CubaNews / July 2003
By Larry Luxner
Lanahan Lumber Co. of Jacksonville, Fla. has begun its first shipments of wood to Cuba, marking the first large-scale U.S. lumber exports to the island in 43 years.
Beau Pineda, the company’s export manager, told CubaNews he has orders for 360 containers of southern yellow pine sourced from forests in South Carolina and Alabama. That translates into 10,850 cubic meters, or about 4,585,000 board feet of lumber.
While the company declined to reveal the dollar value of its contract with Cuban state import agency Alimport, the latest domestic commodity price listed by lumber industry newsletter Random Lengths for 2x4 southern yellow pine, No. 2, varies between $292 and $315 per 1,000 board feet.
Using those numbers as a rough guide, the Lanahan deal would be worth no more than $1.5 million, excluding transportation costs.
Even so, the contract is significant because it’s the first lumber sale to Alimport by a U.S. firm since passage of the Trade Sanctions Reform and Export Enhancement Act of 2000 — an exemption to the U.S. trade embargo that allows American firms to sell agricultural commodities to Cuba on a cash-only basis.
Since lumber is considered an agricultural commodity, it is therefore allowed under TSRA, even though the wood that’s exported to Cuba might end up being used for anything — from rebuilding houses damaged in recent hurricanes to flooring for five-star hotels.
In Lanahan’s case, most of the industrial-grade wood it’s shipping to Cuba will be processed into shipping pallets.
“With all that frozen poultry and other U.S. food exports going to Cuba, there’s an increased need for pallets,” said Pineda.
The contract comes as exports of U.S. lumber to the Caribbean — traditionally a key market for southern pine — continue to fall. Between 1999 and 2002, those imports tumbled by 40% (see chart).
During the first four months of 2003, the United States shipped 11.6 million board feet of southern pine to the Dominican Republic, 2.0 million board feet to Jamaica, and 1.6 million board feet to Trinidad & Tobago.
The prospect of a virgin market like Cuba is encouraging news to the industry — especially considering that Cuba was by far the biggest buyer of U.S. southern pine lumber in the 1940s and 1950s.
“I think it’s exciting. It gives us a chance to expand our markets in the Caribbean,” said Wayne Lancaster of the Southern Lumber Exporters Association in an interview with Random Lengths. “I hope it pans out. I’ve never known anything but the embargo.”
President Michael Lanahan, 61, said the company was started by his father in 1946, and has generally kept a low profile. The company has 22 employees and derives about 50% of its revenues from southern pine exports to the Bahamas, Barbados, Bermuda, St. Maarten, St. Vincent and the U.S. Virgin Islands.
Lanahan hoped to export to Cuba as well, and he began making serious inquiries during last September’s U.S. Food & Agribusiness Exhibition in Havana. But it would take five more visits and a personal meeting with Fidel Castro to secure the contract.
“This is an opportunity to show everybody that you can do business throughout the world,” he told CubaNews. “We don’t differentiate between one country and the next, and we leave politics and religion out of it.”
Asked if his company had received any angry calls from Miami-based Cuban exile groups, Lanahan said “we’ve had some people who were not pleased that we’re doing business with Cuba” — and he left it at that.
Lanahan’s shipments began May 1 from Jacksonville, which is a 40-hour sailing to Havana, and from Gulfport, Miss., which is 38 hours away. The wood is being transported by Crowley Liner Services, which is also based in Jacksonville, at the rate of 20 to 25 containers every two weeks until November.
Lanahan said his company has the potential to ship nearly 800 containers of lumber to Cuba over the next 12 months.
“Our supply of lumber in the Southeast is readily available with quick sailings, and it’s easy to inspect,” he said. “We’re relatively trustworthy, and they can depend on us.”
Other U.S. lumber exporters haven’t been as lucky.
Tom Sheets, president of Blue Ridge Lumber Co. in Fishersville, Va., attended the same September 2002 trade show in Havana that Lanahan did, but came home with no contracts.
He’s convinced, however, that Cuba represents a large market for the U.S. lumber industry — once Castro is gone and capitalism is restored to the island.
“Since the infrastructure’s falling down, the potential is unlimited,” said Sheets, adding that “what Cuba truly needs is not four-inch walnut and oak, but low-priced woods.”
John Clark, sales manager of Kitchens Brothers Manufacturing Co. in Hazlehurt, Miss., also thinks it’ll be awhile before the island imports U.S. lumber in large quantities, particularly hardwoods used in flooring and upscale housing and hotel construction.
“On the hardwood side, we’re a little premature,” he said. “They’re accustomed to South American species they can get in much larger sizes and specified widths.”
Cuba currently imports 55% of its wood product needs, and 96% of its plywood needs. According to a study prepared by economist James E. Ross, the potential value of Cuba’s market for sawnwood, plywood and particle board is about $150 million.
“The U.S. share of the total Caribbean market for softwood lumber is approximately two-thirds,” said the report. “If the U.S. could realize a similar share of the Cuban market, and Cuba has the foreign exchange to import, U.S. exports of softwood lumber to Cuba could amount to about $100 million soon after resuming trade.”
Ross added, however, that Canada has a big share of the Cuban market, and it could be difficult for U.S. firms to capture the same market share as in other Caribbean islands.