Export News and Opportunities

 

Export Credit Guarantee Program: USDA Extends $1 Billion in Credit Guarantees to South Korea

 

On March 29, Agriculture Secretary Dan Glickman announced that the U.S. Department of Agriculture (USDA) has authorized $1billion in GSM-102 export credit guarantees for sales of U.S. agricultural products to South Korea in fiscal year 1999. "During the last two years, in response to the global financial crisis which has hurt U.S. agricultural exports, the department has allocated record levels of GSM export credit guarantees," Glickman said. "This allocation to South Korea is a continuation of our efforts to use the GSM program to counter the adverse effects of the global financial crisis on American agriculture."

 

Korea is an important market for U.S. horticultural exports. In fiscal year 1998, Korea was the seventh largest market for U.S. horticultural exports. U.S. horticultural sales totaled $166 million, down 40 percent from 1997. As a result of a decline in U.S. horticultural exports to Korea, USDA has authorized $5 million in credit guarantees for horticultural products under the Korea GSM-102 program. These credit guarantees will provide Korea with the assistance in financing horticultural imports as it works to rebuild its economy, and the $5 million authorization will help the United States export its horticultural products. Exporters may apply for credit guarantees on a first-come, first-served basis to cover sales of the following horticultural products:

-- Dried Fruit: raisins; prunes; dates; figs; and apples

-- Fresh Fruit: apples; apricots; avocados; blueberries; cherries; grapefruit; grapes; kiwi; lemons; melons, including watermelon, cantaloupe and honey dew; nectarines; oranges; peaches; pears; plums; raspberries; strawberries; and tangerines

-- Potatoes: cut and chilled or frozen; flakes; granules; dried and dehydrated refers to flakes and granules

-- Tree nuts: almonds, pecans, walnuts, and hazelnuts

The $5 million Korea GSM-102 authorization for horticultural products includes an allocated $3 million and an unallocated $2 million. The unallocated amount is to ensure that credit guarantees are available throughout the year given the seasonality of horticultural products.

 

The Export Credit Guarantee Program (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 on page 11 presents the FY 1999 GSM-102 programs for which USDA has authorized credit guarantees for sales of U.S. horticultural products as of April 16, 1999. Additional information about the GSM-102 program, regulations, country specific press releases and program announcements, and a Monthly Summary of Export Credit Guarantee Program Activity may be accessed on the Internet at:

 

http://www.fas.usda.gov/excredits/exp-cred-guar.html

 

Supplier Credit Guarantee Program: USDA Extends Credit Guarantees to East Africa Region

 

On April 8, the U.S. Department of Agriculture (USDA) authorized $5 million in supplier credit guarantees for sales of U.S. agricultural commodities to the East Africa Region under the Commodity Credit Corporation’s Supplier Credit Guarantee Program (SCGP) for fiscal year 1999. The East Africa Region includes Kenya, Uganda, and Tanzania.

 

Exporters may apply for credit guarantees on a first-come, first-served basis to cover sales of any of the commodities specified in the GSM list of commodities published in FAS program announcement PR 0122-99, issued April 18, 1999, or as superseded. The following horticultural products are eligible under the export credit guarantee programs for FY 1999: dried fruit; fresh fruit; frozen fruit; 100 percent fruit juices; canned fruit; fruit and vegetable concentrates, pastes, pulps and purees; honey; hops or hops extract; tree nuts; canned vegetables; dried vegetables; wine; and brandy. The latest commodity program announcement can be obtained by accessing the FAS homepage as specified below.

 

The East Africa Region allocation does not assign dollar amounts to any of the commodities specified in the GSM list of commodities. This is intended to provided buyers and sellers maximum flexibility in arranging the size of their transactions within the scope of the overall allocation.

 

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 on page 12 presents the FY 1999 SCGPs for which USDA has authorized credit guarantees for sales of U.S. horticultural products as of April 16, 1999. Additional information about the SCGP, regulations, country specific press releases and program announcements, and a Monthly Summary of Export Credit Guarantee Program Activity may be accessed on the Internet at:

 

http://www.fas.usda.gov/excredits/scgp.html

 

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, 202-720-0911).

Last modified: Tuesday, May 08, 2001