Cuba has sparked a renewed effort to boost Illinois agricultural exports to the island nation, which has been under crippling economic sanctions for more than 50 years.
Admittedly, the attempt to sell more products such as corn and soybeans grown in Illinois to Cuba is hindered by hurdles, not the least of which is existing federal legislation that forces Cuban businesses to buy U.S. agricultural products with cash paid in advance.
Cuba once had been relatively fertile ground for Illinois agribusiness. Illinois corn and soy exports to Cuba reached about $66 million in 2008 but plummeted 63 percent to $24 million in 2014, according to the Illinois Cuba Working Group, a coalition of state agricultural organizations, the Illinois Chamber of Commerce, a few major agricultural-related businesses and members of the state’s General Assembly formed in 2013 to improve trade relations between Illinois and Cuba.Overall, U.S. agricultural exports to Cuba have fallen substantially, from $570 million in 2009 to about $300 million in 2014, according to a recent U.S. Department of Agriculture report.
In an effort to regain a stronger foothold in Cuba, a federal bill has been introduced that would repeal restrictions on export financing and give access to U.S. Department of Agriculture marketing programs. The bill has the backing of two key Illinois politicians – U.S Representatives Cheri Bustos, a Democrat from East Moline, and Rodney Davis, a Republican from Taylorville.
They traveled together to Cuba in October on a trip organized by the Illinois Cuba Working Group with an eye on bolstering business opportunities for Illinois agriculture.
“I wanted to go to Cuba to figure out how to improve trade,” Bustos said. “I come from a long line of farmers and agriculture is the No. 1 economic driver in Illinois.”
Bustos, who along with Davis, is a member of the House Committee on Agriculture, said she signed on to the bill because of a desire to “have success across party lines.”
“We have to grow the number of sponsors,” she acknowledged.
Bustos wants to ensure that the Illinois Cuba Working Group establishes an office in Havana, Cuba’s capital city, so that business leaders from Illinois can focus on boosting their presence there.
She said she met in Washington, D.C., with veteran diplomat Jose Cabanas, who in September became Cuba’s first ambassador to the United States in 54 years. Bustos also wants to bring a group of Cuban farmers and political leaders to the United States in order to make Illinois agriculture “top of mind” in Cuba, which produces very little of its own food and relies on foreign suppliers.
“We have some of the best farmland in the world in Illinois,” Bustos said.
The lifting of economic sanctions against Cuba also would benefit Illinois-based farm equipment manufacturers, such as Moline-based Deere & Co. and Peoria-based Caterpillar Inc., she said.
Davis also vowed to push to make Cuba a more fruitful territory for Illinois agricultural businesses, but admitted that the recent trip left him a bit dismayed. He expected to find more of a shift toward free enterprise and a higher standard of living than what he experienced when he first visited Cuba as a congressional aide to Rep. John Shimkus, a Collinsville Republican, a decade ago.
“I expected to find more optimism,” Davis said.
Cuba has shown a growing reluctance to buy U.S. agricultural products on a cash-only basis, he said. Davis vowed to fight to change the existing law and give Cuba the option to purchase products on credit.
“It would be a boon for Illinois,” he said.
In fighting for the change, Davis is bucking his Republican colleagues who oppose lifting the strict sanctions against Cuba as long as the Castro family is in power. Davis believes increased trade between the United States and Cuba would eventually rid Cuba of the Castro regime, thus accomplishing what the sanctions have yet to do.
He is convinced, however, that Cuban leaders are reluctant to the have the trade embargo lifted, even though it has contributed to the country’s harsh economic conditions.
“They are scared of losing control,” Davis said. “They have blamed the embargo for all of Cuba’s social ills. Then they will have no one to blame but themselves.”
The visit to Cuba resembled a trip “back in time,” Davis said.
“There are cars from the 1950s, 40-year old Russian tractors and agricultural equipment that we take for granted that they have never seen,” he said.
Nonetheless, Cuba’s proximity to the United States – he noted that the entourage’s recent flight from Miami to Cuba took a mere 30 minutes – should provide ample trading opportunities, under the right circumstances.
Easy access to water infrastructure allows Illinois farm products to reach Cuba quicker than those coming from competing countries, such as Brazil and Argentina, Davis said.
Davis said he’s optimistic that the Cuba credit issue eventually can be resolved. He’s less convinced that the Cuban government will enact needed changes on its end, including moving to a single currency and expanding private enterprise.
Illinois has been exporting agricultural products to Cuba since the enactment in 2000 of the Trade Sanction and Export Act, which allowed certain U.S. agricultural and medicinal products and medical devices to be exported to Cuba. The act required that exports to Cuba be paid for in cash in advance and be financed by third-country financial institutions.
Illinois Gov. George Ryan made a historic trip to Cuba in October 1999, the first by a sitting U.S. governor since Fidel Castro took power 40 years earlier. During the trip, Ryan reportedly spoke out against the U.S. ban on trade with Cuba. Ryan, who held a highly criticized marathon meeting with Castro during his visit, also touted at the time the major market opportunities in Cuba for agriculture in Illinois, which is among the country’s top producers of soybeans and corn.
Contacted at his Kankakee home, Ryan declined to comment on his trip to Cuba and whether viable business opportunities remain for Illinois agriculture.
In an interview last year with the Daily Herald, Ryan called the delegation he led to Cuba “one of the highlights” of his Illinois governorship. Ryan served one term, from 1999 to 2003. He later spent more than five years in federal prison after being convicted on corruption charges.
In April, President Barack Obama met with Cuba president Raul Castro, the younger brother of the retired Fidel Castro, at the Summit of the Americas in Panama, marking the first meeting between U.S. and Cuban heads of state since the two countries severed ties in 1961.
The Obama administration has allowed more expanded commercial sales and exports of goods and services to Cuba, including agricultural equipment for small farmers. In addition, travelers are now permitted to use credit and debit cards. The U.S. embassy in Havana reopened in August for the first time since 1961.
Cuba should be a prime market for U.S. agricultural businesses because of its population of 11 million and geographic proximity to the United States, said Paul Johnson, executive director of the Illinois Cuba Working Group.
“But because of politics, sales have been declining,” Johnson said. “We’re trying to work through Congress to level the playing field.”
Johnson is president and owner of Chicago Foods International LLC which focuses on the purchase, distribution and marketing of food exports to Cuba. He helped form the Illinois Cuba Working Group along with the Soybean Growers and the Farm Bureau.
“Cuba has always been difficult but Obama started a new chapter,” Johnson said. “People have gotten frustrated by the embargo.”
Johnson routinely travels to Cuba, as often as once per month. He believes Cuba is ripe to forge a long-term trade relationship with the United States. He pointed out, however, that Cuba has other trading partners willing to make sales on credit, leaving the United States at a competitive disadvantage. Cuba’s top trading partners are Venezuela, Canada, China and the Netherlands.
“It’s clear that we have to clean up our policies. Without that we won’t do a lot more business,” he said.
Johnson is convinced that President Obama will continue to push legislation clearing the path for business opportunities in Cuba before his term expires after the November 2016 elections.
“The embargo has been in place way too long,” he said.
The roots of the embargo date to 1959, when Castro and his revolutionaries seized power in Havana by overthrowing the government of Fulgencio Batista. The U.S. initially recognized Castro’s Communist-run government, but tensions rose as Cuba increased trade with the Soviet Union, nationalized U.S.-owned properties in Cuba and hiked taxes on U.S. imports. The United States responded with escalating economic retaliation that eventually culminated with a full-fledged economic embargo and stringent travel restrictions.Mike Levin, director of issues management analysis for the Illinois Soybean Association, has made several trips to Cuba in recent years and was part of the entourage that visited the country in October.
“Illinois agriculture needs to get into new markets like Cuba,” Levin said.
The Illinois contingent received what Levin described as a warm reception during its visit to Cuba.“The people there love their country but understand it’s time to open up and have relations with the United States,” he said.
Ted Mottaz, District 8 director for the Illinois Corn Growers Association Board and a full-time family farmer, said normalizing relations with Cuba is long overdue.
“The country is eager for our products,” he said.
Rich Rovito, BGA
January 6, 2016