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U.S. exporters pin hopes on fall elections for change in Cuba trade policy
The Packer / June 23, 2008

By Larry Luxner

Cuba is spending more than ever on U.S. food imports — but that's not because bilateral ties have improved or because Cuba's new leadership has suddenly acquired a taste for California cherries, Oregon pears or New York sweet corn.

Rather, it's because the cash-strapped government of Raϊl Castro — forced to spend more on suddenly expensive staples like rice and wheat — has fewer dollars left over for imported fresh produce.

"My industry is very interested in sales to Cuba," said Kevin Moffitt, president and CEO of Pear Bureau Northwest of Milwaukie, Ore. "People say Cuba used to be a great market for pears in the 1950s, and there's a specific variety they really like, the comice pear, which is very sweet. We're holding out hopes that when this market opens up, we will once again have a good market for that variety."

Back in September 2002, Moffitt attended a widely publicized U.S. food show in Havana that attracted thousands of curious visitors including Fidel Castro, who even sampled one of his pears.

For awhile, Moffitt's agency — which supervises $110 million a year in Oregon and Washington pear exports — was shipping 6,000 boxes of pears annually to Cuba.

But following President Bush's imposition of tough new U.S. restrictions on Cuba trade in 2004, that began dropping, and last year the two states shipped only 2,500 boxes to Cuba. That's only a tenth of what the neighboring Dominican Republic — a Caribbean nation with far fewer people — buys from Oregon and Washington, which together account for 93% of all U.S. pear exports.

However, the export picture could brighten dramatically if barriers to trade between the two countries were removed even partially.

While Sen. John McCain, the presumptive Republican nominee for president, has vowed to keep all Cuba-related sanctions in place, his Democratic rival, Sen. Barack Obama promises that if elected, he would reinstate unlimited family travel and remittances to Cuba and relax the bureaucracy associated with selling food to the island's communist regime. "We could easily see 10,000 boxes in the short to medium term, and we have a lot of potential even without the travel restrictions easing for U.S. citizens," Moffitt told The Packer. "Cuba's tourist trade is still booming, and we could sell pears at those hotels."

Last year, Cuba bought $437.6 million in agricultural goods from the United States under the Trade Sanctions and Reform Export Enhancement Act of 2000 (TSRA), up from $340.4 million in 2006.

The U.S. Commerce Department reports that since passage of TSRA, essentially a loophole in the 1962 trade embargo against Cuba, that island's purchases of U.S. food and other agricultural commodities (including lumber and newsprint) have totaled $2 billion.

Cuba's numbers are substantially different. State food purchasing agency Alimport says it bought $682 million worth of food items from U.S. companies in 2007 — up from $570 million the year before — amounting to cumulative purchases of $2.79 billion. The reason for the discrepancy: Alimport's numbers include the cost of shipping as well as third-party financial charges incurred because Cuba can't deal directly with U.S. banks.

No matter whose numbers are used, it's clear that fresh produce isn't among the top items on Alimport's shopping list.

According to FAS statistics, U.S. fresh fruit exports to Cuba totaled $1.83 million in 2007, up from $1.1 million in 2006. Most of the 2007 shipments consisted of apples ($1.35 million), followed by smaller amounts of grapes ($235,000) and pears ($71,000). Vegetable exports were negligible.

"Alimport is using its limited resources and putting them where they are most critically needed" — in a few large categories [like grains and frozen poultry] rather than many small ones like fresh fruit and vegetables, says Dave Kuntarich, vice-president of operations for PS International, a farm commodities broker in Chapel Hill, N.C.

"The problem is that with commodity prices so much higher than they were 12 months ago, the quantity that can be purchased with those dollars is less," Kuntarich said. "I feel badly for a country like Cuba that relies heavily on imports. It must be very difficult for them."

Limited funds aren't the only challenge facing the new government of Raϊl Castro, who turned 77 in early June. The new U.S. restrictions make it considerably harder for American food companies to export to Cuba under TSRA — even as large states like Texas, New York and California send delegations to Havana trying to drum up more business.

Among other things, the rules force Alimport to pay cash up-front for any food purchases before they can even be loaded onto a U.S. ship bound for Havana. They also make it very difficult for Cuban phytosanitary officials to travel to the United States to conduct inspections of produce prior to shipment.

Critics say that makes the United States an unreliable supplier to the Cuban market, despite the advantage of proximity (Havana is only 90 miles south of Key West, Fla.).

"There's a tremendous interest in Cuba for our products, but with all the restrictions, it's going to be hard to sell to them," said Lloyd Zimmerman of Black Horse Farm in Coxsackie, N.Y. "For one thing, the Canadians are able to extend credit; we can't. Secondly, because they have to prepay, there's no inspection of the produce until it arrives in Cuba. That's hard on any deal in case something happens along the way."

In late April, Zimmerman, whose Hudson Valley vegetable farm covers 800 acres, traveled to Cuba on a three-day trade mission with 18 other New Yorkers. Zimmerman says he'd love to sell Alimport sweet corn, cabbage, squash, tomatoes and cucumbers during the summer months, when Cuba produces only 20% of its domestic needs for those crops.

Adds Rebecca Baerveldt, international marketing manager at the Washington Apple Commission in Wenatchee: "Other than that one trade show, we haven't really done anything. Until the trade sanctions are lifted, it's very difficult for us as industry to invest money in that market, because there's not enough product going down there to justify promotional activities."

Allan Henderson told The Packer he considers himself "one of the lucky ones." As president of C.L. Henderson Produce Co. in Hendersonville, N.C., he's shipped, on average, nine to 10 containers of apples a year to Cuba. At $15,000 per container, that comes to $135,000 worth of apple exports annually.

Henderson, who markets his fruit under the "Henderson's Best" label, said he's helping put together a North Carolina trade delegation that will visit Cuba later this year in an effort to score some major contracts with Alimport.

Whether such missions succeed depends in large part on what happens in both Havana and Washington.

"I don't see Alimport backing off or buying any more, unless they start to allow private enterprise in Cuba and people have more disposable income," said an Atlanta-based food broker who asked not to be named. "For now, nothing has really changed and I honestly don't think anything will in the short term."

But Cynthia Thomas says all that could be out the window if Obama gets elected.

A few weeks ago, Thomas, founder of the Texas-Cuba Trade Alliance in Dallas, helped organize her state's first mission to Cuba since the 1959 revolution.

"If Obama wins, there'll be a strong possibility of improved [U.S.-Cuba] relations beginning in 2009," said Thomas. "I think the whole package will be re-examined, and the work that Congress does won't get automatically vetoed. Right now, it's not even worth expending energy to push any legislation through, because it won't go anywhere."

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