What the US-Cuban Policy Changes Mean for Food?

The Lempert Report
December 24, 2014

An opportunity for U.S. farmers and ranchers to do business in Cuba

Last week's historic announcement by President Obama to restore diplomatic relations between Cuba and the US represents a dramatic shift in US-Cuba policy and the end of 50 years of acrimony. In a press conference, Obama said “We will end an outdated approach that for decades has failed to advance our interests, and instead we will begin to normalize relations between our two countries.”.

 Food is one area that should see significant change from this new relationship. Part of Obama's announcement was for the "expanded sales and exports of certain goods and services from the U.S. to Cuba." That includes agricultural products, like rice and beans and butter. While U.S. farmers have been permitted to sell corn and wheat to Cuba in recent years, it has been shrouded in red tape and for farmers the ability to secure trade financing was limited.  For example, agricultural producers who wantto sell to Cuba have to get cash upfront from the Cuban government before shipping, and the money exchange must be handled through a third-party bank. Such complications have essentially handed U.S. business to competitors in countries like Brazil and elsewhere. Going forward financial restrictions will be lifted for food products. 

Agriculture Secretary Tom Vilsack, responded to the news by saying - "Today's announcement expands opportunity for U.S. farmers and ranchers to do business in Cuba. It removes technical barriers between U.S. and Cuban companies and creates a more efficient, less burdensome opportunity for Cuba to buy U.S. agricultural products. It also makes those products far more price competitive, which will expand choices for Cuban shoppers at the grocery store and create a new customer base for America's farmers."

Others are also excited about the opportunities, Bill Thoreson, president of the U.S. Dry Bean Council told the Associated Press; with dry beans, dry peas, lentils and potatoes being such big parts of the Cuban diet, it creates more opportunities for farmers in colder states like North Dakota, though they'll still have to compete with cheaper Chinese beans. He said; "If we have normalized trade relations with them and are able to do away with some of the banking regulations, I believe there's some real potential to do business with Cuba," 

And then there's rice. According to the USA Rice Federation,  producers in southern states and California are hoping to resume exports to Cuba for the first time since 2008.  But what about the US importing from Cuba? And what about sugar? Pre-embargo, Cuba was a big exporter of goods like sugar and citrus fruits like grapefruit.   Idaho Farm Bureau spokesperson John Thompson told the Associated Press, he still sees most food benefits will be for Cuba not the U.S, "As far as a possible trade with Cuba goes, they would have a lot more to gain from our products than we would from theirs," Thompson said. "As far as sugar goes, I don't expect there will be a lot to gain from us importing sugar, here."

Most Cubans depend on monthly rations (limited amounts of deeply subsidized food) of rice, beans, coffee and a few other staples And for the wealthier citizens there's an active black market for more gourmet items like blue cheese and smoked salmon.   Last week's announcement will the beginning of big changes for the Cuban food supply and should benefit US Agriculture greatly.