Posted November 10, 2003 by publisher in Cuba Business.
By Larry Luxner
Corn from Iowa, cattle from Florida, rice from Texas and apples from Washington state - these are just a few of the farm commodities eagerly being snapped up by the Cuban government in an expensive and calculated effort to influence members of Congress to lift the embargo.
Thanks to the Trade Sanctions Reform and Export Enhancement Act of 2000 (known in business circles as TSRA), Cuba has become an important customer for everything from cereals to soybeans. The United States now accounts for 25% of Cuba’s total food imports - up
from virtually zero two years ago.
The first U.S. agricultural sales to Cuba began in December 2001, after the island’s main crops were devastated by Hurricane Michelle. Under TSRA, the Cuban government must pay cash for all U.S. purchases.
While that restricts sales, it also offers U.S. exporters a virtual guarantee that they’ll be paid for their products - a luxury denied Canadian and European rivals, some of which have waited for years to get paid by Cuba.
Yet Jaime Suchlicki, director of the Univer-sity of Miami’s Cuba Transition Project, calls TSRA “an attempt to undermine the embargo.” He recently told the Chicago Tribune that U.S. food sales
to Cuba are “politically as well as economically motivated.”
FOOD SHIPMENTS UP 50% OVER A YEAR AGO
Politics or not, Cuba now ranks as the 16th-largest overseas
buyer of U.S. corn, according to the Iowa Corn Promotion Board. In
the past 12 months, Cuban purchasing agency Al-import has bought 11
million bushels of U.S. corn; recently, Iowa-based FCStone sold $8
million worth of corn and soybeans to Cuba.
Meanwhile, the Indiana Farm Bureau has vowed to work for the
repeal of trade and travel sanctions against Havana, in return for a
Cuban pledge to buy $15 million worth of pork, soybeans, corn,
poultry, eggs and cattle.
Last year, U.S. companies sold 875,000 metric tons of
agricultural products worth $138.6 million to Alimport; these
products were sourced from 34 states and delivered to Cuba aboard 83
vessels and three cargo aircraft.
Despite worsening tensions between Washington and Havana, the
trend has shown no sign of slowing down; in fact, U.S. food exports
to Cuba are soaring.
During the first eight months of this year, U.S. companies
shipped $139.1 million worth of food commodities to Alimport - a 50%
jump over the same period a year ago. That’s according to John
Kavulich, president of the U.S.-Cuba Trade and Economic Council.
“U.S. commodity prices continue to be good,” Kavulich told
CubaNews. “And with the events of earlier this year - the arrests,
the convictions and the executions - the Cuban government has only
one remaining effective lobbying tool, and that is the purchase of
food under TSRA.”
Kavulich explained: “If the Cubans reduce or eliminate those
purchases, they extinguish the last remaining constituency in the
U.S. seeking a change in U.S. policy. So the business community is
somewhat insulated, because the Cubans have no alternative.”
AMERICAN EGGS IN HAVANA
One company alone, Archer Daniels Midland (ADM) of Decatur,
Ill., accounts for nearly half of all U.S. food exports to Cuba.
Tony DeLio, former vice-president of marketing and public
relations at ADM, was quoted by the Tribune as saying: “We are always
concerned when there is a lack of freedom. But as a company, our
ability to affect that, and where we can help bring about change, is
Dave Radlo, president of Radlo Foods LLC in Watertown, Mass.,
said he’s sold four million dozen eggs to Alimport for just over $2
million, thanks to TSRA.
Those eggs sell for $1.44 a dozen in Cuba’s dollar stores,
and considerably less in the peso markets, which supply the
commodities that Cubans are entitled to as part of their monthly
On Oct. 15, Communist Party daily Granma reported that a
national network of 2,388 farmers’ markets with prices fixed at the
pro-vincial level - on the basis of production and costs, and the
absence of intermediaries - is being consolidated as an alternative
to the private sector supply and demand markets, where prices are
Prices at the state-run farmers’ markets are fixed by the
Poder Popular, which makes a monthly calculation based on production
estimates and the average costs of items being sold. There’s a top
ceiling, but this can be lowered according to quality.
If the U.S. travel ban is lifted, Radlo told CubaNews, “it
would be good for everybody involved. We’d sell more eggs, and there
would be more money to buy eggs. Tourists love to have eggs for
Other companies are less keen to do business with Castro -
especially after President Bush’s Oct. 10 speech announcing a
crackdown on illegal travel to Cuba by U.S. citizens.
In fact, said Kavulich, “about 10 very large, well-known branded U.S.
food companies have decided to put on hold indefinitely their
exploration of opportunities in Cuba. They simply didn’t want to
expose themselves to potential political fallout.”
A total lifting of the trade embargo could easily double or
triple U.S. food sales to Cuba, since experts predict that American
suppliers would quickly grab 60% or more of Cuba’s annual $1 billion
food import bill.
OFAC DENIAL OF FOOD SHOW LICENSE ‘POLITICAL’
There’s little doubt that U.S. companies lost a valuable
chance to market their commodities when the Bush administration
cancelled a second agribusiness fair planned for January 2004 in
Peter Nathan, president of PWN Exhibicon International of
Westport, Conn., was turned down in late June by the Treasury
Department’s Office of Foreign Assets Control, which enforces the
Nathan successfully staged the U.S. Food & Agribusiness
Exhibition at Havana’s Pabexpo last year. That five-day event was
atended by 16,000 Cubans including Fidel Castro - and generated $92
million in sales for many of the 291 U.S. companies and state
or-ganizations participating in the historic event.
Following the denial, Nathan accused the White House of
putting politics before U.S. interests, charging that OFAC has shown
“a painful lack of understanding of commerce and the role of trade
Responding to Nathan’s charges, Treasury spokesman Taylor
Griffin told the Dallas Morning News: “It’s beside the point whether
trade shows help or hurt commerce. This is really about Castro’s
brutal oppression of his own people. You’re gonna round up
dissidents, fine. You’re not going to get trade shows.”
That whole battle could soon become moot, said Kavulich, who
helped Nathan put together last year’s event in Havana.
“Eventually they will issue the license,” he told us. “Cuba
itself is a commodity, and its value is very low, and it’s unlikely
to increase until after November of next year.”
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