Greek Citrus Export

1. UNIVERSITY POLITEHNICA OF BUCHAREST
FACULTY OF ENGINEERING IN FOREIGN LANGUAGES
Greek Citrus Exports
Student: Camelia Giambașu
1/19/2016

2. Table of Contents
1. Product description..............................................................................................................................................3
2. Target market..........................................................................................................................................................4
3. Entry mode................................................................................................................................................................5
4. Marking and Packaging......................................................................................................................................7
6. Transport and delivery...................................................................................................................................18
7. Payment terms.....................................................................................................................................................19
References........................................................................................................................................................................21

3. 3
1. Product description
Citriculture represents an important branch of the Greek economy with an
annual production of 1, 3 million tons. The main citrus crops grown are Oranges,
Mandarins, and Lemons and during the last years, there has been a tendency to cultivate
the red varieties of Grapefruit, like the Ruby Star. Citrus crops exported from Greece are
about 350.000 tons per year. The fresh Citrus fruits represent the greatest volume of
production. The property regime in combination with the viability of many agricultural
exploitations consist a serious hindrance to the modernization of the sector and the
reconstitution of the exploitation.
a. Oranges
The main Orange variety is Washington Navel Parent. This variety was
principally important during the decades 1950-1990, which is before the great
competition with Spain started. It can reach an annual production of 750.000 tons but it
faces a lot of problems during trading. The quality is reduced due to the physiological
rind disorders (creasing) and its sensitivity to rainfall because of the physiological
disorder water-spot. Particularly, the early varieties Navelina and New Hall participate
in the group of navel Oranges with an 11 % rate. For the last 15 years there has been a
tendency to replace Washington Navel Parent by the early Navelina, New Hall and Ro 25.
There had also been an effort to spread the variety Skagg’s Bonanza, but it was
interrupted because of the sensitivity of that variety to Mal Nero. The other navels
belong to the old variety Washington Navel Parent that covers the commercial period
between November to March. For the last years there has been an effort to spread the
late Navel varieties: Navel Late and Lane Late. The “Valencia” oranges showed an
economical prosper during the decade 1970-1980, and contributed to the economic
development of the County of Lakonia. However, the parallel cultivation of this variety
in Spain and Morocco caused problems to its distribution. Because of the marketing
problems and the physiological rind disorders, there is a tendency to restructure the
surfaces that are covered with the group of the Navel Oranges by the Mandarins Nova,
Page and Encore.

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b. Mandarins
Greece is par excellence a country of Willow-leaf Mandarins. This is a traditional
mandarin, with an excellent taste but with a distribution problem because of the big
number of the fruit seeds. Hence, by the beginning of 1970, it begins to be replaced by
the Clementines. Another basic Clementine variety, which is cultivated during the whole
year, is the S.R.A. 63 (origin from Corsica). This variety is commercialized during the
period November to December and experiences a great competition with the
Clementines of the other Mediterranean Countries. There is also a tendency to replace
this variety with the breedings of other Mandarins like the Nova, Page and Encore.
c. Lemons
Until the year 1990 Greece was a great export country of Lemons (after Italy),
with the variety Maglini as a main production. This variety showed high sensitivity to
Mal secco, the disease that caused massive damages to the crops during the last 20
years. There were also serious damages during the winter of 2004. Nowadays, there is
the tendency to spread varieties that are tolerant to the Mal secco, like the
Adamopoulou, Vakalou and Zambettakis.
2. Target market
a. DestinationMarkets
The main destination markets of the Greek citriculture are the Northern
countries of the European Union (England, Germany, the Scandinavian countries) and
the Central and Eastern countries (Russia, Romania, Poland, Czech Republic). According
to the data estimated for the last three (3) years, the 27 % of the production is destined
to exports, the 28 % is processed by the local factories and the 40 % is destined for
interior consumption.
Greece has a big volume of Orange exports between the months December to
February and an important participation in the late summer exports, among Spain,
Morocco and Egypt. But while Greece has a bigger volume of exports in general than
Egypt and Turkey, in the time period of September to November the rate of the Greek
participation is only 5%. The peak time for the export of Mandarins is during December

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and January. The exports begin late in November, while after January the exports are
reducing. Greece exports little quantities of lemons during the peak time (25.000 tons)
but is forced to import during the summer time.
i. Oranges
In MY 2013/14, Greece exported 365,806 MT of oranges mainly to Romania
(80,048 MT), Serbia (38,477 MT), Bulgaria (33,612 MT), Poland (32,117 MT), Hungary
(27,914 MT), and Germany (24,250 MT). Navels and Tardives are marketed mostly from
November through March.
ii. Tangerines
In MY 2013/14, Greece exported 83,100 MT of tangerines, mainly to Romania
(25,603 MT) and Bulgaria (17,797 MT). Clementines are marketed from January to May.
iii. Lemons
In MY 2013/14, Greece exported 7,500 MT of lemons mainly to Bulgaria (2,765
MT) and Romania (2,550 MT). The Maglini lemon variety is marketed from December
to May and from September to November after artificial ripening.
iv. Grapefruit
In MY 2013/14, Greece exported 2,200 MT of grapefruits mainly to Bulgaria
(1,015 MT) and Romania (452 MT).
3. Entry mode
Greek agriculture today is mainly focused on the production of high quality,
competitive, certified, labelled products produced by innovative procedures compatible
with sustainable development principles. Improved quality and the resulting increase in
value of Greek agricultural products will be achieved through technological innovations
resulting from focused and well-coordinated agricultural research.

6. 6
Similarly to the E.U. Countries, the Greek Citrus crops are facing a deep
reorganization. The reformation of the CAP leads to the induction of limits in the
production, under the form of steps or quotas.
The impact of horticulture and agriculture on local conditions has to recognize,
as everywhere, economic rules and ecological needs to be supported by the industry.
Product information needs to be an integrated part to support quality, which will help
growers to and the trade and will guide consumers. The implementation of the HACCP
program in the packing – houses of Peloponnesus and Crete are in accordance with
other systems of Certification.
The application of agro-environmental measures introduced by the E.C. for an
Organic Citriculture is supported by many farmers (3 % of the whole surface).
Selected varieties of Oranges and Mandarins that mature during the summer
tourist period favor the development of Agro-Tourism activities in the small and great
islands of Aegean’s Sea (Crete, Chios, Kalymnos, Rhodes).
Recently, the Greek government developed a plan for the restructure of the
citrus sector. This plan will classify the planting areas based on the microclimate of each
region and the variety requirements of the market. In Crete -where are mostly small
growers and the temperature favours the sensitive species- there is a tendency to have
plantings of Citrons (Citrus medica), Lemons (Citrus limon) and the late varieties of
Tangerines like the Encore. This management plan is going encourage the farmers to
insert the new plantations in the regions of the Western Greece, like Thesprotia and
Messologi. The annual rainfall: 800 – 1000 mm and the fertile soils of these zones favors
the cultivation of citrus, which are replacing the cultivation of tobacco.
In these regions it is necessary to organize and apply an anti-frost system as in
certain years there have been noticed problems with frost. Concerning the
Peloponnesus, the region of Argolida presents a bigger frequency of frost.
The studies of the Bioclimatology of Citrus in Crete have made possible the
development of predictive models, which are focused on the institution of management
programs of plantations, in relation to the quality of fruits and the development of
different agro-systems of Agro–tourism. The grouping of the growers with the support
of the European Union is evaluated like organizations that work for the reconstitution of
the old varieties in relation to an Integrated Management System.

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The European sector of citrus production is mostly destined to the fresh market.
The products that are processed usually make a complementary income for the
producer. The several specific European Community (EC) laws and measurements as
well as the Common Agricultural Policy (CAP) control the development of the Greek
citrus sector.
The distribution channels of citrus in Greece have been delimitated in the
following four major groups:
 Central Fruit and Vegetables Markets (CFVMs) - There are two such markets,
in Athens and in Thessaloniki, and their market share is estimated about 20-
25% of fruits and vegetables.
 Wholesalers outside CFVMs - Such businesses purchase directly from local
producers and standardizing facilities or import from third countries and sell
to specialized retailer outlets and supermarkets, accounting for 35-40% of
the aggregate market fruits and vegetables.
 Supermarket chains - They purchase either standardized quantities from
relevant facilities, wholesalers, or import from other countries. Lately, they
are also purchasing directly fresh produce from growers and standardize
these quantities at their own facilities. Their aggregate share is constantly
increasing (at the expense of wholesalers as well as specialized, small retail
outlets) and is estimated to around 20% of fruits and vegetables.
 Direct sales in street-markets - Street markets have a long tradition in Greece.
Fresh fruit and vegetables are sold in such places directly from the producers,
with a total share of around 10-15% of fruits and vegetables.
4. Marking and Packaging
Multiple characteristics are taken into account in the process of packaging and
marking.

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a. Minimum size
Size is determined by the maximum diameter of the equatorial section of the
fruit. The following minimum sizes apply:
Figure 4.1: Fruit minimum diameter.
b. Uniformity
Citrus fruit may be sized by either of the following two options:
i. Option (a): To ensure uniformity in size:
The maximum difference in diameter between fruit in the same package shall be limited
to:
 10 mm, if the diameter of the smallest fruit (as labeled) is < 60 mm
 15 mm, if the diameter of the smallest fruit (as labeled) is 60 mm but < 80 mm
 20 mm, if the diameter of the smallest fruit (as labeled) is 80 mm but < 110 mm
 There is no limitation of difference in diameter for fruit 110 mm.
If by count, the fruit must meet the above-mentioned size uniformity.
ii. Option (b): When size codes are applied, the codes and ranges in the
following tables must be respected:
Figure 4.2: Size codes for Lemons

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Figure 4.3: Size codes for Limes, Mandarin varieties and Oranges
Uniformity in size is achieved by the above-mentioned size scales, unless
otherwise stated as follows:
For fruit in bulk bins and fruit in sales units of a maximum net weight of 5 kg, the
maximum difference must not exceed the range obtained by grouping three consecutive
sizes in the size scale.
A. Quality tolerances
 "Extra" Class
A total tolerance of 5 per cent, by number or weight, of citrus fruit not satisfying
the requirements of the class but meeting those of Class I is allowed. Within this
tolerance not more than 0.5 per cent in total may consist of produce satisfying the
requirements of Class II quality.
 Class I
A total tolerance of 10 per cent, by number or weight, of citrus fruit not satisfying
the requirements of the class but meeting those of Class II is allowed. Within this
tolerance not more than 1 per cent in total may consist of produce satisfying neither the

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requirements of Class II quality nor the minimum requirements, or of produce affected
by decay.
 Class II
A total tolerance of 10 per cent, by number or weight, of citrus fruit satisfying
neither the requirements of the class nor the minimum requirements is allowed.
Within this tolerance not more than 2 per cent in total may consist of produce
affected by decay.
B. Size tolerances
For all classes and types of presentation: a total tolerance of 10 per cent, by
number or weight, of citrus fruit corresponding to the size immediately below and/or
above that (or those, in the case of the combination of three sizes) mentioned on the
package is allowed. In any case, the tolerance of 10 per cent applies only to fruit not
smaller than the following minima:
PROVISIONS CONCERNING PRESENTATION
A. Uniformity
The contents of each package must be uniform and contain only citrus fruit of the
same origin, variety or commercial type, quality, and size, and appreciably of the same
degree of ripeness and development.
In addition, for the "Extra" Class, uniformity in coloring is required. However, a
mixture of citrus fruit of different species may be packed together in a sales unit,
provided they are uniform in quality and, for each species concerned, in variety or
commercial type and origin.
The visible part of the contents of the package must be representative of the
entire contents. Presentation should not be misleading, i.e. concealing in the lower
layers of the package produce inferior in quality and size to that displayed and marked.
B. Packaging

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The citrus fruit must be packed in such a way as to protect the produce properly.
Packages must be of a quality, strength and characteristics to protect the fruit during
transport and handling.
The materials used inside the package must be clean and of a quality such as to
avoid causing any external or internal damage to the produce. The use of materials,
particularly of paper or stamps bearing trade specifications, is allowed provided the
printing or labelling has been done with non-toxic ink or glue.
Stickers individually affixed on the produce shall be such that, when removed,
they neither leave visible traces of glue, nor lead to skin defects. If the fruit are wrapped,
thin, dry, new and odorless paper must be used. The use of any substance tending to
modify the natural characteristics of the citrus fruit, especially in taste or smell, is
prohibited.
Packages must be free of all foreign matter. However, a presentation where a
short (not wooden) twig with some green leaves adheres to the fruit is allowed.
A visible lack of cleanliness in several packages could result in the produce being
rejected.
PROVISIONS CONCERNING MARKING
Each package must bear the following particulars, in letters grouped on the same
side legibly and indelibly marked, and visible from the outside. In the case of packed
produce, all particulars must be grouped on the same side of the package, either on a
label attached to or printed on the package with water-insoluble ink.
A. Identification
Packer and/or dispatcher/shipper:
Name and physical address (e.g. street/city/region/postal code and, if different
from the country of origin, the country) or a code mark officially recognized by the
national authority. For inspection purposes, the “packer” is the person or firm
responsible for the packaging of the produce (this does not mean the staff that actually
carry out the work, who are responsible only to their employer). The code mark is not a
trademark, but an official control system enabling the person or firm responsible for
packaging to be readily identified. The dispatcher and/or shipper may, assume sole
responsibility, in which case identification of the “packer” as defined above is optional.
B. Nature of produce
 Common name of the species if the produce is not visible from the outside

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 Name of the variety, for oranges
 For the mandarins´ group:
 Satsumas: “Satsumas”, which may be followed by the variety
 Clementines: “Clementines”, which may be followed by the variety and,
where appropriate, by either the indication “seedless” for seedless clementines (no
seeds), clementines (1 to 10 seeds), or clementines “with seeds” for clementines with
more than 10 seeds
 Other mandarins and their hybrids: name of the variety
 For grapefruit and hybrids: the indication “pink” or “red” where appropriate
 For pummelos and hybrids: the indication “pink” or “red” where appropriate
 “Mixture of citrus fruit” or equivalent denomination, in case of sales units
containing a mixture of citrus fruit of different species. The names of the
different species shall appear in addition to the details listed above
 “Seedless” (optional).
C. Origin of produce
- Country of origin and, optionally, district where grown, or national, regional or
local place name
- In the case of sales units containing a mixture of citrus fruit of different species
of different origins, the indication of each country of origin shall appear next to the
name of the species concerned.
Marking must include the country of origin, i.e. the country in which the citrus
fruit is grown (e.g. Israel, Spain, South Africa). Optionally, district of origin in national,
regional or local terms may also be shown.
D. Commercial specifications
Stating the class is compulsory.
 Size expressed as: Minimum and maximum size (in mm) orvSize code(s)
followed, optionally, by a minimum and maximum size or Count.
 Post-harvest treatment (optional, based on the national legislation of the
importing country).
E. Official control mark.

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Genetically modified products
The Council of the European Union has recently issued a separate labelling
regulation for genetically modified foodstuffs. Genetically modified products are food
products that are made with or are made of genetically modified organisms (GMO) and
according to the EU Regulation, genetically modified products have to be labelled as
such. This applies to modified foods, ingredients and materials which are used in the
production or processing of a food.
Quality control
Greece is a member of the ORGANISATION FOR ECONOMIC CO-OPERATION AND
DEVELOPMENT. The OECD is a unique forum where the governments of 31
democracies work together to address the economic, social and environmental
challenges of globalization. The OECD is also at the forefront of efforts to understand
and to help governments respond to new developments and concerns, such as
corporate governance, the information economy and the challenges of an ageing
population. The Organization provides a setting where governments can compare policy
experiences, seek answers to common problems, identify good practice and work to co-
ordinate domestic and international policies.
The other OECD member countries are: Australia, Austria, Belgium, Canada, Chile,
the Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy,
Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland,
Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom
and the United States. The Commission of the European Communities takes part in the
work of the OECD.
The purpose of the standard provided by OECD is to define the quality
requirements for citrus fruit at the export-control stage after preparation and packaging.
However, if applied at stages following export, products may show in relation to
the requirements of the standard:
- a slight lack of freshness and turgidity
- for products graded in classes other than the “Extra” Class, a slight
deterioration due to their development and their tendency to perish.

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The holder/seller of products may not display such products or offer them for
sale, or deliver or market them in any manner other than in conformity with this
standard. The holder shall be responsible for observing such conformity.
Minimum requirements
In all classes, subject to the special provisions for each class and the tolerances
allowed, the citrus fruit must be:
- Intact - Means not having any mutilation or injury spoiling the integrity of the
fruit, such as cuts or punctures or other significant physical damage sustained during
harvesting or post-harvest handling.
- Free of bruising and/or extensive healed over cuts - The fruit must be practically
free of oleocellosis, bruises and / or extensive healed over cuts. (oleocellosis: or rind-oil
spotting. The result of impact or compression damages the skin and causes green or
brown discoloration.)
- Sound - produce affected by rotting or deterioration such as to make it unfit for
consumption is excluded. The fruit must be free from disease or serious deterioration
which appreciably affects its appearance, edibility, or market value. In particular, this
excludes produce affected by rotting, even if the signs are very slight but liable to make
the produce unfit for consumption upon arrival at its destination.
- Clean, practically free of any visible foreign matter - Citrus fruit must be
practically free of visible soil, dust, chemical residues or other visible foreign matter.
- Practically free from pests - Citrus fruit must be practically free from insects,
mites or any other pests. The present of pests can detract from the commercial
presentation and acceptance of the fruit.
- Free from damage caused by pests affecting the flesh - Citrus fruit must be free
from damage caused by insects, mites or any other pests that affects the fruit flesh. Pest
damage affecting the flesh makes the produce unfit for consumption.
- Free of signs of shriveling and dehydration - Damage caused by evaporation of
water from the fruit due to extreme temperature.
- Free of damage caused by low temperature or frost - Damage caused by frost
prior to harvest, or by chilling due to low temperature during storage or transportation.
- Free of abnormal external moisture - This provision applies to excessive
moisture, for example free water lying inside the package, but does not apply to
condensation on fruit following release from cold storage or refrigeration vehicle.

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- Free of any foreign smell and/or taste - This refers particularly to citrus fruit
which have been stored on badly kept premises or have travelled in a badly maintained
vehicle, especially fruit which has acquired strong smell from other produce stored on
the same premises or travelling in the same vehicle. It does not refer to any smell
emanating from products used in conformity with the regulations for their use to
improve keeping properties. For example, care should be taken to use only non-smelling
materials as protection in packaging.
The development and condition of the citrus fruit must be such as to enable
them:
- To withstand transport and handling
- To arrive in satisfactory condition at the place of destination. The state of
ripeness must allow the fruit to withstand transport and handling and to arrive in
satisfactory condition at the place of destination. The fruit must have reached an
appropriate degree of development and ripeness in accordance with criteria proper to
the variety and the area in which they are grown.
Maturity requirements
The citrus fruit must have reached an appropriate degree of development and
ripeness, account being taken of criteria proper to the variety, the time of picking and
the growing area.
Maturity of citrus fruit is defined by the following parameters specified for each
species below:
- Minimum juice content
- Minimum total soluble solids content (TSS), i.e. minimum sugar content
- Minimum sugar/acid ratio
- Coloring.
The degree of coloring shall be such that, following normal development the
citrus fruit reach the color typical of the variety at their destination point.
Color is a progressive parameter. The transport conveyance time and/or means
may be taken into consideration when inspecting fruit at the export or dispatch control
point. The degree of coloring shall be such that following normal progress of colour
change, the citrus fruit reach their normal variety color.

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Citrus fruit meeting these ripeness requirements may be “de-greened”. This
treatment is only permitted if the other natural organoleptic characteristics are not
modified.

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The minimum coloring prescribed by this standard may in some cases be
obtained at the dispatch stage by "de-greening". It should, however, be emphasized that
this practice should be applied only to remove the green color and obtain a uniform
color, without affecting any of the fruit's natural characteristics. Consequently:
 Only fruit showing the required degree of development and ripeness may
be de-greened.
 The operation must be performed in such a way that the fruit's intrinsic
characteristics are not at all affected.
Classification
Citrus fruit are classified in three classes, as defined below:
 "Extra" Class
Citrus fruit in this class must be of superior quality. In shape, external
appearance, development and coloring they must be characteristic of the variety and/or
commercial type. They must be free from defects with the exception of very slight
superficial defects, provided these do not affect the general appearance of the produce,
the quality, the keeping quality and presentation in the package.
 Class I
Citrus fruit in this class must be of good quality. They must be characteristic of
the variety and/or commercial type. General appearance of the produce, the quality, the
keeping quality and presentation in the package:
- A slight defect in shape
- Slight defects in coloring, including slight sunburn
- Slight progressive skin defects, provided they do not affect the flesh
- Slight skin defects occurring during the formation of the fruit, such as silver
scurfs, russets or pest damage
- Slight healed defects due to a mechanical cause such as hail damage, rubbing,
damage from handling
- Slight and partial detachment of the peel (or rind) for all fruit of the mandarin
group.
 Class II
This class includes citrus fruit which do not qualify for inclusion in the higher
classes but satisfy the minimum requirements specified above. Citrus fruit in this class
must be of reasonable quality.

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The following defects may be allowed, provided the citrus fruit retain their
essential characteristics as regards the quality, the keeping quality and presentation:
- Defects in coloring, including sunburn progressive skin defects, provided they
do not affect the flesh skin defects occurring during the formation of the fruit, such as
silver scurfs, russets or pest damage healed defects due to a mechanical cause such as
hail damage, rubbing or damage from handling superficial healed skin alterations
- Rough skin - a slight and partial detachment of the peel (or rind) for oranges
and a partial detachment of the peel (or rind) for fruit of the mandarin group.
Transport and delivery
Success in exporting citrus does not just depend on their quality, or the season.
Many first trials have not lead to repeat orders because of poorly defined or
misunderstood terms of delivery and payment. You will have to compete with Asian
exporters who are well organized. Buyers could ask for orders at the last moment but
be sure you can meet their request before you make a commitment. The biggest
challenge here is to be clear and gain trust, and frankly say to what extent you can
deliver the citrus in time.
Large importers usually request samples for deliveries by sea or air freight.
They may visit your company, especially if they already buy fresh citrus or other
fruit. They monitor beforehand whether you are able to supply dried mangoes that look
uniform and of a consistent quality. If it concerns supplies of dried mango cubes to e.g. a
cereal processor, a buyer will check whether you are able to supply large (uniform)
quantities throughout the year and if you can supply large quantities quickly on a
regular basis. If they approve your performance, they will usually ask you for an order.
Smaller importers
For smaller quantity supplies of citrus for the consumer market from landlocked
countries such as Mali and Burkina Faso, there are no clear rules. First, you could send
photos with the different stages of fruit ripening. Based on a (face-to-face or Skype)
discussion you can propose to send some samples e.g. 2 or 3 bags by express mail or by
a reliable courier who can handle food transport.

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To prevent lead time problems, the exporter should anticipate by clearly
estimating how much time it will take him to comply with order, as the importer will
immediately start ‘pre-selling’ the expected consignment.
Payment terms
The determination of payment conditions for a regular export transaction is part
of the package of negotiations between seller and buyer, who actually have more or less
opposing interests. The seller wants to have the largest possible guarantee of financial
coverage for the goods he has to supply according to his sales contracts. The buyer
wants to be sure about availability, quantity and quality of the goods he buys, before he
pays the agreed price. After deduction of the commission and expenses for handling,
transport etc., importers or agents generally transfer payment within 30 days. A Letter
of Credit is common practice, but is often considered cumbersome and prevents the
option of retaining the money if the consignment does not prove to be as good as
expected. When relations are established, cash against documents (CAD) is also a
method used. However, clean payments are the most commonly used payment method
in the fresh fruit and vegetable sector. After the sale is concluded, the importer can
determine the levy with the Customs, and pay a deposit. If the products are not
imported within two months after this has been done, the fixed levy is no longer valid
anymore and the importer loses his deposit. This means that on-time delivery is vitally
important. Another possibility for the importer is to pay the current levy at Customs
clearance.
General methods and terms of payment
Clean payment
The process is fast and reliable, depending on the credit worthiness of the
importer. The bank carries out the transactions through swift electronic data system
and the transfer costs are not very high.
Documents against payment (D/P)
Also known as cash against documents (CAD). The buyer takes possession of the
goods only after payment. Although this method is not very popular, it is very safe and
the costs amount to one pro mille. One can also make use of a ‘documents against
acceptance of a bill of exchange’. However, the bill of exchange is not commonly used in

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the European Union and it does not guarantee that the bill will be paid; it is less secure
than the D/P.
Letter of Credit (LC)
The irrevocable LC is very often used in the beginning of a business relationship
when the importer and exporter do not know each other very well yet. The LC is
irrevocable and will always be paid. The costs are higher when compared to the D/P
method, namely five pro mil. This method is widely used in the European Union when
dealing with exporters from outside Europe.
Bank guarantee
The buyer's bank will present a bank guarantee for the amount of the invoice.
Cheques
Bank guaranteed cheques are generally not a problem though cashing may take
some time, up to six weeks. Not all personal cheques are accepted.
Payment on consignment basis
Payment on consignment basis is mostly used in the trade of perishable products,
for example fresh fruit and vegetables. The products are sold at a predetermined price
after a mutually appointed arbitrary person (General Super Intendance Company (GSC))
has controlled the quantity, quality and other aspects of the products at the moment of
acceptance/sale. If the products do not meet the conditions as described in the contract,
the contract is not valid and, depending on the conditions of the contract, prices are
generally adjusted. An open account is used to make the payment after 14 days as from
acceptance/sale.
It is recommended that quotations to European customers should be made on a
CIF basis. However, supplier and importer are free to negotiate and agree whether
quotations and subsequent trade are based on CIF or FOB prices.
Most common delivery terms:
• FOB (Free On Board): The buyer arranges for transportation and insurance.
FOB must specify the port of departure.
• CFR (Cost & Freight): The exporter pays the freight, the buyer arranges for
the insurance.
• CIF (Cost, Insurance & Freight): The exporter pays the freight and the
insurance.

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References