The Obama Administration’s efforts to normalize trade with Cuba continue, with an announcement this week that embassies will re-open in Havana and Washington this summer. However, many trade restrictions remain in place that can only be effectively addressed by the U.S. Congress – and that continue to stymie U.S. grain exports to Cuba.

Last week, a joint officer’s mission from the U.S. Grains Council (USGC), the National Corn Growers Association (NCGA) and the North Dakota Barley Council (NDBC) visited Cuba to both identify potential partners in developing that market and to learn more about the hurdles that need to be overcome.

This week’s Global Update reached USGC Chairman Ron Gray and USGC Vice Chairman Alan Tiemann for their observations.

Let’s start with the bottom line question – what is the potential in Cuba for U.S. coarse grains exports?

Gray: The potential is real. Cuba is only 90 miles south of Florida, and the United States has an obvious logistical advantage over South American producers. If the United States was to capture 100 percent of that market today, Cuba would be our 12th largest corn buyer.

Right now Brazil is winning that market because of the embargo. But the greater opportunity lies in the future. Cuba is a country of 11 million people. It has, in the past, been a hub of economic activity for the region and can be again in the future.

What are the next steps to get U.S. coarse grains exports back on track?

Gray: It is important to understand there is no embargo on U.S. food exports to Cuba, which is free to import U.S. feed grains today. But there is an effective credit embargo, so all transactions with U.S. suppliers have to be in cash. That’s a real problem.

The second issue is that Cuba has depended for decades on Russian and more recently Venezuelan subsidies. As those have disappeared, Cuba is short of foreign exchange. The embargo really constricts their options.

Tourism is one option to infuse dollars into their economy, and a relaxation of the travel restrictions on U.S. citizens visiting Cuba could have a fast impact. Those are political questions beyond our control, but we want to be prepared as the situation evolves.

What kind of reaction did you get from the Cubans with whom you met?

Tiemann: The reaction was very positive. Of course there are still political issues, but the Cubans recognize, as do we, that the relationship is going to change. Fidel Castro is in failing health and Raul Castro, who succeeded him as president in 2008, has announced that he will retire in 2018.

The Cubans we met were focused on the future. Historically the United States and Cuba were close trading partners, and we could be again. The bottom line is that the Cubans we met want to do business and build their animal production.

If the embargo is not relaxed or removed, what will be the effect?

Tiemann: Here is one example that stands out. Cuba has just built a new container port outside of Havana. The cost was about one billion dollars and $700 million of that investment came from Brazil.

Cuba has normal trade relations with most of the rest of the world. The United States has a logistical advantage due to proximity, but if we aren’t willing to compete for a market in our own backyard, the South American producers are happy to step in.

How soon do you expect U.S.-Cuban trade relations to be normalized?

Gray: As everyone who follows this issue knows, that’s a deeply political question here in the United States. The first step will be resumption of diplomatic relations, which is happening as we speak. Congress will also have to act to entirely remove the sanctions. That will take longer, and the U.S. presidential election adds significant complications. When sanctions could be lifted is an open question; what is certain is that the relationship is changing, and we need to be ready when it does.

For more information about the Council’s work in Cuba:

• click here to read a press release that the Council and NCGA distributed July 3 about this mission;
• click here to read articles about Cuba the Council published in previous editions of Global Update; and

click here to view more photos from this mission.