OTTAWA – Agricultural marketers trying to cash in on the government’s ambitious food export goals have an increasingly helpful ally in the Export Development Corporation.
During the past several months, the federal agency has added money, flexibility and eligible countries to its credit program.
Corporation official Keith Milloy said food exporters are major users of the corporation’s short-term credit insurance. Last year, the corporation guaranteed food-related sales worth $1.3 billion.
He said the crown corporation and its credit guarantees will be a useful tool as the food sector gears up to meet the goal of increasing the value of exports to $20-$23 billion by the end of the decade.
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Three years ago, when the goal was set, the value of exports hovered around $13 billion. Last year, they topped $17 billion.
“If the export targets set by the government are going to be realized, then producers and exporters will have to move beyond traditional markets and break into emerging markets,” he said in an interview. “We can help them do that.”
Typically, the development corporation protects exporters for up to 90 percent of the value of their sale to a foreign country.
If the buyer defaults on the credit, the corporation pays.
This summer, the corporation improved its insurance package for 33 “emerging markets”, ranging from Poland and Egypt to Vietnam and Lithuania.
One improvement was to speed claim payments.
“Our customers now have less time to wait before a claim is paid, which is particularly important for smaller companies,” said Milloy, chief underwriter for the corporation’s short-term insurance.
The corporation announced last week it is adding $1.5 billion to the fund designed to support medium and long-term credit sales into 50 higher-risk markets, although that fund will not be as much use to agricultural firms.
As a reflection of Canada’s booming export sector, the development corporation’s business also is growing. Milloy said the value of short-term credit insurance coverage it provided grew by 60 percent last year and this year the coverage level is running almost 25 percent above that level.
During the first half of the year, the agency supported $10.8 billion worth of sales abroad.
It earned $60 million in the first half of the year, based on the fees it charges for its services.
The corporation is adding $1.5 billion to support credit sales in high risk markets.
