U.S. growers eager to sell rice to Cuba

Cubans have a saying, “No hay comida sin arroz,” that means, “Without rice, there’s no meal.” The popular expression sums up what rice means to this population.

Yet Cuba, with one of the highest per capita rice consumption rates in the Western hemisphere — about 150 pounds annually, or five times that of the United States — only produces about one-fifth of its rice needs. To make up the gap, it imports massive quantities of the staple, averaging about 600,000 metric tons MT per year.

Cuba’s ideal trading partner is one who can send regular shipments of milled rice, ready for consumption. Enter U.S. rice growers and millers, who produce about 2 percent of the world’s rice supply but nonetheless rank third among the world’s rice-exporting nations.

It’d be a perfect match, if it weren’t for U.S. trade embargo restrictions now in effect. If the red tape can be removed, Cuba itself has said it could easily become a major export market for the United States, buying as much as 400,000 metric tons of rice per year.

USA Rice Federation, the national organization representing all segments of the U.S. rice industry, has kept steady pressure to bring about change. Its members are asking legislators, Republicans and Democrats alike, to get the government out of the way and let U.S. companies have access to Cuba’s market.

U.S.-Cuba trade is an issue “of the highest priority to USA Rice and many other commodity and export-related businesses, which we’ll pursue very aggressively with the president, his farm and trade officials, and the Congress,” said Betsy Ward, the group’s president and CEO.

Change happens slowly

Things were looking up when Congress passed the Trade Sanctions Reform and Export Enhancement Act of 2000. That legislation, strongly supported by the USA Rice Federation, permitted U.S. firms to pursue limited sales to Cuba of medicine and agricultural products, and was the first successful attempt to pierce the trade embargo of nearly half a century, dating to the 1962 Cuban Missile Crisis.

In fact, rice became the first agricultural commodity to post a sale in Cuba after the enactment of TSREEA.

There were still onerous restrictions. The Cuban government had to pay cash in advance through a third-country bank before U.S. rice shipments could be offloaded and vessels traveling to a Cuban port had to wait six months before re-entering a U.S. port. Nonetheless, annual U.S. rice sales to Cuba had climbed from zero in 2001 to 176,632 MT in 2004.

The Bush administration, in its second term, it dialed back the trade relationship by imposing stricter, nearly prohibitive, regulations. Among other things, the Treasury Department’s Office of Foreign Assets Control “reinterpreted” the cash-in-advance clause so that Cuba had to pay for its rice shipments before they left the port.

That resulted in extra expense for Cuba and increased the uncertainty about the United States as a stable supplier given that our government could change the rules at any time.

By 2008, U.S. rice exports to Cuba had dropped back to 12,620 MT, and Cuba was once again importing the majority of its rice from Southeast Asia. That’s unfortunate, said Reece Langley, USA Rice Federation vice president for governmental affairs.

“The industry really does need this market to be reopened. We have seen rice prices decline from where they were a year ago and our exports are also down at this point,” he said.

“Given how close we are to Cuba, we have a huge transportation advantage over any other country that supplies them with rice. If we can get these trading terms and payment terms relaxed some, a lot of agricultural products besides rice would gain an advantage. It would be a win for pretty much everyone. But rice would benefit most.”

Cultivating relationships

Companies can travel to Cuba on trade missions if they apply for a business visa through OFAC. Marvin Lehrer, senior adviser on Cuba for the USA Rice Federation, has visited Cuba some 40 times in the past decade, leading U.S. rice industry growers and executives on trade missions with key Cuban political and business officials, participating at eight trade fairs, and visiting Cuban rice growing areas, mills, distribution facilities, ports, and trade expositions.

Lehrer and USA Rice have also conducted promotions at trade events, chef competitions, and a primary-school educational event. The USA Rice Federation was hosted at three formal dinners by former President Fidel Castro.

Lehrer explained how Cuba’s rice distribution system works:

When U.S. shipments arrive, the rice is distributed to the 11.2 million Cuban people through a network of bodegas, or state-run commissaries that sell cooking oil, beans, corn, flour, and other basics on a ration-card system. Cubans may purchase up to 7 pounds of rice each month at a heavily subsidized price amounting to about 2 cents per pound. After that allotment, they must buy rice through private channels — import shops or farm markets — at a higher, going market price.

For sellers, the price, payment and details of U.S. rice shipments must be negotiated with ALIMPORT, the Cuban government’s food importing arm. Lehrer has nothing but praise for the officials he’s encountered along the way, the Cuban men and women whose job is to purchase food products from all over the world.

“Most of them are multilingual because they deal with so many countries,” he said, “and because of their economic situation, they’re really tough negotiators. They do their homework, keep up on world markets, and they know their products. They’re as informed and professional as anywhere in the world.”

Given the long history of U.S.-Cuban rice trade, dating back many years, “they know our quality, and want our rice,” Lehrer said. “They want to negotiate with us, and to do so, they followed difficult, costly, and embarrassing restrictions. The current system makes it very difficult to buy U.S. rice.”

Keeping up the pressure

Federation efforts in Washington have met with some early success. In mid-March, as part of the mammoth spending bill that provided funding for the majority of the federal government for the remainder of the fiscal year, both houses of Congress approved preliminary provisions intended to loosen up travel and trade to Cuba. The new provisions will restrict the Treasury Department from spending money to enforce the “reinterpreted” cash-in-advance provision, although the law remains on the books.

“This is a small beginning,” Lehrer said. “We need a number of measures to normalize trade and travel relations with Cuba and put them in line with those we enjoy with other trading partners.”

“It’s a small step in right direction,” Langley says.

Following the inclusion of the amendments to the spending bill, Treasury Secretary Timothy F. Geithner on March 5 announced that Treasury’s Office of Foreign Asset Control (OFAC) would continue to adhere to the 2005 definition of “payment of cash in advance” by Cuba as payment prior to the shipment of goods. That prompted a bipartisan group of lawmakers to send Geithner a letter urging him to keep the commitment he made as a nominee to “take great care to follow congressional intent and work closely with Congress to ensure that OFAC’s activities with regard to Cuba are achieving important objectives without unnecessary hurdles or unreasonable delays.”

USA Rice helped marshal support for the letter signed by rice state lawmakers including Sens. Blanche Lincoln, D-Ark., Mark Pryor, D-Ark., Mary Landrieu, D-La., and Kit Bond, R-Mo.

USA Rice also actively supports bills introduced in Congress allowing for unrestricted travel to Cuba and the reestablishment of normal trade relations, and USA Rice Federation is working with other agricultural and business groups to secure cosponsors for those bills.

“Changes that lead to more open trade with Cuba will take time to achieve,” advises Ward, “and to the extent possible, USA Rice will push for them every step of the way.”

Martha Snyder Taggart is a freelance writer in northern Virginia specializing in health, food, business and travel topics.

TAGS: Rice
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