|
|
|
|
|
|
It Pays To Know
About These USDA Programs
By Kate DeRemer
The Quality Samples Pilot Program
Providing samples is a time-honored commercial practice that often leads to sales. But, while passing out samples in a retail store may simply involve holding out a tray, it’s far more problematic for U.S. agribusinesses trying to stimulate the interest of foreign importers.
To address these problems, the United States Department of
Agriculture (USDA) recently introduced a pilot "Quality
Samples Program" (QSP) to help expand and develop U.S.
agricultural product export markets by providing potential
importers with commodity samples. 
These samples, coupled with technical assistance provided by QSP participants, will promote a better understanding and appreciation for the high quality of U.S. agricultural products.
Quality Samples Program projects include those agricultural commodities that are subject to further processing or substantial transformation in the importer’s market. Projects should benefit an entire industry, not just one company or brand. They must also promote a new use or market, rather than substitute one U.S. product for another.
Because the program is not intended for consumer marketing, samples cannot be used as part of a retail promotion or supplied directly to consumers.
Commodities in a QSP project must be readily available on the U.S. market so that interested importers can make immediate purchases. In addition, each sample must measure less than a typical commercial sale.
USDA and QSP participants will share responsibilities: USDA will allocate funds to the most qualified applicants and reimburse agreed-upon costs, such as procuring and exporting the samples. USDA may also cover the costs of document preparation fees.
However, USDA will not cover technical assistance to importers under the QSP; this is a key component of the participant’s responsibilities. In addition, participants are responsible for procuring the commodity at a fair market price and shipping the sample, although these are costs that USDA will reimburse.
Each QSP application must identify an importer. QSP projects should target importers who:
Export Credit Guarantees
Export credit guarantee programs for commercial financing of
U.S. agricultural exports help exporters reach buyers in
countries where credit is necessary to maintain or increase U.S.
sales but where financing may not otherwise be available.
Two programs underwrite credit extended by the private banking sector in the U.S. (or, less commonly, by the U.S. exporter) to approved foreign banks using dollar-denominated, irrevocable letters of credit to pay for food and agricultural products sold to foreign buyers.
The Export Credit Guarantee Program (GSM-102) covers credit terms up to 3 years. The Intermediate Export Credit Guarantee Program (GSM-103) covers longer credit terms up to 10 years.
Under these programs, the CCC does not provide financing but guarantees payments due from foreign banks. Typically, 98 percent of principal and a portion of interest at an adjustable rate are covered.
Because payment is guaranteed, financial institutions in the United States can offer competitive credit terms to the foreign banks, usually with interest rates based on the London Inter-Bank Offered Rate (LIBOR).
The resulting credit arrangements between the foreign bank and the importer are negotiated separately and are not covered by the CCC guarantee.
For example, in fiscal 1998, GSM-102 facilitated $237 million in cotton exports to Korea, representing 89 percent of all U.S.cotton sales to Korea. In 1999, the program contributed $161 million worth of cotton exports to Mexico, approximately 40 percent of the U.S. cotton sales to Mexico. In 2000, GSM-102 is expected to once again stimulate additional sales in both markets.
The Supplier Credit Program
Under the Supplier Credit Guarantee Program (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, including cotton. 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. A substantially smaller portion of the value of exports (currently 65 percent) is guaranteed under the SCGP than under the Export Credit Guarantee Program (GSM-102) where CCC is guaranteeing foreign bank obligations.
For fiscal year 2000, coverage under the Supplier Credit Program has increased to 65 percent and guarantee fees have been lowered. More info can be found at the following web site:
Check the following web-site for more information:
http://www.fas.usda.gov/excredits/exp-cred-guar.html
The author is a marketing specialist with the FAS Cotton, Oilseeds, Tobacco and Seeds Division in Washington, D.C. Tel:(202) 720-0138; Fax (202) 720-0965; E-mail: DeRemerK@fas.usda.gov
|
|