Opportunities await in Cuba
May 14, 2015
Opportunities with an unlikely trading partner are on the horizon for U.S. food producers. After more than 50 years, Congress is looking to lift the embargo on Cuba. In February, S. 491 (The Freedom to Export Cuba Act) was introduced by a bipartisan group of senators, including Senator Debbie Stabenow (D-MI); the bill would lift the trade embargo on Cuba and repeal current laws restricting trade to that nation.
"Improving trade with Cuba represents not only a great opportunity for America's farmers, ranchers, and manufacturers, but a meaningful way to help rebuild trust between our nations," said Stabenow, who traveled to Cuba in January 2015 as part of a congressional delegation seeking to normalize trade relations between the two countries. "After more than 50 years of stalemate, it's time for a new policy on Cuba.When I visited Cuba earlier this year – just days after President Obama eased some trade restrictions – I saw firsthand the eagerness of Cubans who want to develop a more effective relationship with the United States. But we can only get there if we begin to take meaningful steps to soften many of the barriers that exist between us."
In 2014, the U.S. exported more than $290 million in agricultural goods to Cuba; however, Stabenow said the potential for even better business opportunities with Cuba is too good to pass up.
"America's farmers and ranchers are uniquely positioned to lead the way," said Stabenow. "Cuba's own import agency estimates that it will receive approximately $2.2 billion (in U.S. dollars) worth of food and agricultural products this year alone. That type of economic potential deserves a chance to succeed – and is one reason why many of the largest producer groups, trade associations, and companies from within agriculture have come together to push for increased engagement."
“Our visit was an important first step toward a stronger relationship with Cuba. Lifting the embargo represents a unique chance to benefit rural citizens for both nations. Jack AlexanderBelgrade, Montana
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Senator Pat Roberts (R-KS) agrees with the potential for the U.S. agricultural industry to meet the food needs of the Cuban people.
"If the embargo is lifted and the proper assurances are in place, the U.S. has the potential to be a significant trading partner with Cuba," said Roberts. "Cuba is home to 11 million people and relies on imports. The U.S. is less than 100 miles away from Cuba, which gives us significant export advantages compared to other exporting countries.
Roberts said opening trade to Cuba won't be an easy, overnight fix. He hopes Congress can assist in normalizing trade with the country.
"For over 50 years, agriculture exports to the island have seen many ups and downs— sometimes due to politics and sometimes due to tropical storms," said Roberts. "This is not an issue that we are going to be able to fix overnight. It will take efforts in addition to bills in Congress to truly normalize trade with Cuba. The U.S. and Cuba have a long history full of contention and instability. We must take a strategic approach towards re-establishing relations with Cuba and ensure that the decisions made are the best ones for our farmers and ranchers and the Cuban people."
To start, Roberts said it will be necessary to see how the president's regulatory changes are being implemented.
"Allowances have been made for correspondent bank accounts to be established, as well as new definitions as to when cash exchanges must take place in a transaction," said Roberts. "We need to monitor how these new rules are being applied. I'm also interested to learn about who is taking advantage of these changes, how they have been working and what benefits they have offered."
In April, Roberts said the Senate Agriculture Committee held a hearing on the opportunities and challenges of agriculture trade with Cuba.
"We had a chance to hear from both government regulatory agencies responsible for enforcing the restrictions with Cuba, and from the farmers, ranchers and other stakeholders who stand to benefit from more market access," said Roberts. "Agriculture has long been used as a tool for peace and stability. It is my hope that Cuba will embrace the practices of free trade, enterprise and commerce, so that both countries will gain from increased relations."
In March, 95 members of the U.S. Agriculture Coalition for Cuba (USACC) went on a four-day visit to Cuba, including Jack Alexander of Belgrade, Montana. Alexander joined industry leaders, commodity groups, and agribusiness from a dozen U.S. states on the trip. He represented the Rural and Agriculture Council of America (RACA), which he serves as president.
"Our visit was an important first step toward a stronger relationship with Cuba," said Alexander. "Lifting the embargo represents a unique chance to benefit rural citizens for both nations. We appreciate the opportunity for shared dialogue between representatives of U.S. agriculture and the Cuban people."
Alexander is founder and president of Synergy Resource Solutions, Inc., a natural resource consulting company based in Bozeman, Montana. He is a certified range consultant and erosion control specialist who works closely with ranchers and land owners. He said it was a privilege to represent farmers and ranchers in his trip to Cuba.
"Opening trade with Cuba makes sense for many reasons," said Alexander. "U.S. farmers could provide food to Cubans to alleviate shortages in their markets. Cuban farmers could provide foods to U.S. markets that we are currently importing from half way around the world — primarily fruits, vegetables, and seafood. Normalizing trade with such a close neighbor would make life better for those growing food and those feeding their families."
Alexander said ending the U.S. embargo on Cuba would benefit both nations and would offer great opportunities in a new market for producers.
"While we were in Cuba, we had the opportunity to sit down with Josefina Vidal Ferreiro, U.S. Division Ministry of Foreign Affairs General Director, and it was very evident how serious Cuba is about opening up trade relations with the U.S.," said Alexander. "After that meeting, we toured six different farms and had many positive discussions with Cuban farmers about building relationships and creating business opportunities for both parties."
While touring Cuba's agricultural sector, Alexander said many are still operating in the 19th century. Yet, the farmers there are keenly aware of the technology available that could bring them to the 21st century.
"Rural Cuban families are cash poor; however, there is a heavy focus on education in rural areas, so these folks are well-educated and ready to capitalize on new business avenues for their products."
Because Cuba is a tropical nation, key products include fruit, vegetables, tubers, tobacco, citrus and herbal medicine. Alexander said most Cubans have never even tasted beef, as cattle are used for dairy production in Cuba. He also noticed the quality genetics of the hog farm he toured, although he said they were much leaner than the pigs U.S. producers raise.
"The farms were toured were truly beautiful," said Alexander. "The Cuban producers have the ability to grow fruits and vegetables year round, but they can't produce wheat, rice or corn. Obviously, American growers are very interested in opening up trade to meet the demands of these products."
Alexander noted that many Cubans are keen to try U.S. beef, knowing how close the market is and that is is considered the highest quality of beef in the world.
"Looking ahead, normalizing trade with Cuba is purely political at this point," said Alexander. "Sure, there are some food safety compliance issues to get figured out, but for the most part, those issues are pretty straight forward. I'm hoping Congress moves along the bills that will have a positive impact on getting the embargo lifted and trade to get going."
"We have tried this embargo for 50+ years and it didn't work; it's time to try something else.," he added. "This will support farmers and ranchers, and it will provide higher quality food to our neighbor and the non-political leadership of that country because they will have better access to food. Those people deserve to have good food just like we do. It's the right thing to do. There are starving people in rural communities in Cuba. The U.S. needs to take the volume we have and be willing to share it, especially in the free market. When moms can get better food for their kids, it drives politics."