Normalization of U.S.-Cuba relations, announced by President Obama, will include easier terms for selling U.S. food and agricultural equipment to the island nation, long viewed by farm groups as a natural and nearby market. A White House official called normalization the most significant change in Cuba policy in half a century. A trade embargo has been in place for decades.
There has been limited agricultural trade since 2001. Cuba bought nearly $350 million of U.S. farm exports last year, mostly frozen chicken, corn, soybeans and soymeal, says the U.S.-Cuba Trade and Economic Council, which monitors bi-national trade.
Two steps will be key for boosting farm exports. One will be revision of a Treasury Department regulation that requires payment in cash before ships leave U.S. harbors and the other will be permission for U.S. banks to open correspondent accounts with Cuban banks. The “cash in advance” rule will become “cash before transfer of title” at Cuban ports, said the White House, and the direct relations with Cuban banks will speed transactions. At present, payments must be routed through third-party banks, which takes time and adds to costs.
As part of steps to encourage growth of Cuba’s private sector, sales will be allowed of agricultural equipment for small farmers, said the White House.
Farm groups cheered the announcement. The American Farm Bureau Federation, for example, said improved relations “will expand access to a market of 11 million customers for U.S. agriculture.” Cuba was once the largest market for U.S. rice exports and could become a major customer again, said USA Rice Federation. The National Corn Growers Association said removal of regulatory and financial barriers wold boost U.S. competitiveness. The American Soybean Association saw the opportunity to sell U.S. soy products from cooking oil to livestock feed in Cuba.
The Incoming chairman of the House Agriculture Committee, Republican Mike Conaway of Texas, said trade embargo on Cuba was undermined by “a poorly negotiated deal” that will not bring democracy to Cuba. The National Farmers Union said the embargo “has made no sense for a long time.”
Conaway’s dour view was a sign of the acrimony felt over Cuban policy.
“(W)hile chicken and rice exports may take off, don’t expect shiny new U.S.-made tractors and lumber to flood Havana anytime soon,” says Politico, citing analysts and industry sources who say there are many barriers still in place. “And, the new measures only chip away at the sweeping embargo that has kept U.S.-Cuban trade flows at a minimum for more than five decades, trade watchers say.”