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Ohio farmers could benefit from Obama’s Cuba policy

Ohio farmers could benefit from Obama’s Cuba policy
Deirdre Shesgreen 5:41 p.m. EST January 14, 2015

WASHINGTON – Ohio farmers are poised to benefit from the Obama
administration’s decision to normalize trade relations with Cuba, with
the state’s corn, soybean and poultry producers hoping closer ties with
the communist nation will lead to increased exports.

The new policy, announced by President Barack Obama in December, will
expand trade, increase travel and establish diplomatic relations with
Cuba’s regime.

“It’s very positive any time we open trade barriers and especially when
you’re looking at a country like Cuba, which is so close and where we
would have competitive advantage due to the issue of proximity,” said
Joe Cornely, a spokesman for the Ohio Farm Bureau Federation.

“We’re talking about the potential for millions or tens of millions of
dollars in sales eventually,” Cornely said.

Ohio farmers already export some soybeans and corn to Cuba under a
narrow exemption to the five-decade trade embargo. The exemption, passed
by Congress in 2001, allows American businesses to sell food and
agricultural products to Cuba with restrictions.

Cuban buyers must pay in cash, payments are required in advance and the
money must be routed through a third-party bank in another country.
Cornely said those extra hoops have made trade with Cuba complicated,
and the island nation often turns to other countries that offer
financing for purchases and other incentives.

It’s not clear yet how quickly trade will expand under the new policy or
how far the changes will go. Some hints will emerge in the next week or
so, when the U.S. commerce and treasury departments are expected to
issue new regulations implementing Obama’s executive action.

Agriculture Secretary Tom Vilsack said the administration will remove
some “technical barriers” and make U.S products “far more

“It’s a $1.7 billion market,” Vilsack said last week, noting that Cuba
imports about 80 percent of its food.

In 2014, about 20 percent of Cuba’s food imports came from the U.S.,
according to data from the U.S.-Cuba trade council. That leaves a lot of
room for growth.

Cornely and others say Ohio is ideally positioned to meet any new demand.

Agriculture is Ohio’s largest industry, and it’s a diverse sector,
producing everything from apples to cabbage to Swiss cheese. Ohio ranks
sixth in the nation in sweet corn production, second in egg production
and third in tomatoes, according to data from the secretary of state’s

The new trade relationship still will have limits, said John S.
Kavulich, a senior policy adviser at the U.S.-Cuba Trade and Economic
Council Inc. The council is a nonpartisan, nonprofit organization that
analyzes U.S.-Cuba political relations.

Kavulich said, for example, that the Obama administration cannot nix the
cash-payment requirement without legislation from Congress. But it can
allow direct exchanges between American banks and Cuban banks.

Even as the administration moves ahead, some lawmakers are aiming to
curtail the effectiveness of the new policy. Many Republicans have
blasted the president’s decision as a victory for the oppressive regime
in Cuba, led by Raul Castro. They say the U.S. should continue to
isolate Cuba diplomatically and economically until its leaders grant
their people more political and economic liberty.

Sen. Rob Portman, R-Ohio, said agriculture exports might improve
“somewhat,” but he sounded skeptical it would make a big difference. And
he said the U.S. has now lost its leverage to force democratic change in

“The president moved without getting the kinds of commitments that all
of us would like to see on human rights and opening up that society
more,” he said.

Sen. Sherrod Brown, D-Ohio, was more optimistic about the possible benefits.

“Engaging the Cuban government on diplomatic relations, trade and travel
will benefit Ohio businesses that export, particularly our state’s
largest industry — agriculture and food,” Brown said in a statement.

The real question, Kavulich said, is not how far the new White House
policy can stretch, but how far the Castro regime will let it reach. He
said trade will increase only if Castro thinks it’s politically
advantageous to buy from the U.S. rather than, say, Brazil, China or

“It’s not going to impact (U.S.) food and agriculture exports unless the
Cuban government wants it to,” Kavulich said.

Christopher Doering contributed to this story.

Twitter: @dshesgreen

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