US-Cuba food trade survives political hurdles

HAVANA – Cuba expects to sign deals worth US$150 million with American food producers at talks that started yesterday and which point to sustained US interest in the Cuban market despite political hurdles.

Uncertainty over the fate of ailing Cuban leader Fidel Castro caused a “hiccup,” trade consultant Kirby Jones said, but business has continued seamlessly under the caretaker government of his brother Raul Castro, and is picking up. One US farm state delegation after another has gone to Havana this year to pitch sales of wheat, corn, beans, peas, lentils, chicken and other products needed by communist Cuba to feed its people.The governors of Nebraska and Idaho visited Havana and Delaware sent its first trade mission eyeing a new market.Last week, North Dakota won agreements to supply seed potatoes and red spring wheat.A delegation from Alabama arrived on Friday.US sales to Cuba are allowed on a cash-only basis under an exception to the embargo enforced against Castro’s leftist government since 1962.Despite the hostility between Washington and Havana, exports have totalled US$1,55 billion since 2001.But sales fell 10 per cent in 2005 to US$350 million, and dipped further last year to US$340 million, a decline blamed on a 2005 decision by the Bush administration to require Cuba to pay before its foods shipments can leave US ports.Pedro Alvarez, head of Cuba’s food import agency Alimport, is confident that sales will grow this year.He said 250 agribusiness executives, food exporters and farm group leaders will meet in Havana for three days to negotiate new contracts.”We expect to spend more than US$500 million on US products this year,” Alvarez said, using Cuban figures that include shipping, insurance and financial costs.”That could double in two or three years if US restrictions are lifted,” he said.”This trade is very difficult.It is only one-way and subject to so many obstacles.”Under the embargo, ships that go to Cuba cannot enter a US port for six months, which pushes up Cuban freight costs.The lack of direct banking services means Cuba has to obtain letters of credit in a third country, increasing transaction costs, Alvarez said.Product and travel licenses required by US authorities further complicate business with Cuba.The restrictions on trade with Cuba are being scrutinised in Washington by the US International Trade Commission at the request of the Senate Finance Committee.The commission will issue its study by the end of June.Nampa-ReutersOne US farm state delegation after another has gone to Havana this year to pitch sales of wheat, corn, beans, peas, lentils, chicken and other products needed by communist Cuba to feed its people.The governors of Nebraska and Idaho visited Havana and Delaware sent its first trade mission eyeing a new market.Last week, North Dakota won agreements to supply seed potatoes and red spring wheat.A delegation from Alabama arrived on Friday.US sales to Cuba are allowed on a cash-only basis under an exception to the embargo enforced against Castro’s leftist government since 1962.Despite the hostility between Washington and Havana, exports have totalled US$1,55 billion since 2001.But sales fell 10 per cent in 2005 to US$350 million, and dipped further last year to US$340 million, a decline blamed on a 2005 decision by the Bush administration to require Cuba to pay before its foods shipments can leave US ports.Pedro Alvarez, head of Cuba’s food import agency Alimport, is confident that sales will grow this year.He said 250 agribusiness executives, food exporters and farm group leaders will meet in Havana for three days to negotiate new contracts.”We expect to spend more than US$500 million on US products this year,” Alvarez said, using Cuban figures that include shipping, insurance and financial costs.”That could double in two or three years if US restrictions are lifted,” he said.”This trade is very difficult.It is only one-way and subject to so many obstacles.”Under the embargo, ships that go to Cuba cannot enter a US port for six months, which pushes up Cuban freight costs.The lack of direct banking services means Cuba has to obtain letters of credit in a third country, increasing transaction costs, Alvarez said.Product and travel licenses required by US authorities further complicate business with Cuba.The restrictions on trade with Cuba are being scrutinised in Washington by the US International Trade Commission at the request of the Senate Finance Committee.The commission will issue its study by the end of June.Nampa-Reuters