U.S.Cuba Agricultural Trade: Past, Present, and Possible Future

By Zahniser, Steven; Cooke, Bryce | Amber Waves, August 2015 | Go to article overview

U.S.Cuba Agricultural Trade: Past, Present, and Possible Future


Zahniser, Steven, Cooke, Bryce, Amber Waves


Highlights:

Establishing a more normal economic relationship between the United States and Cuba would allow Cuba to resume exporting agricultural products to the United States and lead to additional growth in U.S. agricultural exports to Cuba.

The United States is already one of Cuba's leading suppliers of agricultural imports, thanks to a loosening of the U.S. economic embargo on Cuba in 2000 that allows for U.S. sales of agricultural products and medicine to Cuba.

The executive actions announced in December 2014 relax U.S. restrictions on remittances and travel to Cuba and allow sales of agricultural equipment to small farmers. These steps by themselves could foster some increased agricultural trade with Cuba.

In December 2014, the United States announced that it would re-establish diplomatic relations with Cuba and implement executive actions intended to ease the trade and travel restrictions currently in place. Establishment of a more normal economic relationship with Cuba could foster additional growth in U.S.-Cuba agricultural trade by promoting greater productivity in the Cuban economy; increasing demand for agricultural imports among Cuban consumers, food service providers, and food manufacturers; and providing the policy and legal framework for the resumption of U.S. agricultural imports from Cuba. The executive actions announced in December 2014, however, only constitute a small step in the direction of normal trade relations between the two countries, as Congressional action is required to modify the longstanding U.S. economic embargo of Cuba.

Over the long term, perhaps the most important ingredients for fostering growth in U.S.-Cuba agricultural trade are to build a foundation for a two-way relationship in trade and investment, and creating the trust for sustaining that relationship. For agricultural trade, that foundation does not yet exist. While over the past 15 years the United States has quickly reestablished itself as one of Cuba's leading suppliers of agricultural imports, the updated U.S. policy approach to Cuba provides few if any opportunities for Cuba to export agricultural products to the United States. Over the next 15 years, the challenge will be to provide more balanced opportunities for U.S.-Cuba agricultural trade and to continue to build confidence in the emerging bilateral commercial relationship.

U.S.-Cuba Past: Cuba was the Largest Foreign Market for U.S. Rice

Levels of U.S.-Cuba agricultural trade prior to the Cuban Revolution of 1959 provide some indication of the possible size and composition of future trade flows between the two countries. At current commodity prices, U.S. agricultural exports to Cuba during fiscal years (FY) 1956-58 would have an approximate annual average value of $600 million, while imports from Cuba would have an approximate average annual value of $2.2 billion.

Rice, lard, pork, and wheat flour were the four leading U.S. agricultural exports to Cuba in terms of value during FY 1956-58. Cuba was the largest commercial market for U.S. long-grain rice exports prior to the Revolution, often taking more than half of U.S. long-grain sales and almost one-third of total U.S. rice exports. Meanwhile, cane sugar, molasses, tobacco, and coffee were the leading U.S. agricultural imports from Cuba. Past volumes of U.S. sugar imports from Cuba, 2.8 million metric tons on average during FY 1956-58, rival contemporary volumes of total U.S. sugar imports from all countries, 3.1 million metric tons on average during calendar years (CY) 2012-14.

After the Cuban Revolution, Cuba switched from a market-based relationship with its agricultural trading partners, primarily the United States, to barter arrangements with the Soviet Union, China, and other countries in the East Bloc. As a result, U.S.-Cuba agricultural trade dropped sharply in 1960 and then disappeared almost completely by the middle of 1961. As relations between the two countries deteriorated, the United States put an extensive economic embargo into place. …

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