As the agricultural trade industry sees more exporters entering the picture, the U.S. Grains Council is working to ensure U.S. corn, barley, sorghum and their co-products remain competitive. Last week, USGC Manager of International Operations Alvaro Cordero accompanied USGC Consultant Jose Alvarado to Morocco for training sessions with Moroccan and Algerian traders on Free on Board (FOB) contracting.
Currently, Moroccan buyers purchase #2 yellow corn through sellers option and origin, and cargo and freight (C&F) contacting. By educating international buyers on the FOB system, the Council aims to increase U.S. market share within the region.
“Through FOB contracting, buyers have more control and flexibility on the availability of products and can also request a specific origin and port, which is an advantage to the United States,� Cordero said. “This allows buyers to focus more on U.S. origins versus multiple origin sources as the United States offers products and a level of quality other countries can’t compete with. For example, there are no distiller’s dried grains with solubles in Argentina and Brazil, and you can only get quality tannin-free sorghum from the United States.�
During the seminars in Morocco, the Council used Costa Rica as a case study to highlight the success of FOB contracting. Due to consolidation issues and few available suppliers in the Central American region, buyers in Costa Rica found they had fewer suppliers to choose from when working under the C&F system. The country turned to FOB contracting which allowed buyers to seek alternative resources, resulting in higher competition from sellers. Since 2007, Costa Rica has enjoyed much success using the FOB process and has not purchased through C&F contracting since making the transition.
“Basically, FOB contracting is more transparent and creates a true win-win situation for U.S. exporting producers and overseas buyers,� Cordero said. “By communicating directly with overseas customers about the FOB process, the Council expects its efforts to result in more direct purchases from the United States by international buyers.�
Written by Jodi Kiely, USGC Contributing Writer