Air Tractor Inc. manufactures single-engine agricultural, firefighting, and utility aircrafts. Based in Olney, Texas, the company has used the Export-Import Bank of the United States’ (EXIM’s) medium-term insurance for almost 30 years to successfully expand into emerging and underdeveloped markets. As a result, this 275-employee company has increased its overall exports from about 10 percent of sales to well over 50 percent of sales annually. A majority of EXIM support has been for farming operations and agricultural spraying companies in Brazil and Argentina, but EXIM also has supported transactions to other markets including Chile, Costa Rica, Paraguay, and Uruguay.
Foreign buyers sought Air Tractor aircrafts but had trouble accessing funds to purchase them, especially with repayment terms longer than one year.
Medium-term credit insurance, similar to any insurance policy, provides protection in return for a premium. The policy safeguards exporters against the risk of foreign buyer nonpayment when extending credit terms of one to five years (or, in some cases, up to 10 years) and up to $25 million. With this security, U.S. companies can increase their global competitiveness by offering foreign buyers the financing needed to win sales.
EXIM’s insurance has benefits to both the buyer and the seller – an American company, such as Air Tractor. Foreign customers secure longer-term financing for foreign customers, while American companies are protected against nonpayment from international buyers.
In July 2019, EXIM approved eight medium-term credit insurance policies for Air Tractor totaling more than $7 million, which will support the sale of eight agricultural aircrafts to Brazil. Since 1992, EXIM has approved more than 300 Air Tractor transactions valued at more than $290 million, which supported the export of more than 300 aircrafts.