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Export News and Opportunities
USDA Announces $3.5 Billion in FY 2000 GSM-102 Programs
As of October 19 1999, the United States Department of Agriculture (USDA) has authorized credit guarantees for sales of U.S. agricultural products to 20 countries and/or regions. Agriculture Secretary Dan Glickman announced $3.5 billion for the FY 2000 GSM-102 programs. These programs will ensure that American farm and food products continue to move to emerging markets around the world. The table on page 58 presents the FY 1999 GSM-102 programs for which USDA has authorized credit guarantees for sales of U.S. horticultural products. 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.
On October 1 1999, USDA issued a list of commodities eligible for coverage under the FY 2000 Export Credit Guarantee Programs (GSM-102) and Supplier Credit Guarantee Programs (SCGP). This list of eligible commodities will apply to all individual country and regional announcements unless otherwise stated in the announcements. The following horticultural products are eligible under the export credit guarantee programs for FY 2000: 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. From time to time, this list may be amended as additional commodities become eligible.
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.
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.
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
USDA Announces $275 Million in Supplier Credit Guarantees for FY 2000
As of October 19 1999, USDA has announced 14 Supplier Credit Guarantee Program allocations for FY 2000. These program allocations total $275 million. Exporters may apply for credit guarantees on a first-come-first-served basis to cover sales of any of the eligible commodities. The following horticultural products are eligible under the SCGP: dried fruit; fresh fruit; 100 percent fruit juices; fruit and vegetable concentrates, pastes, pulps and purees; honey; hops or hops extract; tree nuts; fresh vegetables; canned vegetables; dried vegetables; wine; and brandy.
This list of eligible commodities will apply to all individual country and regional SCGP announcements unless otherwise stated in the announcements.
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 58 presents the FY 2000 SCGPs for which USDA has authorized credit guarantees for sales of U.S. horticultural products as of October 19, 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 General Sales Manager 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.
FAS makes Supplier Credit Guarantee Program More Attractive to Exporters
Recently, Export Credits made changes to the Supplier Credit Guarantee Program (SCGP) in response to feedback from agricultural producers, exporters, and trade associations. Under the FY 2000 SCGP, coverage is increased from 50 percent to 65 percent. Also guarantee fees have been reduced. Guarantee fee rates are $0.45 for credit terms up to 90 days, and $0.90 for credit terms up to 180 days. The guarantee fee rates are reflected in cents per $100 of coverage, based on the guarantee value.
The 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 Commodity Credit Corporation (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.
Program announcements which can be accessed on the internet provide information on specific country and commodity allocations, length of credit periods, the required form of promissory note, and other program information and requirements.
(For further information on the SCGP or GSM-102 Program for horticultural commodities, contact Yvette Wedderburn Bomersheim, (202) 720-0911 or Elizabeth Mello (202) 720-9903)
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