# Presentation: 481990

## Centralized 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 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
10-1-03 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 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
- $18,943,529.65
- 7  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**

- 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

**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

**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

**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?

**Notes:**
Provider submits subsequent EAD Holder ID record to COPS

Notifies the new EAD holder that the ID has been changed.

## Using CCR

**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

**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

**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

**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

**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

**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

**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

**Creating 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

**Notes:**
Acknowledgement File – accepted or rejected bales

## Creating CCR Invoice

**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

**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

**Notes:**
Pending status removed when invoice:

Expires

Is Cancelled

on CCR Buyer Invoice Detail screen in COPS
Invoice as marked “cancelled’
“pending” status will be removed from bales

## Submitting Repayment

**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

**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

**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

**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

**Submitting Repayments**

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

- Overpayments

## Releasing Receipts

**Releasing 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

**Notes:**
May log on COPS to view Invoice Details (if any adjustments, amounts are shown) and payment history

## 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 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 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”***