Arkansas Gov. Asa Hutchinson’s Sept. 28-30 trade mission to Cuba was also his first visit to the island nation. Just 90 miles from the Florida coast, Cuba was banned for decades as a destination for U.S. exports. In fact, during Hutchinson’s trip, Cuban President Raul Castro said he was seeking billions of dollars in reparations from the U.S. to compensate for the economic effects of the long standing embargo.
But in 2000, Congress reopened the Cuban market to U.S. food and medicine, and earlier this year President Barack Obama eased some of the financial regulations and lifted some restrictions on American tourism to Cuba. It’s hoped these moves will allow Cuba to accumulate more foreign exchange, enabling the Communist nation to import more goods and services.
From Havana on Sept. 29, Hutchinson said his trip was intended to put Arkansas at the head of the line when trade opportunities arise.
“This is a step by step process,” the governor told reporters. “The first step is to authorize credit sales to Cuba, and that would open up opportunity for Arkansas products. Secondly, we need to have a number of steps taken by the Cuban government in terms of economic reforms that are compatible the new dynamics of trade opportunities in the future with the United States.”
Specifically, he referred to “business opportunities for the Cuban families,” banking regulations and technical capability, and communication and Internet improvements.
The trip marked a change of heart by the governor, who had previously opposed commerce with Cuba and had a role in enforcing the embargo while a member of the George W. Bush administration. Hutchinson said after 55 years, “It’s a reasonable step to try something different.”
On Oct. 6, Rep. Rick Crawford of Arkansas’ first district introduced H.R. 3687, titled the Cuba Agricultural Exports Act. The law would repeal restrictions on export financing and give producers access to U.S. Department of Agriculture marketing programs that help the U.S. compete in foreign markets. It would also enable limited American investment in Cuban agribusinesses.
“The Cuba Agricultural Exports Act would allow our producers to compete on a level playing field in the Cuban market, a significant opportunity for American farmers and ranchers,” Crawford said in a statement. “Not only is it estimated that Cuba imports around 80 percent of its food supply, but the U.S. also enjoys an inherent advantage due to our close geographic proximity and state of the art production and food distribution infrastructure.”
Opportunity for Arkansas Rice
Arkansas Rice Federation Executive Director Ben Noble told AMP the shift in the governor’s posture is “extremely significant, and we’re very pleased that he’s looked at the reality of the situation further and that he’s changed, not only his mind, but his official policy on that issue, and that he sees not only the economic potential but just the potential of engagement. Anything you do in life is about relationships, and one of the arguments that our industry has made for years is you can’t keep doing something over and over, getting no results, and expect change.”
The Arkansas rice industry was particularly excited about the Cuban market’s potential. Prior to the revolution, Cuba was by far America’s biggest rice customer. Following enactment of the 2000 law, Havana briefly returned to the U.S. market, buying as much as 176,000 tons of U.S. rice in 2004, but again closed the door after 2008. Overall purchases of U.S. farm products have also declined since then.
Bob Cummings, chief operating officer of the Washington-based USA Rice Federation, says the market disappeared again for a couple of reasons. One, Cuba doesn’t have “the economic wherewithal” to buy U.S. rice and is relying on generous credit on Vietnam. And two, Cummings told AMP, Cuba may have made the large purchases of rice and other U.S. farm goods in hopes they would convince the U.S. to drop the embargo.
“I don’t think that worked out as they planned, so they may not see so much of a political impetus in buying from the U.S. that they once did,” he said.
But Cummings agrees the restoration of relations with the U.S. may serve to improve Cuba’s economic position, and could at least help the U.S. regain the limited rice market share of the last decade.
“The demand is clearly there for rice in Cuba and for the foreseeable future, we don’t see domestic rice production coming anywhere near to meeting the demand,” he said. “Whether we can go back to a situation where we were in the late 1950s, I don’t know — that’s a real long time ago. I think we certainly have a real chance at getting back to where we were earlier in this century, but there are additional competitors out there. Vietnam is out there, although that’s a special circumstance of credit and politics, but you’ve got potential suppliers from South America waiting to come into that market. But, I think we’ve got a leg up on that competition, just given our logistics.”
From 2004-2006, U.S. rice exports to Cuba averaged 162,000 tons a year. To put that into context, U.S. rice exports to all destinations the last four years have averaged nearly 3.7 million
That is about the same amount the U.S. sent to Cuba during the 1950s, but U.S. production was much smaller and Cuba was our top export customer for rice at that time, taking about one-third of all exports. According to the U.S. Department of Agriculture, if Cuba were to import U.S. farm goods in the same volume as in the 1950s, it would average $600 million a year. If they were to export to us the same quantity of farm goods as they used to, it would average $2.2 billion.
Overall Agricultural Impact
Arkansas Farm Bureau President Randy Veach said other U.S. farm exports could also benefit, particularly beef and pork. The Manila farmer, who was one of about 45 members of the governor’s entourage, told AMP, “We need to know the principal players down there so that when we do have an opportunity, we’ll have the people to go up to immediately and we can be the first ones in on that market.”
In an email from Havana, Veach said Cuba clearly wants to do more to attract foreign investment and has announced a program to guarantee the value of investments made in the country. He joined officials with the University of Arkansas and state Agriculture Secretary Wes Ward on a tour of Cuba’s agriculture college, where they discussed with Cuban animal scientists the potential of agriculture research exchanges. He also joined Arkansas-based business leaders in a meeting with Alejandro Mustelier Jamora, the head of Cuban import-export agency Alimport.
“Alejandro said we had the highest quality rice in the world and liked our poultry,” Veach reported. “Because of the embargo (everyone in Cuba calls it the blockade, by the way) they don’t have open access to those products. But they want them, obviously.”
Arkansas senior U.S. Sen. John Boozman has introduced a bill to normalize Cuban trade relations; that would include imports from Cuba as well as exports. Hutchinson said he’d discussed with Cuban authorities the prospect of developing an integrated poultry industry so Cubans could raise chickens for processors, and of resurrecting other industries that had historically exported out of Cuba but “died on the vine” with the embargo.
“Any time you engage in discussions, it shouldn’t just be about us, and how it’s going to benefit us,” he said.
Main photo: Gov. Asa Hutchinson speaking with the Provost of the University of Havana, Dr. Gustavo Cobreiro Suarez (center left). Photos courtesy of the governor’s office.