CubaNews / June 2002
By Larry Luxner
WASHINGTON -- From a tiny organic-egg farm in New Hampshire to giant grain conglomerate Archer Daniels Midland of Decatur, Ill., agribusiness companies across the United States are starting to benefit from increased food exports to Cuba.
"We're shipping medium-sized eggs to Cuba, partly because we don't have a ready market for mediums in this country," says Jerry LaFlemme of Monroe, N.H. His dairy farm last month sent 900 dozen Egg*Land's Best Cage-Free Organic Eggs to Cuba, as part of a much larger shipment of 10 million eggs arranged by Radlo Foods LLC of Watertown, Mass.
Company President David Radlo tells CubaNews that the decision to include eggs produced without fertilizers or pesticides in the $500,000 deal follows discussions with Cuban agricultural officials.
"Organic eggs and other organic products have been growing in consumer demand here in the United States," Radlo said. "In Cuba, organic methods of food production have become very common. We might as well give them the opportunity to try organic eggs."
Under the Trade Sanctions Reform and Export Enhancement Act of 2000, exporters like Radlo and LaFlemme are now free to sell their agricultural products directly to Cuba, as long as the Cubans pay cash.
"We didn't release the cargo until we got paid," Radlo said of his first shipment of eggs, which arrived in Havana harbor in April. The eggs, sourced not only from New Hampshire but also Indiana, Maine and Ohio, were first trucked to Gulfport, Miss., and from there loaded onto a Crowley vessel for the two-day journey to Cuba.
Since November 2001, Cuba has spent over $90 million on grains, frozen chicken and other U.S. products. And that represents only 10% of potential volume, says Pedro Alvarez, president of the Cuban food importing agency Alimport.
In a May 15 press conference in Havana, Alvarez said more than 60% of the 550,000 tons of products being shipped to Cuba have already been paid for in cash. No less than 21 U.S. companies are supplying the Cubans, as well as hundreds more that indirectly benefit from these shipments.
Alvarez, who was recently denied a U.S. visa under pressure from conservative lawmakers, nevertheless promised to expand his agency's purchases to include up to 300 new products, including brand-name items.
"The blockade is hurting us," he told reporters, "but it is hurting U.S. companies even more, because it denies them easy access to a nearby market."
The largest single seller of U.S. food products to Cuba is Archer Daniels Midland, a $20 billion conglomerate based in Decatur, Ill. To date, ADM has sold the Cubans 260,000 metric tons of agricultural commodities with a market value of around $42 million.
Tony DeLio, corporate vice-president for marketing at ADM, told CubaNews his company has sourced those commodities -- mainly corn, wheat, soymeal, rice and soybean oil -- from 10 states: Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, Ohio, Texas and Wisconsin.
"No other country can deliver agricultural commodities to Cuba in a more cost-effective and time-effective manner than the United States," says DeLio. "Cuba gains by more immediate delivery and less costly transportation costs. The U.S. farmer gains by obtaining access to a new market 90 miles from our shores."
DeLio, who has made three trips to Cuba and has dined with Castro twice, says the food industry is urging the Bush administration to re-authorize direct correspondent banking services for those transactions specifically permitted under U.S. law.
"Under the current law, Alimport must transfer funds to a bank in a third country, such as France or Canada, and then we must obtain the funds from that bank," he said. "Thus, we have to exchange currencies, which results in an additional risk to the profitability of the transaction, a consequence that the Trade Sanctions Reform and Export Enhancement Act certainly didn't intend."
Among other things, ADM has exported 5,000 tons of Texas milled rice that it purchased from American Rice Inc. of Houston for about $850,000. Another company, Kansas City-based Farmland Foods, shipped $3 million worth of wheat out of Galveston, Tex., and said it'll make another shipment worth about $9.4 million soon.
"We hope this is the first of many shipments to Cuba," Pete Reixach, executive director of the Port of Freeport, said in a written statement. "The economic potential for Texas could be enormous. If the embargo were lifted tomorrow, it could boost rice exports from the Port of Freeport by 20-25%.
Besides rice, wheat, corn and other staples, Cuba has started to import more exotic fare. At a recent dinner hosted by Castro for 25 visiting U.S. food executives, chefs served soy spaghetti, California kidney beans, Washington red delicious apples and Cabernet Sauvignon wine.
Alvarez claims that if the credit prohibitions were lifted and U.S. food producers could sell to Cuba without restrictions, the United States would eventually supply 18% of Cuba's rice, 7% of its soybean oil, 29% of its skim milk, 56% of its whole milk and 3% of its chicken.
Industry experts say Cuba is a ready market for U.S. eggs, because the island lacks sufficient feed grain to raise poultry in large quantities. The unprecedented agreement between the two countries was achieved with help from the United Egg Producers, the USA Egg and Poultry Export Council and the New England Brown Egg Council.
Radlo declined to give sales figures for his family-owned company, but he did say it employs over 100 people and already exports to Puerto Rico, Hong Kong and the Middle East; it also supplies fresh shell eggs to supermarket chains throughout New England.
"We're in business to sell eggs," Radlo said, noting that his regular brown eggs cost 15 cents a dozen in Cuba's peso markets, and $1.44 a dozen in hard-currency stores. "We believe that what we're doing is not only helping our industry, which has gone through tough times, but also the Cuban people, For us to help feed them with a low-cost protein like eggs is quite gratifying."