Opening trade with Cuba a priority for grain industry

12-Dec-2008 - Last updated on 12-Dec-2008 at 16:40 GMT

Related tags International trade Barack obama Us

Potential changes to US trade policy with Cuba once president-elect Barack Obama takes office would significantly boost grain markets, the USDA has said.

There has been speculation that Obama may lift a long-standing trade embargo with Cuba, and if trade were to normalize, the US has the potential to dominate this growing grain market, according to the United States Department of Agriculture Foreign Agricultural Service.

The embargo limits American firms from conducting business with Cuba, although a relaxation of this was agreed in 2000 allowing the sale of agricultural goods.

Currently the US share of the Cuban market for agricultural imports is between 25 and 30 percent of Cuba’s total agricultural imports, USDA figures show. Exports are mainly soybeans and soybean products, corn and corn products, wheat and wheat products, rice and poultry meat.

But Rebecca Bratter, director of policy at the US Wheat Associates (USW), said that opening trade with Cuba is a policy priority for USW and the entire US wheat industry in 2009.

She said: “US wheat market share in Cuba is still well below the average 80 percent in the rest of the Caribbean.

“Easing the embargo and the gradual removal of trade barriers between the US and Cuba should translate to significant upside sales for US wheat producers.”

She added that population, market size, historical ties, shared interests, and proximity make Cuba a natural and significant market for US wheat.

Presently, US-Cuba export regulations increase the transaction costs relative to the comparable costs incurred by other exporters. These higher costs can offset, in part, the shipping advantage that the US has being in such close geographic proximity to the Cuban market.

Exports

Cuba has also consistently ranked among the top ten export markets for US soybean oil, dry peas, lentils, dry beans, rice, powdered milk, and poultry meat.

The USW said that around 500,000 MT of US wheat per year is exported to Cuba under the Trade Sanctions and Export Enhancement Reform Act (TSRA).

Bratter said: “While President-Elect Obama stated his intention to lift the embargo as part of his campaign platform, the issue was conspicuously absent from the presidential debates and final days of the campaign and left doubt about the opportunity to change the US trade relationship with Cuba.

“However, the current consensus suggests the 111th Congress will take up the issue quickly after it is seated in January.”

Cuba imports around 60 percent of its food. However, this month there were strong signals that the country is about to embark on a GM crop program to reduce its dependence on food imports.

The USW promotes US wheat and provides comprehensive assistance to US wheat buyers, millers, wheat food processors and government officials around the world.