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US Agribusiness Is Seeing Green in Cuba

President Barack Obama will arrive in Cuba on Sunday, becoming the first US president to visit the country in 90 years, and US agricultural interests are eager to see Cuba open for business.

by Christopher D. Cook
Mar 18 2016, 4:30pm

Photo by Ramon Espinosa/AP

As Cuba-US relations gradually warm, with President Barack Obama heading to the island this weekend for the first US presidential visit in 90 years, American agribusiness is seeing green — specifically, lucrative pastures of export opportunities. While still a relatively small market, Cuba represents potentially billions of dollars of US commodity exports, just a 90-mile flight or cargo ship ride away.

Along with a bevy of members of Congress, Agriculture Secretary Tom Vilsack and top agriculture industry representatives are joining Obama on the photogenic trip. Perhaps one reason is declining US agricultural trade to Cuba. American agricultural and food product exports to Cuba totaled more than $170 million in 2015, a far cry from its high water mark of $710 million in 2008, according to the US-Cuba Trade and Economic Council based in New York. The bulk of these exports are soybean oil cake, frozen chicken legs, corn, and soybeans.

For a range of reasons, including currency values, limited Cuban foreign exchange, and international competition, US agricultural exports to Cuba have slipped. As one US Department of Agriculture (USDA) report notes, after a decade as Cuba's top exporter, the US has slipped behind the European Union and Brazil in recent years.

The USDA acknowledges the relationship is imbalanced. "[T]he updated US policy approach to Cuba provides few if any opportunities for Cuba to export agricultural products to the United States," the department said. "Over the next 15 years, the challenge will be to provide more balanced opportunities for US-Cuba agricultural trade and to continue to build confidence in the emerging bilateral commercial relationship."

'Cuba imports about 80 percent of its food, which means that the economic potential for our producers is significant.'

Despite the imbalance, major US corporations and commodity groups are vying to expand their opportunities in Cuba.

"Cargill is very anxious to get Cuba open," said Ben Lilliston, director of corporate strategies and climate change at the Institute for Agriculture and Trade Policy (IATP) in Minneapolis.

Indeed, Cargill has been leading the charge to topple the long-standing trade embargo, and spearheaded the 2014 creation of the US Agriculture Coalition for Cuba, a trade-promoting business alliance including the National Chicken Council, the American Meat Institute, the American Farm Bureau, and commodity industry associations such as the American Soybean Association and the National Association of Wheat Growers. Minnesota Sen. Amy Klobuchar has been a key ally in the coalition's efforts to expand trade to Cuba, according to press reports.

At the coalition's launch ceremony in January 2014, Vilsack stated, "Cuba imports about 80 percent of its food, which means that the economic potential for our producers is significant." While other experts put Cuba's fluctuating food import levels at closer to 50-60 percent, it remains a substantial market that American producers hope to capture.

Several members of the agribusiness coalition are joining the presidential trip. "We have been successful in at least getting agriculture as part of the presidential platform while in Cuba," said Paul Johnson, coalition co-chair. "It's not about one-way trade," said Johnson. "It's about supporting two-way trade and finding a balance. A balance where competitive advantages are sought. Cuba could increase its own production, and US farmers can help them do that, which will increase their current levels of national production."

Numerous national and state commodity organizations have formed Cuba trade working groups devoted to promoting exports and trade with the island. According to an October 2015 account by the Illinois Farm Bureau, US agricultural exports to Cuba "will reach $1.2 billion if remaining regulations can be relaxed and trade barriers are lifted. Illinois' share could be about $120 million a year — four times the current value of the state's ag exports to Cuba, according to new estimates. Corn and soybean exports alone could generate an additional $80 million a year for Illinois."

In February 2015, Cargill led a 75-member agriculture trade delegation to Cuba, which included two former US agriculture secretaries, the governor of Missouri and "leaders of several national crop, livestock, and export associations," the Minneapolis Star Tribune reported. "Any time you've got somebody that's only 90 miles away and imports 80 percent of its food, they're definitely a potential customer," Kevin Paap, a corn and soybean farmer and president of the Minnesota Farm Bureau told the newspaper.

But as with any imbalanced trade relationship, expanding American food exports to Cuba could undercut the country's internal food production and farm sector. Rising US agricultural exports "could definitely cause tension" within the nation's farming sector, said M. Jahi Chappell, senior scientist with the IATP. As a rule, Chappell said, "bringing in more exports undermines local economies, and undermines the prices that farmers can get."

Related: US and Cuba Strike Historic Deal to Allow Regular Commercial Flights

In the late 1980s and early 1990s, as Soviet aid and trade slipped away, Cuba's organic farming revolution propelled the island from the lowest per capita food producer in Latin America and the Caribbean to its most prolific, said Miguel Altieri, UC Berkeley Professor of Agroecology. Writing in The Monthly Review, Altieri and Fernando Funes-Monzote, a founding member of the Cuban Organic Agriculture Movement, came to a dramatic conclusion, "No other country in the world has achieved this level of success with a form of agriculture that uses the ecological services of biodiversity and reduces food miles, energy use, and effectively closes local production and consumption cycles."

Now, that agriculture system is under increasing pressure to deliver harvests for export and for Cuba's burgeoning tourist market. Already, Cuba's famously successful organic agriculture is undergoing shifts away from feeding local and regional markets, and is "increasingly geared to feeding tourists," said Chappell. When he visited Cuba 14 years ago, "food was all for local consumption," and "it was a moderately attractive lifestyle to be a farmer." He said that balance has changed, and the Cuban government is gradually shifting away from guaranteeing these farmers' prices and markets.

It remains to be seen how quickly Cuba will accelerate these shifts and ramp up its agricultural imports and exports. Despite rising tourism, Cuba's limited foreign exchange and distribution systems have slowed imports somewhat, according to John Kavulich, president of the US-Cuba Trade and Economic Council. The Cuban government, he said, is "doing what they can to mitigate the emergence of commerce with the US because of the uncertainty it brings," and "taking their time" to increase trade.

As Cuba faces rising pressures to expand its agricultural exports and imports, the "million-dollar question," said Chappell, is whether Cuba will balance protections for its own farmers and domestic food production needs with the push to feed both tourists and outside markets.

Related: US and Cuba Announce Plans to Open Embassies in Each Other's Capitals

Follow Christopher D. Cook on Twitter: @chrsdcook

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