See related story (Farmers to push Congress to end Cuban embargo) at http://farmworldonline.com/News/NewsArticle.asp?newsid=18243
By STAN MADDUX Indiana Correspondent
WASHINGTON D.C. — Opening trade with Cuba is producing mixed opinions on the potential impact for U.S. farmers especially as potential regulations for doing business with the country are still not publicly known. The speculation ranges from optimism to uncertainty on whether any impact will be felt by American growers. The federal government has revealed trade with Cuba will be allowed in the areas of telecommunications, financial services, building materials and equipment for small farms, such as tractors and threshers. No guarantees have been made on whether more food grown and raised on U.S. farms will be made available for sale to Cuba, but many in the agricultural community expect the door to open at least somewhat to farmers. A number of groups have joined the U.S. Agriculture Coalition for Cuba. J. Scott Maberry, an international trade partner in the Government Contracts, Investigations and Trade Practices Group division of the Washington D.C.-based law firm SheppardMullin, is not willing to make any predictions. “It really is going to depend on the regulations,” he said. Some commodities such as food can already be sold to Cuba but under the existing rules, sellers must be paid before their product leaves the port, often a deal-breaker with a country that has a weak economy and not much cash. Under the slightly more liberal new rules, sellers can begin shipping their product before demanding payment and the kinds of goods that can be traded between the two countries will be expanded – but how much won’t be known until the regulations are revealed. Maberry believes at least some of the regulations will be disclosed no later than February. “I don’t know if produce will be among them,” he said. He also said trade with Cuba might be more significant from a symbolic standpoint, given the length of time the United States has maintained an embargo on exports from the political strife between the nations decades ago. Overall, the potential financial benefit could be limited except for producers of the products already given permission to trade. “I think it’s exciting if you’re interested in Cuba or if you’re in one of those industries specifically targeted, but I don’t think it’s going to be a monumental change to the U.S. economy, certainly,” said Maberry. Karl Setzer, Iowa Maxyield Cooperative market analyst on grains and Farm World columnist, also believes the impact of trade between the two countries on farmers will be minimal. He said the market of 11 million people in Cuba is small and the country being poor further limits its purchase power. And, he doesn’t foresee much of a demand to import farm products when Cuba already receives large amounts of donated food from humanitarian aid efforts. “They’re not what I consider a big enough importer for corn and soybeans and such. It’s not going to be a huge market maker or a huge new market for the United States as far as I can see,” explained Setzer. Long-term, he said reestablishing diplomatic relations with Cuba could open the country back up to tourism, something he believes could have the biggest economic gains. Tourists would increase demand for goods and, by stimulating the economy, increase the country’s ability to buy imports. “That would be the only thing in my opinion that would really make a difference with our exports down there. As far as straight-up buying corn and soybeans every week, I don’t see that happening,” said Setzer. Building materials is one area he believes trade with Cuba could have more of a benefit to exporters in the United States, especially if there’s a major updating of the facilities in the country once under the control of former President Fidel Castro. Steve Mercer, vice president of communications for U.S. Wheat Associates out of Arlington, Va., is more optimistic. He said the demand for wheat in developing countries is going up significantly each year and if wheat is opened up for trade with Cuba, that would drive up worldwide demand even further, as well as prices for U.S. farmers. “It’s like a ‘rising tide lifts all boats’ situation,” said Mercer, who feels even though the price would go up in the United States, the cost of goods on store shelves in Cuba would go down. Cuba right now gets much of its wheat from more distant places like Canada and Europe because of the U.S. embargo. The cost of transporting wheat is much higher than it would be if the wheat came from the United States, though, meaning lower retail prices for the variety of foods made with wheat. “It just makes a lot of sense, and it’s a potential significant impact,” Mercer said.
See related story (Farmers to push Congress to end Cuban embargo) at http://farmworldonline.com/News/NewsArticle.asp?newsid=18243
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