Benefits of trade with Cuba
As the push to lift the U.S. economic embargo against Cuba gains renewed attention, many San Joaquin Valley farm industries stand to benefit from easing trade restrictions with the communist country.
Agriculture leaders and farmers say that while Cuba is a relatively small country in population (11.2 million people), it has a major appetite for imported food. Cuba imports about 80% of its food, with much of it coming from countries other than the United States.
Experts say that Valley farmers — including those who are world leaders in producing raisins, grapes and tree nuts — are in a good position to take advantage of an open-door trade policy with Cuba.
“If they are going to buy almonds, it is going to come from us,” said Daniel Sumner, director of the University of California Agricultural Issues Center at UC Davis. “The whole idea here is that the more open markets there are, the better.”
California agriculture’s excitement over exporting to Cuba was fueled last month by President Barack Obama’s announcement to make it easier to travel and trade with Cuba. Although the U.S. has been able to export food products to Cuba since 2000, it has come with restrictions that many companies say put the U.S. at a competitive disadvantage. As a result, U.S. exports to Cuba were just $253 million for the first 10 months of 2014.
That could begin to change under the president’s new rules and a lobbying effort by a coalition of 25 food companies and farm groups that is calling for Congress to end the embargo. Members of the U.S. Agriculture Coalition for Cuba point to a 2010 study by Texas A&M University that estimated Cuba has the potential to spend $365 million in additional imports.
How successful the group will be remains to be seen, and some congressional leaders have already said that Cuba is not on their immediate agenda. Still, Valley agriculture leaders say the president’s actions are an important step towards increasing trade.
Under the previous policy, Cuba was required to pay cash upfront for any food products bought from the U.S. Typically, a bank in a different country was used for the transaction. Now, the funds can be wired to the seller’s account.
“It will make sales easier, more efficient and increase our competitiveness,” said C. Parr Rosson III, agriculture economics professor at Texas A&M. “But the impact won’t be felt right away. The average Cuban consumer is still worried about being able to buy basic staple items.”
In the short run, California and Valley farmers may find an opportunity in supplying Cuba’s burgeoning tourism industry. Rosson said hotels and restaurants that cater to the tourist trade could be increasing their purchases of fresh fruits and vegetables. Cuba also has a need for food ingredients, including dry fruit and nuts for baked goods.
Valley raisin and grape industry representatives are familiar with Cuba, having journeyed to the country in 2002 as part of a trade show. The representatives met with buyers and even had a sitdown meeting with then-President Fidel Castro.
After the trip, California shipped about 100 tons of raisins to Cuba, but that has since dwindled to zero. Jane Asmar, vice president of sales for National Raisin Company in Fowler, said the country has potential as an export market.
“I think this could be a great opportunity,” said Asmar. “But we will also have to work at building that market.”
The raisin industry, like several others in the Valley, has increasingly looked to foreign markets to grow its sales. Last year, raisin growers exported more than 30% of their crop, and about 70% of California almonds were exported. Grape industry officials said that about 40% of the crop was sold to foreign buyers and they are optimistic that there is a demand for California grapes in Cuba.
The industry hasn’t shipped any grapes to Cuba since 2009 and 2010. But Kathleen Nave, president of the California Table Grape Commission in Fresno, is hopeful the industry can export about 200,000 boxes to the country within the next few years. That may seem small, given that the industry exported 48 million boxes in 2013, but Nave said it is a good start.
“Our experience tells us that in markets like Cuba, once the economy improves and people have more disposable income, they will become buyers of California grapes,” Nave said. “And that’s why we continue to have a bright future for table grapes.”
Tree fruit grower, packer and shipper Harold McClarty is doing his homework on Cuba. McClarty’s company, HMC Farms in Kingsburg, is a big believer in exports, shipping about 35% of its total supply of fruit.
“We have shipped fruit to South America and Mexico and it seems that they eat more fresh fruit than we do in the United States,” McClarty said. “We are waiting to see what develops in Cuba, but as far as our business goes, the more markets we have available, the more legs we add to the stool that supports us.”