You Can Export the Whole Pig (except for the Squeal!)

Roy Becker | July 1, 2014 | Export Finance
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You Can Export the Whole Pig (Except for the Squeal) | Shipping SolutionsWith a little creativity and ingenuity, companies have sold and shipped amazing goods overseas. For example, a trading company that specializes in animals and animal by-products has encountered some interesting situations.

The company contracted to ship 240 pregnant Holstein cows to Korea. When the letter of credit arrived, they learned that one of the conditions for payment would be a veterinarian's certification that each animal was pregnant. (The buyer in Korea wanted the cows to bear calves shortly after arrival.) The beneficiary presented the required 240 certificates, each signed by a veterinarian.

The letter of credit also required the presentation of air waybills as proof of shipment. Leroy, the exporter, chartered a 747 from Moses Field in Washington. He entertainingly explained how the airline had to build partitions in the aircraft so the animals would not fall to the back of the aircraft on take-off, or to the front on landing!

From the IBT library—
Letters of Credit in International Trade: A User's Guide

How did Leroy pay the farmers for the purchase of 240 pregnant Holstein cows and pay the airline to ship them? The letter of credit he received from a bank in Korea stipulated he could get paid as soon as he shipped the cattle. However, he did have to convince the dozen or so farmers to sell the cows and wait for payment until he received payment from the letter of credit. He also had to convince the airline to accept delayed payment.

He asked his bank to issue a document called an Assignment of Proceeds. With this document, the bank obligates itself to pay proceeds directly to other parties when the bank receives payment on the letter of credit.

An exporter may request a bank to issue an assignment of proceeds without the buyer's knowledge or approval. Amazingly, all the farmers and the airline agreed to this arrangement, so the transaction proceeded without a hitch.

This same customer received a letter of credit for a shipment of 20 container loads of smelt to Japan. Minnesotans find the best use for this small fish to be fertilizer for their gardens. So, how did he find a willing buyer for the smelt and for what use? He sold them to an airline in Japan, which advertised and served them as a delicacy.

Another letter of credit he received covered a shipment of tripe (the lining of the first stomach of a cow). The Japanese buyer used tripe in a soup recipe.

His exporting of unusual products took a stranger twist when he received an order for cow gallstones. He purchased them from a slaughter house in Omaha and exported them to Japan for use in medicines. When asked what price he received for the gallstones he replied, "Per ounce, it is roughly equal to the price of gold."

Someday, a creative exporter will find a market for a pig's squeal!

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