CubaNews / January 2003
By Larry Luxner
Cuba, world-famous for its tobacco products, is now importing tobacco from the United States for the first time in more than 40 years.
Cuban food import agency Alimport has agreed to purchase $1 million worth of burley tobacco, as part of a $7 million deal between Alimport and the Kentucky Department of Agriculture that also included food products and wooden whisky barrels.
The exact amount of tobacco is unclear, but at roughly $3 a pound, this works out to nearly 170 tons.
Under the Trade Sanctions Reform and Export Enhancement Act (TSRA), one of the few loopholes in Washington’s 40-year-old trade embargo, the Cuban government can buy U.S. farm commodities on a cash-only basis. That includes raw and processed tobacco, cigarettes and related products.
“Tobacco growers have a lot of tobacco on hand that companies pass up. We process and store it, and that’s what we’re trying to sell,” said Benny Garland, director of the Burley Tobacco Growers Cooperative Association, which represents 140,000 growers in Kentucky, Indiana, Missouri and Ohio. “If things open up [with Cuba] a few years down the road, we may be able to sell them more.”
Garland attended last September’s food expo in Havana, where he and fellow tobacco growers enjoyed a two-hour dinner with Fidel Castro and other dignitaries.
W. Scott Althauser, the organization’s vice-president of leaf tobacco, said any burley Cuba buys would be blended with other grades for use by local cigarette producers — definitely not for use in cigars.
He and his colleagues met with officials of BrasCuba, the 50-50 venture between state entity Tabacuba and Brazil’s Souza Cruz S.A. BrasCuba has a 95% share of Cuba’s domestic market for hard-currency cigarettes (see CubaNews, Dec. 2002, page 1).
Garland said there’s potential for burley to-bacco in Cuba. “Their cigarettes are horrible. We gave away a lot of cigarettes down there, and everybody seemed to like ‘em.”
The price of tobacco is a very small element in the cost of a cigarette, Garland added, noting that one pound of tobacco is more than enough to make 700 or 800 cigarettes.
Alice Baesler, an official with the Kentucky Department of Agriculture, speculates that Cuba will likely become one of many countries which regularly import the state’s burley tobacco; last year, Kentucky shipped 120 million pounds of burley tobacco overseas.
“We’re always excited to get new markets for our tobacco,” said Baesler, who has her own tobacco farm in Lexington. “We’re even toying around with the idea of sending some of our burley tobacco to Cuba to be blended with their tobaccos, to see if we can come up with a cigarette that could be sold locally.”
John Kavulich, president of the U.S.-Cuba Trade and Economic Council Inc., says that while the potential for tobacco sales to Cuba is huge, not much has materialized so far.
“TSRA allows for the direct export of U.S. tobacco products to Cuba, but the Cubans have yet to buy anything directly,” he said. “So if you see a U.S.-branded cigarette in Cuba, it’s still coming through a third country like Panama. Sometimes, it’s less expensive for a country to buy a U.S.-branded cigarette product through a third country because of tax and tariff issues.”
Garland said he’d return to Cuba in a heartbeat if it meant additional tobacco sales. “We don’t want to leave any stone unturned,” he told CubaNews. “In the tobacco business, we need all the help we can get.”