Removal of trade barriers will make U.S. agricultural products more competitive
By Steve Karnowski
Associated Press
MINNEAPOLIS (AP) — U.S. agriculture has a big appetite for freer trade with Cuba. From wheat to rice to beans, the industry stands to be one of the biggest beneficiaries of President Barack Obama’s plan to ease economic and travel restrictions imposed against the communist-ruled island.
Agricultural exports have been among the few exceptions to the half-century old U.S. trade embargo, though they’ve been subject to cumbersome rules — requiring cash payments up front before products are shipped, and that the payments go through banks in other countries that charge hefty fees for their services.
As a result, Latin American and Asian countries with fewer restrictions and easier financing have gained market share in recent years.
The removal of such trade barriers will make U.S. agricultural products “far more price competitive” in Cuba, U.S. Agriculture Secretary Tom Vilsack said Wednesday as the Obama administration announced plans to restore diplomatic relations and to try to persuade Congress to lift the embargo.
Major U.S. farm groups including the American Farm Bureau Federation and National Farmers Union, as well as leading agribusinesses such as Cargill Inc., have long advocated normalized trade relations with Cuba, a market of 11 million consumers just 90 miles off U.S. shores.
Sales of U.S. agricultural products to Cuba peaked at over $710 million in 2008, before the recession, but fell to $350 million by 2013, according to the U.S.-Cuba Trade and Economic Council. Frozen chicken, soybeans and soy products, and corn are the main products Cuba now buys from the United States.
It’s hard to quantify just how much of a boost the planned changes will give to U.S.-Cuban agricultural trade, said C. Parr Rosson III, head of the agricultural economics department at Texas A&M University. But he predicted it could grow to $400 million to $450 million within a couple of years.
“That’s just a back-of-the-envelope estimate on my part ... but the market can make those swings very readily,” he said.
Cuba remains a poor, relatively small country, Rosson said. Its economy shifts depending on remittances sent home by Cubans living abroad, tourism, and nickel exports, he said. But liberalized rules for remittances and tourism should provide an early boost in demand, he said, and easier banking rules will eventually make a difference too. The boost would be even bigger if Congress ever dismantles the embargo, he said.
“We’re talking a monumental move to lift the embargo right now,” he said. “But things can change.”
Wheat growers in the Midwest expect new export opportunities since Cuba now buys nearly all its wheat from Canada and Europe. Cuba hasn’t bought U.S. wheat since 2011, but could import at least 500,000 metric tons of it annually, according to the National Association of Wheat Growers.
“If Cuba resumes purchases of U.S. wheat, we believe our market share there could grow from its current level of zero to around 80-90 percent, as it is in other Caribbean nations,” Alan Tracy, president of U.S. Wheat Associates, said in a statement.
Dry beans, dry peas, lentils and potatoes are also big parts of the Cuban diet. That creates more opportunities for farmers in colder states like North Dakota, though they’ll still have to compete with cheaper Chinese beans, said Bill Thoreson, president of the U.S. Dry Bean Council.
“If we have normalized trade relations with them and are able to do away with some of the banking regulations, I believe there’s some real potential to do business with Cuba,” Thoreson said.
Rice producers in southern states and California are hoping to resume exports to Cuba for the first time since 2008, according to the USA Rice Federation.
“It’s an enormous rice market,” said Dwight Roberts, CEO of the U.S. Rice Producers Association. Roberts said believes imports of U.S. rice could someday reach the levels Cubans bought before the revolution.
