Cuba Working Group goals and protecting farming operations

A chat with Arkansas Rep. Rick Crawford

In mid-December, a working group from the House announced it would begin studying how best to deal with the emerging U.S./Cuba trade relationship.

In a letter sent to Speaker Paul Ryan, the 10 members of the Cuba Working Group said, “Increasingly, the American people are indicating their desire for a new, more pragmatic approach to Cuba. More people are traveling from the U.S. to Cuba, more businesses are looking for opportunity on the island, and more sectors are eager for trade. The bi-partisan Cuba Working Group will promote a U.S.-Cuba policy that reflects the interests of the American people in engagement with Cuba.”

On January 6, Arkansas Rep. Rick Crawford, a key member of the working group, spoke with Delta Farm Press about his hopes for a new trading partner and his frustration with fellow lawmakers over their approach to agriculture and the farm bill. Among his comments:

On the new Cuba Working Group…

“The idea is to put together a group of members who have an interest in seeing a change take place while recognizing it will probably require incremental steps. I don’t think we’re in a position to get the support we need for a wholesale repeal of the Cuban embargo.

“I do think agriculture is a good starting point. The folks who’ve signed on to work with us in the group see it in the same way. If nothing else, food is a humanitarian concern and we can meet that need.

“The approach we’re taking is pretty well received. We don’t want to get into a situation where we’re enabling the current (Castro) regime to utilize our commodities as political leverage or tools. Historically that’s happened to us with some regimes we’ve had problems with.

“Instead, we want to identify private sector entities that don’t have the relationship with (Cuban government) agencies like Alimport. Then, we can go to those entities and do two things. One is to provide important staple commodities that Cubans want to avail themselves of. That includes rice and poultry, which bodes particularly well for Arkansas.

Second is the economic factor. Cuba isn’t a huge market but is significant – you’re talking about close to a $1 billion-a-year market for Arkansas — and it’s in such close proximity to the United States. The Cuban market would certainly be a welcome addition to our portfolio.

“We want to lift the cash-and-carry restriction that’s our current policy. The Cubans like our rice and chicken, staple items in their diet.”

On the way Cuba currently must finance U.S. agricultural and medical imports…

“Right now, Cuba is basically a cash-and-carry market. That means if they can pay cash, we’ll sell them some commodities. But they aren’t really in a position to do that and we’re prevented from engaging in any financial transactions or underwriting any arrangements.

“We want that restriction lifted. As I said before, we’re in the process of identifying the third party non-governmental entities. We know those exist. Most countries doing trade with Cuba now – Canada, Brazil, European nations – are doing business with them. That would get around state-owned entities like Alimport and wouldn’t empower the regime to utilize U.S. commodities as leverage over the people.

“We want to help the Cuban people. But we must understand they don’t have the cash in hand to meet our boats at the port offloading. We have to deal with Cuba like we do other countries. We have to deal with them in good faith and make financial arrangements to make transactions come to fruition.”

Regional viewpoints

You’re the only Mid-Southerner in the Cuba Working Group. From the South there is a representative from Florida and another from Texas. What about regional differences between group members?

“I think we’ll see more (lawmakers) become involved in this effort. Right now, there is a geographic disparity to some degree.

“You mentioned Florida. I’m encouraged that a member from that state has joined us. In south Florida there is a real sensitivity to this and you can understand and respect that. The Cuban expat community there was exiled or forced from their country and they have a lot of lingering resentment towards (the Castro) regime. Anything that points to that and they’re typically a ‘no.’

“That’s beginning to soften and there are a couple of reasons to attribute. One is our approach to go around the regime – and they see that. The second thing is the reality that the regime may not stand for much longer. So, we’re in a waiting game and they’re beginning to see the opportunities (post-Castro). If we want begin to build incrementally towards that future now, we’ll be well positioned to help later.

“As for Texas, it’s part of the Rice Belt. (Texas Rep. Ted Poe) being from there helps us.

“A trade deal with Cuba would greatly benefit our rice industry – and I basically represent half the U.S. crop.

“Arkansas is also third in poultry production. Poultry is a huge industry across a large swath of the geographic U.S. That leads me to believe that over time, particularly in rural areas with big poultry production – North Carolina, Georgia, Alabama, Texas — there will be a greater uptake and enthusiasm for a deal.

“It’ll just take a bit of time to make (lawmakers) aware of this. A couple of things are already in the works. One is a Congressional delegation and the other is a delegation of Arkansas ag industry folks that are looking to travel to Cuba and get eyes on the situation. Hopefully that will all happen in the next two or three months. So, we’re moving fairly quickly.”

Farm bill, budget process

On the recent budget process and farm bill programs being up for discussion among some lawmakers…

“I’m very frustrated with that. Under the Budget Control Act the Agriculture Committee was the only authorizing committee in the House that met our prescribed number. We’ve done our work and done it within the act, we’re compliant.

“However, time and again, the farm bill is attacked. It isn’t a good idea to keep opening up the farm bill. We have to fight for it every year – and we will until we reauthorize the next one. All hands must be on deck.

“We dodged a bullet with crop insurance. That was able to be resolved within the highway bill. But when these kinds of things are done it makes it much more difficult for us in the context of the next reauthorization of the farm bill.

“Somehow, people have this idea that they’re going after ‘big ag.’ What they’re really doing is creating ‘big ag.’ Track with me for a minute. When they tinker with things like Adjusted Gross Income and managerial requirements and the like, they’re making it more and more difficult for small operators to cash flow and be compliant. When that happens, smaller operators fall by the wayside.”

On the consequences of that happening…

“Over the Christmas break, I received messages from exactly those types of operators in my district. If you take them out, if you exclude them from receiving benefits or subsidies, you take them out of the actuary base.

“Well, consider crop insurance. A smaller actuary base – which is what reinsurance rates are based on – means the cost will be run up so high that the smaller operators can’t afford it.

“So, you may think you’re being punitive to the large operators while, in fact, the net effect means the smaller operator is forced out. That, in turn, leads to more consolidation and makes the big operators even larger.

“This thing is 180 degrees out of place. We – and I’m not talking about the House Agriculture Committee but the entire institution – must rethink our approach. The House of Representatives has very little understanding or regard for what it takes to feed and clothe 300 million people at home and compete in the global market.

“We’re all worried about ‘too big to fail.’ Well, I’m more concerned with ‘too small to succeed.’ What we need to focus on are smaller operators who are being squeezed to the point of being unable to cash-flow.

“This doesn’t bode well for smaller and younger operators that aren’t well-capitalized. I think loan officers are going to be under pressure. I don’t want to be negative but we may be in the calm before the storm. There’s quite a bit of tension in the air.”

David Bennett, Delta Farm Press

January 20, 2016

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