Centralized Cotton RedemptionCentralized Cotton Redemption

What is CCR?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?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 CCRDevelopment 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 PlanImplementation 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 IncreasesCCR Activity Increases

Beta10-1-03 to 6-30-04

2004 Crop YR

7-1-04 to 6-30-05

2005 Crop YR

7-1-05 to 6-30-06

2006 Crop YR

7-1-06 to 6-18-07

Merchants 2 11 22 30

% of COF Loans

44% 69% 88%

Invoices 32 642 577 751

Bale Count 2,805 1.7 million 1.8 million 3.2 million

Redemption Amount

$736,935 $300 million $357 million $639 million

CCR MilestonesCCR Milestones

• Largest week of activity - May 14 – 18, 2007

– 104 invoices

– 20 buyers

– $262.7 million

– 1.3 million bales

CCR MilestonesCCR Milestones

• Largest day of activity - May 17, 2007

– 9 merchants

– 38 invoices

– 578,980 bales

– $113,132,763.96

CCR MilestonesCCR Milestones

• Largest Invoice

– 8 states

– 68 counties

– 1888 loans

– 97,131 bales

– $18,943,529.65

• 7 of 68 counties – more than 100 loans

– 1 county – 199 loans

Authorization to RedeemAuthorization 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 EligibleCCR 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 DesignationElectronic 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 DesignationElectronic 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 DesignationElectronic 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 DesignationElectronic 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 CCRUsing 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 FileCCR 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 FileCCR 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 FileCCR 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 FileCCR 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 InvoiceCreating 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 InvoiceCreating 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 InvoiceCreating CCR Invoice

• Acknowledgement File sent to buyer

• COPS sends e-mail 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 InvoiceCreating 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 InvoiceCreating 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 RepaymentSubmitting 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 RepaymentSubmitting 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 RepaymentSubmitting 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 RepaymentsSubmitting 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 RepaymentsSubmitting Repayments

• Refunded to the merchant by direct deposit to

merchant’s account

• Manual process

• Future enhancement for automated process

Overpayments

Releasing ReceiptsReleasing Receipts

• Release automatically triggered when funds are

posted in COPS

• COPS emails 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?Contingency Plan – What Happens When COPS Is Down?

• CCC-734 process for periods of time when systems are not operational

– Fax CCC-734

– Email redemption file

– Wire funds to Federal Reserve

• Process unseen by County Office

Processing CCR in the County OfficeProcessing CCR in the County Office

• Loan must be liquidated in APSS

• COF receives email 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 OfficeProcessing 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 CommentsFavorable 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”