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House Hearing Focuses On Potential Benefits Of Expanded US Agriculture Trade With Cuba
Washington—The potential for expanded agricultural trade between the US and Cuba was the focus of a House Agriculture Committee hearing here Wednesday.
A US embargo on trade with Cuba has been in place in various forms for almost 60 years, noted US Rep. K. Michael Conaway (R-TX), committee chairman.
Conaway noted that US Rep. Rick Crawford (R-AR) recently introduced the Cuba Agricultural Exports Act, which lifts financing restrictions under the Trade Sanctions Reform and Export Enhancement Act (TSRA) while providing for both market promotion and US agribusiness investment under strict safeguards.
While he is “very hopeful that we can find a path forward on expanding agricultural trade with Cuba,” Conaway said he remains “firmly opposed” to lifting the embargo or restrictions on travel.
US Rep. Collin Peterson (D-MN), the committee’s top Democrat, would like to see the trade embargo lifted but is “doubtful that it’s politically possible” to do at this time.
Peterson cautioned that, with the exception of rice and possibly wheat, the potential benefits are limited, least in the short term. Cuba is a small country with most people having very limited income. But he feels that, in the long term, trade with Cuba “will be a benfit to US agriculture and the Cuban people.”
Cuba’s food imports totaled $1.9 billion in 2014, and the country has the potential to become a “major market” for US agricultural exports and to develop into a market that is “quite diverse,” with bulk staple products being important in the near term, said Dr. Luis A. Ribera, associate professor of agricultural economics at Texas A&M University.
But as Cuba grows and the tastes and preferences of the average Cuban become more sophisticated, US exports will be well positioned to capture a growing share of the high-value food market, Ribera continued. The US agriculture export potential to Cuba could exceed the record $709 million set in 2008.
With a more open economy, less regulation by both governments, strong tourism and remittances, US food and agricultural exports to Cuba have the potential to exceed $1.2 billion annually within five years, Ribera said. While much of this additional export volume may be consumed by international visitors, a growing share will also make its way into the Cuban populace.
Last year, US agriculture exports to Cuba were valued at $149 million, and were concentrated in poultry, the soybean complex and corn, Ribera said. Dairy products are among the products that have “strong potential” in the market, and frozen desserts also have potential.
There are several challenges that limit the performance of US exports to Cuba, Ribera noted. Consumer incomes, infrastructure/logistics, and policy and regulation are among the key constraints.
Competition for the Cuban food market “is keen,” Ribera pointed out. Many US competitors in the
Cuban market offer some form of credit terms to ALIMORT (through which food and agricultural imports are required to enter Cuba) for food purchases. US firms are precluded from doing so and also face an added constraint of being required to offer only cash-in-advance sales, or cash against documents.
US exporters cannot use letters of credit to facilitate sales and manage risk, raising the cost of US products and making them less competitive relative to Spain, Canada, Brazil, China and Vietnam, Ribera said. Reducing the cost and time necessary to process payment for US ex
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