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HavanaJournal.com: Cuba Business

US agricultural leaders optimistic about lifting US trade Embargo on Cuba

Posted December 19, 2008 by publisher in Cuba Business.
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By Candace Krebs | Ag Journal

Though agricultural leaders’ expectations for the impending Obama Administration are mixed, one thing that excites many of them is the prospect of freer and more abundant trade with Cuba.

Many states and trade groups have sent delegations there with the hope of selling increasing amounts of their products to the island nation of 11 million people, a potential 30 million bushel market for wheat alone.

“It’s already the eighth largest customer for hard red winter wheat even though we only have 50 percent of their market,” said U.S. Wheat Associates president Alan Tracy. “By comparison, the U.S. has 90 percent of the market in the rest of the Caribbean.”

Industry leaders don’t want to risk losing out on the market as trade relations continue to thaw. Tracy draws a parallel between Cuba and Colombia, which is currently targeted for a U.S. trade agreement that would reduce the wheat tariff from 35 percent down to zero. “That should be a U.S. market,” he said. “Now Canada has a trade agreement with Colombia and that could give them a competitive advantage.”

Tracy, who grew up in the family seed business and was once the Wisconsin Secretary of Agriculture, has been president of the check-off funded U.S. world wheat development agency since 1997. He made stops last week in Colorado and Oklahoma for meetings of the two states’ wheat grower organizations.

“With a different president, there is a good chance of a different approach,” he told the growers. “Both houses of Congress have passed legislation to lift the travel ban against Cuba, but they were always taken out of the final bills by the leadership because they knew it would ultimately not be signed by the president.”

Outgoing Republican President George Bush adhered to a hard-line stance, a lingering legacy of the Cold War. Trade sanctions include a requirement that Cuba pay cash upfront for American products, increasing the cost of imports, and tight restrictions on travel that make it hard for U.S. farmers and other business leaders to put together trade deals. The trade embargo against Cuba, the longest in modern history, was imposed in 1962.

In 2006, an ailing Fidel Castro transferred power to his brother Raul, reviving hopes for more progress.

Rep. Jeff Flake, a Republican from Arizona and strong advocate of greater engagement with the island, has said he expects the Cuban government to slowly move toward a Chinese model of greater economic freedom.

Former Iowa Governor Tom Vilsack, Obama’s pick to be his Secretary of Agriculture, canceled a trip to Cuba back in 2003 over human rights violations but later expressed optimism about trade relations between the two countries while campaigning for the 2008 Democratic nomination for president.

In an interview with National Public Radio, Vilsack said he supported “stronger and better dialogue” as an important first step to “softening” relations between the two countries and said he anticipated Raul Castro would take “a different approach to America” that would create new opportunities. He also said he expected the country’s human rights record to improve as a result of the transfer of power.

While public opinion in general appears to be shifting against the Cuban trade embargo, Tracy added that Democratic leadership is an asset too. Democrats in general have been more supportive of normalizing relations with the communist nation.

“Expect an effort to get the travel ban lifted early in this next legislative session,” he told the wheat growers gathered in Oklahoma City. He anticipates that a cautious Obama will “take some initial steps and wait to see what the reaction is on the Cuban side.”

U.S. farmers have already invested heavily in laying the groundwork for an increasing presence in the Cuban marketplace.

Oklahoma Secretary of Agriculture Terry Peach said the state is in the process of putting together a second one million bushel shipment of wheat to the Cubans. The first such deal was struck back in early 2005 and included another two million bushels each from Kansas and Texas.

“There are some logistical areas that need to be worked out, but we’re confident that we will make a delivery of wheat sometime in the coming months,” he said.
For Keith Kisling, a wheat producer from Burlington, Okla., and former chairman of U.S. Wheat Associates, his participation in the delegation was a return engagement. He had a long personal visit with Fidel Castro on his first trip several years ago.

“It’s all about relationships with them,” he said.

Oklahoma, Kansas, Colorado, Nebraska and Texas are among the states that will benefit the most from resuming direct trade and more open credit policies with Cuba, Kisling said. On his recent visit, he noted that economic conditions in the country appear to be improving. Cars and buses are more modernized, and tourism has grown into a huge industry (though the travel ban still keeps American tourists out.)

He also emphasized that it’s not just wheat farmers who stand to benefit. Oklahoma State Senator Charles Wyrick, a dairy farmer, also participated in the trip. In the past, the Cubans have purchased dairy heifers from the U.S. and they currently buy significant amounts of powdered milk. Secretary Peach said the Cubans are also interested in exploring purchases of forestry products from Oklahoma.

Kansas wheat farmer Jerry McReynolds traveled to Cuba with a group of 30 two or three years ago and said Kansas is working on plans for a similar return trip.
“It’s a no-brainer as far as I’m concerned,” he said of opening trade between the two countries.

“I think there’s hope now,” he continued. “It needs to happen. What we’ve been doing in the past, it’s not working. We can’t be closing countries off. They’ve got people who need our products. And we need some of their expertise.”

On his trip a few years ago, McReynolds, who farms near Woodston, noted the hardships caused by ongoing tensions with the U.S. He saw families at the airport crying due to imposed separations from loved ones. When he asked one man about the absence of graffiti, he was told it was because there was no paint.

“It’ll change,” McReynolds observed of the political strains and how they’ve hurt the country’s fortunes. “It has just taken way too long. I found the people so friendly and happy and clean, and yet their living conditions were very meager.”

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Member Comments

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On December 19, 2008, bernie wrote:

It sounds like business as usual with all these vultures waiting to make a deal with Cuba???  I presume the reason Cuba will deal with the US is because the
US will undercut any price that the Cuban goverment is presently paying???
Also what do we need governors and senators going to Cuba to make any
type of business deal????  Looks like they just want to travel at tax payers expense?????

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On December 31, 2008, chuckdaplumber wrote:

An experienced hooker always get the cash up front!
As long as the present terms of sales is maintained, I say let’s do more business with Raul and friends!
Cash on the barrel head. Chuck