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HavanaJournal.com: Cuba Business

Arkansas top firms bide time in Cuba

Posted November 08, 2003 by publisher in Cuba Business.
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BY TOM DARIN LISKEY | Arkansas Democrat-Gazette

Cuba, with its economy in a shambles, pledged to dip into its hard currency reserves this week to purchase American farm products.

So far, Arkansas’ $3 billion poultry industry appears to have missed out on new contracts. But that doesn’t mean the state’s agribusiness doesn’t want to win Cuban palates — and the communist government’s cash.

The state’s poultry industry continues to target the Caribbean island nation where U.S. companies are paid upfront for their barnyard and brandname products.

This week, 71 U.S. firms — including Stuttgart-based Riceland Foods Inc. — are at an international business fair in Havana that ends Sunday.

Tyson Foods Inc. of Springdale sent a representative to Havana, where the company is interested in building up its international business. Tyson spokesman Ed Nicholson said Thursday that while trade continues, the company hasn’t signed any new contracts with Alimport, Cuba’s state import company.

Pittsburg, Texas-based Pilgrim’s Pride, a Tyson rival that is purchasing ConAgra Foods Inc. ‘s Arkansas operations in El Dorado, Batesville and Clinton, is likewise striving to build up its presence in the Cuban poultry market. Pilgrim’s, which owned a chicken facility in De Queen before the deal’s announcement in June, didn’t send a representative to Havana this week, spokesman Ray Atkinson said.

But Atkinson said the company continues to foster commercial relationships it has already made with the Cuban state for its chicken.

Smaller Arkansas poultry companies such as Peterson Farms, the Decatur-based chicken producer; Simmons Foods Inc. of Siloam Springs; and Springdale’s George’s Inc. didn’t attend the fair. Instead, they’re watching developments as Tyson and Pilgrim’s break new ground in the Cuban market. “Cuba’s economy is in trouble,” said economist Aryam Vazquez of IDEAGlobal, a New York-based consulting firm. He said Cubans need food and the government is willing to use what reserves it has to pay for it.

Since the Trade Sanctions Reform and Export Enhancement Act was signed into law in 2000, U.S. exporters have been allowed to sell agricultural commodities to Cuba, but only if the debtladen Cubans pay cash upfront. The act provided an exemption to a U.S. trade embargo against Cuba that has been in effect for more than four decades. “U.S. companies are paid in cash for their transactions and they’re profiting from it,” said John Kavulich, president of the U.S.-Cuba Trade and Economic Council.

Pedro Alvarez, president of Alimport, said as of last Saturday, Cuba had purchased $463 million in U.S. farm goods since the communist government allowed imports of U.S. farm goods in 2001, after Hurricane Michelle hit the island and destroyed many crops.

Backers of Arkansas’ poultry trade to the island nation, just 90 miles off Florida’s coast, say the United States is in a good position to export to Cuba. “The sanctions have made it difficult for Arkansas [poultry and rice producers] to export their products to Cuba,” Sen. Blanche Lincoln, D-Ark., said.

Arkansas, the nation’s secondlargest poultry producer, would stand to reap millions of dollars in new poultry sales if trade restrictions were further eased, industry watchers have said. “We are very interested in the potential [Cuban] market… as the opportunity presents itself,” said Gene Martin, senior market analyst with the Arkansas Farm Bureau in Little Rock.

Tyson, the country’s largest meat processor, sells dark chicken meat to Cuba. Pilgrim’s Pride has sent leg quarters to the island. Other Arkansas poultry companies say their products are trickling into the Cuban poultry market through brokers and international trading companies that are licensed to export there.

Toby Moore, spokesman for the USA Poultry & Egg Export Council, said that in the first eight months of the year the United States’ poultry industry exported 42,326 metric tons of chicken to Cuba, 58 percent more than in the same period in 2002.

Chicken exports in the January-through-August period were valued at $19.8 million, up substantially from $12.5 million in the same eight months a year earlier, he said.

But rival poultry from other nations is making its way to store shelves in the communist nation of 11 million. “As more countries have begun to supply poultry to Cuba competition has increased,” according to a recent report posted on the U.S. Department of Agriculture’s Web site.

Brazil’s Perdigao S. A. and Sadia S. A. recently formed a jointly owned trading company to sell more chicken to Russia, Cuba and other countries. Brazil is the world’s second-largest chicken exporter.

On Monday, Alimport signed deals with U.S. companies valued at $25 million for rice, soybeans and other products. Cuba’s official communist newspaper, Granma Internacional, quoted the country’s vice president, Carlos Lage, as saying that agricultural and food deals worth more than $80 million will be signed by the time the food show ends.

The U.S. trade embargo and the disintegration of the Caribbean island nation’s communist bloc-era trade partners devastated the Cuban economy in the 1990s.

The country’s nickel and sugar cane industries also have floundered, catapulting tourism to the island’s main source of hard currency. The government is using the foreign money it collects from tourists for food purchases, analysts said.

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