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Building Ag Trade with Cuba is a Long Road
Paul Johnson has a passion for Cuba. Not only has he lived there, but also he is focused on building trade between the U.S. and Cuba, despite an embargo and limits on agricultural trade. Johnson is the chair of the United States Agriculture Coalition for Cuba, an organization with more than 100 members trying to promote two-way agricultural trade.
He also visits Cuba several times a year and has taken business and political missions there to improve trade relations and investment between the U.S. and Cuba, a country of 11 million. Successful Farming magazine caught up with Johnson recently.
SF: What is the current trade market with Cuba?
PJ: We’re still exporting some, but the numbers are smaller. We’re at about $215 million dollars in exports from the U.S. to Cuba. It’s a $2 billion market, meaning Cuba imports $2 billion worth of food annually from other countries. So our share is 10%. It's been that way last year for the 2018 figures, and I expect it to be pretty similar in 2019. We saw a little bit of an uptick in the first part of 2019 probably because of stockpiling by the Cuban government. Most of what we export is frozen chicken.
SF: Is there a big upside for American farmers there?
PJ: There’s no question that there are challenges. Cuba wants credit but what they're really looking for is normalized relations with the U.S. American farmers do have an advantage in the Cuban market, mainly logistics. We can get product down to Cuba quicker than any other country, in a few days. So not only can we get products there, which reduces the cost to the Cuban buyer, but we also promote the quality of the good, as well. We can also ship less of items but more frequently – that helps alleviate the limits in their infrastructure. And then, of course, culture alignment between Cubans and the North Americans is very close. I’ve seen this firsthand. Having that cultural affinity, that historical and geographical tie, is really important for business.
SF: What U.S. commodities show opportunity?
PJ: If you're a rice producer, Cuba was historically a really important market for you. Cubans consume a lot of rice per person, almost as much as they do in countries in the East. So for rice producers in the U.S., Cuba could be – under normalized relations – the second-largest market in the world. Frozen chicken is a good market. Cuba is the fifth or sixth largest market for frozen chicken exporters in the U.S. Wheat is about a $250 million market for U.S. wheat. We estimate that corn would be the 12th largest market in the world for corn exports. They're going to continue to import soy in Cuba. Every household has oil because Cubans like to fry food and all the oil they used is soy based, and they want to increase their pork and chicken production. They are looking to do that, but they're going to need feed. Americans could do that better than anybody else.
SF: Are you working on new markets there?
PJ: We're working on a project with a U.S. farmer to increase potato production down in Cuba. So we're working within the framework of the memorandum of understanding that was signed between USDA and the Ministry of Agriculture to allow for the export of seed potato down to Cuba. We’re trying to get some Holsteins down to Cuba to improve Cuban dairy production.
SF: What sparked your interest in this mission?
PJ: I went there in 1995 out of curiosity. It was a Communist country in our hemisphere and it was prohibited. I really wanted to go into the void to understand Cuba better. It never made sense to me why the U.S. was embargoing the country. It didn't seem just, like it was in anybody's interest. It was clearly a failed policy at the time. So I went down there and liked it, went back in 1999 and lived there. I've been going back ever since. I started a company in 2008, exporting food products down to Cuba, and then shifted to working on a coalition side, trying to work with both governments to improve agricultural relations. Now I work on the consulting and development side.
SF: How many times a year do you get there?
PJ: I try to get down there every other month. My wife is Cuban and we've got a couple of kids and they've got to see the grandparents.
SF: Is Cuban life improving?
PJ: There have been some significant changes in Cuba, and I'm not painting a bright picture across the board. There's a lot that needs be done. There's a lot of frustrating points. However, there have been some signals or some movement on the Cuban side ever since really Raul Castro made some economic shifts about eight or nine years ago. And one of those shifts was to open up more internet access. And they've done that. I was there three weeks ago and you could see Cubans on the street with their cell phones sitting on the corner with Wi-Fi. That's new, because six months ago you had to go to a Wi-Fi hotspot and designated parks. Now there is bandwidth for people to connect. So now the complaint is, it's too expensive, of course. But it's significant that they have access to the internet.
SF: Can people visit as tourists?
PJ: Tourism was never allowed. Even when we had some opening under the Obama administration, tourism was never allowed. The administration allowed American travelers under 12 categories, but there were cultural exchanges. There were categories for business research, educational, religious, and the like. But never for tourism. The new administration has eliminated only one category of travel, but 11 categories still remain to us.
SF: What are the obstacles in relations then?
PJ: I guess both sides need to do more, but first the U.S. has to end the embargo. I mean, Cuba is not going to do a whole lot more than what they're doing now because, in their viewpoint, it's the U.S. that put the prohibition on cargo on them. So they're looking to alleviate that. But there are gradual confidence-building steps that we could initiate which both sides could claim as a victory, and where U.S. agriculture and Cuba's private sectors would benefit most.
SF: But there’s more than the embargo, correct?
PJ: From the Cuban side, people have to recognize that even if we ended the embargo tomorrow, it's not like Cuba’s going to drop their existing trading partners and start purchasing a lot of products from the U.S. They have 50, 60 years of relationships that they've built with other countries. We have to compete with that. We can compete on dollar for dollar, but we also have to compete on other fronts. Cuba's going to have to make some changes internally, as well. Frankly, there are still a lot of people within the Cuban government who are not too keen on doing more business with U.S. anyway. I think the majority do. I think the president of Cuba does. I think that there is still opposition within the bureaucracy.
SF: What changes should we be paying attention to?
PJ: First of all, on the Cuban side, we never pay attention to the changes taking place within the Cuban agricultural sector. And there are real significant shifts. The big one is the government now allows for private enterprise. In the last eight or nine years, a third of the workforce is either employed privately or they belong to cooperatives, mostly agricultural cooperatives. A third belongs to the state enterprises, and a third works for the government and in services: doctors, teachers, and the like. So how the government responds to that is interesting to watch.
SF: What are the cooperatives like?
PJ: You're seeing the agricultural cooperatives have more autonomy now. It’s not like it’s an easy road for them. But they have a voice. The agricultural cooperative sector has a lot more room to grow, and as the agricultural cooperative sector grows, the American farmer is going to find more opportunities to interact, to exchange ideas, and to eventually export their products directly to the cooperatives. We can’t do that today, but we're going down that path.
SF: Are you optimistic about the future there?
PJ: I am. You know, I know it's a tough road. It is challenging, but given the fact that Cuba is importing $2 billion worth of goods, that's going to grow as their economy grows. Tourism is a big part of their economy. I think that's only going to increase. If you look at the trends over the last 10 years, you've seen the number go up. Overall, there will be 5 million tourists from a country of 11 million that continues to build infrastructure. So as the capacity increases, more tourists will come. We haven't even talked about all the opportunities for agriculture to service the tourism industry, as well. So I'm optimistic because of the proximity and the cultural relationship.
Name: Paul Johnson
Title: Chair, U.S. Agriculture Coalition for Cuba
Education: International relations degree, University of Wisconsin, and an M.A. from the University of Illinois at Chicago