November 12, 2003

USDA To Offer Export Credit Package To Help Ukraine Wheat Imports

The U.S. Department of Agriculture may offer Ukraine wheat imports this year to offset recent poor growing conditions, an export credit guarantee package to help finance grain purchases from the U.S., according to U.S. government officials. However, no decision has been made as yet.

A USDA official said "Ukraine had a pretty disastrous wheat harvest this year. In fact (the U.S. Embassy there) said that summer-fall wheat harvest was about one-fourth the size of last year's, which is pretty unusual because they were the sixth largest wheat exporter last year."

The Ukraine is forecast to import 3 million metric tons of wheat in the 2003-04 marketing year, more than triple the 810,000 tons it imported the previous year, according to USDA data.

Wheat is one of the many U.S. commodities covered under USDA's GSM-102 export credit guarantee program, and according to Ukrainian government spokesman Gennadiy Salykin, that is what Ukraine will buy if it gets the credit.

"It will be wheat because of the harsh...weather," Salykin said.

Under USDA's GSM-102 export credit guarantee program, the U.S. guarantees that a foreign importer and its bank will pay back a loan made by a U.S. exporter or its bank for the purchase of U.S. agriculture commodities. The foreign bank has up to three years with GSM-102 credit to pay off the low- interest loan to the U.S. bank, but it must do so in U.S. dollars.

A USDA official said. "This has been discussed with the government of Ukraine and needs to be discussed further."

A U.S. State Department official confirmed that U.S. Ambassador John Herbst did "raise" the topic of a possible U.S. export credit package in a discussion this week with Ukrainian President Leonid Kuchma.

The State Department official stressed, though, that "it's too early for us to make any commitment" and that it will be up to the USDA to make sure Ukraine is eligible for the export credit assistance.