Centralized Cotton Redemption

What is CCR? Centralized Cotton Redemption (CCR) System Provides a centralized process for buyers to redeem upland cotton Single redemption from multiple loans and multiple counties Use of an Electronic Agent Designation (EAD) Centralized Cotton Redemption (CCR)

What is CCR? Limited to upland cotton loans disbursed in County Office (Expanding to include LSA loans) Commodity Certificate exchange when AWP is less than National Average Loan Rate Principal plus interest when AWP is equal to or greater than National Average Loan Rate Centralized Cotton Redemption (CCR)

Development of CCR Development began in 2000 Programmed by EDS Resides in COPS CCR was implemented in 2 phases –Phase 1 Beta test October, 2003 –Phase 2 Full nation-wide implementation July, 2004

Implementation Plan Participating buyers recommended by FSA and the National Cotton Council 20 Counties participating in Beta Test 5 buyers participating in Beta Test –Dunavant Enterprises, Inc. –Cargill Cotton –Paul Reinhart, Inc –Volcot Cotton –Weil Brothers-Cotton, Inc.

CCR Activity Increases Beta to Crop YR to Crop YR to Crop YR to Merchants % of COF Loans 44%69%88% Invoices Bale Count2, million1.8 million3.2 million Redemption Amount $736,935$300 million$357 million$639 million

CCR Milestones Largest week of activity - May 14 – 18, 2007 –104 invoices –20 buyers –$262.7 million –1.3 million bales

CCR Milestones Largest day of activity - May 17, 2007 –9 merchants –38 invoices –578,980 bales –$113,132,763.96

CCR Milestones Largest Invoice –8 states –68 counties –1888 loans –97,131 bales –$18,943, of 68 counties – more than 100 loans –1 county – 199 loans

Authorization to Redeem All bales redeemed in CCR must meet two authorization requirements: –Designated as CCR eligible –Electronic Agent Designation (EAD) holder on file in COPS Producer must grant authorization

CCR Eligible May designate at time of loan –Flag set in APSS during loan making process and sent to COPS Authorize by signing CCC-605 –Authorization granted as part of agent designation –Copy of CCC-605 submitted to County Office –County Office updates EAD status flag to “Y”

Electronic Agent Designation Electronic Agent Designation (EAD) is an electronic CCC-605 Authorizes agent to use CCR Producer names Agent and authorizes EAD with single signature on CCC-605 What is an Electronic Agent Designation ?

Electronic Agent Designation Agent can redeem cotton using CCR Agent can deliver paper copy of CCC-605 and funds to County Office Producer may cancel CCC-605 at FSA County Office and redeem the cotton himself What is an Electronic Agent Designation ?

Electronic Agent Designation CCC-605 may be converted to EAD anytime by an initial or subsequent agent Request the Provider to update EWR record with the Agent’s Holder ID Agent requesting initial EAD must retain the original copy of the CCC-605 Provider submits EAD Holder ID to COPS How does EAD Work?

Electronic Agent Designation Once CCC-605 is converted to EAD, option to purchase is passed to a subsequent agent electronically. Current EAD Holder notifies Provider of subsequent EAD Holder Subsequent EAD Holder does not have to maintain paper copy of the CCC-605 How does a Subsequent Agent Receive EAD?

Using CCR The Buyer transmits an electronic file to COPS listing receipts and projected payoff date. COPS generates an invoice based upon the Buyer’s request. The Buyer wires the required funds by the payoff date. COPS automatically releases the receipts to the Buyer. How does a Buyer redeem cotton using CCR ?

CCR Transaction File FTP file listing of up to 100,000 receipts File contains a Header record: –Total receipt count –Buyer ID number. –Payoff date within the current AWP period (Friday to Thursday). –Date of file transmission Preparing Transaction File

CCR Transaction File File contains a Detail record for each receipt: –Gin Code Number –Gin Tag Number –Crop Year –Warehouse Code Number –Warehouse Receipt Number –Buyers EAD Holder ID Preparing Transaction File

CCR Transaction File To be valid, each bale must –be under a County Office issued loan –not in forfeiture status –not be in a pending status for another CCR request –be a valid EWR Preparing Transaction File

CCR Transaction File To be valid, each bale must –reflect CCC as the current holder –not have any critical COPS errors –EAD indicator of “Y” –EAD holder ID that matches COPS Preparing Transaction File

Creating CCR Invoice Calculate repayment for valid bales Uses effective AWP for requested repayment date –requested date must be within current AWP period (Friday to Thursday) –repayment amount valid only if funds are received before next AWP announcement Calculate storage credit on repayment date plus 2 day Repayment Calculations

Creating CCR Invoice Invoice / Collection Letter created and posted to COPS –payment due date –repayment amount –invoice number –invoice expiration date Posting CCR Invoice

Creating CCR Invoice Acknowledgement File sent to buyer COPS sends to: –Buyer to view and download invoice/collection letter from COPS website –Administrative County Office that disbursed to alert of pending CCR redemption Notifying Buyer and County Office

Creating CCR Invoice Bales are placed in “pending” status when invoice is created –no changes allowed, including EAD holder –no additions or deletions of bales to invoice –no changes to payoff date Bales Placed in Pending Status

Creating CCR Invoice Invoice is valid for 21 days Buyer may cancel an Invoice anytime before payment is submitted “Pending” status removed when invoice is cancelled Cancellation of CCR Invoice

Submitting Repayment Buyer wires funds based on the Collection Letter instructions to the Federal Reserve Bank Collection is posted to COPS which triggers release of receipts Accepting Payment

Submitting Repayment Accept funds wired before due date No recalculation –same AWP –same storage credit Bales automatically released later of: – date payment is processed –original due date Accepting Early Repayment

Submitting Repayment Accept payments past due date Recalculated based on –AWP in effect on wire date –storage credit for wire date plus 2 days Accepting Late Payment

Submitting Repayments Will redeem bales covered by sufficient funds Select bales starting in order of –state –county –warehouse code –receipt number New invoice required for remaining bales Insufficient Funds

Submitting Repayments Refunded to the merchant by direct deposit to merchant’s account Manual process Future enhancement for automated process Overpayments

Releasing Receipts Release automatically triggered when funds are posted in COPS COPS s Buyer of release of receipts and refund due, if applicable Electronic CCC-500 data available for download next day Processing Release of Receipts

Contingency Plan – What Happens When COPS Is Down? CCC-734 process for periods of time when systems are not operational –Fax CCC-734 – redemption file –Wire funds to Federal Reserve Process unseen by County Office

Processing CCR in the County Office Loan must be liquidated in APSS COF receives that CCR repayment has been completed CCR repayment file available in COPS COF downloads CCR file and transfers to S/36 using Cotton PC Software

Processing CCR in the County Office New menu option, Option 3, Centralized Repayment APSS repayment fields are pre-filled with CCR file data –automatically selects bales No calculations - accepts data from CCR file COPS tracks loan liquidation records from APSS using indicator COPS R121

Favorable Comments Merchant –“as important as EWR” County Office –"It is a great system that has significantly simplified our cotton loan repayment processing." State Office –“awesome process and I would put CCR up against ANY web application as being the best”