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Export News and Opportunities
In Fiscal Year (FY) 2000, the U.S. Department of Agriculture (USDA) has allocated approximately $5 billion to the Export Credit Guarantee Program (GSM-102) and Supplier Credit Guarantee Program to provide credit guarantees for U.S. agricultural exports. USDA does not provide financing, but does guarantee payments due to U.S. exporters in case the foreign banks or importers default.
In FY 2000, horticultural exporters have registered less than $2 million for these programs, whereas other exporters have registered $3.2 billion. Horticultural exporters, do not overlook the billions of dollars available to help facilitate sales to buyers in countries where credit is necessary to maintain or increase U.S. sales but where financing may not be available without credit guarantees. Invest the time to learn more about GSM-102 and SCGP to increase your sales and lower your risks.
GSM-102
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 Commodity Credit Corporation (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.
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in the GSM list of commodities published in FAS program announcement PR 0003-00, issued January 5, 2000, or as superseded. The 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. For most countries and regions, the allocation does not assign dollar amounts to any of the commodities specified in the GSM list of commodities, providing buyers and sellers maximum flexibility in arranging the size of their transactions within the scope of the overall allocation.
The GSM-102 table presents the FY 2000 GSM-102 for which USDA has authorized credit guarantees for sales of U.S. horticultural products as of August 4, 2000. 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:
Supplier Credit Guarantee Program
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 Supplier Credit Guarantee table presents the FY 2000 Supplier Credit Guarantee Program for which USDA has authorized credit guarantees for sales of U.S. horticultural products as of August 4, 2000. 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:
/excredits/exp-cred-guar.html
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.
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 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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