Harvest might be winding down, but the journey for soybeans is just beginning. With current low prices, buyers in countries like Uzbekistan are searching for affordable ways to source soymeal, helping to keep the U.S. on their soy radar.
“These competitive price points typically come right after our harvest because we’ve got plenty of soybeans to sell and exporters are anxious to move it,” Kim Nill said, director of market development for the Minnesota Soybean Research & Promotion Council (MSR&PC).
To help seal the deal and ease the process for U.S. exporters, the United States Department of Agriculture (USDA) has the Export Credit Guarantee Program (GSM-102). The program encourages exports to buyers in developing countries by reducing financial risk to lenders with foreign exchange available for scheduled payments.
“If you jump through the hoops, the USDA will pick certain banks in Uzbekistan, for example, and if they fill out the paperwork, the bank will back up letters of credit that they issue, guaranteeing a certain amount of money to the exporter in the U.S with conditions,” Nill said.
MSR&PC has also had Uzbekistan on its own radar.
“One of the things we’re pushing in Uzbekistan is the construction of a very large soybean crushing plant,” Nill said. “Because of where it’s situated, all the countries surrounding Uzbekistan would also likely buy soymeal from that crushing plant.”
If the project, which is currently undergoing a feasibility study, is successful, the facility would be able to crush 1 million metric tons (MT) of soybeans per year.
“If the feasibility study finds that greater than 50 percent of all soybeans coming in to get crushed come from the U.S., then they would extend their facilities guarantee program,” Nill said. “They go to the banks that they trust in Uzbekistan and issue a credit guarantee from USDA so the people that are going to supply equipment to go into the crushing plant are confident in the payment process.”
That’s where another USDA program comes into play. The Facility Guarantee Program (FGP) provides credit guarantees for infrastructure improvements in countries where demand for U.S. agricultural products may be limited by lack of adequate facilities.
This program, designed to boost sales of U.S. agricultural products, would provide credit guarantees to facilitate the financing of manufactured goods and U.S. services to improve or establish agriculture-related facilities in emerging markets.
“We believe this could be a game changer,” Nill said. “One of the world’s largest manufacturers of crushing plant equipment has been to Uzbekistan twice now because MSR&PC told them what a great opportunity it is.”
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