WASHINGTON, D.C., U.S. — U.S. agriculture groups voiced their support for normalized relations with Cuba following comments made on Dec. 17 by President Barack Obama, saying such a move would increase trade opportunities for soybeans, wheat and more.
Obama said the U.S. would begin discussions to renew diplomatic relations with Cuba. The U.S. has imposed an embargo against the nation since 1959. However, the embargo was passed by the U.S. Congress and can only be revoked by lawmakers. That is unlikely to happen soon, as the Republicans will take control of the Senate in January.
U.S. law has exempted food from the embargo, but complicated rules make deals difficult and expensive. The policy change discussed by Obama would allow payment to be made while goods are in transit, eliminating the requirement money be routed through a third party, U.S. Department of Agriculture (USDA) Secretary Tom Vilsack told reporters.
Vilsack said the announcement is an important opportunity for U.S. farmers and ranchers.
“It removes technical barriers between U.S. and Cuban companies and creates a more efficient, less burdensome opportunity for Cuba to buy U.S. agricultural products,” he said. “It also makes those products far more price competitive, which will expand choices for Cuban shoppers at the grocery store and create a new customer base for America's farmers and ranchers."
Cuba imported nearly $350 million of U.S. agricultural products in 2013, including $146 million of poultry meat, $108 million of soy products and $82 million of corn and feeds, according to U.S. Department of Agriculture data.
Cargill, which has long been a proponent of ending the embargo and has supported humanitarian exemptions on food shipments to Cuba, said the two nations deserve the opportunity to trade and engage with one another.
“This is an important moment. The history of trade liberalization has clearly led to economic and social benefits for others,” said Cargill Chief Executive Officer and President David MacLennan.
“This move will drive growth in both countries,” said Devry Boughner Vorwerk, a Cargill vice-president and chair of the U.S. Agriculture Coalition for Cuba (USACC), a partnership of more than 20 prominent U.S. agriculture associations committed to normalizing trade with Cuba. “It will create a new market for U.S. farmers, ranchers and food companies, and give the Cuban people improved access to affordable food.”
Cuba is the largest wheat market in the Caribbean, purchasing almost all of its wheat from the E.U. and Canada, according to the National Association of Wheat Growers (NAWG) and U.S. Wheat Associates (USW). The nation could import at least 500,000 tonnes of wheat from the U.S. each year but has not purchased U.S. wheat since 2011. “U.S. wheat farmers are excited about the prospect of exporting more wheat to Cuba,” said NAWG President Paul Penner. “NAWG has long supported strengthened trade relations with Cuba and see this as a historic step in that direction.”
“The U.S. wheat industry applauds these actions, which take concrete steps away from a policy approach towards Cuba that has accomplished little,” said USW President Alan Tracy. “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.”
USA Rice Federation said a key part of the president’s initiative is a new approach to banking that allows U.S. and Cuban banks to have direct relationships.
"The changes to banking are very important because they will significantly reduce red tape and costs associated with doing business with Cuba," said Betsy Ward, president and chief executive officer of the USA Rice Federation.
Ward said her organization has long maintained that the "embargo was not on Cuba, as they could source rice and other products from around the world, but rather on the rice growers in the U.S., whose own government cut them out of one of the world's top markets, just 90 miles from our shores." She added that USA Rice is also a founding member of the U.S. Agriculture Coalition for Cuba (USACC), a group dedicated to lifting the embargo.
"USA Rice was the first U.S. group of any kind to exhibit at the 2001 Cuba International Trade Fair, the first such participation in any Cuban trade fair in more than 40 years," said USA Rice's Marvin Lehrer. "This historic action, taken under extraordinary and difficult circumstances, was among those cited by the government of Cuba as a motivation in making the first purchase of U.S. rice since 1961 and garnered worldwide media attention."
Sales rose steadily reaching 176,631 tonnes in 2004, representing about 30% of Cuba's import needs. Since then, imports fell and no sales have been made since 2008 - due to further U.S. government restrictions on definition of "cash in advance" and banking terms with Cuba.
As a major consumer and importer of rice, and once the largest market for U.S. rice, Cuba is uniquely positioned to once again become a major market for the U.S., which offers easy logistics for exactly the type of rice Cubans demand, USA Rice said.
The American Soybean Association (ASA) said it was excited for Obama’s announcement, not only for the promise the Cuban marketplace holds for soybeans, but also in the larger scope of overcoming geopolitical barriers.
“Trade builds bridges between nations, but it also generates real and concrete value for American farmers by expanding and strengthening our opportunities in foreign markets. Whether it’s the burgeoning Cuban demand for pork, poultry and dairy or that nation’s expanded demand for cooking oils, American soybeans have a significant market opening just off our own shores,” said ASA President Wade Cowan. “While we have been able to sell our products in the country for decades, our Cuban customers were unable to secure the same financing and credit opportunities as other trade partners. Conversely, the restrictions on financing made it difficult for our products to compete in that marketplace. The easing of these restrictions will make it easier for American soy to gain a foothold in the market, but more importantly, it will enable the Cuban people to purchase the products that they need and want as their market develops.”