Vilsack Sees Gains in Cuba

Still, Ag Secretary Sees U.S. Disadvantaged Until Congress Lifts Embargo

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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President Barack Obama has done all he can to help U.S. agriculture make inroads into the Cuban market, USDA Secretary Tom Vilsack said. The next step is up to Congress. (DTN file photo courtesy CIA)

OMAHA (DTN) -- On a trip to Cuba this week with President Barack Obama, Agriculture Secretary Tom Vilsack did as much as he could to further expand agricultural ties with the island without Congress further loosening formal trade restrictions.

In an interview Friday with DTN, Vilsack stressed the importance of food and agriculture trade as a way to further thaw a relationship frozen since the early days of the Cold War against communism and the Castro regime.

The biggest announcement in Cuba for farmers involves allowing the 22 checkoff programs and 18 marketing-order organizations to start reaching out to Cubans to study food trends in the country and begin promoting various U.S. products.

"We have looked at the need for additional research and education concerning the Cuban market and identified ways commodity groups can use promotion boards, checkoff dollars and marketing orders to begin developing a relationship with Cuban food and commodity buyers," Vilsack said.

He took umbrage with the suggestion that opening up checkoff funds for promotion in Cuba would largely translate into a whole lot of farmer junkets to the island this year. He said promotion trips could translate into recapturing a bigger share of the island's $2 billion market for imported food.

"The United States used to do 50% of that market, but because of the barriers we created and the length of time that the embargo has been in place, we simply don't know enough about that market to be competitive," Vilsack said. "We put ourselves in a situation where we are not competitive so having the opportunity to go down to Cuba to essentially begin the process of understanding that market, surveying Cuban consumers to find out precisely what they want in terms of taste, in terms of affordability and so forth, I think is critically important to make sure we take full advantage of that market that's only 90 miles off our shore."

Such trips also would foster some communication between farmers in the two countries.

While the Obama administration is working to normalize relations, fully reopening trade and lifting credit restrictions will require an act of Congress. In a press conference earlier this week, the president called on Congress to end the embargo, though there seems to be little political will to do so.

"I've called on our Congress to lift the embargo," Obama said. "It is an outdated burden on the Cuban people. It's a burden on the Americans who want to work and do business or invest here in Cuba. It's time to lift the embargo. "

Vilsack said the administration has probably stretched to the limit what USDA is allowed to do under executive action. "There's only so much you can do with executive orders and executive power," he said. "The reality is the barriers that exist today [and] hinder our ability at USDA to aggressively promote U.S. products as we've done on trade missions in other markets where we have had success are directly related to issues involving the embargo."

The secretary said he believes there are several possibilities for promoting various foods and feedstuffs, but he believes there are early opportunities to promote soybeans, soymeal, poultry and rice on the island. As the economy improves, it's likely other pork and beef could see shipments as well.

Meanwhile the European Union also is moving to normalize trade relations with Cuba. The EU and Cuba signed an agreement next week, though it still must be ratified by the 28 EU countries. Depending on how quickly they act, farmers in Europe could gain an advantage over the U.S. by offering credit terms for Cuban buys.

"We've lost market share to the EU so anything that creates a more uneven playing field and loses opportunity for American producers is not a good thing," Vilsack said. "We put ourselves at a disadvantage because we are asking Cubans to pay for American products in dollars when they have few dollars in their economy, and asking them to work through a series of intermediary financial institutions rather than direct bank to bank -- asking them to pay in advance -- all of that puts us at a competitive disadvantage," Vilsack said. "We should not be losing market share to Europe."

The U.S. exported $658 million in ag products to Cuba in 2008, but that fell to $300 million by 2014 and was just $150 million last year.

Vilsack is confident the embargo will be lifted at some point as enough members of Congress are convinced it's time to take a more open approach towards Cuba. A bipartisan group of congressmen and senators joined President Obama, Vilsack and other cabinet members on the trip. He believes they came away from the trip as stronger advocates for eliminating the embargo.

"Exposing the Cubans to the rich diversity, affordability and variety of food products the U.S. economy can provide a good, solid trading relationship [and] would have, I think, over time a much greater influence in changing hearts and minds than an embargo that's isolated us from the Cuban people and given others the opportunity to dominate markets," Vilsack said.

The checkoff and marketing order change went along with a memorandum of understanding Vilsack signed with Cuban Ag Minster Gustavo Rodriguez Rollero that focused on helping each other in areas such as research. Vilsack noted farmers in the countries are often coping with the same pests and diseases. He pointed to citrus greening as a disease affecting orange growers in both Florida and Cuba.

The administration also stuck to its focus on climate change and discussed working with the Cuban government to examine climate impacts on crop and livestock production in the Caribbean. Vilsack invited Cuba's ag minister to come with him to Puerto Rico in May to highlight work being done by USDA's climate research team in Puerto Rico.

Chris Clayton can be reached at Chris.Clayton@dtn.com.

Follow him on Twitter @ChrisClaytonDTN.

(CZ/SK)

Chris Clayton