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US feed sector asks Trump to continue to back trade with Cuba

Aerin Curtis

By Aerin Einstein-Curtis

27-Jan-2017
Last updated on 27-Jan-2017 at 11:02 GMT2017-01-27T11:02:18Z

© iStock/bugphai
© iStock/bugphai

Feed and agricultural groups are asking the new US administration to support efforts to reduce regulation and improve the trade relationship between the US and Cuba.

Multiple feed and agricultural producer groups and businesses are among those who sent an open letter to the Trump Administration last week.

The parties, which included the US Grains Council, asked for the administration to work to improve bilateral trade with Cuba and support legislation that allows US producers to be more competitive in the market.

“We urge you not to take steps to reverse progress made in normalizing relations with Cuba, and also solicit your support for the agricultural business sector to expand trade with Cuba to help American farmers and our associated industries,” said group members in the letter.

As overall net farm income has seen a drop, improved trade relations with Cuba and other foreign markers remains imperative, they added.

“Net farm income is down 46% from just three years ago, constituting the largest three-year drop since the start of the Great Depression,” they said. “This strain on the farm economy is felt across all sectors of the industry and the thousands of small communities that make up rural America.”

Currently, the US only has about an 11% market share in the 800,000 metric tons that is imported by Cuba every year, according to data from the US Grains Council (USGC). The country could be the 12th largest international market for US corn if trade were normalized.

However, the US has lost much of the market share to South American countries including Argentina and Brazil, the Council reported.

Request support

The producer group is looking for administrative support on legislation that would remove current restrictions on extending credit to purchase agricultural commodities, like feed grains, and equipment, its members said.

“Your support in removing outdated financing and trade barriers for exporting agricultural products and equipment to our island neighbor could significantly strengthen a US industry,” said the letter. “Cuba’s $2bn agriculture import market could provide tremendous benefits for farmers across the country and help American agribusiness offset recent losses.”

US feed and feed crop producers have been facing a steady decline of market share in the area for several years, despite the potential for lower shipping costs and reduced delivery times because of the proximity of the two countries, group members said. “As result of trade restrictions, the US has fallen from its position as the number one supplier of agricultural products from 2003 to 2012, to now the number five supplier after the European Union, Brazil, Argentina, and Vietnam,” they added.

“The logistical advantages alone should make Cuba a common-sense partner for two-way commerce,” said group members. “Instead, the federal government overreach has put American farmers at a global disadvantage.”

Trade potential

When the economic embargo on Cuba was lifted in 2000, the US was able to become the leading supplier of agricultural goods to the country, according to a report from the US Department of Agriculture’s Economic Research Service.

But, remaining restrictions on the ability to issue credit allowed other countries a competitive edge in dealing with the country, the report authors said. 

“A major inhibitor of US agricultural exports to Cuba is the TSRA’s restrictions on the terms of payment and financing,” they said. “TSRA [Trade Sanctions Reform and Export Enhancement Act] specifies that the only payment or financing terms that US persons may provide for US agricultural exports to Cuba are (1) payment of cash in advance or (2) financing by third-country financial institutions.”

From 2012-2014, agricultural exports amount to about $365m a year and corn, soybean meal, soybeans and poultry accounted for 84% of the products sold, they said. Corn, soybean meal and soybeans are all used in feed for Cuba’s animal producti

“Over the long term, fostering growth in US-Cuba agricultural trade hinges on building a foundation for a two-way relationship in trade and investment and then creating the trust to sustain that relationship,” said the report authors. “For agricultural trade, that foundation does not yet exist as of now.”

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