New Cuba policy may cut into wheat, corn exports

19.06.2017

A new Cuba trade policy announced June 16 by U.S. President Donald Trump will make it more difficult for U.S. growers to sell corn, wheat and other grains to the island country, but executives of the U.S. Grains Council, the U.S. Wheat Associates and the National Association of Wheat Growers are hopeful the market eventually will become more open.

The new policy includes measures designed to restrict the flow of money to elements of the Cuban regime — the military, intelligence and security services. The policy is designed to prohibit direct financial transactions with businesses owned by those elements. President Trump’s policy comes after President Barack Obama reached out to Cuba to restore diplomatic ties.

“This is a political process, and that means there are going to be steps forward and back,” said Alan Tracy, president of USW. “Our organizations support measures that move toward ending the embargo. Cuba is a significant wheat-importing nation, and our farmers can supply high-quality wheat at a lower cost than Cuba pays now to import European and Canadian wheat. Wheat is an important food grain that should be above politics, but the embargo will likely have to end before wheat farmers can help meet the increasing demand for agricultural products to help feed the Cuban people.”

David Schemm, a wheat farmer from Sharon Springs, Kansas, U.S., and president of the NAWG, added, “NAWG supports the effort to end the embargo on Cuba because it is what is best for our farmers, and farmers like me know that agricultural trade is a proven way to foster stronger and more productive ties with folks who live outside the United States.”

Cuba purchased more than 250,000 tonnes (9.8 million bushels) of corn from the United States, about 30% of Cuba’s total demand, in the first eight months of the marketing year, said Tom Sleight, president of the USGC.

“The USGC has worked in Cuba for nearly two decades to help capture grain demand and develop its livestock industry within the confines of U.S. policy,” Sleight said. “While the announcement today will make our efforts in Cuba more difficult — and almost certainly cost U.S. corn farmers sales in the short term — we have every intention of continuing our work there to build long-term, mutually beneficial trade.”

Cuba historically has been a 900,000-tonne (35.4 million-bushel) corn market, he said. Based on recent export sales, Cuba would be the 11th largest customer for the United States if U.S. corn growers could capture that demand. Free flow of grain to Cuba also could help U.S. growers capture sales to the Dominican Republic and Puerto Rico.

“In the past two years, our work in Cuba and with Cuban grain buyers has shown us that the only hindrance to progress there is U.S. policy,” Sleight said. “While we are concerned about the announcement today, we are steadfast in our support of the market and our Cuban customers.”

Wesley Spurlock, president of the National Corn Growers Association (NCGA), said he is concerned about the competition getting an upper hand with the new trade policy.

“Cuba should be an easy market for U.S. corn farmers,” Spurlock said. “Instead, that market has gone to our competitors — costing us an estimated $125 million in lost opportunity each year. If trade with Cuba were normalized, it would represent our 11th largest market for corn. Instead, we have just 11% market share in a country only 90 miles from our border. At a time when the farm economy is struggling, we ask our leaders in Washington not to close doors on market opportunities for American agriculture.”


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