One thing I’ve always loved about agriculture is its world-wide impact. Current events concerning Cuba bring that to light again.
Now that President Obama has enacted an executive order to normalize relations with Cuba, several farm groups are calling for an end to the trade embargo. The Illinois Farm Bureau policy wants to see normalizing trading relations with Cuba, eliminating restrictions on travel to Cuba and simplifications to licensing and shipping requirements for sales to Cuba. The Illinois Soybean Association also wants to see increased travel to Cuba by U.S. citizens because that travel typically results in more trade of agricultural products.
From wheat to rice to beans, observers say the industry stands to be one of the biggest beneficiaries. The country just 90 miles from the tip of Florida has a population of 11 million.
First, a little history — 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 last week as the Obama administration announced plans to restore diplomatic relations and to try to persuade Congress to lift the embargo.
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.
U.S.-Cuban agricultural trade has the potential to grow to $400 million to $450 million within a couple of years, according to C. Parr Rosson III, head of the agricultural economics department of Texas A&M University.
He predicts the boost will be even bigger if Congress lifted the trade embargo.
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.
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 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.
