Cuba continues purchasing agricultural products from U.S.

Posted on Mon, Jan. 22, 2007

AGRICULTURE AND SHIPPING
Cuba continues purchasing agricultural products from U.S.

PROSPECTS: No matter what happens, Cuba will continue purchasing
agricultural products from the United States, although the amounts could
drop if Washington makes it more difficult to export.
BY JANE BUSSEY
jbussey@MiamiHerald.com

Just over five years ago, the 526-foot freighter Express, loaded with
500 tons of frozen chicken parts, sailed out of Gulfport, Miss., with
the first U.S. food exports bound for Cuba in almost 40 years.

The voyage of the Crowley Liner Services vessel packed with $300,000
worth of poultry products was a pioneering step in reopening
agricultural trade with Cuba.

Nearly $1.5 billion in exports later, diplomatic relations between Cuba
and the United States are still icy, but farm diplomacy is moving on its
own track as state trade officials, farmers, ranchers and food traders
flock to Cuba to sign deals with Cuba's food import firm Alimport.

Despite continuing U.S. Treasury restrictions on travel to Cuba and on
financing U.S. exports, evidence of agricultural trade with the United
States can be found across the island:

• Genetically improved cows -- sired by Florida Brangus bulls and Cuban
Zebu -- now graze in Cuban pastures. ''There's a new generation of
Cuban-American cows in Cuba,'' said John Parke Wright, managing director
of J.P. Wright & Co. in Naples, who has exported cattle to the island.

• North Dakota beans reach Cuban tables.

• Tens of thousands of Alabama tree trunks have become utility poles as
Cuba steps up a drive to improve its power infrastructure.

• Crowley now has weekly container service out of Fort Lauderdale to
Havana -- a stop on a Central American route.

Oakland, Calif.-based Crowley recently marked the fifth anniversary of
its first shipment to Cuba with a business dinner with Alimport
executives at Marina Hemingway just outside Havana.

But trade with Cuba is now so routine, the anniversary ''was almost like
a nonevent,'' said Brickman, Crowley's vice president of government
services.

The Cuba trade ''is pretty much a break-even operation,'' said Brickman,
who is based at Port Everglades. ``Cuba certainly has the potential to
be much more than it is. It is a question of trying to position
ourselves to take advantage of that.''

IMPORTING IN BULK

The Cuban government also hires barges and other vessels to carry bulk
imports: soy beans from Maryland, rice from Texas, dry beans from North
Dakota and so on.

After decades of barring food shipments to Cuba under the embargo, the
2000 Trade Sanctions Reform and Export Enhancement Act authorized the
sale of agricultural products to the island. Since then annual food and
agricultural product sales to Cuba have soared from a modest $4.3
million in 2001 to $350 million last year.

And there has been a steady stream of trade missions and business and
fact-finding trips by U.S. executives and politicians. In a slide
presentation to a Congressional delegation that visited in December,
Alimport said the country had made contact with more than 4,000
companies from 45 states, signed deals with 162 firms and received 815
shipments from the United States since 2001.

Among the most active in forging ties has been Alabama Agricultural
Commissioner Ron Sparks. ''Right after my election of 2002, I flew to
Washington to sit down with the [Cuban] Interests Section,'' Sparks
said, referring to the entity that takes the place of an embassy in the
absence of diplomatic relations between Cuba and the United States.

That meeting led to a trip to Havana, where Sparks laid the groundwork
for companies from his state to do business. ''I don't sit in on
negotiations,'' he said. ``I try to open doors and try to build
opportunities.''

Alabama's Cuban exports last year totaled more than $100 million, Sparks
said, adding that businesses just returned from Cuba with signed
contracts for 2007.

Still, there are some signs that trade with Cuba has leveled off or
could drop. Alimport has warned that uncertainty over Washington's
regulations caused it to order more than $300 million in planned imports
from the United States from other ''reliable foreign markets that also
extend credit.'' Alimport's President Pedro Alvarez has said, for
example, that Cuba is shopping in Vietnam for rice.

Some U.S. companies have yet to receive orders for 2007.

TIGHTER RULES

In 2004, the Treasury Department's Office of Foreign Assets Control
tightened up the payment rules, demanding that U.S. companies receive
cash before their shipments leave U.S. soil. Payments are made as
letters of credit, which have to be cleared through four banks -- a
Cuban bank, a European bank, the European bank's correspondent bank in
the United States and the exporter's bank.

A single error or change in paperwork -- say because a ship is delayed
-- means that all four banks must rewrite the letter of credit.

Kirby Jones, who represents a number of clients in Cuba through his
Washington-based company Alamar Associates, predicted that any new
attempts by Washington to complicate agricultural trade will steer more
orders to other countries at a time when U.S. interest in trading with
Cuba is growing.

''Every state is looking for export markets,'' said Jones, who founded
the U.S.-Cuba Trade Association in 2005 to promote trade with Cuba.
'Many people know about trade with Cuba and a lot of people don't. When
they find out, they say, `We'd like to get in on this action.' ''

Wright said food diplomacy still has room to grow. Cuba, he said, is set
to import 2,000 portions of Brahman bull semen from Texas, and he plans
to attend the March Agricultural Fair at the Boyeros Ranch outside Havana.

Despite current complications with Ag trade, he predicted: ``This storm
will pass. The island needs to eat.''

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