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Will Cuba Matter to U.S. Agriculture?

The door to agricultural trade is opening slowly. Will it make a difference in U.S. exports?

Cuba is on peoples’ minds. Over the past year, there have been developments since President Obama reestablished diplomatic relations with Cuba after 55 years of a U.S. embargo.

Will Cuba matter to American agriculture? Is it big enough? Is Cuba open to U.S. poducts and services?

These are some of the questions that American companies are asking – inside and outside of agriculture.

Clearly an early wave to benefit will be Cuban tourism. Americans are fascinated by Cuban lore, including the revolution in 1959, Fidel Castro, Che Guevera, even the 1950s-era cars that still fill the roads in Havana.

Tourism will certainly help the coffers of this poor nation. It could also help the hospitality industry (including the food and ag industries) with a surge in tourists. The U.S. is opening commercial air travel there this summer. One estimate showed the agreement could add more than 100 flights a day into Cuba.

Last year, Cuban welcomed 3.5 million visitors, many from Europe. Of those tourists, 1 million were from Canada. That number could swell to 6 million.

Cuba is ready for the infusion of money, but its infrastructure may not be ready. The nation is riddled with crumbling buildings, and its airport cannot handle the baggage from existing travelers.

Cuban Agriculture

Cuba is a country with 11 million people; only 1 million are farmers. Its ag economy is focused on its primary exports: cigars, citrus, honey, coffee, cacao, and sugar. Cuba imports 74% of its food, according to Armando Nova Gonzalez, a professor at the University of Havana. That alone suggests that the U.S. could provide raw goods for Cuban consumption, and it already has.

Cuba has been an importer of U.S. agricultural products. The U.S. has typically been a large supplier, but its share of imported goods has dropped dramatically over the past several years. The share of products was as high as 42% in fiscal year 2009, according to USDA.

What country has delivered the goods? Canada, Europe, and Brazil – all countries that have not enforced embargoes with Cuba as has the U.S. for nearly a half century.

Many Challenges

Will Cuba grow its consumption of soybeans, corn, and meat? The first step will need to be eliminating (or amending) the embargo by an act of Congress. The embargo is in the code of the U.S., so President Obama cannot rescind it. Some estimates by observers suggest it could take two to five years to rescind the embargo.

Transactions today require cash in advance; there is no credit. Should that change, the proximity to the U.S. markets could give the U.S. an advantage over Canadian and Brazilian exporters.

“What is the Cuban dream?”

According to Gilberto Beto TorresVela with the U.S. Embassy in Havana, Cuba has four core challenges for progress and growth.

Economics. The country is poor. Most Cubans earn $30 Cuban dollars a month. Doctors and professionals only earn $90 a month.

Demographics. As a socialist country, Cuba has free health care. Its medical system is highly regarded, sending newly trained doctors all over the world. Life expectancy for people is 78.4 years. Many younger Cubans don’t want to have children, however. The farm population is older: 27.8% of farmers are age 51-65.

Migration. According to TorresVela, 20,000 Cubans legally change their residence each year. It is growing to 40,000 or 50,000 people a year leaving for foreign lands, such as Central America, hoping to get to the United States.

“What is the Cuban dream?” TorresVela asks. The government is establishing goals for the next 10 or 15 years. What kind of growth will a socialist government allow? It appears to be opening up individual opportunities – for farmers and citizens – but it doesn’t appear to be fast enough for sudden growth.

Climate. Like many other regions in the world, Cuba experiences the effects of climate change, especially in the Caribbean. Climate that impacts Cuba, according to experts, includes:

  • Severe droughts
  • Heavy rains and floods
  • Hurricanes

Despite the challenges, the specter of a productive and growing agricultural sector there is expanding. Of the 6.2 million hectares of arable land (roughly 50 million acres), half of that area is cultivated.

Cuba’s technical expertise in agriculture is growing, as well. Cuba has 37 research centers to develop technology there and for other countries.

Whether the U.S. will resume large exports will take time and will take a lifting of the embargo.

According to a report from the nonprofit Engage Cuba Coalition, there is an upside for the U.S. “Significant opportunities exist for American agribusiness in Cuba,” says its president, James Williams. “American producers and exporters of agricultural commodities and food products, as well as associated industries, stand to benefit from greater market access and increased trade with Cuba.”

USDA Secretary Tom Vilsack is optimistic about the prospects of increasing U.S. trade in Cuba. The U.S. should “dominate” the Cuban food market, he told thousands of farmers at the 2016 Commodity Classic in March.