WASHINGTON: Representatives of American wheat and rice growers on April 21 urged the Senate Committee on Agriculture, Nutrition and Forestry to pursue the lifting of statutory restrictions on trade with Cuba.
Doug Keesling, a farmer and a Kansas Wheat commissioner from Chase, Kas., told the committee he recently visited Cuba as a member of a nearly 100-strong trade delegation from the U.S. Agriculture Coalition for Cuba (USACC).
“We had the opportunity to hear from Cuban government officials and speak with Cuban farmers,” Mr. Keesling said. “We are certainly interested in selling our products to Cuba, but we were also there to learn and to help break down the wall that has separated the people of our two countries for so long.”
Mr. Keesling pointed out that when restrictions on U.S. agriculture trade with Cuba were loosened in 2000 (under the Trade Sanctions Reform and Export Enhancement Act of 2000, or T.S.R.A.), for the first time in 40 years, U.S. wheat was exported to Cuba.
“We were excited that there would be an opportunity to reestablish Cuba as a consistent wheat market for American farmers,” he said. “For a while, it looked like that might happen, as wheat exports slowly grew through the decade until they peaked at 18 million bus in 2008 (Cuba imported from all origins a total of around 32 million bus in that year). During that time, almost all the imported wheat was hard red winter, just like the wheat I grow on my farm in Kansas.
“But it was not to be. Exports tanked over the next couple of years, and we haven’t exported anything since 2010. There are a number of reasons for this, but economics is not one of them. In the rest of the Caribbean region, the market share for U.S. wheat is more than 80%. Cuban ports are literally the closest non-Mexican ports to wheat export terminals in the Gulf. There is no domestic production of wheat in Cuba that could compete with ours, and there are no tariffs in place on imported wheat.”
Mr. Keesling asserted the problem is U.S. regulations and statutes that make U.S. wheat too expensive to compete with wheat from Canada and the European Union in the Cuban market.
“The law requires that exporters receive cash before they’re allowed to unload in a Cuban port,” Mr. Keesling said. “If a company wants to take the risk of providing a loan to a Cuban buyer, they’re out of luck because selling on credit isn’t even an option for them. There are also shipping restrictions that prohibit docking in the United States without specific permission from Washington if a ship has been in a Cuban port within the last six months. Recent regulatory changes don’t seem to have made any impact on making U.S. products more competitive.”
Mr. Keesling said if Cuba is to become a successful export market for U.S. farmers, the U.S. regulatory and statutory obstacles to trade must be repealed.
“But more than that, we need to see the trade sanctions in their entirety lifted,” he said.
Terry Harris, senior vice-president, marketing and risk management, Riceland Foods, Inc., Stuttgart, Ark., told the Senate panel that before the United States imposed a trade embargo on Cuba, Cuba was the No. 1 destination for U.S. export rice. In November 2001, after Congress passed T.S.R.A., the U.S. rice industry completed its first rice sale to Cuba in 40 years. U.S. rice exports to Cuba began to expand, and Mr. Harris noted as recently as 2004, sales of U.S. rice to Cuba were valued at $64 million.
“The success of rice and other U.S. agriculture products in Cuban was seriously curtailed in large part following a change by the Office of Foreign Assets Control (U.S. Department of the Treasury) in the definition of ‘payment of cash in advance’ in 2005,” Mr. Harris explained. “U.S. rice exports to Cuba dropped to zero following this regulatory change.”
Mr. Harris said Cuba imports about $300 million worth of rice annually, mostly from Vietnam.
“With the lifting of the embargo and the restoration of trade and travel with Cuba, we estimate that the U.S. could regain 20% to 30% of the Cuban rice business within two years, or an estimated 90,000 to 135,000 tonnes of new demand for U.S. farmers, based on the U.S. Department of Agriculture’s current estimate of overall annual Cuban import demand,” Mr. Harris said. “We would anticipate the U.S. share of the market would exceed 50% within five years and could reach 75% or more within 10 years.”
Mr. Harris said rice producers applauded the OFAC for adjusting in January 2015 regulations on trade with Cuba to allow for the definition of “payment of cash in advance” to revert to the pre-2005 wording as well as other actions by the Obama administration to facilitate trade. “However, three are still obstacles to conducting normal trade with Cuba.”
Mr. Harris said U.S. rice producers seek normal commercial relations with Cuba, by which he said he meant U.S. citizens should be allowed to travel to Cuba and spend money in that country, and Cuba should be allowed to export its goods to the United States, so it will gain the resources it requires to import products from the United States.
“It also means permitting the full range of commercial banking and financial relationships to facilitate trade based on individual exporter assessments of the risk of doing business in Cuba.” Mr. Harris asserted.
The ability of U.S. exporters to extend credit under commercial terms to Cuban imports would go far in positioning the United States to compete with Vietnam for the Cuban rice market, Mr. Harris said.
“To give U.S. rice the chance to compete in Cuba, the rice industry seeks the ultimate lifting of the embargo and the elimination of all restrictions on tourism and trade with Cuba,” Mr. Harris said. “This, of course, requires congressional action.”
