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From truffles to fox furs, U.S. ships more than food to Cuba

Posted on Saturday, 09.05.09
From truffles to fox furs, U.S. ships more than to Cuba
Despite a rigid embargo that has spanned half a century, the United
States is playing a major role in feeding Cuba.
BY MARTHA BRANNIGAN
mbrannigan@MiamiHerald.com

When a family sits down for pollo asado, passes pan de ajo across
the kitchen table or splurges on some chocolate soy ice cream, chances
are the ingredients came from U.S. farms.

may boast of its revolutionary friendship with Cuba, and
may send its youth there to study Spanish, but the United States has
emerged as the No. 1 exporter of agricultural products to Cuba.

And that's not all that can be sent to Cuba legally. Try live primates,
truffles, azalea bushes, fox furs — even cigars.

When President Obama announced plans in April to ease the embargo by
lifting family-travel restrictions to the island and allowing U.S.
telecommunications firms wide latitude to do business there, many
analysts said the policy changes could significantly expand ties between
the estranged neighbors — assuming Havana responds positively to the
overture.

But fairly significant commerce has been going on since the Trade
Sanctions Reform and Enhancement Act of 2000 opened the door to U.S.
food and medicine exports to Cuba — despite the tense relationship
between Havana and Washington and a trade embargo that has spanned
nearly 50 years.

U.S. agricultural exports to Cuba hit a record $711.5 million in 2008,
as prices for commodities soared. That makes the United States Cuba's
fifth-largest trading partner overall.

“We are the natural provider of food and products to
Cuba,'' says Kirby Jones, president of Alamar Associates, a consulting
firm for U.S. companies aspiring to trade with Cuba. “We're No. 1 and
could be selling a lot more, were it not for the restrictions.''

Over the past nine years, Cuba, which imports 80 percent of its food,
has come to rely heavily on its nemesis to the north for wheat, corn,
soy goods and scores of other key agricultural products.

American companies provide two-thirds of Cuba's imported chicken and
more than 40 percent of its pork imports. Utility poles, organic
fertilizer and chewing gum also make their way in.

Not much medicine has been shipped, however, since Cuba has other options.

CASH FLOWS FROM U.S.

Much has changed since President John F. Kennedy imposed a total
economic embargo of Cuba in 1962, making it illegal for Americans to
spend any money in Cuba or trade with Havana.

The chinks began when some travel restrictions were lifted in the late
1970s, and through the years there has been a tightening and loosening
of the embargo as administrations change in Washington.

In recent years, Cuba has raked in U.S. dollars in a host of other ways,
too:

• The Castro government charges a 10 percent fee to exchange greenbacks
for convertible pesos, or CUCs, used by Cuban Americans and other
visitors, and there's another 10 percent hit due to the unfavorable
exchange rate given by money changers.

• Cuba also gets millions of dollars — perhaps hundreds of millions —
in fees from U.S. telecommunications companies that already provide
long-distance service to the island through third countries.

• When Cuban Americans make trips to Cuba, they generally travel heavy,
lugging an estimated $3,000 to $5,000 in goods for family and friends.
If just half of the 200,000 Cuban travelers expected this year carried
even the low end, or $3,000 worth, that would amount to $300 million of
clothing, electronics and household gadgets winding up in Cuba in 2009
alone. These travelers also are allowed to spend up to $179 per day
while in Cuba, according to U.S. regulations.

• Cuba's airport-related fees levied on U.S. air-charter companies
average $120 per passenger, according to charter officials, which would
bring in some $12 million for the 100,000 U.S. visitors last year and
possibly double that amount this year.

• And money sent by individual Cuban Americans to help family members
amounts to an estimated $400 to $800 million a year, according to a 2004
study by the Commission for Assistance to a Free Cuba, which noted some
estimates put U.S. remittances as high as $1 billion a year.

Even with all major portions of the embargo still in place, such
commercial ties between the United States and Cuba could easily exceed
$2 billion a year.

TOUGH BUSINESS

Meanwhile, a series of intentional hurdles reflects the U.S.
government's conflicted attitude toward dealing with the communist
regime that has outlived nine U.S. presidents.

The cash-strapped island must pay in advance for U.S. goods, and with no
banking ties between two nations, Cuba has to pay through a bank in a
third country, typically France.

U.S. exporters need clearance from the Office of Foreign Assets Control
and the Commerce Department's Bureau of Industry and Security. Cargo
ships carrying goods from the United States must go directly to Cuba
before visiting any other nations, and they are forbidden from picking
up anything to haul elsewhere. Cuban food inspectors often can't get
visas to visit U.S. facilities.

And the trade remains a one-way street. Virtually nothing can be
imported to the United States from Cuba, with the exception of artwork,
printed materials and recordings. Last year, that came to a grand total
of $39,126.

That gives Cuba the curious distinction of helping the United States
with its chronic balance of trade deficit, albeit in a token fashion.

The obstacles to Cuba trade have tipped the scales in favor of
agribusiness Goliaths like Cargill, Archer Daniels Midland and Tyson Foods.

For American businesses, there is only one customer in Cuba: Alimport,
the government agency that coordinates purchases from the United States.

Small and mid-sized exporters are often spooked by the maze of
regulations and the opaque process of selling to Cuba. More than a few
would-be exporters have ventured to Havana trade fairs only to come home
empty-handed.

“People [looking to export to Cuba] get discouraged,'' says Jay
Brickman, vice president of government services at Crowley Maritime
Corp. He travels frequently to Cuba for his company, which sends a cargo
ship with chicken and other agricultural products to Havana from Port
Everglades every week.

“They confuse being nicely received by the Cubans with the idea they're
going to get business. Cuba is limited [in its ability to buy imports],
and they're price-conscious. You almost have to have a certain passion
to really want to be there,'' he said.

Some U.S. business executives imagine big opportunities in an untapped
market. Others are drawn to the forbidden fruit.

Naples businessman John Parke Wright IV shipped beef to Cuba from
Port Everglades three years ago and flew to Havana to shepherd his herd
from the dock.

Last year, Wright, a member of the Lykes family that owned vast
agricultural lands in Cuba before they were seized in the revolution,
exported 2,500 straws of Brahman bull semen from the J.D. Hudgins ranch
in Hungerford, Texas, to impregnate Cuban heifers.

Now he's negotiating more cattle deals for Florida and Alabama Brangus
cattle and semen. Wright, who has been making frequent visits to Cuba
for nearly a decade, sees big potential for agricultural development on
the island, in keeping with President Raúl Castro's recent call to the
Cuban people to work the land. “There was and there is another Florida
there in the land ma
ss and agricultural potential,'' says Wright.

But many others have called it quits after a few sales. Independent
Meats shipped some goods about a year and a half ago, but decided its
Idaho location is too far west to compete with other U.S. suppliers.

“It just didn't make a lot of sense for us,'' said Independent Chief
Executive Patrick Florence.

Cuba, meanwhile, has spread out its purchases among as many U.S. states
as it practically can in hopes of drumming up support in Congress for an
end to the embargo.

And yet, this year, U.S. exports will likely trail 2008 as Cuba
struggles with severe financial problems that limit its ability to pay
for foreign goods..

CUBA'S CREDIT WOES

Some experts believe Cuba is facing its biggest challenges since the
early 1990s, when the collapse of the Soviet Union left
scrambling for support in a changed world.

Just as poor families do, the Cuban government often makes purchases
based on access to credit. That leaves U.S. businesses at a
disadvantage, since transactions must be in cash.

U.S.-grown , especially the long-grain style favored in many
recipes, was a huge hit with Cubans until 2005, when the Bush
administration changed the meaning of cash in advance to mean payment
before a product leaves U.S. shores — instead of when it arrives in
port in Cuba.

Since that tightening of policy — which is expected to be reversed
under provisions in the 2009 omnibus appropriations bill — U.S. rice
exports to the island have plunged. Cuba has relied more on ,
which is thousands of miles away and sometimes delivers broken rice but
provides generous credit.

Some argue, however, that the cash-in-advance rule is a blessing in
disguise for American companies, because it ensures that they get paid.

“Cuba generally doesn't pay on time,'' says John Kavulich, senior
policy advisor for the nonprofit U.S.-Cuba Trade and Economic Council.
“And sometimes it doesn't pay at all.''

From truffles to fox furs, U.S. ships more than food to Cuba – Cuba –
MiamiHerald.com (6 September 2009)
http://www.miamiherald.com/news/americas/cuba/v-fullstory/story/1220161.html

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