Cuba could become big buyer for Oklahoma wheat

Photo: Natalie Wheeler

Oklahoma sent a shipment of wheat to Cuba in 2004, but Cuba hasn’t bought from the United States since 2011.

If the United States embargo on trade with Cuba is lifted, it has the potential to drastically change Oklahoma’s wheat market.

Cuba and the U.S. have formally restored diplomatic relations. But an embargo restricting trade between the two has put the U.S. behind Canada and the European Union in the Cuban market. Agriculture, especially wheat, is one of the island’s top imports. Behind refined petroleum at 6.1 percent, wheat makes up 3.9 percent of the country’s imports, according to the Observatory of Economic Complexity at MIT. In 2012, Cuba imported over $234 million worth of wheat.

The embargo doesn’t eliminate trade completely. Oklahoma made a shipment of wheat to Cuba in 2004, but Cuba hasn’t bought from the United States since 2011.

“It was under a humanitarian aid exemption,” said Mark Hodges, contractor with Plains Grains Inc. and Oklahoma Genetics Inc. “It was a 25,000-metric-ton vessel. They needed wheat, and we had it.”

Under the embargo, U.S. wheat exporters must use third-party banking institutions that make trade more expensive. Even though the Cuban ports are the closest nonMexican ports to wheat export terminals in the Gulf, the island looks to Latin American and Asian countries for easier financing and fewer restrictions.

“I’ve been to Cuba six times,” Hodges said. “And each one of those has been in an effort to increase the amount of wheat that we can get into there. We are strategically located and should take advantage of this opportunity.”

While everything is still up in the air and nothing can be quantified, Hodges predicts one-third or more of Oklahoma’s wheat production will get to Cuban soil if the embargo is lifted.

“We have high-quality wheat,” Hodges said. “When you look at logistics and quality, I would think we would be very high on their list of states to work with, and they’ve worked with us before.”

But Hodges said if Oklahoma has the opportunity to expand and build a relationship with Cuba, price is still going to be a factor.

American farmers say the main problem the U.S. runs into is providing credit upon arrival to Cuba. And in reforms President Barack Obama introduced in December 2014, that wouldn’t change.

“We’ll have to compete when it comes to price, but strategically it’s easier for us because we’re closer than any other country,” said Keith Kising, a member of the U.S. Wheat Advisory Committee.

Kising also explained that French wheat imported to Cuba is a wet wheat, so it can cause clogging and sticking in the mills. The Caribbean island wants to buy Oklahoma’s dry winter wheat, but can’t, due to financial hardships created by embargo policy, he said.

By Leilah Naifeh, The Oklahoman

July 26, 2015

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