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Advocates show potential for high returns from trade between US and Cuba

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A recent report​ coauthored by the US Agriculture Coalition for Cuba (USACC) and Cuba Trade Magazine, two advocates for normalizing trade between the US and Cuba, examined the potential effect that lifting some trade restrictions of feed and food crops could have on 16 agriculturally involved states.

The white paper, Opportunities for US Agriculture Export to Cuba​, highlighted the potential for agricultural commodity exports between the two nations based on logistics, demand, historic sales and outreach.

Sales of agricultural products including feedstuffs such as corn, soybeans, and wheat reached a high in 2008. However, sales total dropped to less than $219m by 2016.

The country continues to import about $2bn in food and feed products, of which the US accounts for about 11%, they said. “In recent years, the US share of Cuba’s food purchases has declined, as the country has fallen behind exporters such as the European Union, Brazil and Argentina,”​ they added.

Trade restrictions continue between the two countries. These include that products need to be pre-paid in cash, which is not a standard trade practice.

“Allowing Cuba to pay for agriculture with credit is the most immediate action the US can take to potentially boost agriculture exports to the island,”​ they argued.

However, that may not be the only impediment to trade, they added.

Report details

Multiple US states could play a role in providing feed crops to Cuba, noted the report. These include Arkansas, Illinois, Iowa, Indiana, Georgia, Kansas, Nebraska, Missouri, North Dakota and Virginia.

Arkansas has not seen many exports to Cuba since about 2010, they said. However, some of its major exports including rice and animal feeds are among top imports for Cuba.

“If Arkansas were to maintain its 2015 share of all US exports of soybeans and soybean meal (4.2%), and the US were to capture 50% to 80% of the soybean and soymeal import markets for Cuba, that would mean additional sales of between $4m to $7m in these commodities,” ​they said.

Georgia has already been exporting feed ingredients like soybean meal to Cuba, they said. If it were able to keep or expand that market it could bring the state about $21.5 to $34m.

“Demand for soymeal in Cuba (as livestock feed) should rise with an emerging middle class and booming tourism sector,”​ said the authors.

Midwestern states like Illinois and Indiana also could benefit from an expansion of the market.

“Illinois stands to reap benefits from access to the Cuban market,” ​the authors said. “The state ranks as the nation’s number two exporter of corn, and the top exporter of soybeans and soybean meal, all of which Cuba imports regularly.”

“The US already has a competitive advantage over corn suppliers in Brazil, Argentina, Canada and Ukraine because of its proximity to the island,” ​they said. “Economists estimate that the US could capture 80 to 90% of the Cuban corn market.”

Depending on market captured, the sales for Illinois could amount to $14m to $23m for soy ingredients, they said. Similarly, Indiana could potentially see $13m to 15m in corn sales.

Several other states are also involved in the production of sales of feed ingredients including corn and soybeans or soybean meal, and easier access could lead to an expanded market, they said.

One goal of the report is to help “reignite” ​interest and momentum in improving trade practices between the US and Cuba, added Paul Johnson, USACC co-chairman in a release on the report.

“The research contained in this report provides a state-by-state look at missed opportunities,”​ he said. “This white paper paints a clear picture of the benefits that US farm states could be enjoying if not for the unfair barriers imposed by outdated US trade policy.”

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