The Obama administration announced new rules, effective today, to expand travel and trade with Cuba, including sales of agricultural herbicides, insecticides and pesticides. The revisions do not change the requirement for Cuba to pay cash in advance for U.S. food and agricultural exports.
Restrictions were eased on payment and financing terms for other authorized exports and re-exports. The Commerce Department said its Bureau of Industry and Security “will generally approve license applications for exports and re-exports of certain agricultural items (such as agricultural commodities not eligible for a license exception; insecticides; pesticides; and herbicides).”
“From an agricultural standpoint, it doesn’t help much,” said John Kavulich of the U.S.-Cuba Trade and Economic Council, which tracks trade between the nations. There may be some sales of pesticides, he said, but Cuba relies on organic farming, which could be a profitable niche market for exports. As well, he said, there are hurdles to selling U.S. goods to private farmers in Cuba. “What the United States does is 50 percent of the equation.”
U.S. farm groups regard Cuba as a natural and nearby market for farm exports and have been at the forefront of the the push to improve trade relations. The island nation imports an estimated 80 percent of its food. Congress exempted food and agriculture exports in 2000 from the half-century-old economic embargo on Cuba, so long as Havana paid cash in advance. Sales peaked at $710 million in 2008 during a warming of relations, but they dropped to half that level in recent years, according to data compiled by the U.S.-Cuba Trade and Economic Council.
Through November, food and ag exports to Cuba for 2015 totaled $166 million, a 37-percent decline from sales at the same point in 2014, said the trade council. Frozen chicken and soymeal accounted for 70 percent of the 2015 exports. Herbicides and anti-sprouting products ranked third in dollar value, at $12.6 million, or 7.6 percent of overall sales. Cuba agreed to import 4,500 tonnes of frozen U.S. chicken meat worth $1 million during January, following a visit by Arkansas Gov. Asa Hutchinson.
When President Obama announced restoration of diplomatic relations with Cuba in December 2014, the administration modified the “cash in advance” rule for U.S. food and ag exports to mean payment before cargo was unloaded in Cuba. Previously, exporters had to receive payment before ships left U.S. ports. Under the normalization initiative, U.S. banks are allowed to have correspondent accounts at Cuban financial institutions, which speeds payment of purchases. Beforehand, payments were routed through third-nation banks, at additional cost. Credit and financing of U.S. exports to Cuba are banned.
At present, agricultural exports from Cuba are not allowed in the United States.