Posted October 20, 2003 by publisher in Cuba Business.
By GARY MARX | Chicago Tribune
HAVANA - One year after a historic U.S. agricultural trade fair in Havana, U.S. food and agricultural sales to Cuba are soaring even as relations between the two countries are at their lowest point in years.
Archer Daniels Midland Co., the Decatur, Ill.-based food giant, along with dozens of other U.S. companies, have sold more than $125 million in wheat, rice, poultry and other products to Cuba in the first six months of 2003, according to the U.S.-Cuba Trade and Economic Council. That compares to $138.6 million for all of 2002, according to the council.
Diplomats and experts said Cuban officials are increasing their purchases of U.S. products because shipping and other costs are far cheaper for American goods than those from Europe, Asia and other distant regions.
But Cuban officials also are trying to boost U.S. agricultural trade which several years ago was exempted under the decades-old U.S. economic embargo against the Caribbean island as a way to build pressure in the United States to further ease longstanding economic sanctions, experts said.
Last week, Cuban officials signed a contract in Havana to purchase $8 million worth of corn and soy from an Iowa-based farm cooperative. The next day, Cuba signed another contract to purchase 250 cattle from a Florida company.
“It’s an attempt to undermine the embargo,” said Jaime Suchlicki, a Cuba expert at the University of Miami. “There is a political motivation as well as an economic motivation.”
Many U.S. business executives say they are eager to increase sales to Cuba a relatively modest market with 11 million people at a time of stagnant economic growth in the United States and tight markets overseas.
They argue that constructive engagement and free trade are the most effective ways to improve the political climate in Cuba even in the wake of the arrest and sentencing this year of 75 Cuban dissidents.
“We are always concerned when there is a lack of freedom,” said Tony DeLio, vice president for marketing and public relations at Archer Daniels Midland. “But as a company, our ability to affect that, and where we can help bring about change, is through trade.”
Others are blunt about the separation of business and politics.
“We’ve faced tough economic times and we can’t leave any money on the table,” said David Radlo, a Massachusetts businessman who has sold about $2 million worth of eggs to Cuba since last year.
“We’ll leave political issues to the politicians. I’m just going to continue doing business,” he said.
John Kavulich, president of the U.S.-Cuba trade council, said he knows of no U.S. companies that have severed trade ties to Cuba because of the recent dissident crackdown.
But he said fewer U.S. political and business leaders have visited Cuba this year. He said several major companies that had planned to enter the Cuban market “postponed their engagement indefinitely” after the mass arrests.
At last week’s signing ceremonies, Pedro Alvarez, a top Cuban trade official, said U.S. agricultural sales in 2003 could reach $320 million, a figure that includes transportation, insurance and other costs.
If the embargo is lifted, U.S. merchants could quickly capture more than 60 percent of the $1 billion Cuba spends annually on agricultural and food imports, he said.
Alvarez said increased trade would inevitably improve relations between the two countries, although he said nothing about whether it would create pressures to ease Cuba’s crackdown on dissent or alter its one-party political system.
“Trade and travel will benefit peoples and communities and will not hurt anybody,” said Alvarez, chairman of the Cuban import agency Alimport. “It will create employment, and people-to-people contacts nurture friendships.”
Diplomats and experts said Cuba’s use of trade as a political weapon comes at a time when the island nation has few diplomatic cards to play and is facing a prolonged economic crisis.
Tourism, the nation’s most important source of hard currency, has increased this year but remains volatile. Sugar, once Cuba’s most important industry, is in a severe and perhaps terminal decline.
For most Cubans, the struggle to put food on the table and make ends meet remains paramount.
The recent crackdown on dissidents has compounded the economic problems facing Cuban President Fidel Castro. Stung by European criticism, Castro withdrew Cuba’s application to a European preferential trade pact that could have meant hundreds of millions of dollars in commercial benefits and assistance.
Castro also rejected most future economic assistance from the European Union, which totaled more than $155 million between 1993 and 2000.
In recent months, Cuba has cancelled about $18 million worth of projects funded by the European Union, according to one Havana-based European diplomat. More than a dozen other bilateral aid projects funded by European nations also have been eliminated.
At the same time, Cuban leaders continue to criticize President Bush, who opposes any easing of the trade embargo or lifting of the travel ban that prohibits most Americans from legally visiting the island.
Experts said Cuban officials are seeking an economic boost by improving ties with Brazil, China and other large developing nations.
Cuban officials also are hoping that purchasing American agricultural products from as many U.S. companies as possible will eventually create a lobby powerful enough to overturn the sanctions, which remain an impediment to economic growth.
Farm-state politicians and business leaders are among the most vociferous opponents of the embargo.
“The 40-year-old economic embargo hasn’t worked,” said Chris Aberle, director of domestic sales for the Iowa-based cooperative FCStone, which last week sold corn and soy to Cuba. “I personally disagree with using food like a carrot on a stick.”
The first U.S. agricultural sales to Cuba began in December 2001 after the island’s agricultural sector was devastated by Hurricane Michelle. According to U.S. law, the Cubans must pay cash for all U.S. exports a condition that restricts sales in this cash-strapped economy but makes the deals particularly attractive to U.S. sellers.
The sale of U.S. agricultural products to Cuba increased substantially in September 2002, when 288 exhibitors displayed their products at the first U.S. Food and Agribusiness Exhibition in Havana. The five-day fair ended with $92 million in U.S. sales.
At one point, Castro was mobbed as he toured the exhibition hall and stopped at the Archer Daniels Midland booth, where he sampled a chocolate milkshake, French fries and a hamburger each containing a soy protein ingredient produced by the company.
Since then, DeLio said, the Cubans have purchased tens of thousands of dollars worth of the soy ingredient from ADM. He predicted increased sales by many U.S. companies, even though the Bush administration denied a license for a new agribusiness trade show this year in Havana.
“It’s happening quietly, effectively and routinely,” he said.
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