Playing politics: The drying up of ag and food sales to Cuba

There’s many a slip ‘twixt the cup and the lip, Shakespeare wrote, and agriculture and other U.S. interests that were salivating at the prospects of new business opportunities as a result of improved relations with Cuba are finding that erasing 50 years-plus of political ostracism doesn’t come easy.

The Castro government is, observers say, using its purchasing power as a tool to try and get more concessions from the U.S. as the process of easing sanctions moves forward.—Getty Images/Joe Raedle

In fact, sales of U.S. food/ag products have dropped precipitously since the Obama administration announced limited easing of sanctions and the two countries jointly opened embassies.

The latest report by the U.S.-Cuba Trade and Economic Council shows U.S. food and agriculture exports to Cuba in August at $2.25 million, a substantial decline from $14.3 million, or 84 percent, August 2014. Projections are that total food/ag sales for 2015 will be only about $150 million; that compares to $710 million in 2008 — long before the make-nice meetings earlier this year between President Obama and Cuban President Raúl Castro and the continuing diplomatic maneuverings between the two countries.

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The Cuban government spent $2.55 billion on food/ag imports in 2014, so there obviously is market potential there. Why, then, has the U.S. seen its sales drying up?

Those who follow the workings of the Cuban regime sum it in one word: politics. The Castro government is, they say, using its purchasing power as a tool to try and get more concessions from the U.S. as the process of easing sanctions moves forward.

The Cuban government “may determine greater leverage exists from not increasing purchasing levels as a means of encouraging those impacted United States-based parties to seek further regulatory and legislative changes,” says latest the U.S.-Cuba Trade and Economic Council report.

“U.S. companies have been promised a whole lot,” says Cuban-American Jason Poblete, an attorney at Poblete|Tamargo LLP in Arlington, Va., who writes a blog on political/regulatory issues, “but it seems like the main winners of this new policy are the European entities.”

President Obama says he’s committed to working to remove the 54-year-old embargo, but that the Cuban government will need to agree to various reforms, which it has thus far given no indication of doing.—Getty Images/Joe Raedle

Communist Cuba “remains a brutal dictatorship, a police state,” he says, and it “uses food exports from the United States as a political weapon … to try to buy votes in Congress to secure sanctions-easing legislation that goes well beyond the sale of food.” Rather than purchase food on market-based terms, he says, Cuban officials “opt to purchase food on the other side of the world.

In the meantime, U.S. diplomatic officials visit Cuba to try and get things moving, but return with little substantive accomplished. President Obama says he’s committed to working to remove the 54-year-old embargo, but that the Cuban government will need to agree to various reforms, which it has thus far given no indication of doing.

“Sanctions should not be eased one inch,” says Jason Poblete, until Cuba makes the changes. “Until then, be careful not to get too caught up in the Cuba hype.”

Cuba is, he says, “playing a political game of chicken” with the U.S.

TAGS: Legislative
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