Agricultural News
U.S. Wheat Farmers Anticipate Increased Trade Opportunities with Cuba
Fri, 09 Jan 2015 05:51:41 CST
US agriculture is standing together to build a stronger trading relationship with Cuba. US Agricultural Secretary Tom Vilsack announced Thursday the launch of the U.S. Agriculture Coalition for Cuba (USACC). The coalition is made up of more than 30 U.S. agricultural and food organizations that are seeking to end the United States' Embargo against Cuba and advance trade relations between the two nations. The group aims to re-establish Cuba as a market for U.S. food and agricultural exports.
"The historic policy changes announced by the President will take steps to make American farm and products more price competitive, which will expand choices for Cuban shoppers at the grocery store and create a new customer base for America's farmers and ranchers," said Vilsack. "The President and this Administration look forward to engaging in an honest and serious debate about next steps in Cuba, and I have no doubt that the USACC will have an important role to play as these conversations continue and we expand our relationship with the Cuban people in the coming years."
Representatives from various agricultural organizations expressed their support for the coalition during a news conference Thursday at the National Press Club. Among the founding members are U.S. Wheat Associates and the National Association of Wheat Growers (NAWG). Click or tap on the LISTENBAR below to listen to the comments made by USW President Alan Tracy at that event on Thursday.
Cuba, which does not grow wheat commercially, is the largest wheat market in the Caribbean, purchasing almost all of its wheat from the European Union and Canada. In the recent past, Cuba has imported more than 16.3 million bushels (445,000 metric tons) of wheat in a single year from the United States, sales that today would represent a value of nearly $123 million. However, under current rules set by the Treasury Department's Office of Foreign Assets Control, the United States can only export agricultural products to Cuba through the use of third-party, foreign banks, which makes facilitating trade burdensome and often more expensive for Cuba. Partly as a result, Cuba has not purchased U.S. wheat since 2011.
"U.S. wheat farmers are excited about the prospect of exporting more wheat to Cuba," says NAWG President Paul Penner, a wheat farmer from Hillsboro, KS. "NAWG has long supported strengthened trade relations with Cuba and see this as a historic step in that direction."
"The U.S. wheat industry applauds these efforts to normalize trade relations, which take concrete steps away from a policy approach towards Cuba that has accomplished little," said Tracy. "If U.S. trade with Cuba can increasingly respond to economics rather than politics, we believe our wheat market share there will eventually grow from its current level of zero to around 80 to 90 percent, as it is in other Caribbean nations. We have a natural competitive advantage over other suppliers."
The U.S. began exporting wheat to Cuba in 2002. Over the last 14 plus years, export volume has been variable. Tracy said from 2004 - 2008, American wheat made up about half of that market. Over time, US wheat export levels have tapered off. He attributes the decline to the increased regulations required by the U.S. government.
"We look forward to the lifting and changing of some of the regulations that are currently in place that caused the decline," Tracy said. "The Cubans simply got frustrated with having to deal with us and our competitors found their way in there again."
If the US can normalize relations with Cuba, this country could become a significant wheat customer. Tracy said long term Cuba has the potential to import one-million ton market of wheat and flour annually. In today's dollar terms that is equal to about $250 - million annually.
"We recognize there is a lot of work to do, but we greatly welcome this first step," Tracy said. "To us, the real meaning of this step by the administration is it puts them in favor of fostering trade, rather than frustrating it."
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