Ben Scholz raises wheat in Northeast Texas, near Wylie, and serves as president of the Texas Wheat Producers Association. He’s had several good production years over the last four or five seasons—This one was off a bit because of late rain. He’s seen prices reach record highs and back off just as quickly and settle in at a more tenuous profitability level in the last two years.
He, like most Southwest wheat farmers, would like to see a bit more consistency in wheat and other farm commodity prices.
Part of the solution to that dilemma could be next door, Scholz says.
“Cuba is a $1.7 billion a year importer of 80 percent of its food,” he said after visiting Cuba earlier this year with a Texas Trade Mission representing 30 food and farm organizations through the newly created U.S. Agriculture Coalition for Cuba.
“Cuba is a 30-million-bushel annual wheat market,” Scholz said. “That’s one-third of the Texas wheat crop.” The U.S. maintains an 80-percent market share in other Caribbean markets, so trade with Cuba could offer similar opportunities. “Export potential could be $450 million annually.”
One of several goals for the Texas Trade Mission was to build relationships with Cuban importers.
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“The United States has a competitive advantage because of proximity to Cuba,” Scholz said. Shipping costs would be considerably less than from other Central or South American exporters.
And Cuba needs the commodities. “Cuba once exported sugar, tobacco and citrus to the U.S. Today the island’s agricultural production has fallen drastically, resulting in high food costs.” Scholz said lack of infrastructure and old, worn-out farm equipment hinder agricultural production. Members of the trade mission saw farms and industries and inefficiency. He said most of the tractors are old Russian brands that the drivers somehow keep running.
Producers now have market options that were not available until 2006, when Raul Castro launched reforms for long-term loans of fallow land to private farmers. They are now allowed to sell any production over their quota on the private market.
“We saw a lot of roadside stands in rural areas,” Scholz said, “as well as inner city farmers’ markets.”
Cuban farm cooperatives may now sell as much as 30 percent of the crop on the private market. The rest goes to the state for 30 percent to 50 percent less than they get at those urban farmers’ markets.
Scholz said many Cubans are idle most of the time with an average work day of three hours. Average salary is $20 a month.
Other recent Cuban reforms allow foreign investment and privatization of restaurants. “Several native Cubans are now operating their own restaurants,” Scholz said. Two new hotels recently built by a Spanish investment company support tourism. And a special Port of Mariel development zone created by a Singapore company for deep-water shipping could establish Cuba as a distribution hub after the Panama Canal expansion is complete. “But Cuba will retain ownership of the land that is developed.”
Opportunities for U.S. farmers exist, Scholz said. And U.S. agriculture already has a toe in the door, exporting $300 million of food to Cuba annually. That includes frozen chicken and soybeans. “Our goal is to capitalize on potential market growth,” Scholz said
But barriers and restrictions pose significant challenges to increased trade.
“The Cuban government is currently unable to offer reciprocal trade. Their dream is to export things like seafood, tobacco and honey to the U.S.
“Also important is the U.S. concern that increasing business ties could actually help the Cuban military rather than the Cuban citizens.”
Lingering U.S. restrictions make trade cumbersome. “Current financial restrictions increase costs by 15 percent to 20 percent,” Scholz explained. “Those restrictions require payment from third party banks and cash in advance of shipment.”
He added that increasing trade also offers an opportunity to “make a positive impact on human rights” through the interactions members of the trade mission have with Cuban officials.
“This is still a country with arbitrary arrest, harsh prison conditions, restrictions on free speech and Internet access, and limited academic freedoms.” He said some changes in communications are occurring.
With reforms in Cuba, and the U.S. government working to ease some of the trade and travel restrictions that have been in place since the early 1960s, Texas and other U.S. farmers may soon see the beginning of a mutually beneficial relationship.