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View Winners → A Surefire Way to Boost Farm Exports: Sell to Cuba
Arcadia Weekly Sep 10, 2009
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U.S. farm income will drop 38 percent this year due to global economic woes and because “demand for exports has tailed off, with few options available to expand marketing elsewhere,” according to a Department of Agriculture report issued last month.
Actually, there’s a small but surefire option to boost American farm exports that would not cost taxpayers a single dime: open up U.S. policy toward Cuba.
Congress made an exception to the Cuba embargo in 2000, allowing sales of U.S. agricultural products to the communist island. Since 2002, Cuba has spent an average of $373 million per year on American grain, poultry, and cattle, products for Cuban grocery stores, and even telephone poles and newsprint.
But our exports are hampered by a tangle of red tape that the U.S. government imposes on this small but promising market.
American shippers aren’t allowed to move their product from a U.S. port until Cuba has paid for the cargo.
Cuba isn’t allowed to wire money to U.S. banks — payments have to be sent through third countries. This makes European bankers happy as they collect fees for handling the transactions and changing money from one currency to another.
Cuban buyers and phytosanitary inspectors have rarely been given visas to enter the United States to meet our farmers and vendors and to see our products.
And American companies are not permitted to extend credit to Cuba. Given Cuba’s debt troubles and payment record, it is questionable how much private credit would be extended, and it would be wrong to risk U.S. taxpayer dollars in Cuba through loans or export insurance. But by blocking American lenders from risking their own money, Washington adds another impediment to U.S. exports.
Cuba is a natural market for American agriculture, with advantages in cost, quality, and convenience. Cuban buyers recognize that — but when they add up all the conditions we impose, they see delay, inconvenience, difficult access, and a few percentage points of cost that are unnecessarily added to their purchases.
Reasonably enough, Cubans also ask why we have a one-way only trade policy that doesn’t allow Cuba to sell anything here in the United States.
These are all policies that, to date, President Obama has preserved – even though he says he wants to “recast” our relations with Havana.
Congressman Jerry Moran (R-Kansas) has introduced a common-sense bill that would increase farm exports by normalizing the rules governing transactions.
Congressman William Delahunt (D-Massachusetts) has introduced a bill that would also have an important impact on U.S. farm exports. His bill would end all restrictions on American travel to Cuba.
American travelers — religious and civic groups, sports teams, universities, and even tourists — will create a flow of information and ideas between our countries and correct a mistaken foreign policy that pretends to extend American influence while building a wall between our peoples. An open travel policy would affect agriculture too: the revenues from American travelers will help Cuba’s strapped economy and lead to increased purchases of our farm products.
Together, these bills would make the United States a more reliable vendor and Cuba a stronger customer.
Cuba spent $1.8 billion on agricultural imports last year — more than three times the amount it spent in 2000.
About one third of those imports come from America. The U.S. International Trade Commission estimated last June that Cuba would buy one half to two thirds of its agricultural imports from the United States if we drop the cumbersome rules governing transactions with Cuba, end travel restrictions, and allow private credit.
Those steps won’t end the slump affecting American agriculture, but they are long overdue steps that will benefit American farmers, improve our foreign policy, and open doors to eleven million of our neighbors to the south.
President Obama and Congress should act this week as they return from Labor Day vacation.
Peters is vice president of the Lexington Institute in Arlington, Virginia, and writes the blog The Cuban Triangle.
By Philip Peters
