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Will U.S. share in Cuban market?

The Cuban government's food buying agency, ALIMPORT, could import up to 1 million metric tons of rice annually by the end of the decade. But U.S. rice producers may not fully participate in the increase from current levels of 712,000 metric tons.

Cuban President Fidel Castro announced during a meeting with USA Rice Federation leaders in his offices in Havana Aug. 25 that Cuba would buy 100,000 metric tons of U.S. paddy rice and 30,000 metric tons of U.S. milled rice for delivery between September and January 2006.

Castro and Pedro Alvarez, chairman and CEO of ALIMPORT (the Empresa Cubana Importadora de Alimentos), said the Cuban people prefer American rice over that of other countries. But new restrictions on shipments of rice and other products are souring the Cuban government on U.S. rice.

“Cuba is being deprived of rice that is very much liked by the Cuban people,” said Alvarez, speaking at the First Cuba-USA Rice Federation Rice Conference at the Hotel Nacional in Havana prior to the meeting with Castro.

“We have to wonder why if there are excess supplies of rice in the United States there are restrictions on the sale of rice to Cuba.”

Alvarez thanked leaders of the Rice Federation for their efforts to remove the recent trade restrictions but said more needs to be done to allow trade and travelers to flow freely between the two countries.

Cuban officials were obviously annoyed at new Treasury Department regulations aimed at restricting food shipments to the island. Last December, the Treasury Department's Office of Foreign Assets Control (OFAC) issued new rules requiring the Cuban government to pay for such shipments before they leave U.S. ports instead of on delivery.

U.S. rice sales to Cuba were down nearly 50 percent by volume and 62 percent by value for the January-May 2005 period, primarily due to the new restrictions, according to USA Rice Federation officials.

The House has passed legislation introduced by Rep. Jo Ann Emerson, R-Mo., which would require the Treasury Department to stop enforcing the OFAC rules for one year. Similar legislation has passed the Senate Treasury Appropriations Subcommittee and Senate Appropriations Committee and is awaiting a floor vote.

Lee Adams, chairman of the USA Rice Federation, told Alvarez that USA Rice will continue to do all it can to try to ease the restrictions and “normalize” trade relations between the two countries.

“Simply stated, we are active in Cuba in promoting U.S. rice, and we are equally active in the United States in seeking ways to end the economic sanctions against Cuba,” said Adams, president of American Rice Inc., in Houston. “We are highly committed to normalizing relations and are working publicly and behind the scenes to make this happen.”

The new purchases announced by Castro on the night of Aug. 25 will bring 2005 U.S. rice shipments to Cuba above last year's 177,000 metric tons. U.S. rice mills and merchants had previously shipped 90,000 metric tons to Cuba.

Alvarez said Cuba could easily increase its imports of U.S. rice even if it retains its other foreign suppliers such as China and Vietnam. “U.S. rice producers and the rice industry are very efficient and have high quality rice,” he said. “And those producers are linked to Cuba geographically allowing shipments to be made in a matter of days rather than months.”

While Cuba wants to buy U.S. rice, “we have had to divert $200 million to other sources of rice or other crops because OFAC's new restrictions on shipments from Cuba,” he said. “These new restrictions have made imports from the United States highly unreliable and those shipments have dropped 50 percent in recent months.”

The ALIMPORT chairman was referring to shipments that were en route from the United States last December when the Treasury Department's Office of Foreign Assets Control issued its new regulations.

“Cuba turned to other markets to make up for those losses,” he said. “But we favor American rice in Cuba, and we want to buy more.”

In an interview with Delta Farm Press and radio broadcaster Stewart Doan, Alvarez said Cuba could eventually import up to 1 million metric tons of rice annually as part of a plan to improve the diets of the Cuban people.

During a five-and-one-half hour meeting in the Cuban president's offices, Castro told the USA Rice Federation leaders that he plans to provide Cubans with one more kilogram (2.2 pounds) of rice per month by December at subsidized prices.

According to USA Rice Federation estimates, Cuba's 11.2 million people consume 128 pounds of rice per capita compared to 26 pounds per capita in the United States. Most of the rice is distributed through the “bodega” or ration system and through government-controlled supermarkets.

During their meeting, Castro told USA Rice members that the Cuban government is taking a number of energy conservation measures, including distributing electric rice cookers and other appliances to 2 million Cubans. “This is so we can buy more rice from you.”

But Cuban officials also took numerous opportunities to express their displeasure with ongoing U.S. government efforts to strengthen the 43-year-old embargo against Castro's government.

“We don't burn any flags,” said Castro, asking why the United States isn't willing to relax the embargo and allow free trade and free travel between the countries. (The USA Rice Federation delegation had to apply for a commercial license from the U.S. government for members to legally travel to Cuba.)

“What is the fear of 2 million to 3 million Americans traveling to Cuba and getting to know us?” asked Alvarez during the interview. “This appears to be an anti-constitutional restriction on travel for Americans.”

Prior to Castro taking power in Cuba in 1959, Cuba was the No. 1 market for U.S. rice. Since Congress passed the Trade Sanctions Reform and Export Enhancement Act of 2000, which allowed U.S. producers to resume food exports to Cuba, the latter has become the fourth biggest market for U.S. rice.

“We know the restrictions are aimed at us, but it's the U.S. rice producer who is harmed the most by these restrictions,” said Alvarez.

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