Though door’s opened a crack, Cuba trade still faces obstacles

Though door's opened a crack, Cuba trade still faces obstacles
Apr 27, 2015 by Hembree Brandon in Farm Press Blog

The recent meeting between Obama and Cuba's President Raoul Castro has
renewed hopes by American agriculture that expanded trade opportunities
are on the horizon, but there are still obstacles on both ends, analysts
say.

The standoff between the U.S. and Cuba that President Barack Obama wants
to end is older than the president himself.

In January 1961, outgoing president Dwight Eisenhower ended diplomatic
relations with the island nation (Obama was born in August that year).
Cuba had allied itself with the Soviet Union and embraced communism, and
in 1962 President John Kennedy enacted the trade and diplomatic embargo
that continues to this day. The Cuban missile crisis in October 1962
brought the world to the brink of nuclear war. Fortunately, Russia
blinked and catastrophe was averted, but Cuba became a virtual unknown
to most Americans, save for the occasional TV clip of classic 1950s
American automobiles patched together with duct tape.

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Pre-embargo, Cuba was a major customer of U.S. agriculture, particularly
rice and chicken. In 1958, 70 percent of Cuba's imports came from the
U.S., and American business interests controlled a large part of the
country's economy.

U.S. business, agriculture, and tourism interests have been pressuring
Washington for years to scrap the embargo and allow free trade between
the two nations. President Obama has termed the embargo a U.S. policy a
failure. But there remains strong opposition by the powerful Cuban
American community and many members of Congress who have differences
with Cuba's stance on human rights, communism, and more than 6,000
claims for billions of dollars of U.S. businesses seized by the Cuban
government over 50 years ago.

There has been limited authorized U.S.-Cuba trade since 2000, but it
requires cash-in-advance transactions and considerable red tape. The
best years were 2007, when Cuba bought $437.5 million worth of
agricultural products; 2008, with $710 million; and 2009, with $528.4
million, according to the U.S.-Cuba Trade and Economic Council.

But in subsequent years, amounts have gone downward and in 2014 U.S.
ag/food exports to Cuba hit their lowest level since 2003, only $291
million. Top 10 exports in 2014 were frozen chicken and soybeans (by far
the two largest commodities in value, $147.5 million and $67 million
respectively), oil cake, soybeans, corn, mixed animal feeds, herbicides,
frozen pork, frozen turkey, soups/broth, and fresh fruit.

The recent meeting between Obama and Cuba's President Raoul Castro has
renewed hopes by American agriculture that expanded trade opportunities
are on the horizon, but there are still obstacles on both ends, analysts
say.

The American Soybean Association issued a statement saying the
organization appreciates the renewed focus from the Senate Agriculture
Committee on expanding agricultural trade to Cuba. A Senate hearing gave
several groups, including the U.S. Agriculture Coalition for Cuba
(USACC), of which ASA is a member, an opportunity to speak about the
challenges and potential opportunities for trade with Cuba.

"Normalized and barrier-free trade with Cuba — an emerging market only
90 miles from our shores —would have a positive impact on soybean
exports in the form of increased demand for pork, poultry, dairy and
eggs, as well as vegetable oil for cooking," said ASA first vice
president and Greenwood, Del., farmer Richard Wilkins.

ASA is a charter member of the USACC, which was formed in response to
the need to re-establish Cuba as a market for U.S. food and agriculture
exports.

"We know the soybean industry is losing out on valuable opportunities to
market U.S. food and agriculture products in Cuba," Wilkins says.

"In the last year, Cuba imported about a half-million tons of soybeans
and soybean products. A little less than half that total came from the
U.S. soybeans that have gone to Cuba in the last year have been exported
with difficulty as a result of the red tape related to the 1960s embargo.

"Lifting trade barriers and normalizing commercial trade would allow
U.S. soybean producers to grow the Cuban export market and better
compete with foreign suppliers who continue to increase their market share."

Only Congress can lift the embargo, and the Republican-controlled body
thus far has shown little enthusiasm for doing so. Obama, through his
executive authority, can eliminate many of the restrictions to trade and
travel, and opening doors to Cuba is, sources say, one of the legacy
objectives of his presidency.

Even so, hurdles remain, among them an antiquated infrastructure in Cuba.

Source: Though door's opened a crack, Cuba trade still faces obstacles |
Farm Press Blog -
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