Though door’s opened a crack, Cuba trade still faces obstacles

The standoff between the U.S. and Cuba that President Barack Obama wants to end is older than the president himself.

In January 1961, outgoing president Dwight Eisenhower ended diplomatic relations with the island nation (Obama was born in August that year). Cuba had allied itself with the Soviet Union and embraced communism, and in 1962 President John Kennedy enacted the trade and diplomatic embargo that continues to this day. The Cuban missile crisis in October 1962 brought the world to the brink of nuclear war. Fortunately, Russia blinked and catastrophe was averted, but Cuba became a virtual unknown to most Americans, save for the occasional TV clip of classic 1950s American automobiles patched together with duct tape.

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U.S. SOYBEANS and products would benefit from lifting the trade embargo with Cuba, as would rice, U.S. agriculture leaders say.

Pre-embargo, Cuba was a major customer of U.S. agriculture, particularly rice and chicken. In 1958, 70 percent of Cuba’s imports came from the U.S., and American business interests controlled a large part of the country’s economy.

U.S. business, agriculture, and tourism interests have been pressuring Washington for years to scrap the embargo and allow free trade between the two nations. President Obama has termed the embargo a U.S. policy a failure. But there remains strong opposition by the powerful Cuban American community and many members of Congress who have differences with Cuba’s stance on human rights, communism, and more than 6,000 claims for billions of dollars of U.S. businesses seized by the Cuban government over 50 years ago.

There has been limited authorized U.S.-Cuba trade since 2000, but it requires cash-in-advance transactions and considerable red tape. The best years were 2007, when Cuba bought $437.5 million worth of agricultural products; 2008, with $710 million; and 2009, with $528.4 million, according to the U.S.-Cuba Trade and Economic Council.

But in subsequent years, amounts have gone downward and in 2014 U.S. ag/food exports to Cuba hit their lowest level since 2003, only $291 million. Top 10 exports in 2014 were frozen chicken and soybeans (by far the two largest commodities in value, $147.5 million and $67 million respectively), oil cake, soybeans, corn, mixed animal feeds, herbicides, frozen pork, frozen turkey, soups/broth, and fresh fruit.

The recent meeting between Obama and Cuba’s President Raoul Castro has renewed hopes by American agriculture that expanded trade opportunities are on the horizon, but there are still obstacles on both ends, analysts say.

The American Soybean Association issued a statement saying the organization appreciates the renewed focus from the Senate Agriculture Committee on expanding agricultural trade to Cuba. A Senate hearing gave several groups, including the U.S. Agriculture Coalition for Cuba (USACC), of which ASA is a member, an opportunity to speak about the challenges and potential opportunities for trade with Cuba.

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“Normalized and barrier-free trade with Cuba — an emerging market only 90 miles from our shores —would have a positive impact on soybean exports in the form of increased demand for pork, poultry, dairy and eggs, as well as vegetable oil for cooking,” said ASA first vice president and Greenwood, Del., farmer Richard Wilkins.

ASA is a charter member of the USACC, which was formed in response to the need to re-establish Cuba as a market for U.S. food and agriculture exports.

“We know the soybean industry is losing out on valuable opportunities to market U.S. food and agriculture products in Cuba,” Wilkins says.

“In the last year, Cuba imported about a half-million tons of soybeans and soybean products. A little less than half that total came from the U.S. soybeans that have gone to Cuba in the last year have been exported with difficulty as a result of the red tape related to the 1960s embargo.

“Lifting trade barriers and normalizing commercial trade would allow U.S. soybean producers to grow the Cuban export market and better compete with foreign suppliers who continue to increase their market share.”

Only Congress can lift the embargo, and the Republican-controlled body thus far has shown little enthusiasm for doing so. Obama, through his executive authority, can eliminate many of the restrictions to trade and travel, and opening doors to Cuba is, sources say, one of the legacy objectives of his presidency.

Even so, hurdles remain, among them an antiquated infrastructure in Cuba.

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