THE United States has increased credit guarantees for American companies selling rice to the Philippines, allowing its businesses to profit from the Asian nation’s grain shortage. The Philippines is the world’s biggest rice importer.

In a statement made available on its web site, the United States Department of Agriculture (USDA) increased its credit guarantees by $10 million, hiking the amount to $75 million, which will be used to cover rice purchases.

“These guarantees are to cover sales of rice to the approved buyer,” said the USDA. The approved buyer is the National Food Authority (NFA). The USDA noted that sales should be registered with the Commodity Credit Corp. (CCC) by April 18 and that the exporters’ contractual arrangements must call for exports no later than November 30.

The credit guarantees are under CCC’s Export Credit Guarantee Program (GSM-102) for fiscal year 2008.

Under this program, the CCC reduces the financial risk to lenders by guaranteeing payments due from approved foreign banks to exporters or financial institutions in the US.

On March 7 the USDA announced that it will make available $65 million worth of export-credit guarantees to the Philippines.

For its part, the NFA said the tender for the rice it intends to procure will be made in the US.

The GSM-102 program helps ensure that credit is available to finance commercial exports of US agricultural products to developing countries, while providing competitive credit terms in these countries.

Earlier, the Philippine government through the Department of Agriculture (DA) said it will use the available loan to procure some 100,000 metric tons (MTs) of US rice, which is equivalent to about three days of supply at an average daily requirement of 33,000 MTs.

The Philippines is currently stockpiling on the staple to ensure sufficient supply. Rice prices in the international market have gone up as supply continues to tighten due to the efforts of rice-importing countries like the Philippines to beef up their inventories.

Last November the USDA already warned that the grain’s costs in the international market will remain expensive as stocks are projected to be the smallest in 25 years.

THE United States has increased credit guarantees for American companies selling rice to the Philippines, allowing its businesses to profit from the Asian nation’s grain shortage. The Philippines is the world’s biggest rice importer.

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