Normalizing relations with Cuba a boon to Texas ag

Normalized relations to Cuba could be a boon to Texas agriculture.

President Obama’s announcement Wednesday that the United States will seek to normalize relations with Cuba could be a boon to Texas agriculture, says a Texas AgriLife economist.

Parr Rosson, professor and department head, Department of Agricultural Economics, says if the normalization is implemented “as planned,” Texas has the potential to facilitate agriculture and forestry product exports.

Significant aspects of the plan, he says, include easing monetary restraints on banks and on Cuban-Americans who routinely send money to Cuba.

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Business travelers to Cuba may no longer need to rely on cash for transactions but may use credit cards under the proposed changes. Rosson, who worked closely on Cuban trade issues prior to taking over as department head, says the ability to transact business without having to budget cash would be a huge advantage to U.S. businessmen.

Remittance change, he adds, is another significant factor. Currently, Cuban-Americans and others are limited to remittance of no more than $500 per quarter to persons in Cuba. Under the new program, that limit would increase to $2,000. “That’s huge,” he says. “Remittance is one of three big aspects of the Cuban economy, along with tourism and nickel.”

Easing banking restrictions also will spur trade, he says, and “facilitate exports. Now, U.S. banks can’t be directly involved in Cuban business transactions.” Cubans have to wire pesos to France where French banks convert them to dollars and transmit dollars to the U.S. banks. Rosson says the additional paperwork and time add as much as 10 percent to the cost of each transaction.

See more on Cuba trade.

Business delays

Other delays also thwart business. Instead of being able to complete a transaction as soon as all the documents are verified, as will be the case under new rules, Cubans must wait until they have goods in hand.

The banking restrictions, Rosson says, adds 15 percent to 25 percent to the cost of doing business.

“I hope these changes lead to substantially more sales to Cuba,” he adds. “We need it. Exports have been trailing off and these changes will make us more competitive. We have a location advantage. We lacked price advantage; this will improve that. Cubans are very sensitive to price.”

Texas has products to sell. Rosson says at one time Texas shipped significant amounts of frozen leg quarters, corn, wheat, soybeans and soy meal to Cuba. “We still export those products but also have value-added opportunities with beef, pork, condiments, and things like bottled water.”

Cuban farmers may also offer a viable market for used farm equipment.

Value-added products will help fill demands for Cuba’s tourist industry, mostly dependent on Canadians. Tourists at Cuba’s resorts expect quality products such as beef and wine, Rosson says.

Texas has another advantage. “Cubans like Texans,” he says. “They remember when Texas food products were available and in high demand, especially rice.”

Rosson says Wednesday’s announcement came as a surprise. “I had heard of some possible diplomatic attempts to free Alan Gross (an American contractor held in Cuba on espionage charges for some five years). The other issues were a surprise.”

Texas Extension has worked with state businesses for years through a Texas-Cuba Trade Alliance. “We had seminars on how to do business with Cuba,” Rosson says. “We were beginning to wonder if we were wasting our time.”

Much remains to be settled before real change occurs, he adds, but the process offers hope for re-establishing what was once a good market for Texas agriculture.

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