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Thaw in relations with Cuba positive for U.S. agriculture – USDA

Thaw in relations with Cuba positive for U.S. agriculture: USDA
BY KARL PLUME
CHICAGO Wed Dec 17, 2014 10:18pm EST

(Reuters) – Exports of U.S. agricultural products such as wheat, rice,
soybeans and meat products stand to gain from a surprise U.S. move
toward repairing relations with Cuba, agriculture industry officials
said on Wednesday.

U.S. Department of Agriculture Secretary Tom Vilsack called the move an
“important opportunity” that will make exports of U.S. farm goods
cheaper, easier and less time-consuming for shippers.

President Barack Obama announced on Wednesday that the United States
would restore diplomatic relations with Cuba more than 50 years after
they were severed.

U.S. law exempted food from a decades-old embargo on U.S. trade with the
Cuba, but cumbersome rules on how transactions were executed made deals
difficult and costly. The U.S. policy shift should eliminate these hurdles.

“The policy change is that now payment can be made while goods are in
transit, which is the normal course of business, and no longer does the
money need to be routed through a third party,” Vilsack told reporters
on the sidelines of a U.S.-China trade meeting.

Cuba imported nearly $350 million of U.S. agricultural products in 2013,
including $146 million of poultry meat, $108 million of soy products,
and $82 million of corn and feeds, according to U.S. Department of
Agriculture data.

Easing of financing restrictions opens up the market, just 90 miles (145
kilometers) from the world’s largest agricultural exporter, to other
products.

“Wheat hasn’t traded there, rice hasn’t either. Those are two new
opportunities. With the enhanced tourism, the increased incomes could
benefit higher-value products like beef and pork,” said Devry Boughner
Vorwerk, a Cargill vice president and chair of the U.S. Agriculture
Coalition for Cuba.

Cuba’s purchases of U.S. wheat and rice have been restricted by the
higher cost of financing transactions compared with shipments from South
America and Asia.

“Cuba has not imported any U.S. wheat for five years. Opening trade has
the potential to put that market back in our column as they like our
wheat and it is loaded only a short sail from Cuba,” said Steve Mercer,
spokesman for the U.S. Wheat Associates.

The trade group said Cuba could import at least 500,000 tonnes of U.S.
wheat a year if trade were easier. “We believe our market share there
could grow from its current level of zero to around 80-90 percent,” Alan
Tracy, president of the U.S. Wheat Associates, said in a statement.

Cuba would likely buy mostly hard red winter wheat, a bread-making
variety grown mainly in the U.S. Plains states, as well as pasta-making
durum and soft red winter wheat, used in pastries.

Cuba’s milled rice purchases could approach 700,000 tonnes a year,
according to one rice exporter, making it one of the region’s top
markets for U.S. rice.

(Editing by Tom Brown and Ken Wills)

Source: Thaw in relations with Cuba positive for U.S. agriculture: USDA
| Reuters –
http://www.reuters.com/article/2014/12/18/us-cuba-usa-agriculture-idUSKBN0JW07X20141218

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