October 5, 2000
Island's market could be larger than expected if sanctions lifted U.S. FARMERS could sell substantially more rice to Cuba than has been anticipated if Congress lifts U.S. economic sanctions against the Cuban people.
U.S. analysts have been projecting a Cuban market of 400,000 metric tons based on Cuba's annual imports of the last three years. But a veteran rice industry observer says the figure could go much higher than that.
Riceland Foods President Richard Bell, who spent the first week in September in Cuba visiting with government and business leaders, says he is convinced that the potential Cuban market for U.S. rice is much larger than the rice industry has assumed.
"If annual rice consumption in Cuba were allowed to attain its full potential, and assuming a modest increase in domestic rice production, I believe annual imports of milled rice would be between 550,000 and 600,000 tons," said Bell, in testimony before the U.S. International Trade Commission.
"I also believe, if sanctions were removed, nearly all of these imports would originate from the U.S. due to freight advantages and quality preferences."
Bell, one of 36 witnesses who testified before the ITC during two days of hearings in Washington, said there is "considerable under-consumption" of rice in Cuba due to shortages that have occurred since the collapse of the Soviet Union in 1993.
Prior to the imposition of U.S. economic sanctions in 1962, Cuba was the largest export market for U.S. rice, accounting for nearly half of all U.S. exports in some years, Bell told the Commission.
Cuba switched most of its purchases to East Asia, relying on financing by the Soviet bloc. But, after the Soviet Union began to fall apart and withdrew its financial support in the early 1990s, Cuba's domestic rice production and its imports of rice began to decline sharply.
"In the five years ending in 1992, Cuba's production of rough rice averaged nearly 425,000 metric tons per year," said Bell. "Since 1992, annual production has been less than 200,000 tons per year. The production decline has been due primarily to a shortage of fertilizers and crop protectants.
"This past year, Cuba's average field yield for rice was less than 30 percent of the U.S. average."
Fidel Castro's government has attempted to offset the decline in domestic production by increasing imports, but those efforts have been hampered by foreign exchange problems. As a result, rice is often in short supply in Cuban ration stores.
"Rice and beans are the primary staples in the average diet in Cuba," said Bell. "USDA estimates that the daily caloric intake in Cuba fell from an average of 2,908 calories in the 1980s to below 1,900 calories in the early 1990s. The USDA-recommended minimum is 2,100 to 2,300 calories per day."
The Riceland Foods CEO said he believes the situation has improved substantially since that time, but Cuban government continues to face problems meeting the daily needs of some segments of the population, particularly the elderly.
Last month, Riceland Foods, Inc., donated a container of U.S. rice to Cuba as a humanitarian gift. "The shipment arrived in Havana in late July and was distributed by Caritas Cubana, a Cuban charity associated with Catholic Relief Services," he said. "Severe drought has sharply reduced food supplies in Cuba's eastern provinces. Our shipment provided 400,000 standard servings of cooked long grain rice."
Compared to the high cost of shipping rice from East Asia, Bell said, U.S. millers could sell Cuba more rice for the same price they are paying for the 400,000 to 450,000 metric tons it now imports.
If shipments rose to the 550,000 to 600,000 tons mentioned by Bell, it would be the equivalent of 20 percent of the U.S.' total annual exports of rice in recent years. Cuba would, in fact, challenge Mexico as the leading importer of U.S. rice.
Bell put the value of those imports at between $130 million and $175 million, depending on the quality and transportation costs. The added sales would provide a "modest" price increase for rice produced by U.S. growers and enhance employment opportunities in drying, milling and transportation in the rice industry.
"Our industry believes that all U.S. economic sanctions with respect to Cuba should be removed," he said. "There is no longer any justification for them. Any justification with respect to national security disappeared with the collapse of the former Soviet Union.
"The only real winners as a result of our Cuban trade sanctions are the suppliers of lower quality rice elsewhere in the world. The big losers are the U.S. rice industry and the Cuban consumer."
Another witness denied allegations that the agricultural community is being selfish when it calls for an end to the sanctions against Cuba. Some supporters have claimed that low farm prices are the driving force behind the renewed effort to lift the embargo.
"Farmers are tired of sanctions that don't work," said Nelson Denlinger, vice president of U.S. Wheat Associates. "We do not avoid trade with other countries that are led by leaders we disagree with. If we can send wheat to North Korea, we should be able to export to Cuba.
"Do we need 40 more years to learn that there is no political leverage in withholding exports of food?"
Denlinger said his organization, which has held marketing and grain handling seminars in Cuba in the last year, estimates total Cuban wheat and flour exports at 950,000 metric tons. "This volume is well below the levels of the late 1980s when wheat imports reached 1.4 million tons.
The hearings by the International Trade Commission were held at the request of the House Ways and Means Committee.
Farm-state congressmen such as Marion Berry, D-Ark., and Jerry Moran, R-Kansas, have been pushing legislation that would lift the economic sanctions and restore normal trade relations with Cuba.
But the House Republican leadership is opposed to the measure and has thrown up a number of delaying actions, including refusing to name House conferees for the Fiscal Year 2001 agricultural appropriations bill because of concerns it will include sanctions reform.
The International Trade Commission is scheduled to report its findings on the economic sanctions issue by Feb. 15.
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