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Texas Agriculture Archive

March 21, 2003

Cuba trip highlights
export opportunities

By Lana Robinson
Field Editor

A growing number of U.S. companies and individuals has successfully tapped the Cuban export market and is selling agricultural products to the island nation. Texas Farm Bureau representatives were among 150 or so Americans attending the Cuba Trade Conference last month in Cancun, Mexico. They reported that sales of food, lumber, and other building materials, which are allowable since Congress agreed to ease sanctions on trade with Cuba, have shown steady increases. In fact, since the first conference a year ago, which took place shortly after the first shipment of U.S. goods to Cuba in more than 40 years, Cuba has purchased $252 million in agricultural products ($189 million of that in ag supplies) from 85 different companies in 34 states.

"Cuba's purchases have broadened to about anything we produce in Texas, including pinto beans and peas," said Glen Jones, TFB's Director of Education, Research and Policy Development, who also traveled to Cuba with board members last year to explore trade opportunities. "We talked to companies that had actually sold, delivered and got paid for their goods. What we got from them is that they hadn't had any problems."

As part of the conference, TFB State Directors Bob Reed of Bay City and Gary McGehee of Mertzon, along with Jones, flew to Cuba on Feb. 19 and participated in an unscheduled three-and-one-half-hour meeting with Cuban President Fidel Castro. Fifteen major sponsors, including the Texas Farm Bureau, put on the conference. The Cuban import company Alimport sponsored the 14-hour trip to Cuba.

Jones noted that Cuba imports up to $1 billion in food and agricultural goods per year from countries other than the United States. Farm Bureau policy suggests that opening trade with the United States would help Cuba to increase its standard of living, buy more food and agricultural products with its current fiscal budget and provide higher quality products to its citizens, while benefitting U.S. farmers and ranchers.

Jones commented on the tremendous potential for Texas rice producers, based on the high consumption of rice by Cubans.

"Since the embargo, they have been buying rice from Thailand and Vietnam and some of those countries. The problem is they have to buy big lots at one time. It takes up to a month to get delivered. Coming from Texas, Louisiana or Mississippi, a smaller size lot could be delivered in a couple of days. The problem I see is that they buy in such a volume, it really prevents our members, or average producers, from participating. The only good thing is there are some of these commodities coming from Texas," he reported.

District 6 State Director Bob Reed, a Matagorda County rice farmer, agreed.

"Pedro Alvarez, head of Alimport, which imports all the food supplies for Cuba, said 'Send me a bid on 10,000 tons of paddy rice and 5,000 tons of milled rice.' There's no way an individual farmer could do that, " Reed said.

Reed explained that the once a deal has been struck and a contract is in place, the Cubans hire the shipping vessel to come to the U.S. ports and pick up the goods. Because of current credit restrictions, in order to buy from the U.S., Cuba must go through a third party. They are primarily working through European banks, and then the Euros are converted to U.S. dollars.

"They can't unload the vessel until the money's in your account. From what we heard, you don't have to worry about the money. There were no stories about them refusing product, but it's kind of complicated. The banking restrictions really slow the process and makes it a lot more difficult. They are not wanting to let their supplies run low, so with all the strings attached, it's just easier to go somewhere else to buy it. In the meantime, we're missing the boat," Reed opined. "The thing is, we're very competitive pricewise on rice. Steve Appel (AFBF vice president), a conference speaker, said the per-ton cost of rice in Cuba when purchased from the U.S. reduced their cost by one half. Later, I asked him, `Steve, did I hear you right?' and he said `yes.'"

This was also Reed's second time to travel to Cuba on a Texas Farm Bureau trade mission. He observed a noticeable difference in the appearance of downtown Havana.

"The first trip, a lot of the buildings were in pretty bad disrepair. Doors were missing, windows broke out... They've done quite a bit of cleaning up, restoring the insides, and repairing streets, which I'm guessing is in anticipation of more tourist trade. That's Cuba's number one priority, to open up the tourism. Number two is lifting the credit restrictions," he said.

Reed noted that the potential for U.S. trade with Cuba is $3 billion, with a billion of that in ag products.

District 6 TFB Director Gary McGehee, a West Texas sheep and goat producer, was interested in scouting opportunities for Rancher's Lamb in San Angelo, a producer-run processing plant. McGehee explored the potential for selling Cuba lamb carcasses with the idea that they could do the processing themselves.

"In their so-called resort area, they have a lot of Europeans, who are consumers of lamb," McGehee noted. "My thoughts were that after they take the select cuts for restaurants, they could use the rest of the carcass for the general population. The main ports in Mississippi and Florida and the Beaumont, Galveston and Corpus Christi ports were at the meetings. If we were to sell them something from here in San Angelo, and ship it in a refrigerated sea container from a Texas port, it's a two-day trip. Timewise, things would work."

McGehee pointed out that Cuban agriculture is limited.

"There are not many beef cattle. They have some dairy cattle and I saw a few vegetable farms. Their big product is sugar cane. They really stressed the fact, too, if trade was completely opened up, that they would not flood the U.S. market with sugar," he said.

McGehee said it was an eye-opener for him to visit a Communist country and see, firsthand, the effects of living under a dictatorship.

"It's definitely a different way of life. I'd even say Mexico has a better way of life, as poor as it is. The best looking, most well-kept facilities I saw in Cuba were the public schools. Education is a high priority there. Once they're through high school and college, students go into a foreign language program for three years. The tour guides speak excellent English, with no accent. They are very well educated. I saw a lot of school kids in uniforms. I guess their education system is one of their more positive points, but I don't see any advantage for using it with their economy being the way it is."

All the men seemed to agree on Farm Bureau's role.

Reed said, "Farm Bureau's involvement with the conference is good, but we are in a little different position, as an organization, in that we don't really have anything to sell to Cuba. The organization doesn't own any corn or rice or anything like that. Most people are in a position to make a sale. Our role as an organization could be staying in touch, keeping up with what's going on, learning the ropes of how to make a deal with them, and supplying that knowledge to any of the ag businesses or producers operating on a large enough scale that could actually make a sale."

Jones indicated that Texas Farm Bureau's goal has been to help producers and agribusinesses interested in trading with Cuba make the right contacts and to monitor existing trade enough to know the risks.

"Unless something changes politically in the U.S. or over there, I don't think much can be done, unless someone has a big quantity to sell," Jones concluded. "And of course, Farm Bureau does not want to get into the sale of it, but rather act as a liaison to put the buyer and sellers together."