WASHINGTON, July 13, 2016 - A spate of legislative progress on Capitol Hill has farm groups and forces opposed to the half-century old Cuban embargo optimistic that one of the last major barriers to increasing U.S. agricultural trade ties with the communist nation will soon fall away.
“I think that there is now momentum to make the changes necessary, especially when it comes to agricultural products,” USDA Acting Deputy Secretary Michael Scuse told Agri-Pulse.
James Williams, president of Engage Cuba, agrees. “We're encouraged by House leadership’s recognition that we are overdue for a reexamination of our policies toward Cuba. After 55 years of stalemate, this is a major step forward,” he said.
That step – approval of a bill that would tear down the U.S. prohibition on financing agricultural exports to Cuba – hasn’t actually been taken yet. But Congress is closer than it’s ever been, said the author of the legislation, Rep. Rick Crawford, R-Ark.
As it is now, Cuba can only buy U.S. agricultural commodities if it pays cash up front, and that puts U.S. exporters at a disadvantage to their competitors in Brazil, Argentina, Vietnam and elsewhere.
“Once we can extend credit… to level the playing field, we think there’s a real opportunity for U.S. agricultural products,” Scuse said.
Crawford offered up his bill as an amendment to a spending bill last week, but withdrew it after getting support from key Florida lawmakers to pass it as standalone legislation.
“We want to get the policy right through authorizing language and move this forward without having these year-to-year disputes,” Crawford said. And because he has the support of House Agriculture Committee Chairman Mike Conaway, Crawford said he believes he can get that done in September.
The consensus that Crawford is building with House Republicans from Florida like Mario Diaz-Balart, Ileana Ros-Lehtinen and Carlos Curbelo has the entire agriculture sector excited, said Mark Albertson, director of strategic market development for the Illinois Soybean Association.
“It does look like we’ve got a lot of momentum here,” Albertson said in an interview. “It’s inevitable that something’s going to happen and it’s going to be a change for the better and we’re all pretty excited about it.”
Historically, many Florida lawmakers – representing large numbers of Cuban-American constituents – have been opposed to easing restrictions on trade with Cuba, but that’s changing, Crawford said in a recent audio posting.
“Until today there seemed to be no path forward for an agreement, but I’ve got commitments from leadership and my friends from Florida,” Crawford said. “There will be a proper path forward… The fact that members from South Florida pledged to work for an agreement… that works for American agriculture – that’s really big news, given the fact that they represent the largest population of Cuban Americans in the country. It’s a sign of, as much as anything, a generation shift.”
There is also some momentum in the Senate where Heidi Heitkamp, D-N.D., and John Boozman, R-Ark., succeeded last month in getting legislation similar to Crawford’s attached to the Senate’s financial services spending bill. “This vote brings us one step closer to tearing down the No. 1 barrier facing North Dakota farmers who want to export their crops to Cuba,” Heitkamp said at the time.
Crawford, who comes from the country’s No, 1 rice producing state, is primarily concerned with getting U.S. rice back into Cuba. The success of U.S. rice farmers hinges largely on foreign sales and right now, U.S. exporters cannot compete with Vietnamese shippers for the Cuban market. The U.S. is a lot closer to Cuba, making it substantially cheaper to send rice from Arkansas than from Hanoi, but Vietnam can offer Cubans good financing deals.
Cuba’s rice market is now estimated at about $1 billion annually and it would not be a stretch to imagine the U.S. getting back a good share of those sales.
Agricultural products began flowing back to Cuba after then-President Bill Clinton signed the Trade Sanctions Reform and Export Enhancement Act of 2000. In 2002 the U.S. sold about $6 million worth of rice to Cuba, according to USDA data. That more than doubled to $13 million in 2003 and then skyrocketed to about $64 million in 2004. But things changed in 2005 after the Treasury Department’s Office of Foreign Assets Control implemented a provision that effectively banned private U.S. banks from financing U.S. sales to Cuba and required exporters to be paid before shipments left the U.S.
U.S. rice exports remained relatively strong in 2005 and 2006 – about $39 million worth in each year – but that dropped to $24 million in 2007, $7 million in 2008 and then zero in 2009.
But there is a lot more at stake than just rice exports.
Cuba already imports a lot of U.S. poultry, corn and soybeans, and farm groups expect that business to climb sharply once all of the trade barriers have come down.
Albertson, with the Illinois Soybean Association, said he expects U.S. exporters to eventually get nearly 100 percent of Cuba’s market for soybeans, soyoil and soymeal. “We may double our soy exports to Cuba once we get this part of the embargo eliminated,” he said.
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