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Wheat, other commodities see promise in Cuban trade

Restoring trade with Cuba could give a boost to Pacific Northwest Agriculture.
Eric Mortenson

Capital Press

and John O’Connell

Capital Press

Published on December 19, 2014 10:41AM

Last changed on December 19, 2014 11:40AM

Commodity group leaders say the outlook for improved relations between the U.S. and Cuba bodes well for Northwestern food producers, especially those who raise hard red winter wheat.

Eric Mortenson/Capital Press

Commodity group leaders say the outlook for improved relations between the U.S. and Cuba bodes well for Northwestern food producers, especially those who raise hard red winter wheat.

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Commodity group leaders say the outlook for improved relations between the U.S. and Cuba bodes well for Northwestern food producers, especially those who raise hard red winter wheat.

President Barack Obama announced his intention Dec. 17 to restore diplomatic relations with the Caribbean nation, located about 90 miles from the tip of Florida. The Associated Press reports the restoration of economic ties is expected to follow.

The U.S. has had an embargo against Cuba since 1960, based on human rights concerns that still worry opponents of the president’s plan. The U.S. has, nonetheless, sold $4.6 billion in agricultural products to Cuba since the passage of the U.S. Trade Sanctions Reform and Export Enhancement Act of 2000. The act allowed exports of U.S. agricultural goods to Cuba, with significant restrictions, including that Cuban buyers pay upfront in cash through third-party banks, rather than credit.

Cuba, which grows none of its own wheat, hasn’t purchased U.S. wheat since 2011 and has bought mostly from Canada and Europe lately. However, Cuba imported about 400,000 metric tons of U.S. hard red winter wheat during the 2007-2008 marketing year, said U.S. Wheat Associates spokesman Steve Mercer.

Given the proximity of U.S. ports, Mercer sees potential for the U.S. to sell Cuba at least 500,000 metric tons of U.S. hard red winter wheat with eased trade restrictions — roughly 10 percent of this marketing year’s expected exports of the class.

Though wheat exports to Cuba would mostly originate from Gulf of Mexico ports, Mercer said the PNW would benefit because “export markets are really the price determinate,” and Cuba would likely absorb a large volume of hard red winter wheat from the domestic market.

“A rising tide lifts all boats, and (PNW farmers) grow a lot of hard red winter and spring wheat,” Mercer said.

Oregon growers haven’t sent anything to Cuba in the past, but it could be a potential market for potatoes, onions, and tree fruit, among other items, said Dennis Hannapel, trade policy specialist with the Oregon Department of Agriculture.

Existing shipping protocols are complicated, Hannapel said. For example, all shipments of fresh or dried fruit, nuts and vegetables must be sealed and verified at the port of departure. Shipments are currently allowed only through the ports of Gulfport, Miss., Jacksonville, Fla., and Norfolk, Va. The loading and sealing requirements don’t apply to grain shipments, according to protocol information furnished by Hannapel.

John Toaspern, chief marketing officer with U.S. Potato Board, said Cuban farmers raise potatoes and represent a “decent seed market,” importing 6,500 metric tons from foreign countries last year and 25,000 metric tons a few years ago. Toaspern envisions Cuba would import potato seed from any U.S. region with the desired varieties.

Toaspern said the U.S. hasn’t shipped seed to Cuba before, and phytosanitary issues must still be resolved.

Idaho Bean Commissioner Don Tolmie said the Cuban diet is heavy in black beans. His organization joined a state trade team to Cuba in the mid-2000s.

“I’m sure initially the sales would be pretty slow, but once they saw the quality of our beans I think sales would increase,” Tolmie said.

From 2004-2006, the U.S. averaged about 11,000 tons per year of milk powder exports to Cuba, according to the U.S. Dairy Export Council. A Council spokesman said sales to Cuba ceased after 2006 due to challenges associated with Cuba’s credit restriction.

Joe Schuele, a spokesman with the U.S. Meat Export Federation, said U.S. pork exports to Cuba peaked at $15 million in 2010, and beef exports peaked at $900,000 in 2011. Even if trade restrictions are eased, Schuele said a lack of disposable income in Cuba would still be a barrier for high-value commodities, such as red meat. He believes a policy change could improve Cuba’s economy in the long term.

Cuba, once a dominant player in the sugar industry, produced about 8 million tons of sugar annually in the late 1980s, but has seen its production decline to 1.7 million tons last year, according to USDA.

American Sugar Alliance economist Jack Roney said trade with Cuba is a sensitive issue and declined to comment.



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