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Eyes on Cuba: What is Outlook for U.S. Ag?

Is Cuba the next agricultural opportunity or just a tourist destination?

Since the U.S. reestablished diplomatic relations in Cuba more than a year ago, Americans have reignited their curiosity with this small Communist nation just 90 miles off the coast of Florida.

Successful Farming will be reporting from Cuba this week as part of a delegation of agricultural companies and associations, along with government officials from the state of Iowa – all in an effort to build relationships and expand trade between Cuba and the U.S.

In addition to meeting farmers and visiting a Cuban marketplace, we will interview agricultural officials from this country of 11 million people.

Cuba is clearly known for Castro, cigars, and cars still stuck in a time warp of the 1950s and '60s. There could be more opportunity in the future.

Here are some fast facts:

 

  • Cuba has been a big importer of agricultural products. The U.S. has typically been the largest 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. Who has benefited? Canada, Europe, and Brazil – all countries that have not enforced embargoes with Cuba as has the U.S. for nearly a half-century.
  • Cuba’s gross domestic product will continue to grow through 2021, according to USDA.
  • Imports account for 60% to 80% of caloric consumption by Cubans. Wheat, corn, poultry, rice, and dairy are among the items that the world exports there.
  • Cuba’s main export is sugar, although ag production is stagnant.

 

Recent news that American airlines are going to begin commercial flights (sometime by fall) and that President Obama is planning on visiting Cuba in the coming months have raised optimism about the opportunity in Cuba. Certainly the optimism for tourism will come in the first wave.

However, there are significant obstacles before America can grow exports and trade there:

 

  • The U.S. cannot offer credit terms there today, as can other competitive countries. Congress will have to approve trade with Cuba before significant trade will happen. 
  • Today, trade with the U.S. requires cash in advance.
  • It will take sizable investment before Cuba is ready for increases in U.S. activity – whether that is investment in tourism and hotels, or ports and shipping infrastructure.

 

Despite the excitement, the road to Cuba will take time – despite it being such a short distance to visit.