Digging into the Opportunities, Challenges for Coarse Grain Trade With Cuba

Financing restrictions are hindering increased grain trade cooperation between the U.S. and Cuba, but the desire on Cuba’s part to see its agriculture sector grow has given the Council a means to work with the country to build its industries.

In the months that have followed the Obama Administration’s announcement it would seek normalized trade relations with Cuba, the U.S. grain industry has been making moves to seize the opportunity for increased exports to the island nation. The Council strongly supports open trade and works in the Cuban market despite the embargo’s restrictions, assessing possibilities and offering trade support.

Cuba has purchased corn from the United States since the early 2000s, with market share varying widely from as high as 100 percent to just 15 percent last marketing year. The country has purchased distiller’s dried grains with solubles (DDGS), a byproduct of the ethanol manufacturing process that is used as high-protein animal feed, from the United States since 2005. If Cuba purchased all of its imported corn from the United States, it would be the 12th largest export market for the product.

Although there are significant opportunities in this market for U.S. coarse grains and co-products, current restrictions imposed by the U.S. government severely hinder Cuba’s trade prospects.

The primary issue standing in the way of increasing U.S. market share is financing restrictions. The long-time U.S. embargo on engagement with Cuba has limited the ability of Cubans to bring in U.S. dollars from tourism or exports. This and restrictions on how sales to Cuba can be financed have made increasing trade with the country very challenging.

And yet, while imports from the United States are stymied, the Cuban government wants its agriculture sector to grow. This has given the Council an opportunity to work with the Cuban people to build their industries and, at the same time, build demand for U.S. coarse grains and co-products. The Council has used this model all over the world, and it’s clear that this type of engagement could now also work in Cuba given the right conditions.

According to USGC assessments, Cuba’s broiler and egg production are both deeply underdeveloped. To this end, the Council is looking to engage the Cuban government and producers to help Cuba expand its livestock production so that it can meet the basic needs of its population.

Though farm leaders now have reason to be optimistic about an increased presence in Cuba, challenges remain. Politics surrounding the embargo have stood in the way of consistent imports or market development activities by the U.S. agriculture sector, creating an environment in which the United States’ competitors such as Brazil dominate the market. The Obama Administration’s announcements concerning Cuba, including the re-opening of the embassies in Havana and Washington, have taken steps to reduce restrictions, but Congress must take action to remove them for good.

The Council will continue to gather details about the changes in policy. It will also include Cuba in its market development plans for 2016 and beyond.