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Congressmen, farm groups urge conferees to keep OFAC language in report

A large group of senators, representatives and farm and trade organizations has called on a House-Senate Conference Committee to prohibit the use of fiscal year 2006 funding to enforce the Treasury Department’s payment-in-advance rule for cash agricultural sales to Cuba.

The request by seven senators, 42 House members and 55 farm organizations is setting up a potential confrontation with the White House, which has threatened to veto legislation that contains the Cuba agricultural trade language sought by the letter writers.

“We support elimination of the problematic Office of Foreign Assets Control payment-in-advance rule, and we encourage you to adopt language in the House and Senate-passed fiscal year 2006 transportation and treasury appropriations bills that prohibit use of FY06 funding to enforce it,” said one letter signed by Senate Agriculture Committee Chairman Saxby Chambliss, R-Ga.

“Though this funding prohibition option is temporary, its enactment as part of the FY06 transportation and treasury appropriations conference report is an important and germane first step in ultimately replacing the current restrictive OFAC rule and resuming all legal U.S. agricultural exports to Cuba.

Sens. James Talent, R-Mo., Mark Pryor, D-Ark., Blanche Lincoln, D-Ark., David Vitter, R-La., Larry Craig, R-Idaho, and Mike Enzi, R-Wyo., also signed the letter to Sen. Christopher Bond, chairman of the Treasury Transportation Appropriations Subcommittee.

The House letter, which was circulated with the assistance of the USA Rice Federation and other farm groups, noted that Congress authorized cash agricultural sales to Cuba in the Trade Sanctions Reform and Export Enhancement Act of 2000. By 2004 Cuba was purchasing more than $400 million worth of U.S. agriculture, fish, and forestry products annually, almost all of it on a cash basis.

“U.S. agriculture exports to Cuba have been seriously damaged by the Treasury Department’s OFAC ‘clarification.’ Since its announcement this February, the value of U.S. agriculture, fish, and forestry products sales to Cuba has fallen by 22 percent,” the House letter writers said.

Commodity declines “Some of the commodities suffering significant declines in sales to Cuba include rice, apples, soybean meal, poultry, dairy products, fresh fruits, lumber, cotton, pasta, and seafood. Cuba has made up the shortfall by buying many of these commodities from other international suppliers, often with credit extended by the selling country.”

Many farm-state congressmen, including Rep. Jo Ann Emerson, R-Mo., and Sam Poe, R-Texas, signed the letter to the chairmen and ranking members of the House and Senate Subcommittees on Transportation, Treasury and Housing and Urban Development Appropriations.

A USA Rice Federation trade delegation helped arrange the sale of 130,000 metric tons of U.S. rice to Cuba in late August, but heard numerous complaints from Cuban trade officials about the OFAC clarification of the payment policies, which require Cuba to pay for shipments before they leave U.S. ports.

Following the passage of the Trade Sanctions Reform and Export Enhancement Act of 2000, Cuba had been increasing its purchases of U.S. agricultural commodities. By 2004, Cuba was purchasing more than $400 million worth of U.S. agriculture, fish, and forestry products annually, almost all of it on a cash basis.

Since February, however, Cuba has sharply curtailed its purchases of U.S. farm products. U.S. rice sales, for example, have declined 25 percent by volume and 45 percent on a value basis compared to the same period in 2004, the Senate letter said.

Buying elsewhere “Cuba has returned to buying rice from China and Vietnam as U.S. rice sales have fallen this year,” the letter noted. “Cuba was the fourth-largest milled rice market for U.S. rice last year, totaling 177,000 tons, and was our nation’s No. 1 export market prior to the 1960 embargo.”

“Last week USDA’s Economic Research Service forecast that net farm income for 2005 will be down $11 billion from 2004,” the House letter said. “This is due to several factors, including soaring energy input prices and weakening commodity prices. Many producers are also facing severe losses this year due to hurricanes, droughts, and other disasters. “At times such as this it is especially important that every effort be made to enhance, rather than restrict, export opportunities for U.S. farmers.”

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