USRPA and 18 agricultural organizations sent a letter this week to Secretary of Agriculture Tom Vilsack urging that he make available additional allocations of GSM-102 export credit guarantees.  The Export Credit Guarantee Program (GSM-102) provides competitive credit terms to buyers in foreign countries and reduces financial risk to lenders, whether they are private banking institutions or exporters. 

 Through GSM-102, credit from the private banking sector in the US is extended to approved foreign banks for the purchase of US farm products.  USDA’s Foreign Agricultural Service administers the program on behalf of the Commodity Credit Corporation (CCC), which acts as the middle man by guaranteeing payments for US farm exports that foreign banks owe to US private banks or exporters. 

The purpose of the Export Credit Guarantee Program according law is threefold:

• To increase exports of US agricultural products;
• To compete with foreign agricultural exports; and
• To assist developing countries and emerging markets in meeting their food and fiber needs

Because the Secretary of Agriculture administers the program, he is also required to maximize export sales of farm commodities and the export credit guarantees that are made available and used during the course of a fiscal year. For Fiscal Year 2010, Congress authorized $5.5 billion for the GSM-102 Program.  To date, USDA has only made available $1.2 billion in guarantees despite difficult global credit markets that necessitate competitive credit terms for buyers in emerging economies.

GSM-102 is critical to the development and maintenance of markets for rice and hundreds of food and agricultural products around the world.  80 developing countries and 2 multilateral organizations have participated in the Export Credit Guarantee Program.  For a complete list of participating countries and risk ratings, see http://www.fas.usda.gov/excredits/countryrisk.html. 

“We believe the immediate release of additional guarantees under the GSM-102 program will result in increased U.S. farm exports, boost the farm economy and save and create jobs in rural America,” the farm groups communicated to USDA.

Download the full letter sent to Secretary Vilsack below.

2010.02.16_GSM-102 _RequestForAllocationsToSecVilsack.pdf

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