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Cuba’s Food Potential
Agricultural interests remain optimistic about export potential to Cuba following last week’s announcement that the U.S. and Cuba are restoring diplomatic relations at the end of this month.
Yet, opening an embassy in Havana is barely a first step.
Last spring the Senate Agriculture Committee held a hearing on potential trade to Cuba that included both hopeful and sobering testimony from experts, including C. Parr Rosson III, the head of the agricultural economics department at Texas A&M University, and an authority on international trade and Cuba.
In April, Rosson told the committee that Cuba, which is the largest island in the Caribbean with 11 million people, has the potential to be a big U.S. market.
“Our previous research indicates that U.S. export potential could exceed the record $709 million set in 2008,” Rosson said. “With a more open economy, less regulation by both governments, strong tourism, and remittances, U.S. food and agricultural exports have the potential to exceed $1.2 billion annually within five years…”
In the short run, a large share of potential food exports would likely go to Cuba's tourism business, he said. Cubans have little disposable income, with salaries averaging about $20 per month.
The U.S. has lost market share in recent years, selling only $286 million in agricultural exports to the Cuban government in 2014.
“There are several reasons for this sharp decline in U.S. exports,” Rosson said. “First, Cuba has diversified its food suppliers by shifting away from U.S. products in favor of those from Brazil, Canada, Argentina, Mexico, Spain, France, Ukraine, and Vietnam. Credit terms are offered by some of these countries, allowing ALIMPORT [Cuba’s importing agency] to conserve hard currency and use credit to make larger purchases over periods of several months or longer. Sustained high prices for many agricultural commodities and a strong U.S. dollar also negatively impacted U.S. exports over the last several years. Lower earnings from tourism, and nickel exports also hampered the GOC from continuing large cash expenditures on imported food. Perhaps another reason may have been the deliberate decision by the [Cuban government] to move away from the United States as a food supplier. After a decade of trying to influence U.S. policy and failing, persistence may have waned.”
Congress is trying to make up for lost time, with several bills introduced that would at least partially end the U.S. trade embargo with Cuba, which remains in place in spite of improving ties between the two governments.
The U.S. Grains Council sees potential to export more feed grains to an island with relatively small livestock numbers at the present time.
According to Melissa George Kessler, communications director at the council, these are the official statistics published by the Cuban government as of last year:
Cattle - 4 million head
Swine – 1.6 million sows / 5.2 million farrowings
Poultry – 32.5 million total
14 million layers – all government owned
18.5 million broilers – nongovernment owned
Those cattle numbers are comparable to the number in Iowa or Missouri in the U.S.
“Bottom line is that there's room to grow, and we're hopeful we can both help with that and sell U.S. grains in the process,” Kessler told Agriculture.com in an email message.