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House bill will ease ag barriers to Cuba

By ANN HINCH
Assistant Editor

WASHINGTON, D.C. — A bill introduced into the U.S. House of Representatives would lift ag trade financing and travel restrictions with Cuba would wedge further open a nearby market and benefit American farmers, according to its backers.

On Feb. 23, House Ag Committee Chair Collin Peterson (D-Minn.) introduced House Resolution 4645. Its text is surprisingly brief, with two major aims: easing restrictions on how Cuba can pay for U.S. agricultural imports, and lifting barriers on travel for U.S. citizens and other permanent residents to the country southeast of Florida.
“It doesn’t work,” said Rep. Leonard Boswell (D-Iowa), one of 38 cosponsors supporting H.R. 4645, of existing restrictions on ag trade. “It’s made it more expensive for the people of Cuba to get what they need, and it’s denied American producers a market.”

“It” is part of the economic embargo the United States put into place against Cuba in 1962 and has upheld since. This bill – also known as the Peterson/Moran bill, for Rep. Jerry Moran (R-Kan.) – would not end that embargo; it only addresses ag trade and general travel to Cuba.

Right now, Cuba must pay “cash in advance” for U.S. ag goods, but cannot do business with U.S. banks – which means the country must obtain credit through a third-party foreign bank, which then pays the American supplier. Cuba is also the only country required to pay before goods leave the U.S., rather than being able to do so at the time of delivery.

“The things we had to do to get (goods) to Miami, and then to get (to Cuba) … it was a lot of hoops,” Boswell explained.

According to a statement from Peterson, H.R. 4645 would allow Cuba to make direct payment transfers to U.S. banks for ag products. He said it would also allow Americans to travel to Cuba without “bureaucratic red tape,” the better to negotiate specific ag trade contracts – though travel would not be limited to ag purposes.
What’s more, allowing Cuba to wire to American banks directly would eliminate fees associated with using a third-party bank, said Rep. Timothy Johnson (R-Ill.) – fees which Boswell said he heard adds about 5 percent to Cuba’s bill.

“I don’t think it’s a party issue,” Boswell said of the proposed bill. “I think it’s common sense.”

Johnson also acknowledged “broad bipartisan support” for the bill. “This is good for American farmers. It’s good for the Cuban people,” he said in a statement. “This is an unexplored market right on our doorstep that only arbitrary bureaucratic roadblocks have prevented us from accessing.”

A June 2009 report from the U.S. International Trade Commission (ITC) shows that while the U.S. is still Cuba’s single biggest supplier of ag goods, as of two years ago it’s still only 38 percent of food and animal feed the country imports. What’s more, since 2003, Brazil has been gaining ground steadily each year as a viable competitor; in 2008, it sold nearly half as many ag goods to Cuba as did the U.S.

In 2008, the U.S. exported $708 million to Cuba in ag products. Corn made up the greatest share, almost 28 percent, with wheat and poultry coming in second and third, respectively, at more than 19 percent each. Other goods included animal feed, soybeans, fats and oils and, in much lesser quantities, pork, milk powder, rice, beef and processed foods.

Further, the ITC estimated if financing and travel restrictions not been in place for 2008, the U.S. might have captured a much higher percentage of Cuba’s $1.8 billion ag import market – to the tune of as much as almost $480 million more.

The bill has the backing of many U.S. ag groups, including the North American Millers Assoc., American Farm Bureau, American Soybean Assoc., National Corn Growers Assoc., National Assoc. of Wheat Growers, National Pork Producers Council, U.S. Dairy Export Council and the National Farmers Union, to name but a few.
(For the record, the ITC report notes that such groups are prohibited from using industry-generated funds and USDA Market Access Program money for market research and promotion activities in Cuba. The proposed legislation does not address this.)
This isn’t the first time such a proposal has been put forth, but as for why it’s come up now, Boswell offers this observation: “We’ve got a deficit, we need to do the best we can with available markets – and here’s one in our backyard.”

3/3/2010