Export of Corn From America to China, Research Paper Example

China imports its corn from America, which is its leading supplier followed by Argentina. Thailand is also among its suppliers. Karn Corn Company Ltd in Thailand is a producer of Corn like Sweet Kernel, Baby and on the cob packaged in cans. It has been awarded certificates like ISO, HACCP among others and is a manufacturer and exporter worldwide. Argentina is the fifth largest producer of corn, grown in the central region of Argentina in the province of Buenos Aires. Cordoba is the second largest producing province in Argentina. Planting season begins from October to December. However, silking starts in the middle of December to end of January, and harvesting takes place from March to mid-June. Terms of Sales, delivery and payment terms should be agreed upon between both the buyer and seller. CIF (cost, insurance, freight) this term is where the seller indicates the price for the goods including the insurance, transportation and miscellaneous charges. CPT (courage paid to) indicates the place of destination for the goods.

Export license

The China – USA trade transactions approved in 1999 offers raised entrance for US exports through a wide variety of products and removal of obstacles. China approved to cancel most of the export subsidies as section of their WTO dedication and has alerted to the WTO, which such subsidies have not been kept or established from 2002. However, the Tiananmen Sanctions of 1990 up to now are applicable and stiffly restrain US exporter chances to sell crime management implements to the Chinese military. In addition, the US authorities’ Enhanced Proliferation Control Initiative (EPCI) needs the US department of Commerce and exporters to evaluate closely end-users of US export of any forms. This policy needs an authorized license application especially when the exporter has “desire to understand,” which of the end applicants can be engaged in dangerous exports of both farm and industry products. China keeps the right to use export taxes. Subsequently, China cannot levy such taxes on farm goods having limited exceptions, like a 25% tax on exports of corn.

Charter terms

Charter terms include free in which is a pricing term that indicates the charter of a vessel is responsible for loading goods into the vessel. Free in and out that indicates that the vessel charter is accountable for the loading and unloading costs of goods from the vessel. Free out indicates the prices quoted, which include the unloading cost of goods from the vessel. Understanding the sales terms is important and should be understood and used correctly. This is because misunderstandings may prevent exporters from meeting contractual obligations or make them incur extra shipping costs.

Quantity Purchased according to USDA’S foreign agricultural service (FAS) America has exported nearly 2.8 million metric tons of corn to China in the current marketing year. This year, China is expected to import 5 million tons of corn or 240 million bushels from the United States. China imports corn from America at an average price of $275.58 per metric ton.

Delivery is done in four months each year, which are March, May, July and December. The US charges $35 delivery fee and $50 per bushel above elevator cost for the corn. It also offers a full service delivery within a convenient time. Delivery can either be filling the customers’ containers or through their corn bags, which are strong and convenient for easy movement.

Corn is packed either in vacuum bags with a minimum order of 500 pieces. Corn bags or poaches with a minimum order of 20,000 bags has different packaging. The packaging of corn is important for Companies to invest in because it contributes to their profit and export quantities. Its term of payment is through western union or flexible printing and lamination of packaging pop space corn plastic packaging with a minimum order of 3000-5000 pieces.

When shipping a product overseas, which is part of a commercial transaction, the exporter must be aware of labeling, packaging, documentation, and insurance requirements. Corn is shipped from Pacific Northwest, which is the shortest sea route from United States to Asia. Export-import bank’s export credit insurance policies enables US exporter to finance their activities and reduce the risk of non-payment. The policies include multi buyer export credit insurance policy, which enables exporters to insure export accounts receivable from non-payment. Insurance is also important during shipping due to natural calamities, bad weather conditions or careless handling by carriers. The term of sale is the one that dictates who should be responsible for the loss incurred. Export items are insured against, loss, damage or delay in transit.

Advertised prices are in U.S dollars excluding shipping, handling, and taxes. Unless the credit period has being extended, payment is due at the period stated in the invoice or when the products have being shipped. The amounts not cleared when the due date ends earn an interest. The interest rate acquired by banks is at a rate of approximately 1.5% per month. An assortment of documents need to be filed in order to legalize exportation they include export compliance documents, common export documents, certificate of shipment of specific goods among others.

Common export documents

Commercial invoice

This is a bill for the goods from both the seller to the buyer. The government uses this to determine the value (true) of goods when assessing customs duties the content of this document include the following; form of the invoice, content, number of copies and language to be used.

Export packing list

It contains the following; seller, buyer, shipper, invoice number, shipment date, method of transportation, carrier and itemizes quantity, description, package type, quantity of packages and total net and gross weight it is carried by both commercial stationers and freight forwarders. U.S and foreign customs officials use this document to check the cargo.

Pro forma invoice

This is a document prepared by the exporter before shipping the goods; it informs the buyer of the sent goods, their worth, and other important information.
Export compliance documents

Export licenses

Government document that authorizes the export of goods in quantities to a particular destination examples include bureau of industry and security, state department’s directorate of defense trade controls, nuclear regulatory commission and the U.S drug enforcement administration.

Destination control statement (DCS) is required for exports from the united states for items on the commerce control list that are outside of EAR99 (products, for which, no license is required) or under the control of the international traffic in arms regulations (ITAR).

It appears on the commercial invoice, ocean bill of landing or airway bill to notify the carrier of items export destination.
A specialist known as a freight forwarder who advises the exporter on certain issues like; exporting costs such as freight charges, port charges and insurance costs, does inland freight. He also prepares and files the required export documentation like a bill of landing, which he gives the appropriate mode of transport. Additionally, he ensures compliance of goods and documents with China’s customs regulations.

Warehousing

Before corn is taken to the warehouse to wait for exportation, the following information should be indicated in each item; the booking number assigned by the warehouse office, the address and name of the producing company, address of where it is being exported to and the total of the items a copy of the general packing list should also be sent to the warehouse if the warehouse feels that the packaging is not fit for export, it is re-packed before exporting.

Name of customers

America has several purchases with China being the leading purchaser other purchasers include Japan with 6.9 million metric tons and Mexico with 5.45 million tons. Other documentations include FWS Import Declaration Form 3-177 original alongside three duplications. FWS permit or export documentation (when products are obtained from endangered species). The certificates or permits needed by ESA, with other rules applicable to given shipments. There are also the certificates of exports, sanitation, origin, inspection, as well as other terms from country of origin or export, as needed by Customs, USDA, or FWS. A copy of bill of lading or air waybill is also required.

Recommendation for implementation of transaction
The US government should reduce its customs duty to encourage more exportation and make more access routes to the country, this will make the export figures to increase and hence make its economy to grow. America should generate and identify new agricultural opportunities to expand its exportation and take care of the environment to provide the crops with adequate conditions for growth. The approved provisions of the protocol scheme as well make sure that American local firms and employees have steady protection over the rises of imports. For success and growth in both countries, a strategy has to hit equilibrium among the concerns of trade and environmental interests. There should be agreements that need members to lower export subsidies to ensure more movement of products in and out of the country as this will ensure continuity, which in turn boost rate of economic development.

References

United States Department of Agriculture (USDA). 2012. Grain: World Markets and Trade. Retrieved 21 April, 2012 from http://www.fas.usda.gov/psdonline/circulars/grain.pdf

Spectrum Commodities. Corn – World Supply and Demand Summary. Retrieved 21 April, 2012 from < http://www.spectrumcommodities.com/education/commodity/statistics/corn.html>

http://www.agweb.com/article/record-high_chinese_corn_prices_favor_u.s__exports

Newsroom-meattradenewsdaily.co.uk http://www.bardstownmills.com/post/8996804924.