Export trade
Exports out of the Corpus Christi Port could include a lot of ag products with eased trade restrictions for Cuba.

Cuba trade hopes still linger

Several U.S. agricultural commodity organizations are hoping to see further easing of trade restrictions.

On January 20, bar any unforeseen development, president-elect Donald Trump will be sworn in as the 45th President of the United States, bringing with him a new administration, a new agenda and policies, and arguably a new direction for the nation. How that will play out for farmers and ranchers is probably one of the top things on the minds of agriculture industry leaders.

Plenty has been said and written about the potential for less government regulation in agriculture, the potential for trade challenges under Trump's rigid stand on trade equality, and ag-related issues like a new farm bill, the future agriculture risk coverage, and topics of price support.

But for a few, especially U.S. grain and pork producers, not enough has been said about the positive impact on agriculture more normal agricultural trade relations with Cuba would have if Congress and the Trump Administration would continue to move forward in repealing the 50-plus year embargo that has cost the agricultural sector billions of dollars over the last half century.

EFFORT TO EASE RESTRICTIONS

U.S. Rep. Rick Crawford, R-Ark., plans to reintroduce the Cuba Agricultural Export Act (formerly HB 3687) in an effort to ease restrictions and trade barriers preventing unrestricted free trade between U.S. and Cuban producers. The legislation is aimed at removing restrictions that bars farmers from extending credit to Cuban purchasers; specifically, the bill would modify the prohibition on U.S. assistance and financing for certain exports to Cuba under the Trade Sanctions Reform and Export Enhancement Act of 2000.

As it stands now, Cubans must provide cash in advance when they purchase U.S. agricultural products. Crawford’s legislation would allow credit to be extended, a change favored by most U.S. farm groups.

In a Jan. 2 report published in the Arkansas Democrat Gazette, Crawford indicated he is hopeful that barriers to agricultural sales to Cuba will be addressed early in 2017.

"But there’s plenty of uncertainty after the Nov. 8 presidential election and the Nov. 25 death of Fidel Castro, the 90-year-old former Cuban president. It’s unclear whether President-elect Donald Trump would be willing to support the bill," the report stated.

A spokesman for Rep. Crawford's Washington office said last week the bill will be introduced "on behalf of all producers of U.S. agriculture," but close to the heart of the Arkansas Congressman are the rice growers in his state.

BOON FOR RICE

Arkansas leads the U.S. in rice production, a segment of the industry that may stand to gain the most if the bill were approved by Congress and signed by soon-to-be President Trump.

But a great deal of doubt exists among many farm groups on whether Trump would sign off on the bill even if Congress sends it forward to the Oval Office. 

In November, Trump aides said the Cuban government must give greater freedom to its people and "something in return to the U.S.," if it wants to keep the new era of warmer relations with Washington alive. Reince Priebus, Trump’s incoming chief of staff, took it a step further when he said the president-elect would absolutely reverse Barack Obama’s stance on Cuba unless there was "some movement from Havana."

U.S. farm groups have argued that restricting agricultural trade with Cuba does little to penalize the Cuban government that now has developed successful agricultural trade relations with the European Union, China, Brazil and others.

THE ADVANTAGES TO U.S. PRODUCERS

According to USDA's Economic Research Service, before the Cuban Revolution, the United States and Cuba were major agricultural trading partners, a relationship that provided a positive impact to U.S. ag producers. During fiscal years (FY) 1956-58, for example, Cuba was the ninth leading destination for U.S. agricultural exports and the second leading supplier of U.S. agricultural imports. At the time, U.S. agricultural exports to Cuba averaged $139 million per year.

At today's prices, U.S. agricultural exports to Cuba during FY 1956-58 would amount to roughly $610 million annually. And over the last 50 years, consumption of food and imports has risen greatly.

The four leading exports to Cuba before the embargo included long-grain rice, wheat flour, pork and lard. For exports of U.S.-grown long grain rice alone, this represented as much as one-half of total U.S. production of long-grain rice, and nearly one-third of all rice exports.

While the U.S. still provides a number of food exports to Cuba under strict provisions of the current trade agreement, supporters say an easing of those provisions could provide a positive jump in the number of products and total sales of agricultural trade with Cuba.

USDA-ERS reports that Cuba’s current agricultural imports are concentrated in grains and animal products. In recent years, for example, the five leading agricultural imports in terms of value were wheat (13 percent), corn (12 percent), chicken meat (11 percent), nonfat dried milk (10 percent), and rice (10 percent).

U.S. farm groups by-and-large believe that if reintroduced legislation easing agricultural trade restrictions were passed by Congress and signed by the White House, U.S. producers could supply most, if not all, of these food commodities to Cuba at a lower price. In addition, the boost in U.S. food exports could help to energize the U.S. agricultural industry at a time when slumping prices and higher input costs have cast a shadow over the farm economy of North America.

TAGS: Crops Outlook
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