CubaNews / April 2005
By Larry Luxner
Rice and chicken are staples of the Cuban diet. Now it turns out that arroz con pollo is also essential to the lobbying effort now underway in Washington to pass the Agricultural Products Export Facilitation Act of 2005
Both the USA Rice Federation and the Natio-nal Chicken Council are among the many Washington-based trade associations pushing hard for the bill, co-sponsored by Sen. Larry Craig (R-ID), Max Baucus (D-MT) and about 30 other co-sponsors in the Senate.
Its counterpart in the House is H.R. 719, sponsored by Rep. Jerry Moran (R-KS).
At a recent press luncheon sponsored by the National Foreign Trade Council (NFTC) and USA*Engage, food exporters warned -— over a meal of rice and chicken, of course — that recent efforts by the Bush administration to curtail food sales to Cuba would cost American jobs and hurt U.S. farmers at a time when they need export markets more than ever before.
Specifically at issue is a ruling that took effect Mar. 24 restricting the financial terms of cash sales for farm products being shipped to Cuba. The decree, issued by the Treasury Department’s Office of Foreign Assets Control, says commodites may not leave a U.S. port bound for Cuba until the Cuban government has paid for the shipment in full.
“OFAC’s February 2005 ruling not only ig-nores the congressional intent of TSRA, it discounts the fact that export markets are important to the future of U.S. agriculture,” said Bill Reinsch, president of NFTC and co-chairman of USA*Engage. “It is critical to U.S. agricultural trade that this issue be resolved expeditiously in a manner that does not jeopardize current or future exports to Cuba” (see our exclusive interview with Reinsch, pages 8-9).
Richard C. Lobb, director of communications for the National Chicken Council, said 48% of total chicken production is dark meat, which is favored by Cubans but not Americans.
“In a good year, we export 15-18% of total production,” said Lobb. “Cuba’s especially attractive because they really want the product.”
Some 30 of the 40 chicken companies represented by Lobb are currently exporting to Cuba, either directly or indirectly.
“All around the world, we have to deal with quotas. Mexico has a long list of restrictions, and they have a safeguard on leg quarters. Canada imports no more than 7.5% of the total market,” he explained. “Cuba doesn’t have any of those things. They are not particularly interested in investing in their own domestic poultry sector; they’d be happy to import from abroad. And if we can’t sell to them, Brazil and other exporters will step right into the breach.”
From virtually zero in 1999, Cuba today ranks as the 25th largest importer of food commodities, buying over $1 billion worth of U.S. farm products since passage of the 2000 Trade Sanctions Reform and Export Enhancement Act (TSRA).
The Craig bill seeks to protect TSRA from Bush administration hardliners by:
* clarifying Congress’ intent to legally sell farm goods to Cuba by defining “cash payment in advance” as receipt of payment before transfer of title and release of physical control of goods to the Cuban government.
* authorizing the issuance of a general license for U.S. agricultural producers to travel to Cuba to sell, market and finalize any sales or trade agreements.
* authorizing Cuba to make direct payments to U.S. banks. Currently, Cuban food purchasing agency Alimport is forced to use European banks for transactions, which often add up to 5% of the overall price.
* repealing Section 211 in order to protect U.S. trademarks registered in Cuba, and bring the United States back into compliance with the Inter-American Convention and WTO obligations.
* urging he need for the “expeditious issu-ance” of temporary visas to Cuban nationals who, pursuant to TSRA-authorized purchasing activities, must inspect certain products such as beef, poultry and seed potatoes prior to shipment of goods.
Reinsch he expects the Craig bill to be act-ed on “sometime in the next couple of weeks,” and that its prognosis is reasonably good.
“Both the Senate and House have consistently taken the position that Congress is very clear on these issues. Everybody we’ve talked to is confident this will pass by a large margin,” Reinsch said, noting that TSRA “is the only loosening of the embargo that’s ever passed no matter who’s in the White House.”
He added: “Craig tried not only to fix the current problem but also anticipate other ambiguities to make sure they couldn’t be exploited. OFAC would prefer this was never passed in the first place, and that the administration will do whatever it can to deter, limit and prevent this kind of trade with Cuba.”
Currently, Cuba ranks as the 7th-largest importer of U.S. chicken, buying 59,718 tons worth $56.4 million last year. In fact, the dollar value of U.S. broiler trade with Cuba grew 59% in 2004 over the year before, despite a 12.8% drop in the quantity of exports.
Since December 2001, U.S. sales of poultry sales to Cuba (including turkey) have totaled almost 200,000 tons worth $128 million, with chicken accounting for 96.8% of that total, or around $116.6 million.
But those sales could plummet if Cuba is forced to pay for chicken even before it leaves the docks in Jacksonville or New Orleans.
“There’s a great deal of uncertainty right now,” said Lobb. “We hope Congress will give us some relief, and the sooner, the better. Brazil has built up a very efficient, modern poultry industry. They can get into markets we can’t get into, and we’d hate to lose a promising market like Cuba.”
The same is true of rice, an even more im-portant commodity in terms of total sales.
“We’re very sensitive to this whole argument. Rice is the poster child for embargoes,” said Bob Cummings, vice-president for international policy at the USA Rice Federation.
“Before the revolution, Cuba was our largest market, and after 1959, it wasn’t there anymore. Iran was our largest market in the 1970s, and it’s not there anymore,” he said. “You can’t keep cutting off export markets unilaterally and expect there won’t be some negative effect.”
Cummings told CubaNews that in recent years, Vietnam has emerged as Cuba’s chief source of rice, shipping huge quantities of low-quality rice to the Cubans in very large containers, and at very favorable terms.
The problem is that Cuba has almost nowhere to store the rice once it arrives in Havana, so it has to be trucked throughout the island to be sold locally.
“U.S. rice is of a higher quality, and obviously, they wouldn’t have to pay the shipping charges they do from Vietnam,” said Cummings. “But if we’re not available as a supplier for whatever reason, they’ll go back to buying from Vietnam.”