U.S.- Cuba Food Trade Survives Difficult Year

U.S.- Cuba Food Trade Survives Difficult Year
Caribbean Island Importing More U.S. Food Despite Opposition and Payment Issues
By MARC FRANK

Dec. 19, 2005 — Havana - "That is one big pile of wheat," quipped Alan Tracy, the president of U.S. Wheat Associates, last week in Havana, as his organization signed contracts to provide Cuba with 500,000 tonnes of the grain in 2006, around 35 percent more than this year.
"I assure you it's enough to make wheat growers in Kansas, Oklahoma and Texas notice," Tracy said.
They also will in France and Canada, where farmers dominated the wheat market until Cuba began purchasing U.S. products under a 2000 law allowing agricultural sales on a cash basis as an exception to the decades-old U.S. trade embargo.
Also this month, Maine Gov. John Baldacci visited the Caribbean island to negotiate a $20-million agreement for the new year, and Virginia's agriculture secretary struck a $30-million deal.
It was a strong finish to a year that many felt might spell disaster for the lucrative food trade with Cuban President Fidel Castro's government just 90 miles south of Florida.
Cuba has become the 26th largest market for American agricultural exports, up from 225th, and the United States has become the Caribbean island's most important food provider, exporting around $400 million worth of grains, cereals, poultry and other products this year.
New Regulations Hurt Sales
The Bush administration in February decided Cuba should pay for goods before they were shipped from U.S. ports, instead of prior to delivery in Cuba as had been the practice.
Cuba at first balked at the new cash-in-advance regulation, fearing its property would be seized while in U.S. ports by Cuban-American exiles who had won court cases against the Cuban government worth millions of dollars.
"This year we would have purchased up to $750 million or $800 million" said Pedro Alvarez, the head of Cuba's state-run food-importing company, Alimport, "but for the new U.S. regulation that forced us to buy from other more secure food providers."
U.S. exporters eventually worked out a solution whereby goods are paid for with letters of credit, which technically means they are not Cuban property while in the United States, leading to a recovery of sales during the second half of the year.
But the letters of credit add 1.5 percent to 2 percent to costs, hurting sales by smaller companies to Cuba.
Florida is home to a powerful Cuban-American political organization with a one-issue agenda: toppling Castro. The organization has helped President Bush win his first and second terms.
Cuban-American Opposition
Cuban-American politicians in Congress see any trade or contact with Cuba as aiding and abetting a dictator and say that Havana is buying support in Congress to further undermine sanctions.
"The first sign of uncertainty and this agreement will not work," Alvarez said upon signing the wheat deal.
Cuban-American lawmakers formed a caucus this year called the Cuban Democracy Group to counter growing anti-embargo sentiment in Congress. Among their goals: curtailing U.S. agriculture exports to Cuba, according to Republican House member Lleana Ros-Lehtinen of Miami.
Alvarez says the Bush administration in cahoots with the caucus is denying food inspectors visas thus blocking sales, for example of Maine seed-potatoes and apples, and tampering with regulations to hamper the trade.
"This is a gesture any other government would welcome," Alvarez said of the wheat agreement, adding that he had faith in the U.S. farm lobby's ability to defend food sales and loosen sanctions further.
Tracy, whose organization opposes all trade sanctions as simply opening markets to U.S. competitors, says that food shouldn't get mixed up in politics. He admitted that Cuba was a particularly difficult case.
"You have to play with the hand you're dealt and in the long run there has been progress," Tracy said, recalling that when the embargo amendment was passed, the Castro government considered it an insult and refused to import U.S. food, only to reverse its position two years later.
Copyright © 2005 ABC News Internet Ventures

http://abcnews.go.com/International/story?id=1420427&CMP=OTC-RSSFeeds0312