Aussie underwrites cotton

Aussie underwrites cotton

CANBERRA (Reuters): Australia plans to extend about A$250 million in export guarantee assistance for cotton exporters to Indonesia, Industry Minister John Moore said yesterday.

The assistance, to be arranged through the Export Finance and Insurance Corporation, follows insurance cover for wheat sales to Indonesia, announced last month and since increased to around A$500 million.

"Some 500,000 (cotton) bales go to Indonesia, it's our major export area, and we will be extending government insurance that makes sure that market is maintained," Moore said in a television interview on the Nine Network.

Without the facility, international competitors could undermine local producers by offering more attractive credit terms, he said.

"It'll cost something of the order of A$250 million, but it's government-guaranteed by the Indonesian government, so the sovereign guarantee there should protect the Australian taxpayer," he added.

Australia's total cotton exports are forecast at about A$1.2 billion in 1997/98.

The government first announced plans in February to support exports to financially troubled Indonesia, and has not put a cap on the plan, saying aid would be supplied on a case-by-case basis.