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Even as Trump reportedly considers new limits on travel and investment on the island.

Bloomberg, Content provider

June 16, 2017

4 Min Read

by Alan Bjerga and Marvin G. Perez 

A rollback of Obama administration efforts to open Cuba to U.S. tourism and trade may chill a rebound in agricultural sales to the island nation, setting back a farm-lobby push that’s weathered two decades.

U.S. Secretary of State Rex Tillerson signaled Tuesday that changes would come as soon as Friday, when President Donald Trump visits Miami. The moves may include new limits on travel and investment policies. While there’s no indications of a clampdown on agricultural sales allowed on a cash-only basis since 2000, cooled relations may drive buyers elsewhere, said Bob Young, chief economist for the American Farm Bureau Federation in Washington.

The agriculture sector has long advocated an end to the trade embargo with Cuba in place since Fidel Castro consolidated power in the early 1960s. Companies including agricultural equipment maker Deere & Co. and soybean processor Bunge Ltd., along with the federation, the biggest U.S. farmer group, have supported full farm trade. 

"If we make it tougher on Cuba, there are other folks ready to line up and say, ‘We can help you with that,’" Young said.

U.S. agricultural exports to Cuba rose to $221 million in 2016 after three consecutive annual declines, according to U.S. Department of Agriculture data compiled by Bloomberg. Sales so far this year are outpacing last year’s by 19 percent.

Boosting trade with Cuba has symbolic significance for farmers beyond any financial benefit. The country lies only 90 miles (145 km) from Florida, and had traded sugar and grain with its larger neighbor for decades before the embargo. 

"Does being a communist country mean people living on that island don’t deserve to eat?" said Doug Keesling, who raises wheat, corn, soybeans and sorghum outside Chase, Kansas. "The goal is to feed the world, with the government getting out of the way." Keesling co-chairs the state support committee of the U.S. Agriculture Coalition for Cuba, which counts Cargill Inc. and Archer-Daniels-Midland Co. among its members.

Illicit Travel
Normalized trade with Cuba could add $1 billion in sales for U.S. farmers, the USDA said last year. Even under trade restrictions, the U.S. was the country’s leading source of imports from 2003 to 2012.

“Rural America has benefited from the opening to Cuba, and we want that progress to continue," U.S. Senator Heidi Heitkamp, a Democrat from North Dakota, said Thursday in a statement.

Trump may crack down on illicit travel to Cuba and dissuade U.S. companies from interacting with Cuban businesses that are owned or controlled by the military, said John Kavulich, the president of New York-based U.S.-Cuba Trade and Economic Council, in an interview.

Comments from the administration have already "caused pain to the Cuban government" by spurring companies and financial institutions to pull back from the island nation as an investment destination, he said.

Supporters of the embargo point to Cuba’s poverty and poor human-rights record as reasons why agriculture groups should attach less importance to markets.

Since 2014, when Obama moved to re-establish normal diplomatic ties, agriculture groups have streamed south to scope out investment partners. They’ve found little success, said Jaime Suchlicki, director of the University of Miami’s Institute for Cuban and Cuban-American Studies.

"Traditionally Cuba has been an enemy of the United States and an ally of Venezuela, Iran and Russia that has done significant mischief," he said. "If you grow rice in Texas and want to sell to Cuba, this is important to you, but in the context of the overall relationship, it’s a pittance," he said.

Legislators, Lobbyists
Trump’s tough line on Cuba isn’t deterring legislators and lobbyists. Senators including Republicans Mike Enzi of Wyoming and Jeff Flake of Arizona, along with Democrats Amy Klobuchar of Minnesota and Patrick Leahy of Vermont, introduced anti-embargo legislation last month.

"Instead of eating American-grown food, Cubans and tourists will be eating food from other countries,” unless trade is opened, Klobuchar said in a statement.

A House bill limited to food exports would create an excise tax that would be used to compensate people whose properties were confiscated by Cuba’s government.

"Being a Cuban-American from South Florida doesn’t mean you’re foursquare against the embargo," Crawford said in an interview. "Agricultural trade is an area where we can get the support we need to effect change in Cuba."

The doggedness of the agriculture lobby itself may be its best hope of preserving market share, said William Messina, a professor at the University of Florida in Gainesville. Ties forged during a 20-year slog will count with the Cuban government, he said. 

"I think they appreciate the efforts of those agricultural industry associations in the U.S. that are trying to get regulations relaxed," Messina said. "Out of respect for that, I don’t think they’ll make a big turn away."

--With assistance from Jeff Wilson. To contact the reporters on this story: Alan Bjerga in Washington at [email protected]; Marvin G. Perez in New York at [email protected]

To contact the editors responsible for this story: Simon Casey at [email protected]

Jim Efstathiou Jr., Carlos Caminada

© 2017 Bloomberg L.P

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