U.S. Ag Industry Hindered by Cuban Trade Relations

Updating U.S.-Cuba trade relations will benefit American farmers and ranchers and the country as a whole. This is the stance the American Farm Bureau Federation (AFBF) took in a recent post on the issue.

“The Farm Bureau supports normalizing access to trade and travel with Cuba,” said the AFBF. “Current financing restrictions make it difficult for U.S. farmers and ranchers to compete when our foreign competitors offer generous credit terms.”

This is evidenced by a decrease in agricultural exports to the island nation over the last decade. Currently, bills in the U.S. House and Senate are aimed at modifying the Trade Sanctions Reform and Export Act of 2000. H.R. 525, also known as the Cuba Agricultural Exports Act, was introduced in January to amend the prohibition on U.S. assistance and financing for certain exports to Cuba set forth in the 2000 legislation, according to the new bill.

“United States agricultural exporters are still not permitted to extend credit to Cuban buyers, a key disadvantage relative to other exporting countries,” said the bill. U.S. firms are “precluded from offering credit … resulting in declining United States agricultural exports to Cuba.” The U.S. slipped to the third-largest exporter of agricultural goods to Cuba in 2014.

Cuba has not imported U.S. wheat since 2011 and has not purchased U.S. rice since 2008. Cuba is instead going to Canada, Brazil and the European Union among other places for these products. “The added costs of using third-party banks and requiring cash-only transactions make the U.S. less competitive in export sales,” said the Farm Bureau. Cuba imports roughly $2 billion in agricultural products, including nearly 80% of its food. The U.S. accounts for only $150 million of that total.

"American farmers can sell to Cuba, but with one hand tied behind their backs," said Engage Cuba President James Williams in a press release. “This commonsense legislation simply lets them compete. Removing arbitrary financing restrictions on selling to Cuba could significantly increase U.S. agricultural exports, create jobs across the country and provide the Cuban people with high-quality American food.”

“As a cash-poor country, U.S. agricultural exports to Cuba have declined every year since 2009—in terms of dollar amount, market share and in the variety of products shipped,” said the release from Engage Cuba, which is an organization of private companies dedicated to improving trade relations with Cuba.

The current law requires cash payments for products before they leave the U.S. “Lifting the ban would allow private banks and companies to offer credit for the sale of U.S. agricultural commodities to Cuba,” said Sen. John Boozman of Arkansas in a press release. “This small step would help level the playing field for American farmers and exporters while simultaneously exposing Cubans to American ideals, values and products. This bill is a win-win for American farmers and the Cuban people.”