Letters of Credit
While there is no space here to deal with financing, a few
words with regard to LCs are in order. LCs create more trouble
than one may think, and some sources peg the failure rate as
high as 50 percent. Why is that? The biggest reason is that the underwriting bank does not accept the paperwork. This can create
major headaches for both the exporter/seller and the im-porter/buyer.
Also keep in mind that most banks will count the LC against
your credit line, reducing your available credit. Before entering
into an LC agreement, review the specific requirements for the requested
papers carefully, if possible by comparing them with papers of shipments you
already received. An introduction to
LCs can be found at:
In Conclusion: Communicate,
There is no simple recipe for
successfully importing organic ingredients, but here are the most important
• Talk to colleagues; visit trade shows.
If you need professional help, contact a few consultants and check
their product and supplier
• Discuss financial terms including
LCs early in the game and be
painstakingly scrupulous in their
• Communicate clearly about all
types of certification, request product certificates before you go
ahead, and transaction certificates
with the shipment, if at all possible.
• Make sure that everybody is on the
same page regarding quality re-
quirements and products specs.
• Stay on top of every single shipment, in terms of preparation and
• Communicate often and don’t take
anything for granted.
Dr. Winfried Fuchshofen specializes in agricultural and trade issues as well as certification, processing and sourcing. He is a
speaker and writer for constituencies both
domestic and international. He is also the
president of Organic Insights, an organic
OI’s latest project is the research and publication of organic import data at www.or-ganicti.com.
Dr. Fuchshofen holds a Ph. D. in Organic
Agriculture from the University of Kassel,
Germany. You can reach him at firstname.lastname@example.org.