FOOD FOR PROGRESS

MONETIZATION
HANDBOOK

International Food Assistance Division (IFAD)

Global Programs
United States Department of Agriculture
Foreign Agriculture Service

March 16, 2023

 Table of Contents
INTRODUCTION....................................................................................................................................... 5
Figure 1) Monetization Step-by-Step Overview ....................................................................................... 6
SECTION A – PRE-MONETIZATION ................................................................................................... 7
PLANNING A MONETIZATION PROPOSAL ......................................................................................... 7
BACKGROUND .................................................................................................................................. 7
COST RECOVERY AND PROGRAM EFFICIENCY ....................................................................... 7
SCOPING TRIP .................................................................................................................................... 8
DEVELOPING A MONETIZATION PLAN ............................................................................................ 10
MARKET ANALYSIS OVERVIEW................................................................................................. 10
Figure 2) Factors to Consider for a Monetization Plan ........................................................................... 11
Figure 3) Flow Chart Summarizing the Commodity Selection Process ................................................. 12
MARKET ANALYSIS STEPS .......................................................................................................... 12
SUBMITTING A MONETIZATION PROPOSAL TO IFAD ................................................................... 17
BELLMON DETERMINATION .............................................................................................................. 17
COST RECOVERY GUIDELINES .......................................................................................................... 19
BACKGROUND ................................................................................................................................ 19
CALCULATION ................................................................................................................................ 19
MONETIZATION PLAN REVIEW AND CHECKLIST ........................................................................... 21
SECTION B – THE MONETIZATION PROCESS .............................................................................. 22
MAKING A MONETIZATION SALE ...................................................................................................... 22
INITIAL STEPS – AFTER THE PROJECT AGREEMENT HAS BEEN SIGNED ........................ 22
CONDUCTING THE SALE .............................................................................................................. 22
SECTION C – POST-MONETIZATION ASSESSMENT ................................................................... 25
APPENDIX 1: COMMODITY TRADING TERMS AND STANDARDS ......................................... 28
APPENDIX 2: BULK COMMODITY LIST......................................................................................... 29
APPENDIX 3: DATA SOURCES .......................................................................................................... 30
APPENDIX 4: EXAMPLE OF AN INVITATION FOR BID ............................................................. 33
APPENDIX 5: SAMPLE SALES CONTRACT ................................................................................... 38
APPENDIX 6: MONETIZATION AGENTS CONTACT INFORMATION .................................... 45
APPENDIX 7: FREIGHT FORWARDERS ......................................................................................... 46

Key Terms

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Bellmon Amendment – Adopted as Section 212 of the International Development and Food
Assistance Act of 1977 and codified at 7. U.S.C. 1773(a), it applies to commodities under the Food
for Peace Act. The authorizing legislation for McGovern-Dole and Food for Progress incorporates
the programs by reference to the amendment. The amendment says that agencies must determine
before supplying in-kind food aid to a country, that adequate storage facilities are available in that
country and that the distribution of the proposed commodities will not result in a substantial
disincentive to, or interference with, domestic production or marketing to recipient countries.

Call Forward – The process of issuing purchase tenders for commodity and freight through
USDA AMS’s International Bulk Commodity Procurement Division.

Chicago Mercantile Exchange – The Chicago Mercantile Exchange (CME) is one of the world’s
largest financial exchanges. The CME trades futures and many options products in agriculture,
energy, stocks, foreign exchange, interest rates, metals, real estate, and weather.

Commodity Management Section –The commodity management section (CMS) is the part of
the Food for Progress project proposal that discusses an applicant’s monetization plans, potential
scenarios, and forecasted results for funding the project’s operating budget.

Cost recovery – Defined as a percentage. This looks at the value of proceeds generated from a
monetization sale divided by the sum of the cost of procuring the commodity and ocean freight.

Cost and Freight (CFR) – An international commercial term for designating the term of a sale,
defined as the cost of the good plus the freight to the named port of destination.

Cost, Insurance, and Freight (CIF) – An international commercial term for designating the term
of a sale defined as the cost of the good plus insurance to cover shipping plus the freight to the
named port of destination.

Import Price Parity – This is the price an importer of goods is expected to pay. It concludes the
cost of the good, insurance, and freight, also known as the CIF price, plus any relevant taxes or
import tariffs.

Incoterms – The international commercial terms are a set of eleven definitions created by
International Chamber Commerce that define the terms of sale between buyers and sellers.

Invitation to Bid – The notice that is published publicly for conducting a monetization sale or
purchasing commodity and freight. The notice contains the detailed description regarding the
commodity or commodities and shipping terms as well as relevant dates and contracting parties.

Market Analysis for Monetization – The Market Analysis for Monetization (MAM) is USDA’s
internal assessment for looking at the potential impact of a proposed monetization plan on
domestic production of the particular target commodity or commodities, as well as substitutes, and
U.S. commercial trade. It forms a key component of the Bellmon Determination Letter.

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Information from the commodity management sections and subsequent monetization plans form
the basis for the analysis.

Monetization – The conversion of an asset into money. In the case of food assistance and Food
for Progress this is the sale of the awarded commodity or commodities to generate program
proceeds.

Payment Guarantees – A means by which the buyer provides some sort of guarantee to the seller
for the monetized commodity or commodities. This may include letters of credit, bank guarantees,
performance bounds, and down payments or some combination.

Program Participants – These are eligible entities that have received program awards through
Food for Progress’s Notice of Fund Opportunity process.

Sales Platform – The method of conducting the monetization sale. This includes a public tender
or direct negotiations, depending on specific circumstances.

USAID BEST – The U.S. Agency for International Development (USAID) hired the consultancy
Fintrac to undertake the Bellmon Estimation for Title II project to produce a series of reports for
selected countries targeted for food assistance. BEST reports include information on market and
production systems, storage capabilities, and policy issues affecting the country.

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INTRODUCTION

The purpose of this handbook is to provide current and prospective Food for Progress Program
Participants (PPs) with an explanation of monetization as a funding mechanism. The goal here is
to provide examples of best practices with respect to planning, conducting, and then assessing the
impact of a monetization sale. This Monetization Handbook is an effort, in part, to provide a
current update to the previously issued USAID Monetization Field Manual (MFM). Links to the
USAID MFM, as well as to other relevant historical information on monetization practices are
included in Appendix 3 of this handbook. This handbook contains three graphics designed
facilitate an understanding of monetization practices and how they mesh with Food for Progress’s
grants making cycle and overall project management.

There are six additional appendices filled with relevant information resources, examples, and/or
links to such sources designed to help PPs prepare well-constructed monetization plans. They
consist of commodity standards and trading terms to help inform the sales agreement process; the
approved list of bulk commodities for use in monetization; commodity pricing data sources; an
example of an invitation to bid (IFB); a sample sales contract; and contact information for
monetization agents and freight forwarders, should a prospective PP wish to hire a third-party
consultant to assist with its monetization efforts. This handbook will be treated as a living
document and updated routinely to account for any program developments, legislative changes, or
other pertinent information.

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 Figure 1) Monetization Step-by-Step Overview

07 11 15
03
Answer Bidder questions Obtain USDA’s approval Commodities
Bellmon Determination pertaining to the tender. on Purchase Agreement loaded at a US port.

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05 09 17
01
Payment Terms Finalized/Down
USDA Approval of Present bids to USDA payment received and/or Letter of Post-monetization
Scoping Trips Monetization Plan for approval. Credit opened. assessment study.

Pre-Award Monetization Post-Monetization

Agreement closeout
Proposal Review Commodity tender Notify winning bidder(s) and PVO submits Call Forward
advertised. draft/negotiate purchase request to USDA. 18
02
agreements.
06 14
10

Award Signature Receive bids from Execute Purchase Commodities discharged at

interested buyers. Agreement destination port.
04
08 12 16

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SECTION A – PRE-MONETIZATION

PLANNING A MONETIZATION PROPOSAL

BACKGROUND

Monetization is an activity in which donated commodities are sold in a commercial fashion in local
markets to generate cash resources for program implementation. Monetization is used by project
implementers, including foreign governments in the case of government-to-government
agreements, to ensure that Food for Progress activities can be funded and completed.

The “Do No Harm” Principle

The “do no harm” principle stems from the legal requirements of the Bellmon Amendment. Four
general characteristics of a monetized sale can help ensure that the activity will “do no harm:”

1. The market is a net importer for the proposed monetized commodity and is therefore
dominated by commercial imports, with minimal to no supply met through domestic production.
2. Monetized food aid is sold at a fair market price. For the purposes of this policy, “fair market
price” and “fair market value” should be considered synonymous.
3. The volume of food aid monetized is small compared to the normal volume of commercial
imports and/or the normal volume of marketed domestic supply.
4. The timing of the monetization sale is calibrated to local seasonal calendars and market
conditions to avoid substantially depressing producer prices or discouraging traders from
engaging in intra-seasonal storage.

In addition to the Bellmon requirement to “do no harm,” PPs are expected to monitor markets on
an ongoing basis to gauge whether the monetization continues to “do no harm” as well as document
successful outcomes related to the monetization activity. USDA expects PPs to regularly monitor
markets as part of their standard practices to understand their operating environment and to
immediately alert USDA of any market developments related to monetized commodities or
planned monetizations.

COST RECOVERY AND PROGRAM EFFICIENCY

PPs should strive to sell commodities at a price equivalent to the full cost of the purchase and
transport of the commodities for use in monetization. USDA recognizes PPs have a vested interest
in maximizing the sales price because, by so doing, PPs maximize funds available to meet their
project objectives. USDA has not established a minimum required cost recovery; however, cost
recovery is a high-profile measurement of program efficiency. If the cost recovery is estimated to
be (i) less than 70%, with 50% of the ocean freight moving via U.S. flag vessels, or (ii) less than
90% of the FOB cost of the commodity, the PP should consider an alternative commodity.

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PPs should strive to consider all contingencies, such as the use of alternative commodities,
sales platforms including regional sales strategies, and/or financing methods. Introduction of
alternative and/or new ideas can lead to enhanced program efficiencies. Inclusion of these
alternatives in the market analysis/study may result in greater flexibility (and efficiency) in the
final Agreement between the PP and USDA and fewer Amendments to Agreements. As part of
planning the commodity management section (CMS) for the monetization portion of the proposal,
a PP may wish to consider a scoping trip to gather necessary data. Alternatively, they may hire a
consultant or obtain similar details from in-country advisors. Scoping trips can also be taken
following an award to update and revise a submitted monetization plan.

SCOPING TRIP

A key component during the pre-monetization phase is conducting a scoping mission to develop a
critical understanding of a particular market and its suitability for monetization. In most cases, the
scoping mission will involve the market or country where the PP plans to implement its project
activities. In some cases, a market may be too small for the projected size of a monetization sale
and thus, a regional approach or a third-country option may be required to conduct a successful
monetization. In either instance, a scoping mission will help lay the foundation for a well-
constructed monetization plan. For those markets where monetization has been executed
previously, the emphasis will likely be on reviewing previous efforts and updating market
information.

When undertaking a scoping mission, there are some key facts and talking points regarding Food
for Progress and the purpose of monetization to remember. They include the following:

1. Commodity sales proceeds are used to finance agricultural development projects in the
country of operation to increase production and export of agricultural products.
2. USDA Food for Progress Program – as of 2023, there are 45 active projects in 39 countries
with investments valued at $1.1 billion in various agricultural value chains.
3. Commodities are purchased by USDA in accordance with buyer’s commodity specification
needs. Commodities are purchased on the spot market from approved U.S. agricultural
producers/suppliers. All commodities follow U.S. grades and standards and are inspected
according to established protocols and regulations.
4. Commodities sold at 100% Cost and Freight (CFR) prices, with the port of delivery
finalized per USDA regulations by PPs and their representatives.
5. Manageable payments terms, including use of letters of credit or other secure forms of
payment. Payment guarantees, including down payments, are required at time of sales
agreement signing, however payment terms, schedule, and the form of security are
negotiable.

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The following topics include key information items and data points to document as part of a
scoping mission to the target market/country/region.

Commodity Specific Inquiries

• Estimated gross imports.
• Estimated gross local production/harvest.
• Estimated timeline of imports/purchases (seasonal considerations).
• Intended use of commodity (human, feed).
• Where is the demand coming from? Is the demand increasing/decreasing?
If feed, what is the feed composition in country/per product?

Buyer Specific Inquiries

• Estimated number of importer(s).
• Estimated monthly, quarterly, and yearly demand (total and per buyer).
• Seasonal demand -- What are the periods of increased demand (total and per buyer)?
• Estimated timeline of imports/purchases (per buyer).
• Purchasing practices: individual mills purchase alone, or group purchasing.
• Buyers’ commodity specification requirements.
• Buyers’ storage/transportation capabilities, delivery needs.
• Current source of imports-suppliers and commodity specifications.
• Current financial practices/payment terms with suppliers/ transactional costs/bank
guarantees/banking stability in the country where monetization occurs.
• Importing requirements for local buyers per commodity (quotas, permits, licenses, specific
government agency approvals).
• Current duties/taxes on commodities and/or financial transactions, including foreign
exchange restrictions/limitations.

Port Specific Inquiries

• Freight pricing trends for both U.S. and foreign flagged vessels to the ports of the target
country/market/region for monetization.
• Port infrastructure, berths (depth), offloading equipment’s, storage/silo capacity (in MT).
• If applicable, who owns grain elevators.
• Buyers’ added costs of using one port vs. another port.
• Buyers’ current receiving practices/delivery needs and discharging rates.
• Any seasonal considerations/constraints of port usage.
• Multiple ports should be considered particularly if congestion or clearance delays are a
factor.

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DEVELOPING A MONETIZATION PLAN

MARKET ANALYSIS OVERVIEW

In preparing a proposal to submit to IFAD, the PP should consider the following and conduct the
initial steps of a market analysis to ensure monetization is feasible –
• Is there a potential market for monetizing available donated agricultural commodities?
• Is there current or past monetization activity in-country, either through USDA or USAID
programs, or other non-United States Government (USG) sales of donated commodities?
• Is a small volume of monetized commodities (relative to total commercial imports) sufficient
to support funding needs? Target thresholds should be 5 to 8 percent of imports and annual
domestic consumption.
• Can the market absorb this potential volume?
• Can the monetized food aid be sold at a fair market price?
• Does the market have adequate structure at the port and internally to receive, store, handle,
manage, and distribute monetized commodities?
• Does the expected sales price provide a reasonable cost recovery?
• Is it possible to support local market development through monetization?
• What special considerations should PPs consider when planning for monetization?

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 Figure 2) Factors to Consider for a Monetization Plan

Bellmon Determination and Market Yearly Freight Cost Buyers Receiving Capacity/
Analysis for Monetization (MAM) Fluctuations Supply Timeline Requirements

Program Resources MONETIZATION Food for Progress

Requirements and Timelines PROCEEDS TARGET Annual Freight Cap

Cargo Preference Rules Rate of Return Global Commodity

(Cost Recovery) Trends and Fluctuations

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Figure 3) Flow Chart Summarizing the Commodity Selection Process

MARKET ANALYSIS STEPS

Begin a market analysis with basic estimations on commodity market characteristics, volumes,
prices, and potential proceeds from a sale.

Step 1. Identify the Market Opportunity for the Proposed Commodity or Commodities

An opportunity for monetization exists when sufficient local market demand exists for at least one
commodity. Sufficient demand will ensure that monetizing a relatively small portion of the
volume normally traded in that market will provide adequate funding proceeds to justify the PPs’
investment in the monetization process. PPs should consider all commercial commodity markets
and note those which have held monetized sales in the past. Next, PPs should review annual
import, export, production, and distribution levels to determine which markets (if any) possess an
opportunity for monetization. Sources for initial estimations of market size include FAO, USDA,
United Nations Comtrade Database, the World Food Program (WFP), Trade Data Monitor, IHS
Market Global Trade Atlas, local government ministries, and previous USAID-BEST/Bellmon
analyses. If the PP has limited experience with market analysis and monetization in the targeted
country, consideration should be given to hiring an experienced consultant to assist with market

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evaluation, selection of commodity and volume, estimation of cost recovery, and executing the
sale process.

Step 2. Estimate Appropriate Volume

Once a commodity or commodities have been identified as a likely candidate for monetization,
PPs can determine an appropriate volume to potentially monetize. As a rule, monetized volumes
of a commodity should range from 5 to 8 percent of the country’s five-year average annual
consumption or imports. Production, supply, and distribution information on commodities, by
country, can be researched using USDA Foreign Agricultural Service’s (FAS) “PSD On-Line”
application found at http://www.fas.usda.gov/psdonline/psdQuery.aspx.

Policy changes that affect trade, such as import bans or restrictive certification requirements,
should be considered when estimating commercial import volumes. PPs must also consider recent
or planned monetization transactions by other PPs, or government-to-government monetization
transactions in the same market. The volume and timing of the program should adjust to ensure
total monetization volumes do not exceed 10 percent of domestic consumption or imports, and that
monetization sales are timed appropriately to support funding goals while not disrupting any U.S.
commercial trade.

Step 3. Estimate Fair Market Price

PPs should estimate the fair market price they expect to receive for monetizing the selected
commodity on the open market. Global and available local commodity prices should be the
reference prices for both potential buyers and sellers. Price estimations may be obtained by
searching databases listed in Appendix 1 and by contacting freight forwarders and transporters,
international grain traders, local importers, and traders. Direct in-country market analysis and
import parity price (IPP) are considered the best estimates of a fair market price for a monetization.
The import parity price being defined as the average landed cost plus any duties and internal
transport that importers or buyers in the country generally pay for a particular commodity. Both
estimates should be utilized, if possible, but in every case, the IPP should be calculated.

• Direct in-country market analysis is completed by collecting information from a variety of

sources, such as the port of entry, customs offices, wholesale markets, and market
participants. If reliable local price information is available such data can be used to
establish the fair market value, after adjusting for quality variations, as necessary. Quality
adjustment can be made by looking at average price premiums and discounts on the world
market between the evaluated qualities, focusing on prices in key exporting countries.
• An alternative to IPP is the average cost, insurance, and freight or CIF price that buyers or
importers in the target market are paying. In some cases, a reference price may need to be

13
 calculated using export FOB prices plus an average amount for ocean freight to the
destination market.

PPs should consider other characteristics that may impact price, such as normal supply chain
practices of potential buyers, transport, storage and handling costs, administrative fees, and
commodity price trends and market volatility.

Step 4. Estimate Proceeds

Once PPs have estimated an appropriate monetization volume (based on estimated marketed
supply volumes) and estimated a fair market price for the selected commodity, it is possible to
estimate proceeds from the potential sale. If the estimated proceeds (total MT x fair market price
per MT) meet the required funding for the monetization program, PPs should then examine the
competitive environment of the commodity market and other possible factors which might affect
the potential sale, particularly the sales price. The number and type of potential buyers may impact
the sale price of the commodity and should be a consideration when determining the “sales
platform” (see Making a Monetization Sale – Section B).

Step 5. Consider Competitive Environment

PPs should consider the general competitiveness of the selected commodity market(s). This
assessment will (1) inform the likelihood of achieving a fair market price, (2) inform the choice of
sales method, such as small lot sales versus large lot sales, and open tender versus negotiated sale,
and (3) provide insight into the efficiency of the monetization based on the estimated cost recovery.

A market may be deemed uncompetitive when prices reflect market power (i.e. lower than
expected prices) rather than competitive market conditions. Uncompetitive markets are generally
dominated by a small group of large importers, processors, or traders (or a single importer, pro-
cessor, or trader). In such a scenario, a monetized sale is less likely to achieve a fair market price
due to monopsony or oligopsony buying power. Adequate competition among potential buyers
will help ensure PPs receive a fair market price, which will maximize expected returns from the
monetization sale and thus maximize funds available for programming.

PPs may judge market competitiveness by examining international price trends and comparing
them to local price trends, examining the number of importers or processors in the country, and
examining the market share of these actors. Information on market competitiveness can be found
in existing market analyses and through discussions with local traders and market experts.

In cases where a specific commodity market is not competitive, PPs should look to alternative
commodities that can be monetized. The availability of a fallback position will increase a PP’s
bargaining power during negotiations and provide the option of canceling a sale in the event a fair
market price is not achievable.

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In limited cases where a market is not competitive, no other viable alternatives exist, and PPs have
demonstrated expertise in monetization sales, PPs may engage in discussions with large importers
in monopolistic markets. It may be possible to draw up sales contracts that incorporate specific
language dictating how a fair market price will be determined. For example, in determining a fair
market price, a contract may reference a matrix with a basket of prices for a specific commodity
of various origins that importers currently purchase; such a matrix can be developed by an
independent market consultant. In other cases, monetization sales prices may be set based on
Chicago Mercantile Exchange or other commodity exchange futures prices.

Step 6. Further Considerations

Once PPs have determined which commodity is likely appropriate to monetize in terms of
volume, price, proceeds, and market competitiveness the following should be considered:

• Would national government policies and/or sensitivities interfere with the monetization
of the selected commodity, such as exchange controls or currency restrictions?
 Is the local government working to increase local production of the product?
 Does the government have and enforce restrictions of Genetically Modified
Organisms (GMO)?
 What import taxes and fees exist for the commodity?

• What market characteristics (seasonality, storage capacity throughout the year, transport
conditions, seasonal weather events) could interfere with the monetization of the selected
commodity?
• Are there any substitute commodities for the selected commodity? If so, how would the
monetization of the selected commodity impact production/marketing of substitute
commodities?
• Do prices fluctuate during certain times of the year? Have prices remained constant over
the past one to two years or more? Can the PPs take advantage of differences in seasonal
prices on local and global markets to achieve the highest cost recovery and thereby
increase resource use efficiency?
• PPs should consider the timing of their sale. To avoid disrupting the market or creating
production disincentives and to increase the likelihood of receiving a fair market price,
monetization volumes must enter the market at an appropriate time. PPs must understand
if volumes traded vary throughout the year and, if so, how, and why they vary. PPs should
consider when staple foods are harvested in certain locations, when the rainy and dry
seasons occur, and policy (especially trade policy) in effect during certain months. All of
these factors can affect the price and volumes of goods on the market at different times
during the year, which thus affect fair market price and appropriate monetization volume.
Information on seasonality can be found in existing market analysis, seasonal calendars,
price trends, and interviews with market actors.

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• What is the foreign exchange supply? What foreign exchange policies are in place?
Restrictions on foreign exchange is often one of the factors that make monetized goods
attractive to potential buyers, and a shortage of foreign exchange is often cited as one
reason that monetization is important for food security.
• Does the country import the selected commodity from another Low-Income Food Deficit
Country (LIFDC)? Monetization of a commodity typically imported from another LIFDC
would be considered undesirable.
• Are there any current or planned local and regional procurement (LRP) efforts in the
country?
• How expensive will it be for the buyer to transport monetized goods from the discharge
port to the buyer’s facility and how much will this impact anticipated sales price?

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SUBMITTING A MONETIZATION PROPOSAL TO IFAD

While not specifically required, PPs may wish to consider including information on the following
in the CMS portion of their proposal.

• Has the PP hired a freight forwarder, marine surveyor, or other ocean transportation
specialist to provide an evaluation of the port and storage facilities to ensure adequacy
for the handling of the donated commodity?
• Has the PP hired an experienced freight forwarder or cargo expediter to evaluate and
discuss potential contracting options with storage facilities and inland transportation
vendors, in the limited instances these are required?
• Has the PP hired an experienced consultant to assist with market evaluation and to
conduct the commodity sale(s)?
• What Sales Platform does the PP deem most appropriate for the monetization sale and
why? (i.e. open tender, tender with the right to negotiate, direct negotiations)
• Will a fair market price be achievable and what level of cost recovery will this provide?
• Does an opportunity exist for a single monetization transaction with cooperation between
multiple PPs? If so, would this reduce ocean freight costs and/or increase proceeds?

PPs should be aware, the information that provide as part of the CMS section of their application
to Food for Progress’s annual Notice of Funding Opportunity may be utilized to satisfy at least
some of the requirements of the Bellmon Amendment. The Bellmon requirements are as follows:

• Adequate storage facilities will be available in the recipient country at the time of the
arrival of the commodities to prevent the spoilage or waste of the commodity; and
• The distribution of the commodity in the recipient country will not result in a substantial
disincentive or interference with the domestic production or marketing in that country; and
will not have a disruptive impact on the farmers or the local economy of the recipient
country.

The sub-sections of the CMS should also contain information on discharge port facilities and other
details as stipulated in FFPr’s application instructions.

BELLMON DETERMINATION

A Bellmon Determination is required for all food assistance agreements. The Bellmon
Determination, named after Senator Henry Bellmon of Oklahoma, is based on Public Law 480,
Section 403(a), which reads:

Prohibition – No agricultural commodity shall be made available under this Act unless it is
determined that:
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 (1) adequate storage facilities will be available in the recipient country at the time of the
arrival of the commodity to prevent the spoilage or waste of the commodity; and

(2) the distribution of the commodity in the recipient country will not result in a substantial
disincentive to or interfere with domestic production or marketing in that country.

Policies and Procedures:

1. A Bellmon Determination is required for all Food for Progress agreements and must be
completed before an agreement or an amendment that resulted from a change in commodity
or monetization market is signed. The Bellmon Determination is conducted for the country
or region where the commodities will be monetized. In the case of a third-country
monetization, a Bellmon analysis must be carried out for the specific country/region where
commodities are to be monetized. A Bellmon amendment is required if the commodity
and/or country/region are later switched due to obstacles in the original monetization plan.

2. The IFAD Commodity Program Specialist overseeing monetization is responsible for

working with the Program Analysts in the Food for Progress on preparing the Bellmon.
Information from the CMS section of the PP’s proposal is used to inform this process.

3. Information useful in support of a Bellmon Determination can be obtained from the

following sources:

A. Port Facilities and Adequate Storage Facilities

i. Sections seven and nine of the food assistance agreements contain
information on the transportation of the commodity, storage facilities in the
country, and any transportation issues regarding the logistics plan.
ii. Details about country ports can be obtained from “World Port Source,”
which is available via the Internet at www.worldportsource.com. Other
sources of info include websites for the specific ports and websites for
shipping companies.

B. Substantial Disincentives/Market Analysis

i. Potential disincentives to be considered and addressed include:
a. Depressed prices of locally produced commodities - If a country has a
comparative advantage or tradition in the production of the same or
closely substitutable commodity as that supplied as food assistance, the
potential for disincentive effects on the locally produced commodity can
be significant. Monetized commodities should have a neutral or
positive effect on agricultural production and farmer welfare.

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 b. Reduction in the priority given to improving agricultural productivity -
A government receiving substantial food aid may give lower
development and investment priority to its agricultural sector if
imported food assistance is readily available at relatively low cost.
c. Impacting consumer habits that create a permanent dependency on food
imports - Local food production may be adversely affected by food
assistance that contributes to changes in taste preferences for foods
which cannot be produced domestically.
ii. The market analysis considerations of monetization sales include:
a. The market is either a net importer and/or domestic production is
insufficient to meet consumption needs for the proposed monetized
commodity.
b. Monetized food assistance is sold at a fair market price - direct in-
country market analysis and import parity price (IPP) are considered the
best estimates of a fair market price for a monetization.
c. The volume of food assistance monetized will not unduly disrupt the
volume of commercial imports and overall domestic consumption, as is
thus small enough to not distort market prices.
d. The timing of the monetization sale is calibrated to local seasonal
calendars and market conditions to avoid substantially depressing
producer prices or discouraging traders from engaging in long-term
storage.

COST RECOVERY GUIDELINES

BACKGROUND

PPs should strive to achieve a cost recovery equivalent to the full cost of the purchase and transport
of the commodities for use in monetization. In other words, full cost recovery would mean the
total dollars received from the monetized sale equal the total dollars spent to procure and transport
the commodity to the destination country. The 2018 Farm Bill set a minimum cost recovery target
for Food for Progress at 70 percent. The 70 percent benchmark is not mandatory. However,
prudent use of commodity and freight dollars often coincides with PPs successfully meeting their
project budget goals.

CALCULATION

To properly calculate cost recovery, PPs will need to know the full cost of the commodity and
ocean freight to the USG. An estimated cost recovery rate is calculated by using the commodity
cost quotation provided by USDA (FAS) at the time of the call forward and the ocean freight rate.

19
Upon completion of the commodity and freight purchase, the total actual purchase price is divided
by the signed sales agreement sales price to determine the cost recovery percentage.

As part of budget planning, PPs are encouraged to closely manage their freight budgets to avoid
shortfalls. In general, for every $1 in freight funds expended, PPs should endeavor to generate at
a minimum $1.50 in monetization proceeds. Doing so, will also help PPs better navigate swings
in freight costs when oil prices and inflation are pushing up transportation costs.

Factors That May Impact Cost Recovery

Freight and Sales Terms -

Food assistance is generally shipped under more costly and more risk-averse freight terms,
resulting in higher costs than commercial freight costs, and risk of non-delivery for reasons outside
the control of the seller or buyer. Food aid shipments often have delivery schedules that are less
well-defined than commercial shipments, making it more difficult for buyers to predict arrival.
Also, some buyers may be accustomed to purchasing closer to the point of arrival, which entails
much shorter lead times for delivery. Finally, U.S. commodities may trade at a premium to their
international competitors, which can limit some of the cost efficiencies typically experienced by
commercial buyers in the target countries.

On the other hand, monetized food aid may carry some special advantages for potential buyers.
For example, monetized food aid may be payable in local currency, thus preserving foreign
exchange reserves and avoiding the need to obtain foreign exchange licenses which may be
difficult to obtain in some countries. Donated commodities may be of higher quality than generally
available on the market. Monetized sales may have more advantageous payment terms than
commercial sales, which can extend much needed credit to buyers in liquidity constrained markets.
Finally, monetized food assistance may be destined for markets in high-risk areas that are
underserved by commercial market actors. These advantages and disadvantages should be
expected to be reflected in the sales price.

Duties and Taxes –

Monetized food aid may be exempt from duties and taxes. However, any such exemption is not
relevant to buyers. Thus, the sales price should not reflect any such exemption. Donated
commodities for monetization may be taxed by the host government. PVOs may negotiate with
host governments to permit the tax-free importation of commodities. However, USDA does not
require tax-exemption for commodities being monetized.

20
The USDA Agricultural Attaché and PPs must carefully consider the effects of payment or non-
payment of taxes in terms of limiting the proceeds or disrupting the local market. Any waiver of
duties or taxes should result in a higher sales price rather than a windfall to the buyers. In countries
where tax practices are deemed problematic, the USDA Agricultural Attaché and PPs are
encouraged to negotiate with the host country to establish an agreement whereby taxes and duties
would be charged, as in a commercial transaction, but the PPs would be allowed to retain those
taxes/duties as a host country contribution to the program.

MONETIZATION PLAN REVIEW AND CHECKLIST

The prepared plan is submitted to both the IFAD Commodity Program Specialist managing
monetization and the Food for Progress program analyst covering the specific project for review
and feedback. The Commodity Program Specialist reviews all of the plan elements and the
components to conduct the tender sale. If revisions are suggested, the plan will be returned to the
PP for edits. The finalized plan will then be circulated for approval in IFAD and with Post. The
following list covers the items that should be submitted to complete a timely review:

• Description the sales platform.

• Payment terms, including use of guarantees, payment insurance, and down payments.
• List of potential buyers.
• Projected sales price or price range
• Projected commodity and freight costs and cost recovery calculation.
• Anticipated date and copy of proposed public notice.
• Anticipated date of sales tender/invitation for bid (IFB).
• Anticipated date of sales order (call forward).
• The draft IFB for approval by FAS.
• The draft advertisement for the sales tender/IFB
• Estimated date of delivery in country.
• Confirmation of the point at which title to the commodities transfers to the buyer.
• Confirmation of support/agreement of Post (Provided by IFAD).
• The marine insurance clause.
• Other relevant considerations or risks to review.

21
SECTION B – THE MONETIZATION PROCESS

MAKING A MONETIZATION SALE

INITIAL STEPS – AFTER THE PROJECT AGREEMENT HAS BEEN SIGNED

Once the Proposal has been approved and the Agreement signed, the PP can move forward. It is
possible that since the Proposal was completed commodity prices, transportation costs, and
markets have changed. The PP should monitor these changes as closely as possible and update
their monetization plan accordingly. The PP, with the assistance of IFAD, should revisit the plans
and reconfirm the following: (i) monetization proceeds will be adequate based on the current fair
market price; (ii) buyers remain interested in the commodity; (iii) the market remains capable of
accepting the proposed volume without disruption; and (iv) the cost recovery remains acceptable.
The monetization plan should identify the following:

CONDUCTING THE SALE

Step 1. Sales Platform

The most common platform is an open tender, but to maximize cost recovery, it may be necessary
to use a tender with an option to negotiate or engage in direct negotiation. The first option is to
always conduct an open tender unless special circumstances require an alternative. In those cases,
the PP should engage in a direct conversation with IFAD. PPs should strive to host the most
competitive, open sales process as possible to maximize the likelihood of achieving a fair market
price. In markets where evidence suggests only a few potential buyers collude to set prices,
negotiated sales after an attempt at an open tender may yield a higher sale price.

With all open tenders an Invitation for Bid (IFB) will be issued. An example of an IFB is shown
in Appendix 4. The IFB should avoid mentioning “donated” commodities or reference the USDA
or U.S. government. Also, the IFB should stipulate restrictions on re-export of the commodity
outside of the monetization market or region. IFAD must approve the IFB prior to issuance. The
PP and their freight forwarder should be working with IFAD’s Operations Branch to ensure
commodity and transportation funds are available and adequate for the IFB. The monetization sale
should mimic a normal commercial transaction as closely as possible.

Step 2. Conduct Sale

A. Developing a Sales Agreement

22
Once the sales tender process has been completed, PPs can confirm the price, product
specifications, and estimated delivery timeframe as part of the final sales agreement. Although
sales agreements will vary according to country circumstances, the following essential provisions
must be included (See Appendix I for information on commodity trading terms and standards):
• Full commodity specifications.
• Identification of documentation that will be used to verify commodity specifications.
• Quantity to be sold in metric tons to the nearest 10 metric ton increment.
• Agreed total sales price per MT, and currency of sale.
• Date of sale.
• How and when payment(s) will be made, terms of payment(s) (including a description
of the terms), if applicable, which exchange rate is used (including whether it is a
market-based rate), when that exchange rate is used (e.g., at the time of payment, or at
the time of signing the agreement), and a guarantee that payment will take place.
• Stipulation that the purchaser will not re-export the monetized commodities, if it is
regional sale the re-export exclusion will pertain to outside of the region itself.
• Estimated time of shipment (non-binding).
• Statement of purchaser’s capability to take delivery, properly store, and successfully
market the commodities.
• Statement specifying how parties will manage cargo losses/damages.
• Transfer of title.
• Agreement by purchaser, having accepted the commodities when discharged at the port
of entry, not to make claims, thereafter, about the “wholesomeness” or “fitness” of the
commodities.
• Any packaging requirements, such as bags.

The full contract value (the sales price per MT multiplied by the total tonnage) will reflect the
price and quantity agreed upon between buyer and seller. The contract should include a variance
clause that accounts for any price fluctuations that might occur between the agreement signing and
the purchase of the commodities for delivery. Variances can range in most cases from 5 to 15
percent of the contracted total.

B. Payment Guarantees

USDA encourages PPs to secure the sale of commodities by securitizing payment for the
commodities. This can take the form of a letter of credit and can include a good faith down
payment at time of the signing of the sales contract agreement. The size of the down
payment is negotiable and can range from 5 to 10 percent. Payment and/or bank guarantees
from the buyer’s bank should be in place prior to the purchase of the commodity and freight

23
 also known as the call forward process. Note that PPs are responsible for the value of the
commodity until it is delivered, and they have received payment.

IFAD must approve Sales Agreements prior to signing.

Once the Sales Agreement has been signed, the PP will immediately contact IFAD to advise that
a sales order has been entered in the web-based supply chain management (WBSCM) system.
WBSCM provides an integrated commodity purchasing, tracking, and ordering system for USDA
and USAID as well as our customers, vendors, suppliers, and transportation personnel.

Step 3. Handling of the Commodity:

Title to the commodities for monetization is transferred to the buyers at the time the cargo passes
the carrying ocean vessel’s rail. The buyer is responsible for all arrangements in connection with
the receipt, storage, and maintenance of the commodities for monetization from the time title
transfers. This includes obtaining a marine insurance policy to cover any cargo lost once it has
been loaded onto the ocean vessel. PP’s still need to monitor the shipment of the commodity up
until payment is received and delivery is completed to the buyer at the designated port of discharge.

24
SECTION C – POST-MONETIZATION ASSESSMENT

1. Purpose
The primary objective of the post monetization assessments is to document the effects of
monetization in the target country or region to determine whether monetization sales caused
any adverse market impacts. Adverse impacts may include displacing commercial trade,
discouraging local food production, depressing commercial prices, or increasing market
consolidation. The assessments will be conducted by independent, third-party evaluators.

2. Assessment
Selected third party evaluators will conduct in-depth assessments of the impact of monetization
on a country or region’s economy where the monetization occurred. The assessment should
include both desk-based and in-country studies. For regional monetizations with multiple
bidders in multiple countries, the study will need to be large enough to capture the scale of that
approach. Data should be collected from both primary and secondary sources of information,
and the assessment should use a mixed-methods approach that applies qualitative and
quantitative techniques and triangulates information from different methods to enhance the
reliability of the findings.

Outside of a third-party evaluation, USDA expects Program Participants to regularly monitor

both local and regional markets as part of their standard practices to understand their operating
environment. Monitoring markets during project implementation could include identifying
any unduly negative effects attributable to monetization, as well as tracking local or regional
prices at regular intervals and at relevant marketing points (please see price/time series data
template below). This data should be made available to the third-party evaluator. The third-
party evaluator can also collect that data as part of its assessment. Monthly pricing data should
also be collected for at least five years before the start of monetization for a period of eighteen
months after that arrival of the last tranche.

3. Terms of Reference (TOR)

All awarded PPs will submit a Terms of Reference (TOR) for the RFP to solicit the third-
party contractor to IFAD for review and approval prior to publishing the solicitation. Once a
contractor is selected, the PP will submit that information to IFAD as well. Awarded PPs
should endeavor to submit their TORs alongside their initial monetization plans.

5. Types of questions to be answered.

Examples of the questions the evaluator should answer, but not limited to:

• To what extent did monetization affect local or regional production and

consumption in the short - (few months after monetization), medium- (marketing
year 1 after monetization), and long-term (subsequent marketing year)?

1
USDA uses local marketing years in official estimates in the Production, Supply, and Distribution (PSD) database.
Marketing years differ by country and by commodity. For more information on definitions related to the PSD
database please see https://apps.fas.usda.gov/psdonline/app/index.html#/app/about#G10

25
 • To what extent did monetization displace commercial trade in the short-term,
medium-term, and long-term?
• Are there any substitutes for the selected commodity? If so, did the monetization
of the selected commodity impact production/marketing of those substitutes?
• Was the timing and volume of the sale appropriate?
• Did sales occur as intended or was there a lag because of unforeseen conditions in
the market?
• What were the initial PVO estimates for price and quantity? What were the actual
prices and quantities of the commodities sold?
• To what extent was in-country storage utilization affected?
• Did monetized commodities crowd-out commercial or local commodities in
competition for storage facilities?
• Did the cost for storage change due to the monetized commodity coming into the
warehousing market?
• Was the transportation infrastructure affected? How?
• Were buying patterns of local and international actors affected? If so, what was
the magnitude and length of the change?
• Was there an effect on prices? If so, how? Do price trends in the market parallel
overall global trends or are there circumstances unique to that particular market?
• What happened to local and international prices during this period? (Were there
any sudden price shocks that differed from other years)?
• Do price fluctuations follow a global, regional, or particular local pattern?
• Were there any other market factors that could have impacted prices during that
time? (For example, adverse weather affecting production, the one corn processor
had their mill damaged/prolonged power outage and stopped buying corn (which
may have caused lower local prices for farmers), etc.)

Market information that would be helpful to discuss in the analysis would include the
following:

• Market context – how the commodity is produced, consumed/processed, traded,

marketed generally in the context of this country or region. What is the structure
of the local market. Is it competitive or dominated by a few players? Does this
effect pricing? This would also include a discussion of relevant country or
regional policies and regulations that impact the market dynamics of the
commodity.
• Prices (local – ideally farm gate prices if the commodity or substitute commodity
is produced there or wholesale prices if the commodity is a processed product)
and international) –if prices are in the local currency, there should be some
discussion about the local currency vs the U.S. dollar over the time period.

26
• Commodity supply and demand balance sheet for a few years prior and current
year (i.e. similar to USDA’s PSD or Production, Supply, and Distribution) for the
commodity and country/region. Evaluators may use USDA PSD balance sheets
for a commodity and country/region if they are available. USDA PSD estimates
should be compared with information from local/regional market sources and
discrepancies should be noted and discussed in the Market Assessment. A supply
and demand balance sheet includes estimates for the following and balances (i.e.,
Supply equals Demand):

 Supply:
 Beginning Stocks (this is different than storage capacity)
 Production (including estimates of acreage planted and harvested
AND yield)
 Imports
 Demand:
 Consumption (human, for feeding animals (if applicable),
residual)
 Exports
 Ending stocks

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APPENDIX 1: COMMODITY TRADING TERMS AND STANDARDS

Federation of Oils, Seeds, and Fats Association (FOFSA International) –

https://www.fosfa.org/about-us/rules-and-regulations/

Grain and Feed Trade Association (GAFTA) – https://www.gafta.com/

North American Export Grain Association (NAEGA) – http://naega.org/?page_id=1223

NAEGA makes its services related to NAEGA Contracts available to everyone. These services
include Arbitration, the issuance of Certificates and information relating to strikes, riots, lockouts,
and embargoes, or other conditions affecting contract performance.

National Oilseed Processors’ Association (NOPA) – https://www.nopa.org/resources/trading-

rules/

NOPA has trading rules committees for both soybean meal and soybean oil, comprised of both
buyers and sellers. These committees review the Association’s trading rules and recommend
revisions when warranted. These rules are meant to serve as guidelines for sales transactions.
Parties to such transactions are free to adopt, modify, or disregard any or all of these Trading Rules.

Link to Soybean Meal trading rules: https://www.nopa.org/wp-content/uploads/2018/10/NOPA-

SBM-Trading-Rules_effective-Oct-1-2018.pdf

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APPENDIX 2: BULK COMMODITY LIST

Bulk Grains
• Yellow Corn
• Milled Rice
• Sorghum
Feed Additives
• All Beef Packer Tallow
• Extra Fancy Tallow
• Yellow Grease
Grain Byproducts
• Distiller's Dried Grains w/Solubles (DDGS)
Soybeans and Soy Products
• Yellow Soybeans
• Soybean Meal (SBM)
• Crude Degummed Soybean Oil (CDSO)
Wheat
• Hard Red Spring Wheat (HRS)
• Dark Northern Spring Wheat (HRS sub-class)
• Northern Spring Wheat (HRS sub-class)
• Hard Red Winter Wheat
• Soft Red Winter Wheat
• Soft White Wheat

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APPENDIX 3: DATA SOURCES

United Nations (UN) Comtrade http://comtrade.un.org/db/

International Trade Centre (ITC) Trade Map http://www.trademap.org/

COMESA’s COMSTAT http://comstat.comesa.int/Home.aspx

USDA PSD Online www.fas.usda.gov/psdonline/psdQuery.aspx

USDA GAIN http://gain.fas.usda.gov/Pages/Default.aspx

USDA World Supply and Demand Analysis (WASDE) www.usda.gov/oce/commodity/wasde/

USDA (historic) prices www.ers.usda.gov/topics/crops/soybeans-oil-crops.aspx

USDA Dairy Market News Portal www.marketnews.usda.gov/portal/da

USDA oilseeds prices www.fas.usda.gov/oilseeds/Current/

FAS Global Agricultural Trade System (GATS) www.fas.usda.gov/gats/default.aspx

FAS BICO Reports www.fas.usda.gov/GATS/BICOReport.aspx

FAS Online Food Aid Tables www.fas.usda.gov/excredits/FoodAid/Reports/reports.html

USDA Livestock, Grain and Marketing News http://www.ams.usda.gov/AMSv1.0/lsmnpubs

USAID BEST / Bellmon Analysis

http://transition.usaid.gov/our_work/humanitarian_assistance/ffp/bellmonana.html

USAID Commodity Calculator

http://transition.usaid.gov/our_work/humanitarian_assistance/ffp/impletool.html

USAID Monetization Field Manual

http://www.usaid.gov/sites/default/files/documents/1866/MonetizationManual12222012FINAL.
pdf

FEWS NET www.fews.net/Pages/default.aspx

FEWS NET’s Drought and Flood Assessment www.fews.net/Pages/archive.aspx?pid=300%20

World Food Programme (WFP) www.wfp.org/food-security/

WFP Interfais www.wfp.org/fais/quantity-reporting%20

Food and Agriculture Organization of the UN (FAO) STAT http://faostat.fao.org/

30
FAO GIEWS www.fao.org/giews/english/index.htm

GIEWS National basic food prices http://www.fao.org/giews/pricetool/

FAO GIEW’s Food Outlook www.fao.org/giews/english/fo/index.htm

FAO Crop Prospects and Food Situation http://www.fao.org/giews/english/cpfs/index.htm

FAO Monthly News Report on Grains

www.fao.org/economic/est/publications/grains-publications/monthly-news-report-on-grains-
mnr/en/

Eurostat http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home

South African Grain Information Service (SAGIS) www.sagis.org.za/

(China) National Bureau of Statistics www.stats.gov.cn/english./

International Grain Council (IGC) www.igc.int/en/Default.aspx

IGC World Grain Statistics www.igc.int/en/publications/worldgrainstatistics.aspx

Agrimoney www.agrimoney.com/home/

HGCA www.hgca.com/content.template/0/0/Home/Home/Home.mspx

Strategie Grains www.strategie-grains.com/

NOAA www.cpc.ncep.noaa.gov/products/african_desk/cpc_intl/

USGS Early Warning and Environmental Monitoring (EWEM) http://earlywarning.usgs.gov/

Martell Crop Projections www.martellcropprojections.com/

ForeignAssistance.gov www.foreignassistance.gov/

World Bank Pink Sheets http://data.worldbank.org/data-catalog/commodity-price-data

IMF Primary Commodity Prices www.imf.org/external/np/res/commod/faq/index.htm

US Wheat Associates Weekly Price reports www.uswheat.org/reports/prices

Kansas City Board of Trade (HRW Prices) www.kcbt.com/

Minneapolis Grain Exchange (HRW & SWW) www.mgex.com/

Chicago Board of Trade (SRW, Soybean, SBO,SBM,Corn) www.cmegroup.com/

Oil World www.oilworld.biz/app.php?ista=c2436850921505dfb84f05a8f7693e08

31
Trade Data Monitor https://tradedatamonitor.com/

International Grains Council https://www.igc.int/en/default.aspx

Fryer’s Reports https://fryersreports.com/

World Perspectives Inc. https://www.worldperspectives.com/

32
APPENDIX 4: EXAMPLE OF AN INVITATION FOR BID

INVITATION FOR BID

for
[Commodity Description Here]
[PVO / SELLER NAME HERE], (“Seller”) a U.S. based organization with its headquarters at
[ADDRESS], United States of America; acting through its office at [FOREIGN OFFICE
ADDRESS].

Seller announces the sale of U.S. agricultural commodities.

Seller invites firm bids delivered no later than 00:00 hours (LOCAL time) on
[Date/Month/Year], on the terms and subject to the conditions contained in the applicable form
of sales agreement available upon request as described below.

Transaction Overview
This overview is only an introduction to the terms of this transaction. Any decision to submit a
firm bid in response to this invitation must be based on a consideration of all of the provisions of
the applicable form of sales agreement. Please contact POC at the telephone numbers or
addresses provided below to request a copy of the applicable form of sales agreement.
Commodity Specifications:
Class: Hard Red Winter Wheat (HRW)

Grade: U.S. No. 2 or better

Protein (Min): 12.5% (on 12% moisture basis)

Moisture (Max): 13.5%

Dockage (Max): 0.6% (no deduction for dockage)

Test weight lbs./bushel (Min): 58.0

Falling Number (Min): 300

Wheat of Other Classes (Max): 2.0%

Origin of commodity: United States of America

LOT A: One lot of 0000 metric tons in bulk (+/-X% at

Individual lots: seller’s option)

LOT B: One lot of 000 metric tons in bulk (+/-X% at

seller’s option)

33
 LOT C: One lot of 000 metric tons in bulk(+/-X% at
seller’s option)

A bidder may bid for:

(i) one of the individual lots;

(ii) any combination of the individual lots,

(iii) all of the individual lots.

Minimum and Maximum Minimum Bidding and Purchase Quantity:

Quantities:
• LOT A: 000 metric tons
• LOT B: 000 metric tons
• LOT C: 000 metric tons
Maximum Bidding and Purchase Quantity:

• LOT A: 000 metric tons

• LOT B: 000 metric tons
• LOT C: 000 metric tons
Quality: Final at the U.S. Loading Port as per the Official
Export Inspection Certificate.

Minimum Bid Price: Bids below the minimum bid price of $$$$ per metric
ton shall not be considered.

Sales Agreements: Seller has its own sales agreement. Before submitting
a bid, please contact POC at the telephone numbers or
addresses provided below to request the sales
agreement form. Each buyer will be expected to
conclude a signed sales agreement within five (5)
working days of notification of the acceptance of a bid.

Delivery Terms: Cost & Freight (CFR, Incoterms 2010)

Discharge Port: [Discharge Port], [one or two safe berths, Free Out
terms.]

Shipping and discharge:

U.S. Loading Port: The U.S. Loading Port to be determined.

Vessel: The commodity will be shipped from the U.S. Loading

Port to be determined through an ocean freight tender
process. The vessel may be geared or gearless,

34
 tween/multi-deck or ocean-going barges. If buyer
requires gear to be provided by the vessel, the gear
requirements must be provided to Seller prior to
finalization of sales agreement.

Estimated shipping date Estimated during Month Year. Seller does not
guarantee any estimated shipping date from the U.S.
Loading Port or any estimated delivery date at
discharge port.

Estimated delivery date Estimated during Month Year. Seller does not
guarantee any estimated shipping date from the U.S.
Loading Port or any estimated delivery date at
Discharge Port.

Port costs and fees: For Bulk Commodities: All port costs and fees for
discharging the commodity from the ship, including
offloading and stevedoring, and on the quay and in the
port, including vessel demurrage (if any), are for the
account of the buyer(s).

Discharge rate: For Bulk Commodities: The required average

discharge rate of the Commodity will be specified in
the applicable Sales Agreement(s).

Other Terms: The successful buyer(s) must agree that the

Commodity will be imported into [Country]. Once the
Commodity has been imported into [Country], the
Buyer(s) guarantee(s) that neither the Commodity nor
any by-products thereof will be exported out of
[Country].

Taxes and Fees: Any charges, including, but not limited to, any export
or import duties, taxes, levies, fees, surcharges, vessel
dues, licenses, certificates, inspections or
documentation or any requirements of the Government
of [Country] for the importation of wheat into
[Country] or otherwise shall be for the account and risk
of the buyer(s).

Payment Terms:

35
 Currency: U.S. Dollars

Initial cash payment (10%): At the time the sales agreement is signed, the buyer(s)
must pay 10 percent of the Initial Purchase Value to the
Seller in immediately available funds, paid to the bank
account as instructed by the Seller.

Letter of Credit (90%): No later than 10 calendar days after the Effective Date
of the sales agreement, the buyer(s) must open an
irrevocable sight letter of credit payable at sight in
favor of the Seller for 90 percent of the Initial Purchase
Value. The letter of credit must be valid for at least 180
days and shall remain in full force and effect until the
outstanding balance of funds owed to the Seller has
been paid in full, or until the expiration of the
agreement, whichever occurs first. Confirmation of
the letter of credit will be an option of the Seller.

Fees: All banking charges inside [Country] and all charges

related to the opening or confirmation of the letter of
credit will be for the account of the buyer(s).

Bids: A bid must be made in writing and signed by an

authorized officer of the company/entity making the
submission. The bid shall include the unit price per
metric ton, the total number of metric tons, the
individual lot(s) selected and the total bid price both in
figures and in words. The information contained in the
bid must be provided on the basis of the terms and
conditions in the sales agreement. A bid must be
addressed to the attention of POC, the Country
Representative of Seller in [Country].

Deadlines and method for

submission of bids:

Submission Deadline: Submission Place and Methods:

By 00:00 hours (local time) on Date Bids must be received at [Address] before 00:00 hours
/ Month / Year (local time) on Date / Month / Year

Bids may be submitted:

36
 (i) in person;

(ii) by courier;

(iii) by fax; or

(iv) by email (in which case the bid must be included

as a separate signed document attached to the email).

Responses to Bidders: Responses to all companies/entities submitting a bid

will be given in person or by telephone.
Deadline:

by 00:00 hours (Local time) Date /

Month / Year

Contact times and information: Monday through Friday, between 0:00 and 00:00 hours
(local time) to the attention of the following
individual(s):

POC

Telephone:

Fax:

Mobile:

Email:

Seller reserves the right, acting in its sole discretion and without providing any reason,

• to accept, reject or negotiate any or all of the bids it receives in response to this invitation;
• waive any or all of the conditions of sale;
• cancel this invitation for bids; or
• issue a new invitation for bids, which may or may not be the same as this invitation.

37
APPENDIX 5: SAMPLE SALES CONTRACT

This sample contract is NOT to be used as a template for direct use. This sample is non-binding
and is only provided for background information purposes. It is not a formal endorsement from
IFAD. A PVO may wish to review the USAID/FinTrac Monetization Manual for additional
sample contracts. Other resources for sales contracts are listed in Appendix I.

Sales Contract

PURCHASE AND MONETIZATION SALE AGREEMENT

This agreement is made the ___ day of ______ 20__ between the SELLER and PURCHASER.

THE PARTIES
Seller: The Seller is (insert legal name of organization and legal representative of organization)
(hereinafter referred to as “Seller”), a non-profit organization with its principal place of business
at the address of:
Company Name:
Legal Representative of Company:
Address/Telephone/Fax/E-Mail:

Purchaser: The Purchaser is (insert legal name of purchaser and legal representative of
purchasing company) (hereinafter referred to as “Purchaser”), with its principal place of business
at the address of: Address/Telephone/Fax/E-Mail:

NOW THEREFORE, the Seller and Purchaser agree as follows:

I. DEFINITIONS

In this Sales Agreement unless the context indicates otherwise, the following words and phrases
shall have the meaning assigned to them hereunder:

A. “Commodity” shall mean (insert full technical description of commodity including grade,
standards, etc.).

B. “Complete Order” shall mean a total of (insert number written in letters) metric tons
(insert number written in numerals) MT of Commodity as defined, delivered in/with the
Packaging (if packaging required), with an agreed variance in quantity of plus/minus
____percent (+/- ___ %). (Please ensure consistency with USDA language).

C. “Days” shall mean business days (excluding any official non-workdays in the country
and official public holidays).

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 D. “Delivery” shall mean delivery of the Commodity together with bills of lading and
Shipping Documents as described in III.B.3 required to effect proper and complete
transfer of the Commodity from the Seller to the Purchaser.

E. “Packaging” shall mean (insert appropriate description: [25 Kg (55 lb.) bags of multi-
wall paper (a minimum of 3-plies of paper) with inner polyethylene or polypropylene
plastic liner and treated to provide wet strength] OR [50 Kg (110.23 Lb.) woven
polypropylene bags in which the fabric contains an inhibitor to resist ultra-violet
absorption and has an anti-skid coating] OR [4-Liter cylindrical tins, 4-Litre plastic jugs,
20-Litre steel pails, or 208-Litre steel drums] with abbreviated markings showing
Commodity names, net weight, markings and contract number, as appropriate.

F. “Payment Guarantee” shall mean a bank guarantee; surety; or negotiable, confirmed,

irrevocable Letter of Credit, established by the Purchaser in an amount equal to the total
Purchase Price or an amount agreed to prior, payable to the Seller at sight and/or terms as
described in III.B issued by a national or international financial institution acceptable to
Seller.

G. “Purchase Price” shall be [insert total value in agreed currency - # of metric tons
multiplied by price per metric ton - written in both letters and numbers/use only a stable,
internationally convertible currency] which is equal to the (insert price per metric ton in
numbers) per MT multiplied by the total number of MTs as defined by the Complete
Order.

H. “Specifications” shall mean the quality, standard, and/or type of Commodity, as

determined by the USDA and as incorporated at I.A, above.

I. “USDA” shall mean the United States Department of Agriculture. “FAS” shall mean the
Foreign Agricultural Service of the USDA. “IFAD” shall mean the International Food
Assistance Division of FAS’s Global Programs.

A. “Vessel” shall mean the vessel used to transport the Commodity. The performing
vessel(s) shall be chartered in accordance with the freight tender procedures as
established by the USDA.

II. EXPRESS CONDITIONS OF THIS SALE

A. The sale of the Commodity is expressly conditioned upon: USDA supplying the Commodity
to Seller;
B. All rights, title and interest in the Commodity is determined by and subject to applicable
United States laws and regulations.

The Purchaser may not re-export the Commodity or by-products thereof from (insert name of
country or region where applicable).

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In the event that the conditions outlined at II.A.1, above, are not met this Agreement shall
automatically terminate without liability to either party.

III. PAYMENT

A. Within ten (10) calendar days of the execution of this Agreement, Purchaser will obtain
and deliver to Seller an Irrevocable Sight Letter of Credit in favor of Seller for 100% of
the Purchase Price or Another form of Credit Guarantee. The Letter of Credit will be for
[specific the amount] through a bank acceptable to Seller and confirmed by a U.S. bank.
If Purchaser fails to open the letter of credit or establish an acceptable credit guarantee in
an acceptable form by this time, Seller has the right to extend the shipment period
accordingly to suit vessel availability or to cancel the contract with all the costs and
consequences for Purchaser’s account and sell the Commodity to a different party/buyer.
B. The Payment Guarantee shall:
1. Be open and effective as per provision III.A. and not less than five (5) days prior to
the commencement of the Vessel loading in the United States.
2. Remain in full force and effect until such time as the outstanding balance of funds
owed to the Seller has been paid in full or until the expiration of this agreement,
whichever comes first.
3. Provide for payment on site for each consignment (in the percentages referenced at 4,
below) on the following terms and against the following documents (hereinafter
referred to collectively as the “Shipping Documents”) as applicable:
a. Original Commercial Invoice;
b. Three (3) original and three (3) copies of Bill of Lading marked “freight prepaid” or
words of similar substance;
c. One (1) original and two (2) copies of FGIS Weight Certificate;
d. Note other required documentation, such as a Phytosanitary Certificate from
USDA/APHIS, a Certificate of Origin, etc.

C. Purchaser shall waive any discrepancies between the Payment Guarantee and the above-
referenced documents that are either of typographical nature or clerical errors or not
prejudicial to Purchaser insofar as they relate to the specifications of the Commodity.

D. The parties may agree in writing acknowledged by each to waive any requirements
relating to payment under the Payment Guarantee.

E. Payment against the Payment Guarantee shall be made as follows: One hundred percent
(100 percent) payment on sight against the Shipping Documents after loading if shipping
in a single consignment, or in the event of more than one consignment, as applicable:
a. (insert percentage written in letters) percent (insert percentage in numerals) %
payment on sight against the first consignment of (insert number in numerals) MT,

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 b. (insert percentage written in letters) percent (insert percentage in numerals) %
payment on sight against the second consignment of (insert number in numerals) MT;
and,
c. (insert percentage written in letters) percent (insert percentage in numerals) %
payment on sight against the third consignment of (insert number in numerals) MT.

IV. LOADING, SHIPMENT(S) & DELIVERY

A. The Commodity will be loaded and shipped in [a single] or [insert number of shipments
under this contract] consignment(s), as applicable, from the United States port of export
(US Port) to (insert names of discharge port(s) to which commodity will ship), hereinafter
referred to as “Port(s) of Discharge”), as follows:

a. The Complete Order of the Commodity subject to the agreed variance at U.S. Port
estimated, without guarantee, between (insert date range, including year, for
loading).
b. In the event of more than one consignment:
i. first consignment of (insert number in numerals) MT of the Commodity, subject
to the agreed variance, at U.S. Port estimated, without guarantee, between (insert
date range, including year, for loading);
ii. second consignment of (insert number in numerals) MT of the Commodity,
subject to the agreed variance, at U.S. Port estimated, without guarantee, between
(insert date range, including year, for loading); and,
iii. third consignment of (insert number in numerals) MT of the Commodity, subject
to the agreed variance, at U.S. Port estimated, without guarantee, between (insert
date range, including year, for loading).
B. Seller will:
a. Order the Commodity from USDA for loading in [month and year]. The Bills of
Lading, however, will be dated when the Commodity is actually loaded on board the
Vessel.
b. Ship the Commodity from a U.S. Port determined by USDA. Actual shipment
schedule(s) will be based on USDA procurement and delivery schedules. The load and
delivery dates are neither promised nor guaranteed by the Seller.
c. Deliver the Commodity to the Port(s) of Discharge on a Cost and Freight (CFR) basis,
(add any additional details on payment terms, liner terms, prepaid portions, etc.).
d. Use reasonable and all efforts possible to keep Purchaser informed of status of Vessel
loading and the Vessel’s ETA at the Port(s) of Discharge so as to enable the Purchaser to
make the necessary arrangements to accept Commodities.
e. Appoint a surveyor at discharge to inspect the condition of the cargo. This survey report
will include a narrative description of the types and kind of Commodities involved,
quantities landed, short-landed, fit and unfit, the circumstances leading to the condition
and surveyor’s assessment of liability.

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C. Purchaser will:
a. Arrange, at Port(s) of Discharge, at its own expense for its own benefit, sufficient
transport and/or storage facilities to receive cargo as fast as the Vessel can discharge
during normal working hours. [Terms of discharge may be specified including a
guaranteed minimum discharge rate from bulk carriers or “tween” deckers or
accommodations for “gearless vessels” that may use marine legs or other discharge
practices – Seller should discuss with their freight forwarder in advance of sale]
b. Agree that any delay and/or loss and/or damage and/or risk resulting from non-
availability of Purchaser’s conveyances or storage facilities to meet port/vessel
discharge operations shall be for the account and risk of the Purchaser.
c. Confirm to the Seller that the appointed discharge surveyor is in attendance at discharge
and assist the surveyor as customary during the discharge of Commodity.
d. Notify the Seller and the discharge surveyor of any damage to the Commodity
discovered at discharge.
e. Resolve any disputes relating to the settlement of laytime or the payment of demurrage
or dispatch directly with the Vessel owner or agent.
f. Import the Commodity into [Country] and the guarantee that neither the Commodity nor
any by-products thereof will be exported out of [Country or Region, as applicable].

D. Delivery to Purchaser is deemed effective at [end of ships’ tackle (Liner Terms) at Port(s) of
Discharge. Upon discharge at Port(s) of Discharge the Purchaser assumes all risk of loss of
the Commodity.]

E. Commodity weight and specifications are final at the loading port in the United States, as set
forth on the Bill of Lading) in accordance with this Agreement.

F. Risk of loss and title of the Commodity passes to the Purchaser in accordance with the shipping
terms CFR (Incoterms 2020 International Chamber of Commerce). Purchaser shall be
responsible for insuring the Commodity once risk of losses passes to the Purchaser.

V. DEFAULT IN DELIVERY / FORCE MAJEURE

A. Purchaser shall pay the Seller for that portion of the Commodity loaded in accordance
with the terms of this Agreement.

B. Seller may terminate this Agreement without prejudice to any other rights of Seller in the
event the Purchaser fails to open the Payment Guarantee by the time required by
provision III.A of this Agreement.

VI. GENERAL TERMS AND CONDITIONS

A. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the
parties and supersedes any prior or contemporaneous agreements, whether oral or written,
with respect to the subject matter contemplated herein.

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B. AMENDMENT. Any agreement to amend the terms hereof shall be of no force or effect,
unless reduced to writing and signed by all the parties.
C. WAIVER. No indulgence, waiver or relaxation by a party will constitute a waiver or
abandonment of any right or duty of that party, unless agreed to in writing.
D. NOTICE. All notices, accounting reports, submission for approval and other
communications required under this Agreement will be in written form;
E. Delivered to the addresses/facsimile numbers provided at the Section entitled PARTIES,
above, (unless the addresses/numbers have been amended in accordance with this
provision); and,
F. Considered delivered:

a. when sent if personally delivered, sent via facsimile to the correct fax number, sent via
email (properly addressed);
b. upon receipt when dispatched via courier, return receipt requested;
two (2) days after dispatch when sent via telegram or telex; or,
d. eight (8) days after deposit with the postal service, prepaid, registered mail, properly
addressed.

G. BREACH. If either party [PURCHASER or SELLER] commits a breach (the “breaching

party”) of any obligation owed by it to the other party (the “non-breaching party”), the
non-breaching party shall give the breaching party written notice and provide seven (7)
days to the breaching party to remedy such breach. In the event the breaching party does
not take all reasonable steps to cure the breach, the non-breaching party may cancel this
Agreement, subject to the reservation of the non-breaching party’s rights or compel
performance of obligations by the breaching party.

H. SEVERABILITY AND DIVISIBILITY. If any section, paragraph, clause, or provision of

this Agreement is judged, construed, or interpreted by a court of competent jurisdiction to
be void, invalid, or unenforceable, such decision shall not affect the remaining provisions
of this Agreement.

I. APPLICABLE LAW. Regardless of the place of execution, performance or domicile of

the parties, this Agreement and all modification and amendments hereof shall be
governed by and construed in accordance with the laws of, [ name of state or District of
Columbia], United States of America. In addition, the rules and regulations established
under the Food for Progress program and the USDA Foreign Agricultural Service are
fully incorporated into this Agreement.

J. ARBITRATION. Purchaser and Seller shall make every effort to resolve amicably by
direct negotiation any disagreement or dispute which may arise between them under or in
connection with this Agreement. In the case the parties do not come to an amicable
solution after 30 days from the commencement of such negotiation, either Purchaser or
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 Seller may require by writing the dispute to be referred to arbitration. Any controversy,
claim, or dispute arising in connection with this Agreement or its interpretation,
performance, or breach thereof, which cannot be settled amicably by direct negotiation,
shall be settled by arbitration in the (insert location) before the American Arbitration
Association or its successors, pursuant to the applicable Arbitration Rules of the
American Arbitration Association, as those Rules may be in effect at the time of such
arbitration proceeding, which are hereby deemed to be incorporated herein. The
arbitration shall be final and binding on both parties. Purchaser and Seller hereby
recognize and expressing consent to the jurisdiction over each of them of the American
Arbitration Association or its successors. Either party to the dispute will be entitled to
require written notice in which particulars of the dispute are set out and that the dispute
be submitted to arbitration in accordance with the terms of this Agreement.

K. IMPORT OF THE COMMODITIES, DUTIES AND TAXES: Purchaser is solely

responsible for obtaining the necessary import licenses, custom clearances, and any other
authorization needed to import the Commodity to _______________.

All taxes, duties and levies in the (insert name of country) in respect of this
Agreement shall be borne by the Purchaser (please note any potential agreements
between the Seller, the US Government, and the Government of (insert name of
country) regarding import taxes).

L. FITNESS TO PERFORM: Each party expressly confirms to the other that it has the
ability to perform its obligations under this Agreement.

M. COUNTERPARTS. This Agreement shall be signed in three (3) original counterparts,

one (1) for the Purchaser and two (2) for the Seller, with all counterparts together
constituting one Agreement. The parties are entitled to rely on an executed counterpart
agreement delivered by facsimile transmission to the extent as an executed counterpart
agreement with an original signature.

IN WITNESS WHEREOF, the parties set their hand and seals in the presence of witnesses on
the dates written (please include any country-specific requirements, i.e., notary public seals,
stamps, etc.).

SELLER (Duly Authorized, Date): Witnesses:

(1)
(2)
PURCHASER (Duly Authorized, Date):
(1)
(2)
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APPENDIX 6: MONETIZATION AGENTS CONTACT INFORMATION

CBI Global
Key Staff: Lisa Knight (agent), Scott Grady (agent), David Brown (CEO)
Telephone: (410) 848-5105; (410) 610-0225
Email: [email protected], [email protected]
Website: www.cbi-global.com

JDM Monetization Services, LLC

Key Staff: Jon Mooney, President
Telephone: (612) 812-0548
Email: [email protected]
Website: www.JDMMS.com

RPX Consulting Inc.

Key Staff: Matthew C Krzyston, Director
Telephone: (202) 510.5120
Email: [email protected]
Website: www.rpxi.com

CFA Services
Key Staff: Brian Holmes, Managing Director
Telephone: +27 82 858 2446
Email: [email protected]

Saramac Consulting
Key Staff: Craig MacKay
Telephone: (202) 370-6677, (202) 746-0595
Email: [email protected]
Email: mailto: [email protected]

Cantera Partners
Key Staff: Ben Kalhorn, Executive Vice President
Telephone: (402) 930-3074
Email: [email protected]
Website: https://burlingtoncapital.com/international/cantera-partners/

Fettig & Donalty, Inc.

Key Staff: Mike Lagoon
Telephone: (202) 628-5700, (202) 215-5009
Email: [email protected]
Website: www.fettigdonalty.com

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APPENDIX 7: FREIGHT FORWARDERS

BKA Logistics LLC

Key Staff: Mark Millard
Telephone: (202) 331-7295
Email: mailto:[email protected]

LifeLink Logistics
Key Staff: Lisa Spohn
Telephone: (440) 243-1010
Email: [email protected]
Website: www.lifelinklogistics.com

Geodis USA, Inc.

Key Staff: Frank Tripodi
Telephone: (516) 728-7328
Email: mailto:[email protected]
Website: www.geodis.com

Muller Shipping Corporation

Key Staff: Paul Blizzard
Telephone: (516) 256-7700
Email: [email protected]

DSV Air and Sea, Inc.

Key Staff: Sherry Sons
Telephone: (571) 612-3250
Email: [email protected]
Website: www.dsv.com

Fettig & Donalty, Inc.

Key Staff: Mike Lagoon
Telephone: (202) 628-5700, (202) 215-5009
Email: [email protected]
Website: www.fettigdonalty.com

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