Presidential Visit Pushes Change in Cuba Relations; USGC Plans for Grain-Focused Trade Team

U.S. President Barack Obama’s historic visit to Cuba this week continued his efforts to reduce trade barriers with the island nation while back home, the U.S. Grains Council (USGC) and its partners are preparing to welcome a team of Cuban grain industry officials next month.

While most U.S. commercial activity with Cuba is still restricted, the Obama Administration has taken steps to ease some barriers to the market, which could be significant for many U.S. industries, including agriculture. Earlier this month, the Administration eased restrictions on U.S. citizens traveling to Cuba. While with the President in Cuba this week, U.S. Secretary of Agriculture Tom Vilsack announced agricultural commodity groups can use checkoff funds to promote their products there, though restrictions remain on federal trade promotion funds like those used by the Council.

Marking Obama’s visit, private U.S. businesses also made announcements that could lead to boosts in the Cuban economy. Google made a deal with Cuban authorities to expand the country's Wi-Fi and broadband access, and Starwood will be the first U.S. hotel company on the island.

That’s good news for the U.S. agricultural community because their investments could help to generate economic activity that drives demand for meat, dairy and eggs – which require feed grains to produce – and, critically, because they will help the Cuban economy generate the hard currency needed for imports. Tourism in particular has potential to infuse dollars into the Cuban economy that could ultimately be used to finance purchases of U.S. grains.

The United States has sold corn to Cuba each marketing year since the early 2000s, with market share varying from as high as 100 percent in the 2007/2008 marketing year to as low as 15 percent more recently. Overall, Cuba takes about 900,000 metric tons (35.4 million bushels) of corn each year, meaning that if U.S. farmers could capture all of these sales on a regular basis, the country would become the 10th largest importer of U.S. corn.

Selling to Cuba would also help the U.S. grain industry win sales in the region that are now going to Brazil or Argentina because of the efficiencies created when selling to both Cuba and its neighbors.

“Historically, the United States and Cuba were close trading partners, and we could be again,” said USGC Chairman Alan Tiemann, a farmer in Nebraska, who has visited Cuba recently on behalf of the organization.

“Since the Obama Administration’s announcement that it would seek to normalize trade relations with Cuba, the Council has viewed this market with a renewed energy. We continue to assess how best to serve this island nation’s needs as its economy shifts and restrictions continue to fall.”

The Council is currently in the process of making final arrangements for a team of Cuban officials and importers to visit Washington, D.C., Maryland, Missouri and Louisiana in mid-April.

The USGC-sponsored team will meet with members of the U.S. grain marketing system and interact directly with U.S. suppliers of coarse grains and soybeans, which will vastly increase their knowledge of the U.S. purchasing process and logistics. This type of educational outreach is a critical component of Council programs meant to drive sales of U.S. grain.

Click here to read previous Global Update articles about the Cuba market.