USDA OKs using check-off money to promote sales to Cuba

By Bill Tomson

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, March 21, 2016 - U.S. farmers may soon be able to use funds from federal check-off and marketing order programs to finance research, promotion and marketing operations for the first time in Cuba, a breakthrough for the U.S. agriculture sector which is seeking to boost exports to the communist country.

Agriculture Secretary Tom Vilsack, who arrived in Havana Sunday with President Barack Obama, announced today that farm groups will be able to use 22 Research and Promotion Programs and 18 Marketing Order programs to begin forging ties in Cuba, a nation that has increasingly shifted to other countries in recent years for the agricultural imports it needs.

These “check-off” programs that are supervised by USDA and paid for by farmers are a significant part of the reform that agricultural producers across the U.S. are pushing for to help reinvigorate sales to Cuba.

“It's a new day,” Obama told reporters in Havana, speaking in Spanish and English. At a joint press conference with Cuban leader Raul Castro, Obama said better agriculture ties between the two countries could help move Congress to end the trade embargo imposed on Cuba more than 50 years ago.

Lets Talk Food

“If we build on the work we're doing in agriculture and you start seeing more U.S. farmers interacting with Cuban farmers and there's more exports and imports, the possibility of ending the embargo increases,” Obama said.

Brian King, chairman of the USA Rice Western Hemisphere Promotions Subcommittee, said the announcement, like last week's announcements on liberalized travel, “continues the momentum toward normalized commercial relations with Cuba.” He continued: “We are looking forward to a USDA presence at the U.S. Embassy in Havana. But there is much more to be done, and we need to get Congress to take action to remove the embargo once and for all.”

Patrick Delaney, a spokesman for the American Soybean Association, called the USDA announcement “a really good development” and stressed that the group is pleased that it will be able to use check-off funds for future projects.

In a statement, USDA said the funds can be used to:

--Provide nutritional research and guidance, as well as to participate with the Cuban government and industry officials, at meetings regarding nutrition and related Cuban rules and regulations;

--Conduct plate waste study research in schools to determine what kids eat and what they discard, leading to improved nutritional information that helps develop the guidance for school meal requirements, ensuring kids are getting adequate nutrition to be successful in school;

--Provide U.S. based market, consumer, nutrition and environmental research findings to Cuban government and industry officials;

--Research commodities' role in a nutritious diet that improves health or lowers the risk of chronic diseases;

--Study the efficacy of water disinfectants to eliminate/inactivate bacteria on commodities;

--Test recipes and specific products amongst Cuban consumers of all ages, with the goal of increasing product development and acceptance, and

--Conduct consumer tracking studies to measure attitudes when it comes to a specific commodity and consumption and to identify consumer groups based on their behavior, attitudes, and purchasing habits for a particular commodity.

Farm groups like the U.S. Grains Council have been using state checkoff funds to work in Cuba for years, but that money only goes so far and other farm groups have been clamoring to use the better-funded federal programs.

Wayne Watkinson, a partner at McLeod, Watkinson & Miller who specializes in commodity promotion and marketing issues, said the new policy announcement will open a lot of doors for U.S. agricultural importers. The check-off money can be used to get a much better understanding of the Cuban market and what the U.S. sector needs to do to be prepared when the trade embargo ends, he said.

The decision to allow the federal checkoff programs to operate in Cuba is a sharp turnaround for the USDA, which has argued for years that a federal statute - the Trade Sanction Reform and Export Enhancement Act - effectively barred use of the funds in Cuba.

It was about a year ago that then-USDA Under Secretary Michael Scuse - now acting deputy secretary -- testified at a Senate Agriculture Committee hearing that only state checkoff funds could be used to improve agricultural ties with Cuba. But that wasn't good enough for Sen. Heidi Heitkamp, D-N.D., who asked Scuse to re-examine USDA interpretation of the law.

“It's great to see that USDA has agreed to my request that we free up private money - collected from American producers to promote the products they grow - so we can expand agricultural trade to Cuba,” Heitkamp said today. Heitkamp is among nearly 40 lawmakers who traveled to Cuba with Obama, Vilsack and other Cabinet members.

Vilsack announced the green light for checkoff funds today after meeting with his Cuban counterpart, Minister Gustavo Rodriguez Rollero.

"U.S. producers are eager to help meet Cuba's need for healthy, safe, nutritious food. Research and Promotion and Marketing Order Programs have a long history of conducting important research that supports producers by providing information about a commodity's nutritional benefits and identifying new uses for various commodities,” Vilsack said in a statement.

“The agreements we reached with our Cuban counterparts on this historic trip, and the ability for our agriculture sector leaders to communicate with Cuban businesses, will help U.S. agricultural interests better understand the Cuban market, while also providing the Cuban people with science-based information as they grow their own agriculture sector."

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USDA says it is still barred from using Market Access Programs and Foreign Market Development funds to promote U.S. farm goods in Cuba, and that the biggest obstacle to opening up new business - a prohibition on providing credit to Cuban importers - remains.

Once a major buyer of U.S. rice, Cuba is now purchasing large quantities from countries like Vietnam because they offer long-term financing. Cuban importers are required to pay cash up front for U.S. farm goods.

The U.S. resumed exports of some agricultural goods to Cuba around the year 2000. Those shipments reached a high of almost $700 million in 2008 before dropping under $300 million in 2014 and falling again last year.

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