CubaNews / June 2007
By Larry Luxner
The largest gathering of U.S. food exporters in Cuba since Raúl Castro took the reigns of power last year came off without a hitch — and resulted in $118 million worth of new food deals with Alimport, Cuba’s state food purchasing agency.
Further negotiations following the May 28-30 event in Havana could bring the total to nearly $150 million, say news reports.
“The sales this week went beyond all of our expectations,” Jim Sumner of the U.S. Poultry and Egg Export Council told AP. Sumner was one of more than 200 Americans from 25 states who visited Havana for talks with Alimport officials. “When the embargo is lifted, which we hope will be very soon, these deals will be much greater.”
Under a loophole known as the Trade Sanctions Reform and Export Enhancement Act (TSRA), U.S. agricultural commodities may be shipped to Cuba on a cash-only basis. Since 2001, Cuba says it’s used TSRA to buy more than $2.2 billion on U.S. farm products and related expenses — including $570 million in 2006 alone.
Alimport Chairman Pedro Alvarez said Americans are finally “recovering the market” they lost in the 1960s with the imposition of the embargo.
“The active and massive participation of the American business community makes us very happy,” said Alvarez, whose entity organized the latest round of negotiations with U.S. farm producers.
Cuban Commerce Minister Raul de la Nuez said most of the food would be sold at heavily subsidized prices, on the government’s food ration and at public schools and workplace dining rooms.
“This will help feed our people,” he said.
The event also attracted a delegation of five U.S. lawmakers headed by Rep. Rosa DeLauro.
“We are a diverse group geographically and in our politics toward Cuba,” the Connecticut Democrat said. “But we view this as an opportunity to learn, to create dialogue about issues of mutual concern.”
Joining DeLauro in Cuba were Democratic Reps. Marion Berry of Arkansas and Bob Etheridge of North Carolina, as well as Republican lawmakers Rodney Alexander of Louisiana and Jack Kingston of Georgia. All were making their first trips to the island, except Berry who visited Cuba in 2000.
Last year, Alimport claimed it spent $570 million on U.S. food and agricultural products, including wooden utility poles that fall under the “allowed” category of exports to Cuba, according to TSRA.
Yet to the disappointment of U.S. rice exporters, “during the last trade round, there were no contracts signed for any additional rice sales,” according to Jim Guinn of the USA Rice Federation in Arlington, Va.
“What we’re hearing is that the Cubans think U.S. rice prices are too high, and that they think prices will possibly decline in the relatively near future,” Guinn told CubaNews. “Our price has been fairly high compared to Vietnam. Along with that, Vietnam was offering credit to Cuba, which the U.S. can’t do, even though freight from Vietnam to Cuba is obviously much higher [than from the U.S.].”
Guinn acknowledged that Cuba had pretty much stopped buying U.S. rice in July 2006 after the presence of genetically modified (GMO) rice was discovered in U.S. rice shipments worldwide. Cuba began resuming rice imports from the United States in April.
He said Cuba has been importing an average 157,000 metric tons of U.S. per year.
“I don’t know if there was ever really a GMO issue,” Guinn said. “They may have been trying to make a political statement that yes, Cuba is a good market for the U.S., but if things don’t change as far as U.S. policy is concerned, we can always go elsewhere for products. I don’t believe GMO was a valid reason for them not to purchase U.S. rice.”
Indeed, during the negotiating round, Alvarez complained about the numerous obstacles that increase the price of imports to Cuba, including the prohibition of public and private financing that added an additional cost of $21.8 million to products imported from the United States in 2006.
He added that these restrictions force Alimport to pay for merchandise 10 to 15 days before receiving it.
Another significant barrier is having to make payments in funds other than U.S. dollars to 3rd-country banks, which Alimport says cost it an extra $30 million in 2006.
“It’s legal to sell agricultural and food products to Cuba,” says Kirby Jones, president of the US-Cuba Trade Association in Washington. TSRA was approved by Congress and by the U.S. president; nevertheless, in practical terms, the government makes the application of the law as difficult as possible.”
Yet even states that have opened the door to Cuba aren’t always happy with the results. Idaho Gov. C.L. “Butch” Otter visited Cuba in April — generating lots of hype — but his state had only peanuts to show for the visit.
According to the Idaho Business Review, “the trip cost taxpayers $17,550, but the only trade deals the state got were a $100,000 contract to ship pork to Cuba and an agreement to donate medical supplies.”
The paper added: “There was some discussion of opening the Cuban market to Idaho potatoes, but no agreements were finalized.”
North Dakota, meanwhile, won a contract to sell 100 tons of potatoes and 10,000 tons of wheat to Cuba.