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What will major shift in U.S. policy toward Cuba mean for agriculture?

What will major shift in U.S. policy toward Cuba mean for agriculture?
U.S./Cuba trade finally set to open? How might U.S. agriculture benefit? If restrictions lifted, Mid-South rice could be a big winner.

He may be a lame duck but President Obama wasn’t limping when he took the podium Tuesday morning to announce a major shift in relations between the United States and Cuba. The surprising announcement included a host of diplomatic, humanitarian and business bullet points intended to ease the island nation’s isolation.

“In the most significant changes in our policy in more than 50 years, we will end an outdated approach that, for decades, has failed to advance our interests, and instead we will begin to normalize relations between our two countries,” said Obama. “Through these changes, we intend to create more opportunities for the American and Cuban people, and begin a new chapter among the nations of the Americas.”

The president acknowledged his actions will not lift the trade embargo that has been in place for more than 50 years. However, the U.S. will open an embassy in Havana and Obama called on Congress to lift the trade ban.

Lawmakers with Cuban heritage immediately attacked the plan and signaled the embargo would only be lifted after a bitter fight in both houses of Congress. In a statement, Arkansas Rep. Rick Crawford said, “While I welcome the restoration of trade between the U.S. and Cuba on behalf of Arkansas agriculture and manufacturers, Congress must proceed with caution and deliberation in response to the president’s decision. I pledge to lend my voice and the voice of Arkansas businesses to what promises to be a thorough and robust debate.”

What might the easing of sanctions mean for U.S. farmers?

“We’re still trying to figure out exactly what all has been agreed to,” said Andrew Grobmyer, executive vice president of the Agriculture Council of Arkansas. “But we’re certainly excited to see some action brought by the Obama administration on Cuba. We hoped it would’ve happened earlier and would’ve been a unified effort by the White House and Congress. But we’ll take this and hope it leads to the lifting of commerce and trade restrictions.

“We want this to provide open trade — especially with agricultural products in the near future. This might be enough to pressure Congress to move on the Cuban trade embargo.

“We’ve pushed for trade with Cuba for many years and through many presidents. Congress should be proactive and support this effort. Times have changed over the decades and the opportunity is ripe for this. By trading with Cuba, we can bring the country more in line with U.S. ideals.”

What about the Mid-South specifically?

“I think it would be a boost for all crops,” said Grobmyer. “However, rice would be a big winner because it’s a big part of the Cuban diet. And think about how close the United States is to Cuba. Compared to other countries we export to, it’s not a long way to haul from Arkansas to Cuba. From a trade perspective, because transportation costs would be low, it’s kind of a natural fit.

“Another industry that would be helped is poultry. Obviously, there’s a lot of poultry raised in the state.”

Cautious optimism

Milo Hamilton, president of Firstgrain, Inc., agrees that the U.S. rice sector would benefit greatly from trade with Cuba. “I haven’t heard anything specific about agricultural trade or rice. So, I’m cautiously optimistic that this will work out. The Obama administration is trying to open up one of the best and largest markets for U.S. rice in the Western Hemisphere if not the world.

“My fear is we might have problems with visas and financial credit even if it’s for humanitarian aid, which would be the most logical route to go. But even with those caveats, I don’t want to sound negative about this and dash anyone’s hopes. We’re a heck of a lot closer to selling rice into Cuba now then we were before President Obama’s announcement this morning. This is a positive step forward.

“The good part about this is the move comes not due to a crop failure in Cuba, but due to a political failure. Cuba was once one of our largest markets. Any restoration of trade with Cuba would likely be long-term, not a one-shot deal.”

Even so, Hamilton has many questions about how, after a decades-long break, trade deals might be set up. “Again, I come back to how to arrange any deals financially. Cuba isn’t in the best financial shape, right now. If I were a betting man, I’d put my chips on any rice deal being financed through the U.S. government. I may eat my words tomorrow — and that would be fine — but I don’t see how the finances could come through a commercial transaction between the countries.

“By sheer fluke of fate, at this point our rice price would be competitive with Asian-delivered rice. We’re about $80 under South America’s price, so rationally Cuba would buy rice from the United States. The transportation of rice from the Mid-South to Cuba would be an easy shot. Logistically it would make sense.”

Another question: what do Cuban consumers want to eat? “They’ve been forced to eat Asian rice for all these years,” said Hamilton. “Would it be a consumer decision to switch to U.S. rice or a political one? Most likely, it would be political and between governments.

“Short-term, I believe President Obama is able to temporarily ship rice to Cuba. That could be done for humanitarian reasons and would be huge boost for the U.S. rice industry.”

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