There has been plenty of debate since President Obama last week announced a plan for normalized relations with Cuba, but new agricultural trade markets are likely to develop as a result. Farm Bureau has been calling for removal of trade restrictions between the U.S. and Cuba and trade specialist Dave Salmonsen expects trade barriers to open up. Current regulations require trade deals to be paid with cash in advance through a third party bank, outside of either country.
“So both of these things, the cash in advance, using a third country bank, adds cost to the transaction — and why U.S. ag has been against that for many years is we think that makes us less competitive in selling into the Cuban market.”
While agriculture has had an exception to the embargo to Cuba since 2001, this will transform trade with Cuba into a normal market. Salmonsen says that should make exporters look at the Cuban market more and develop that market more over time.
“And for Cuba I think then their consumers will have access to the largest food exporter in the world, even a broader basis than we have now that sits just a small ways from their coast. The transportation advantages alone should be huge in bulk commodities like food and grains such as corn, rice, soybeans and such.”
Currently, the U.S. value of exports into Cuba is worth roughly $350 million, half of that being poultry. Salmonsen advises that market could expand along with corn, soybean and food product exports.
“Certainly if the Cuban economy improves over time, if they’re better and have more disposable income, and if we have more normalized trade in food and agricultural products, then you could see a wide range of products improve.”
The changes will take time as it will take a regulatory process by the Department of Treasury. The President gave no time table for when that may happen.