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Home News Headlines Trading With Cuba: Island nation’s farmers attuned to the possibilities of doing business with ‘The Big Country’

Trading With Cuba: Island nation’s farmers attuned to the possibilities of doing business with ‘The Big Country’

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Jorge Arias with the biotechnology company Alltech recently visited Cuba to help the company understand the agriculture systems there and see what business opportunities the country might offer. He spoke at “One: The Alltech Ideas Conference” in Louisville last month about what he found.

“They have a lot of things we can learn from,” Arias said. “For example, they haven’t been using fertilizers, herbicides, insecticides for a while because they didn’t have the capacity to do so. They’re really big in organic agriculture, and the way they produce is very sustainable. They’re also experimenting with urban farming. You see a lot of urban farms in downtown Havana, which employs 200,000 people, which is basically 15 percent of the Havana population.”

Arias described the country as waking up from a long nap in that they are suddenly attuned to the possibilities of doing business with “The Big Country.” Visitors always remark about the number of old American cars from the 1950s and 1960s on Cuban streets, and Arias said the agriculture in that country is something of a throwback as well.

“Because of conditions and the lack of technology and the lack of energy, they have developed a different kind of agriculture, the kind we used to study 20 or 30 years ago,” he said.

American companies like Alltech have an opportunity to introduce Cubans to intensive agriculture, a prospect that Arias said is “cheaper but not necessarily better or sustainable.”

“We need to do it in a way where we can keep that diversity and that system alive when we get there and work with the Cuban people,” he said.

According to the USDA, about half of Cuba’s land is classified as agricultural, with 75 percent of that land area in relatively flat to gently rolling terrain and suitable for tropical and subtropical agricultural production. But the Food and Agriculture Organization (FAO) of the United Nations reports that poor drainage and low fertility affect 40 to 44 percent of soils due to continuous tillage, overgrazing and inadequate or improper use of irrigation and drainage systems, and that 70 percent of the land has low organic matter, making Cuba one of the top grain and oilseed product markets in the Caribbean region.

“Because of poor soil conditions, high humidity, timing and amounts of rainfall, high insect infestation and a lack of pesticide or biological controls, Cuba’s ability to produce grain and oilseed crops is limited and likely to remain so over the long term,” Dr. Parr Rosson, head of the Agricultural Economics department at Texas A&M University, told a House subcommittee last month. Rosson was Director of the Center for North American Studies from 1997 to 2012, and conducted dozens of studies about the impact of increasing U.S. food and agriculture imports to Cuba.

Talk about Cuba and agriculture comes as the U.S. eases some travel restrictions and Cuba hosts the likes of President Obama, U.S. Secretary of Agriculture Tom Vilsack and agricultural organizations like the Texas Farm Bureau. But agricultural exports to Cuba have declined significantly over the last several years.

Last year, U.S. exports to Cuba — primarily poultry, corn and soybeans — totaled $149 million, way down from 2008, when the the U.S. exported a record $709 million, according to a study from the Center for North American studies that Rosson co-authored.

Part of the reason for the decline — as might be expected — is politics. The Trade Sanctions Reform and Export Enhancement Act of 2000 allowed U.S. firms to legally export agricultural products to Cuba and travel there for business. After Hurricane Michelle devastated the country’s crops and led to widespread food shortages in 2001, Cuba started importing food from the U.S. for the first time since the U.S. imposed a trade embargo in 1962.

However, the 2000 law prohibits U.S. producers from selling agricultural goods to Cuba on credit, which could be the case until the U.S. lifts the embargo. Other countries aren’t so picky. Rosson suggested that Cuba isn’t all that interested in buying from the U.S. anymore, that Cuba tried to meet the U.S. halfway by doing business here, but when the embargo stayed in place they shifted their attentions elsewhere.

“They tried the carrot. That didn’t work,” Rosson told Politico magazine. “This may be the stick.”

WestStar Food, a Texas agricultural company specializing in pinto beans, was selling 5,000 tons of beans to Cuba each year, worth around $3.2 million at today’s prices. Then they weren’t.

“We haven’t exported anything there for almost four years now,” WestStar President Patrick Wallesen told Politico. “For the most part, the way I see it, they pretty much quit buying everything except chicken and grains.”

Recent regulatory changes allow the importation of selected Cuban products into this country, but buyers must purchase from private businesses, not the Cuban government. Currently, all U.S. agricultural products must be sold to a state-owned company, Alimport.

Rosson told the subcommittee that studies from Texas A&M and the Center for North American Studies indicate that U.S. food and agricultural exports to Cuba have the potential to exceed $1.2 billion annually. But he added that the U.S. faces several challenges before that can happen, including more transparent policies and regulations that facilitate trade.

“More open trade would certainly lead to economic growth, but absent free trade, the use of financing and letters of credit, improvements in banking efficiency and better infrastructure would stimulate U.S. exports,” Rosson concluded.

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