Thursday, May 4, 2017

Potato seed to Cuba?

A Cuban potato farmer works his fields outside of Havana


DENVER—While the Trump administration has put trade relations with Cuba on hold, a US Ag delegation is working hard to get potatoes and wheat into Cuba.

A 16-member delegation made up of seed potato growers and agronomists from Potatoes USA, joined Kansas Wheat representatives on a five day exchange with Cuban Ag officials. 

Right now US farmers can export to Cuba, but only with third-party banking that's choked with red tape and limited credit financing that makes trade extremely complicated and expensive. 

Idaho Governor Butch Otter took his historic trade delegation to Cuba in 2007, It was one of the first of its kind. While they moved some potatoes, he addressed the complicated trade barriers that continue to slow trade.

“I am encouraged that there’s growing interest in Idaho products in Cuba. That’s one of the reasons it was important to lead a state trade mission there in 2009. Building international business relationships takes time, but I know from experience that a relatively small investment of time can lead to significant business down the road.”

Devon Barney is a potato and grain producer out of Pingree, he contracts his crop with Lamb Weston but says opening a new market could bring new life into the potato market.

“I think everyone is open to getting the product moved, whether it be potatoes, wheat or sugar. Its all about supply and demand and we have a lot of supply that needs moved, opening up a new market would help everyone,” said Barney.

The US has had a Cuban embargo for decades. With one exception: a 2000 law that allows exporting U.S. food products into Cuba thats totaled more than $5.3 billion so far, according to John Kavulich, president of the US-Cuba Trade and Economic Council.

The US first entered the Cuban discussions with the hope of breaking down Cold War trade barriers. Kavulich thinks that making Cuban buyers to pay cash rather than credit keeps Cuban businesses from opening US bank accounts and places all kinds of restrictions on the use of the US dollar in dealings with Cuba. Trade specialists say nothing kills a trade deal faster than out-dated restrictions. 

Then theres another hurdle, the $1.8 billion still owed to US businesses that had assets seized after the Cuban Revolution. To this day, food products and commodities sold to Cuba have to go through the Bureau of Industry and Security, under the Department of Commerce.

“Some of these issues are political and require diplomatic solutions. However, we’ve seen throughout the world that capitalism works if trade is free and fair. That’s true in China and in Vietnam. And I hope Cuba will come to the understanding that we can do business together and benefit everyone involved if we get past some of those institutional impediments to economic progress,” said Otter.

President Donald Trump threw a monkey wrench into Cuban trade with a cryptic tweet late in November that stalled talks, he wrote: “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban-American people and the U.S. as a whole, I will terminate the deal.”

But Daniel Heady with Kansas Wheat Commission thinks Trump will keep an open mind and find the best deal possible with Cuba. He knows that Cuba represents a 50-million-bushel wheat market and thats a lot of export dollars at time when the wheat market is flat.

The Potatoes USA delegation visited Cuba last March  and met with the Ministry of Foreign Commercial Affairs, Ministry of Agriculture and even potato farmers outside of Havana. 

Trade insiders say that the Cuban government wants to boost its domestic potato supply. The Ag Ministry has seen production numbers drop steadily since 2000 and they need high quality seed. 

Potatoes in that island nation are so scarce and prized that the government controls distribution and price. French fries are unheard of and with fast food outlets poised to move into Cuba, Idaho seed producers could benefit from this deal with Cuba.

Potatoes USA has had big successes in the Dominican Republic and Central America and seed potato growers know they can get quality seed to the Cubans that will immediately improve yields in Cuba.

“It would be terrific to open up the Cuban market to Idaho potatoes. There’s no doubt in my mind that once they get a taste, they’ll want more,” said Otter.

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