News
07.07.2009
U.S. USDA's export credit for grain surpasses $5 billion
On June 24 and July 2, the U.S. Department of Agriculture (USDA) announced an additional $1.05 billion for GSM-102 export credit guarantees for the 2009 fiscal year, bringing this year's total allocations to $5.375 billion, according to the U.S. Grains Council (USGC).
The GSM-102 program provides guarantees to U.S. banks against the risk of non-payment by a foreign bank in the sale of U.S. agricultural commodities, the council said.
"The GSM-102 program facilitates trade when financing is tight and affords U.S. farmers a guaranteed buyer of their grains and related co-products," said Ken Hobbie, USGC president and chief executive officer.
The council said it considers the GSM-102 program one of the most effective programs for defending U.S. market share in difficult economic times. Mexico, Central America, Turkey and South Korea were among the recipients of the recent increased allocations and are key target markets for the council and its market development efforts.
"South Korea is a vital market for U.S. feed grains and co-products," said Mike Callahan, USGC senior director of international operations for Asia. "It would use even more credit if it were available."
The council said the June 24 announcement will provide an additional $300 million to South Korea, totaling to $1.2 billion. Central America was allocated an additional $150 million, for a total of $700 million, the council said, while $100 million was allocated for Mexico, bringing the country's totaling $225 million. Turkey was allocated $50 million, bringing the total to $450 million.
"During this time of slow global economic growth and tight credit, GSM-102 increases the confidence of U.S. banks to give out loans, providing many countries with credit options they would not otherwise have," said Erick Erickson, USGC special assistant for planning, evaluation and projects.
The council said Congress established a $5.5 billion cap for the 2009 fiscal year and added that it hopes the remaining $125 million will be made available in coming months.
"The council works with USDA to help direct GSM-102 credit guarantees toward important feed grains markets worldwide," Hobbie said. "These efforts have paid dividends. GSM-102 has become a very popular program with international buyers and U.S. banks and sellers. Our export customers are able provide food and fiber for their people while U.S. farmers benefit from having a guaranteed buyer. You can't get a more win-win situation."
World Grain
