit Corporation's Export Credit Guarantee Program (GSM-102) for fiscal year 1998. Secretary Glickman has assigned $100 million in coverage for which horticultural products are eligible on a first-come first-served basis.
On January 5, Secretary Glickman announced a $545 million increase in credit guarantees to the Philippines, Indonesia, Malaysia, Thailand, and Singapore to make it easier for buyers in these countries to import U.S. agricultural commodities and products. As a result, more than $1 billion in credit guarantees are now available to these countries. As part of this action, USDA has issued five announcements specifying allocation to these Southeast Asian countries under the GSM-102 and the Supplier Credit Guarantee Program (SCGP). These announcements authorize credit guarantees that double the amount of allocations previously announced for Southeast Asian countries. This action also extends a new $100 million GSM-102 guarantee program to Malaysia. Please see FAS Release PR 0004-98 for country specific details.
The $1 billion credit guarantee package includes funds made available under the new Facility Guarantee Program (FGP). On December 3, 1997, USDA made available $40 million in guarantees to Southeast Asia to stimulate the creation or improvement of facilities that will benefit U.S. agricultural exports. Guarantees under the FGP can be used, for example, to improve cold storage facilities that refrigerate primarily U.S. fruits and vegetables, etc. For specific information on the new program, please refer to http://www.fas.usda.gov/info/factsheets/fgp_fact.htm.
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 tables on pages 11 to 13 present FY 1998 GSM-102 allocations by country as of January 2, 1998 for various horticultural commodities and products.
Supplier Credit Guarantee Program Status
The Supplier Credit Guarantee Program (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 tables on pages 14 through 16 present FY 1998 SCGP allocations by country and product as of January 2, 1998.
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, 202-720-9903).
1/Coverage is detailed in FAS Program
Announcements for all commodities, including those not listed as
of January 2, 1998. 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.
1/Coverage is detailed in FAS Program
Announcements for all commodities, including those not listed as
of January 2, 1998. FAS news releases are available on the
Internet at http://www.fas.usda.gov. 2/ Cocktail,
peaches, pears, and tart cherries. 3/ Dates,
figs, prunes, and raisins. 4/ Apples, apricots, avocados,
blueberries, cherries, grapes, grapefruit, kiwi, lemons, melons,
nectarines, oranges, pears, plums, peaches, raspberries,
strawberries, and tangerines. 5/ Almonds,
pecans, pistachios, walnuts, and hazelnuts. 6/ Asparagus,
beans, carrots, corn, peas, tomatoes, and tomato paste. 7/
Asparagus, beans, broccoli, carrots, cauliflower,
celery, corn, garlic, lettuce, onions, peppers, potatoes, and
tomatoes. 8/ Beans, broccoli, carrots, corn,
mushrooms, onions, peppers, spinach, and zucchini, including
combinations thereof. 9/ Blackberries,
blueberries, raspberries, and strawberries.
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