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Will Farmers Feel a Chill When Trump Cools the U.S.-Cuba Thaw?

Nearly two decades ago, Congress exempted food and agricultural goods from the U.S. trade embargo on Cuba, opening the way for modest exports to the island. The 2000 law would be somewhat of a shield for those sales when President Trump realigns U.S. policy toward Havana, scheduled in Miami on Friday.

Trump is expected to partially reverse the diplomatic thaw that President Obama started in December 2014. By one account, he is likely to restrict U.S. tourism and to bar U.S. companies from doing business with companies affiliated with the Cuban military. As recently as Tuesday evening, a White House spokeswoman said, “There aren’t any final decisions” on the overall package.

Farm groups supported the 2000 Trade Sanctions Reform and Export Enhancement Act with arguments that trade would facilitate the spread of democracy. They also view Cuba as a natural and nearby market for farm exports. Since sales began in 2001, $5.35 billion in food and farm products has been shipped to Cuba, with chicken meat usually the leading item, according to the U.S.-Cuba Trade and Economic Council, which tracks commerce between the nations.

“He (Trump) can’t do anything to stop the sales,” said John Kavulich, the council president. “He can do something to make the sales more difficult.”

U.S. food and ag cargoes are unloaded at Mariel, about 40 kilometers (25 miles) west of Havana. The Cuban military runs the port, so a prohibition on dealing with military-related companies would shut off use of the port. “That would put the Cubans in the position of stopping everything,” said Kavulich.

There is another lever that could be pulled to impede sales. The 2000 law allows cash sales, which initially was interpreted to mean payment before cargo was unloaded. The George W. Bush administration decided at one point to require payment before ships left U.S. harbors, an inconvenience that delayed shipments while money was routed through non-U.S. banks and added to the overall cost of the imports.

Despite the hopes of farm groups, Cuba has not blossomed as a top customer. Annual sales have ranged from a high of $710 million in 2008, when Cuba was the 29th-largest export market, to a recent low of $170.6 million in 2015, the second-lowest tally on record. Exports totaled $232 million last year.

Groups such as the U.S. Agriculture Coalition for Cuba and Engage Cuba say that ending the U.S. trade embargo, which originated during the Cold War, will empower Cubans and lead to improved commercial ties. Some farm-state lawmakers want to allow U.S. financing of exports to Cuba. Other groups say the communist nation has to take steps toward democracy before it merits friendlier treatment from the U.S.

Secretary of State Rex Tillerson told lawmakers Cuba “must begin to address human rights challenges” if it wants to preserve the diplomatic rapprochement begun by Obama. He said the administration believes the Cuban government benefits financially from increased trade with the U.S. The Trump administration wants to prevent that, he said.

FERN’s Ag Insider. Produced by FERN
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