'Tense' might best describe the political relationship between the United States and Cuba over the last 50 years. Yet, expanded efforts by both governments over the last decade suggest that U.S. farm exports could increase to the Caribbean island.
The U.S. placed a trade and travel embargo on Cuba 50 years ago shortly after Fidel Castro assumed leadership. This action essentially eliminated all U.S. trade with the communist nation.
Parr Rosson discussed U.S. - Cuba farm trade issues during the 2011 World Ag Expo in Tulare, Calif.
Rosson is an Extension agricultural economist and director of the Center for North American Studies (CNAS) with Texas AgriLife Extension at Texas A&M University, College Station, Texas. CNAS promotes agricultural relationships between the U.S., Mexico and Canada, and works to resolve trade issues.
Enacted U.S. legislation over the last decade and a technicality linked to the Swiss Embassy have somewhat thawed U.S.-Cuban farm trade relations. The Trade Sanctions Reform and Export Act of 2000 opened the door to some U.S. farm, forestry, and medicinal trade with Cuba. Cuban products are prohibited in the U.S.
The Swiss connection allows the U.S. to have an ‘Interests Section’ office in Havana. The Cubans have an Interests Section office in Washington, D.C. Potential U.S. farm exporters work with the Washington office initially to pursue exports to Cuba. Alimport, the Cuban food agency, buys U.S. products including farm goods.
Rosson says the U.S. exported $4 billion in farm products, mostly feed stuffs, to Cuba from 2002 to 2008. About 95 percent of the total included corn, wheat, soybeans and soybean meal.
The largest U.S. value-added product exported to Cuba is poultry. Other export items include pork, dry beans and processed foods. Smaller amounts of U.S.-grown apples, pears and grapes are exported to Cuba.
U.S. farm shipments to the island nation, located about 90 miles south of the Florida Keys, fell 25 percent in 2009 due to decreased Cuban revenues from its tourism and mined nickel industries.
Tourism and nickel
“The two largest income generators for the Cuban government are tourism and nickel which combined generate about $4 billion for Cuba’s economy (about $2 billion each),” Rosson said. “The Cuban government purchases less food when income from either of these industries decreases.”
More than 2 million tourists vacationed in Cuba in 2009. Tourists consume most of the available high-value commodities at popular vacation destinations including the city of Varadero on the north coast. More than half a million visitors descend on the city’s white sandy beaches annually. Canadians are the top vacationers in the country.
Cuba is the eighth largest nickel producer in the world with the second-highest nickel reserve behind Russia. Cuba received 24 cents per pound for nickel in 2007, but dropped to 11 cents per pound in 2011. The 50 percent price reduction has lowered income for the Cuban government, leading to reduced food purchases from the U.S. and other suppliers.
Cuba, the largest island in the Caribbean, is 745 miles long with mostly flat to rolling terrain. About 75 percent of the land is government owned. About 50 percent of the land is agricultural; equally split between crop production and pasture land for livestock. The major crops grown include sugarcane, coffee, vegetables, tropical fruit, roots and tubers.
Today, Cuban farmers produce about half of the nation’s annual food requirements for the 11.5 million residents. In some years, Cuban food production falls 70 percent to 80 percent short. The U.S. fills about 40 percent of the void on average. Other suppliers include Europe, Canada, Brazil, Vietnam and Argentina.
“Cuban farmers struggle to maintain consistent crop yields,” Rosson said. “The country is located in ‘Hurricane Alley’ where storms can devastate Cuba’s agricultural industry when multiple hurricanes hit the country in a single year. Cuba also struggles with insect pressure and water quality issues including salinity.”
Cubans receive a government food ration supply booklet to purchase food; mostly lower-priced food including rice and beans. This ration system is under phase-out to save money for the government — raising food costs to the average Cuban citizen.
Higher-value products including pork, beef, chicken, condiments, orange juice and pork are usually served to tourists.
U.S. grapes and Cuba
Fresh California grapes have been shipped to Cuba for the last several years. Jim Howard of the California Table Grape Commission (CTGC), Fresno, Calif., says the industry shipped 17,404 19-pound boxes of table grapes to Cuba in 2010. USDA reported the export value at $439,000. That breaks down to about $1.33 per pound.
“The table grape industry as a whole is always happy to have more markets for our grapes,” said Howard, CTGC vice president. “The better the access to a market the better it is for the industry as a whole.”
An even larger customer for California table grapes last year in the Caribbean was the Dominican Republic located east of Cuba. The industry shipped 410,000 boxes of grapes. USDA reported the export value at $7.2 million, or about 94 cents per pound.
“The Cuba market is underdeveloped in comparison with the Dominican Republic,” Howard said. “Over time, it is feasible that exports to Cuba could grow to a comparable level. There is a lot of potential.”
California table grapes are sold in more than 50 countries.
In a CNAS economic impact report, Rosson says 2009 California-to-Cuba farm exports totaled a $9.5 million value. California farm products with major export potential for export include cotton, grains, fruit, dairy, poultry and processed foods.
Cuba is an important market for Texas farm products. CNAS estimates the value of Texas agricultural products exported to Cuba in 2008 at about $45 million. Major exported commodities included wheat, corn, animal feeds, poultry and cotton.
Rosson says potential exists for Cuba to import Texas rice, grain sorghum, beef and cattle, dairy products, planting seeds, horticultural products, and a variety of processed foods.
Texas ports play a key role in facilitating exports to Cuba. In 2010, $18 million in food and agricultural products moved to Cuba through Texas ports.
Oklahoma farm products sold to Cuba in 2009 totaled about $9.2 million; mostly frozen broilers and turkeys, wheat, animal feeds and pork.
CNAS pegs 2009 Louisiana farm export sales to Cuba at a whopping $240 million; Florida - $79 million; Virginia - $53 million; and Mississippi - $22 million.
Every $1 in U.S. agricultural exports to Cuba in 2009, CNAS reports, generated an additional $1.96 in business activity in the U.S. economy.
Critical to increased farm trade with Cuba is the approval of more U.S. ports authorized for shipments. Feed stuffs are shipped from ports including Fort Lauderdale, Fla.; Houston and Corpus Christi, Texas; and Los Angeles, Calif., through bulk cargo facilities.
Most other farm goods must be shipped from Port Everglades in Fort Lauderdale in containers by barge to Cuba.
“These extra transportation costs are a large disadvantage which hurts the price competitiveness of U.S. farm products,” Rosson said. “Hopefully other port systems will be approved to allow more direct shipping to Cuba to reduce costs.”