Posted October 07, 2004 by publisher in Cuba Business.
By Patrick Springer | [url=http://www.in-forum.com]http://www.in-forum.com[/url]
A North Dakota farm trade delegation announced a sale of peas to Cuba on Wednesday that’s expected to bring revenues of $500,000 for state farmers.
“It’s about a million dollars back to the state of North Dakota, including processing,” Eric Bartsch, a state pea industry representative, said from Havana.
The deal, a 5,000-metric-ton shipment of yellow peas, is part of what the delegation hopes will become a package of sales totaling 20,000 tons, said Roger Johnson, state agriculture commissioner.
“That would be a big deal if we could put that deal together,” he added.
This year, North Dakota farmers are expected to produce 308,000 metric tons of dry peas; 20,000 tons would comprise almost 6.5 percent of the total harvest. The state’s growers have sold 25,000 tons to Cuba during the last two years, Johnson said.
North Dakota farmers’ acreage of peas and lentils have doubled in each of the past two years, and now total 315,000 acres for dry peas and 100,000 acres for lentils.
But farmers and processors face two large obstacles that combine to add 15 percent to 25 percent to the cost of putting a commodity deal together with Cuba.
One is shipping: Canadian farmers pay $26 less a ton to ship their crops to a sea port for export, Johnson said. That translates into a 5 percent to 8 percent penalty against North Dakota farmers, who pay $48 a ton in rail shipping costs, he said.
Transaction costs resulting from federal restrictions on U.S. food sales to Cuba also add significantly to the costs. Food and medicine are exempted from the government’s trade embargo against Cuba, but all sales must be paid in cash.
Also, the embargo restrictions mean sales transactions must be handled by foreign banks, usually in Europe. In turn, that requires currency exchanges, which increase costs.
“It’s just lost money,” Johnson said of the added costs that drain profits. “It comes directly out of the pocket of North Dakota farmers, or U.S. farmers, I should say.”
Bartsch, administrator of the North Dakota Dry Pea and Lentil Association, said Cuba remains an important export market as farmer expand their production.
“It’s moving the product,” he said. “We have a lot of product out there.”
The North Dakota delegation, which also includes Greg Johnson, owner of Premier Pulses International, Inc., of Minot, continues to overcome the logistical hurdles in reaching the 20,000-ton goal, with faxes going back and forth to arrange details.
“Quality and quantity of the North Dakota crop should not be an issue,” said Johnson, making his fourth trade trip to Cuba. Instead, further sales hinge on “if we can come together on pricing terms.”
Over the past three years, almost $6 million of North Dakota agricultural products have been sold to Cuba, which now ranks 23rd among 225 food export markets, according to state ag officials.
Readers can reach Forum reporter Patrick Springer at (701) 241-5522
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