One step forward and another step back. It is how things usually play out in the policy world.
So when President Trump announced in a speech Friday in Miami that he was rolling back several loosening of restrictions with Cuba and re-institute restrictions on travel to Cuba and U.S. business transactions, the agricultural industry took a big punch to the gut.
For agriculture markets matter. And when those market opportunities are just 90 miles away from the U.S., U.S. agricultural producers want to be able to serve that market. Cuba is a $2 billion annual food-import market, and purchases 80% of its food to feed its 11 billion people.
Currently, all U.S. exports to Cuba require cash up front, while other nations around the world offer credit to Cuban importers, in effect preventing farmers and ranchers from being able to ship their products to Cuba.
The greatest short-term impact is closing the door on market opportunities when U.S. producers are already facing lower prices.
“Right now our farmers are losing out to Brazil, China, and Vietnam, which allow financing for agricultural exports to the country,” said Sen. Heidi Heitkamp, D-N.D.
In the first eight months of this marketing year, Cuba purchased more than 250,000 metric tons (9.8 million bushels) of corn from the United States, about 30% of their total demand, said the U.S. Grains Council.
“This shows both that Cubans want our product when it’s competitive to other origins and that we have significant room for growth given the right policy environment,” said Tom Sleight, president and CEO of the U.S. Grains Council. “In the past two years, our work in Cuba and with Cuban grain buyers has shown us that the only hindrance to progress there is U.S. policy.”
The National Corn Growers Association (NCGA) added allowing the market to go to competitors will cost U.S. corn producers an estimated $125 million in lost opportunity each year. Currently it has just an 11% market share in a country only 90 miles away from the U.S. border.
“Cuba has historically been a 900,000 metric ton (35.4 million bushel) corn market; based on recent export sales, it would be our 11th largest customer if we could capture that demand. Free flow of grain to Cuba could also help us capture sales to the Dominican Republic and even Puerto Rico, an estimated $315 million in lost demand each year,” Sleight added.
A joint statement from the U.S. Wheat Associates (USW) and the National Assn. of Wheat Growers (NAWG) said they’re hopeful that the increasing public and congressional support for more open trade will lead to an eventual end to the U.S. embargo.
“This is a political process and that means there are going to be steps forward and back,” said USW President Alan Tracy. “Our organizations support measures that move toward ending the embargo. Cuba is a significant wheat importing nation and our farmers can supply high-quality wheat at a lower cost than Cuba pays now to import European and Canadian wheat. Wheat is an important food grain that should be above politics, but the embargo will likely have to end before wheat farmers can help meet the increasing demand for agricultural products to help feed the Cuban people.”
A legislative approach to addressing the embargo is picking up speed. In May, the Senate introduced the bipartisan Freedom to Export to Cuba Act which repeals the current legal restrictions against doing business with Cuba, including the original 1961 authorization for establishing the trade embargo; subsequent laws that required enforcement of the embargo; and other restrictive statutes that prohibit transactions between U.S.-owned or controlled firms and Cuba, and limitations on direct shipping between U.S and Cuban ports. According to the bill’s sponsors, the legislation represents a $2 billion opportunity for U.S. farmers alone.
In February, Sens. Heidi Heitkamp, D-N.D., and John Boozman, R-Ark., also introduced a bill to allow private financing of U.S. agricultural exports to Cuba.
Earlier this week Rep. Rick Crawford, R-Ark., who has been a supporter of loosening the embargo, wrote an op-ed in the Wall Street Journal stating there was a path forward for the President on Cuba trade that would help American farmers and the Cuban people without repealing the embargo.
“I strongly oppose President Trump’s decision to reinstate a failed, outdated, and isolationist posture towards Cuba. This policy change is not just a missed opportunity for rural America, which would greatly benefit from increased access to the island’s $2B agricultural imports market. This policy shift also poses an unjustifiable risk to our national security, as further U.S. disengagement opens up opportunities for countries like Iran, Russia, North Korea, and China to gain influence on an island 90 miles off our coast,” Crawford said.