Farm Bureau pushes for trade with Cuba

WASHINGTON – Food should not be used as a weapon, the American Farm Bureau Federation told a Senate panel last week during a hearing on U.S. trade policy with Cuba.

“All agricultural products should be exempt from all embargoes and unilateral sanctions, except in the case of armed conflict,” said Maryland Farm Bureau President Stephen Weber, a third-generation fruit and vegetable producer from Baltimore County.

“Unilateral sanctions such as the Cuban embargo do not work. Such sanctions often result in little or no change in the foreign policy actions of the targeted nation. The experience in Cuba is a testament to that fact.”

Farm Bureau, Weber said, believes that “maintaining our current trade with Cuba and taking steps to lift the remaining restrictions is needed in order to improve our bilateral relationship with Cuba and to foster democratic reform.”

Would like access. In addition, Weber said, the Cuban market “must remain open” for export sales of U.S. food and agricultural commodities.

“American farmers should have equal access to the Cuban market as do their foreign competitors,” Weber said. “Numerous countries compete for their foreign agricultural export sales, shutting off the Cuban market to our exports simply means that our competitors step in and supply that market.”

Market analysts estimate that the U.S. economy is losing up to $1.24 billion annually in agricultural exports because of the Cuban embargo, and up to $3.6 billion more in related economic output.

Cuba presently imports around $4 billion in goods per year from countries other than the United States and agricultural commodities account for 20 percent to 25 percent of that total – approaching $1 billion. Major suppliers, based in 1999 estimates, are Spain, 16 percent; Venezuela, 15 percent; and Mexico, 7 percent.

Prior to the embargo instituted in 1960, U.S. imports made up 75 percent to 80 percent of the total Cuban foreign agricultural purchases.

Major markets for Cuban exports are Russia, 25 percent; Netherlands, 23 percent; and Canada, 16 percent (1999 est.).

Bush opposes. Farm Bureau has called for reform of U.S. policy toward Cuba, asserting the best way to achieve that is through trade. The organization has pressed for legislation to end the current restriction on financing of U.S. food and agricultural exports to the island nation.

Weber said the third-country financing restrictions placed on agricultural export sales prevent U.S. agricultural exporters from developing normal commercial relations with Cuba.

In October 2000, the U.S. Congress passed legislation, later signed by the president into law on Oct. 28, 2000, which changed the U.S.-Cuba trade relationship by enacting certain exceptions from U.S. sanctions legislation for agricultural and medical exports. The Trade Sanctions Reform and Export Enhancement Act of 2000 was not comprehensive and some prohibitions remain.

The ban on U.S. imports from Cuba was not changed by this legislation.

Cuba’s main agricultural products include sugar, citrus and tropical fruits, tobacco, coffee, rice, beans, meat and vegetables.

Tourism push. In the mid-1990s tourism surpassed sugar, long the mainstay of the Cuban economy, as the primary source of foreign exchange.

Tourism figures prominently in the Cuban government’s plans for development, and Havana devotes significant resources to building new tourist facilities and renovating historic structures for use in the tourism sector.

Cuban officials estimate roughly 1.6 million tourists visited Cuba in 1999 with about $1.9 billion in gross revenues. The official projections for 2000 are slightly higher.

Sugar production in 1989 was over 8 million tons, but fell to about 3.5 million tons in the 1994-95 harvest, one of the worst on record. With increased fertilizers and management attention, subsequent harvests have improved but remain well below the 1989 level. Prospects for regaining that level of output are poor unless the Cuban government undertakes substantial reform of the sugar industry, something it has been reluctant to do, according to the U.S. State Department.

Joint ventures. To help keep the economy afloat, Havana actively courts foreign investment, which often takes the form of joint ventures with the Cuban government holding half of the equity, management contracts for tourism facilities, or financing for the sugar harvest.

Cuban officials said in early 1998 that there were a total of 332 joint ventures. Many of these are loans or contracts for management, supplies, or services normally not considered equity investment in Western economies.

Lure of the dollar. In 1993, the Cuban government made it legal for its people to possess and use the U.S. dollar. Since then, the dollar has become the major currency in use.

To capture the hard currency flowing into the island through tourism and remittances – estimated at $500 million to $800 million annually – the government has set up state-run dollar stores throughout Cuba that sell food, household, and clothing items.

The gap in the standard of living has widened between those with access to dollars and those without. Jobs that can earn dollar salaries or tips from foreign businesses and tourists have become highly desirable. It is common to meet doctors, engineers, scientists, and other professionals working in restaurants or as taxi drivers.

To provide jobs for workers laid off due to the economic crisis, furnish services the government was having difficulty providing, and to try to bring some forms of black market activity into legal – and therefore controllable – channels, Havana in 1993 legalized self-employment for some 150 occupations.

The government tightly controls the small private sector, which has fluctuated in size from 150,000 to 209,000, by regulating and taxing it. For example, owners of small private restaurant can seat no more than 12 people and can only employ family members to help with the work. Set monthly fees must be paid regardless of income earned and frequent inspections yield stiff fines when any of the many self-employment regulations are violated.