Cuba beyond the embargo: Ag coalition works on trade
BLOOMINGTON, Ill. — Anticipation of increasing trade with Cuba, a country only 90 miles off the Florida coast, has grown dramatically for businesses since President Barack Obama announced his goal of normalized relations in December.
But for decades, agriculture groups never stopped thinking about ending the embargo. Some individuals and groups, especially in Illinois, have doggedly kept an eye on the tiny nation with hopes of future trade.
The momentum increased most recently April 15, when Obama took Cuba off the list of State Sponsors of Terrorism. Cuba, which has been on the list since March 1, 1982, has delayed negotiations and reopening its embassies waiting for this change.
Even last fall, there seemed to be few U.S. business folk interested in actively pursuing trade with Cuba, notes Mark Albertson, director of strategic market development for the Illinois Soybean Growers (ISG).
In November, only a “handful of die-hard” American businesses and associations attended the Havana International Trade Fair, among them Albertson representing the ISG.
“I’m sure we’ll get more interest in that fair this year,” he says.
This year’s show will mark the sixth time in the last three years ISG farmer-leaders have visited Cuba to promote Illinois soybeans.
“As the nation’s top soybean-producing state, the momentum on this issue is exciting for Illinois agriculture and our soybean farmers,” says Bill Raben, ISG chairman and soybean farmer from Ridgway.
FOR HIM and others, this change has been a long time coming.
Obama’s Dec. 17 announcement of his intention to rebuild ties with Cuba got the country back in the spotlight and created optimism for farmers.
“Both the Republicans and the Democrats want to end the embargo,” says Paul Johnson, executive director the Illinois Cuba Working Group (ICWG) which aims to improve trade opportunities between Cuba and the Land of Lincoln state.
“I went in 1995 (to Cuba for the first time) because I was curious about a place so close that was a forbidden communist country,” Johnson says.
His relationship with the country started as a master’s thesis and has become a business and a vocation. He has made more than 50 trips to Cuba in the past 20 years.
The ICWG, which he helped create, was established by an Illinois Resolution unanimously approved in the 2013 Illinois General Assembly. The organization grew out of an initiative that began in 1999 when Illinois was the first state to send representatives to Cuba during the embargo.
ANOTHER STEP came when the U.S. Congress passed the Trade Sanctions and Reform Act in 2000, permitting the sale of agricultural products and representing the first major effort to remove barriers to “normalize” trade relations with Cuba.
The United State’s stronger political will to rebuild a relationship with Cuba’s 11 million residents comes at the same time as financial change is happening in Cuba, Johnson notes. There are more entrepreneurs.
“It’s economic change, not political,” he says.
About two-thirds of the economic change is in the agricultural sector, but there is room for more growth.
“There is an opportunity to fill in the blanks … and to connect the dots,” Johnson says. This can include helping get vegetables from a field to a port quickly, sharing know-how in agricultural production and updating credit policies.
“The real momentum is that people want to fix the historic relationship,” he says.
Johnson, also president of Chicago Foods, says lessons learned here will help U.S. trade strategy not only in Cuba, but also in Latin America.
Along with the ICWG and ISG, Cargill is among the founding members of the U.S. Agriculture Coalition for Cuba (USACC). In November, the organizations met with local Cuban officials.
“We told them that our next visit to Cuba would be with the national coalition. It was extremely satisfying for all of us to see it come to fruition,” says ISG’s Albertson.
The inaugural USACC trip to Cuba took place in March, right after Commodity Classic. Several participants flew from Phoenix to Cuba.
“The core part of the USACC Learning Journey was farmer-to-farmer exchanges,” Albertson says. “There is a universal connection among people who grow food and care for the land.
“We were there to listen and learn. Cuba clearly has potential to supply the U.S. with various ag imports, including high-quality seafood, fruits and vegetables, rum and tobacco. All of which could be backhauls on our Midwest ag products that we ship to the island.”
AS FAR back as 2008, U.S. exports to Cuba were $685 million, with about half that value coming from corn and soybeans — “so already that’s a viable market and a good one. It’s not the world’s biggest but still important given the geography,” Albertson notes.
What’s next, according to Albertson, would be passage of a freedom to travel to Cuba act in 2015.
“Then, we will tackle the embargo with The Freedom to Export to Cuba Act which is co-sponsored by Senator Dick Durbin, Senator Rand Paul as well as many others,” he says.
“The fact that Americans are greeted with such open arms, given the history between our governments, is a testament to the irreversible change that has begun. It is hard to picture our relationship going backwards; it would like trying to put toothpaste back in the tube.”
The timing seems right, says Andrew Loder, vice president and global transformation leader of Cargill’s animal nutrition business, who also participated in the learning journey.
Cuba sits in the middle of many countries that Cargill works with in Latin America. The animal nutrition business has operations in 37 countries and does business with more than 100, he notes.
The Cuban people, who have seen many challenges in the last 54 years, are motivated and creative, he says. On his visit, he was impressed with their “industriousness and their ability to make opportunities out of challenges.”
CUBAN FARMERS want to learn about how to improve productivity in the dairy business, for example. They want good nutrition for their livestock to become more profitable. This is something Cargill could help with. At the same time, the company can learn more about how the climate and conditions impact animals in Cuba to optimize their products and services for other countries with tropical climates.
Other divisions of Cargill see an opportunity, including Black River Assets Management, which focuses on investments in land and other business, he notes.
However, an aspect of the current sanctions requiring all transactions to be paid up front limits opportunities. It is difficult when financing can’t be used to invest in big projects.
“The requirement for pre-paying is prohibitive and hurts potential business,” Loder notes.
He will soon meet with his Cargill colleagues to take a deeper look at the opportunities. Cargill supports lifting the embargo in Cuba.
“WE WANT to provide high quality, safe, affordable food around the world and Cuba is no exception,” Loder explains. “I think the trip we took gave us a sneak peak into what the opportunity is.”
Duane Dahlman, ISG marketing committee chairman and a rural Marengo soybean farmer who has also visited Cuba, likewise sees strong potential.
“We’ve been to Cuba, we’ve met with customers and we’ve heard from the Cuban people,” he says. “All of this gives us the necessary perspective and contacts to capitalize on eased trade restrictions.”
There is still much work to be done, politically, financially and in research.
While there are broad agricultural opportunities, Illinois Director of Agriculture Philip Nelson says it is important to think about livestock health, for example. There are a number of protocols that must be in place for herd safety and food safety in the U.S. before agriculture trade from Cuba could be put in place.
“It’s a market waiting for us if we can get the protocols right,” Nelson says.
Phyllis Coulter, Iowa Farmer Today