Gainesville, Florida
September 16, 2005Cuba’s
growing appetite for U.S. food exports is good news for American
agricultural producers, but an end to the current embargo on
imports from the island nation could mean both challenges and
opportunities for Florida agriculture, says a
University of Florida expert.
Though no changes in U.S.
policy toward Cuba are expected in the near future, the embargo
won’t be in place forever, said William Messina, an economic
analyst with UF’s Institute of Food and Agricultural Sciences,
or UF/IFAS.
“Resuming unrestricted trade
and commercial relations with Cuba will provide more
opportunities for U.S. agricultural exporters, but Florida
growers would face additional competition in markets for crops
such as citrus and fresh vegetables,” Messina said.
Cuba’s purchases of food and
agricultural products from U.S. firms have grown each year since
exporting began in 2001, he said. By 2004, annual sales had
increased to nearly $400 million, making Cuba the 25th-largest
export market for American food and agricultural products. Since
U.S. exports resumed, Cuba has purchased more than 280 products
from 37 states, with a total value of almost $1 billion.
“There has been a heavy
emphasis so far on grains and poultry meat. Cuba was the
third-largest export market for U.S. rice in 2004,” Messina
said. “But Cuba also has purchased snack foods, they've bought
wine and candy. They've even bought microwave popcorn and retail
packages of pet food.”
Further changes in U.S.-Cuba
trade policy also could create lucrative business opportunities
for U.S. agriculture in the form of joint ventures or other
contract arrangements between U.S. firms and Cuban farming
operations, he said.
Investments from other parts of
the world could provide better agricultural technology to help
improve Cuba’s agricultural output, but these investments are
unlikely as long as the U.S. embargo on Cuban imports stands,
Messina said.
“In the late 1980s, Cuba had
more acreage planted to tomatoes and peppers than Florida, but
because of low levels of technology and inefficiencies inherent
in its planned economic system, Cuba’s yields in these crops
were only about 20 percent of Florida’s,” he said.
“Nevertheless, Cuba remains a major potential producer of these
and other crops.
“With the proper investments,
it wouldn’t take long for Cuban growers to make dramatic strides
in increasing crop yields,” Messina said. “But the opportunities
for payoffs are limited without the ability to sell to the
United States. If the U.S. embargo were lifted, Cuba’s
agriculture industry could experience significant growth, in
which case investors could see big returns.”
Exports of U.S. food,
agricultural and medical products to Cuba are permitted by the
2000 Trade Sanctions Reform and Export Enhancement Act (TSRA),
which relaxed a trade embargo that had been in place since 1960,
he said. Earlier, the United States counted the Caribbean nation
one of its closest trading partners, purchasing nearly
three-fourths of Cuba’s exports and providing 70 percent of its
total imports.
Though the TSRA legislation
took effect in 2000, it was not until November 2001, when
Hurricane Michelle caused substantial damage to Cuban
agriculture, that the Cuban government began buying food from
the United States, Messina said.
The new trade policy has had a
positive impact on the U.S. chicken industry, said Bill Roenigk,
vice president of the National Chicken Council in Washington,
D.C. In the first seven months of 2005, Cuba was the industry’s
eighth-largest export market, purchasing 53,000 metric tons, an
increase of 40 percent over the same time period the previous
year.
“Cuba has indicated that it is
more efficient for them to import chicken than to produce it,
and they won’t try to provide their own,” Roenigk said. “We
expect to see modest growth in the Cuban market for U.S.
poultry, as Cuba’s domestic economy develops, and as their
tourism industry develops.”
In the meantime, the new law
allowing exports to Cuba represents a significant opportunity
for U.S. agricultural producers, Messina said. In fact, with
the TSRA requirement that Cuba’s purchases be made in cash,
there is no credit risk, making Cuba one of the most attractive
new markets in the world for U.S. agriculture.
“We are not trying to advocate
a policy position in regard to U.S. relations with Cuba,” said
Messina, who is part of a team of UF/IFAS agricultural
economists that has collaborated with scientists at the
University of Havana since 1994 to study the potential impacts
of renewed U.S.-Cuban trade.
“Our primary goal is to get
objective data on the agricultural and fisheries sectors in Cuba
into the hands of U.S. agribusiness firms, legislators, industry
associations and other interested parties so they can make
informed decisions about the opportunities and challenges a new
policy would present,” he said. |