Virginia growers cashing Cuban trade chips

Todd P. Haymore, commissioner of the Virginia Department of Agriculture and Consumer Services (VDACS), and Charles Green, VDACS marketing director, recently hosted a booth at the Havana International Trade Fair (FIHAV) in Cuba.

Marketing staff worked with Virginia exporters participating in the show, including Perdue AgriBusiness, Crown Orchard and Smithfield Foods. Staff coordinated business meetings between Virginia agricultural exporters and Alimport, the Cuban agency responsible for food and agricultural purchases. The annual trade fair included exhibitors from 53 nations, all hoping to conduct business in Cuba.

“I predict exports will increase significantly as a result of trade agreements reached during the FIHAV trade event,” said Commissioner Haymore, “and that will result in more Virginia producers being able to take advantage of this opportunity. The fair was successful in strengthening our relationships and hopefully will provide more trade opportunities for our Virginia farmers and agribusinesses. Our Cuban hosts were very gracious and indicated they want to do more business with Virginia.”

At the first ever U.S. Food and Agribusiness exhibition in Cuba in 2003, the first contract signed was for Virginia apples. In 2007, Virginia sold $1.2 million worth of the fruit to Cuba. This year’s sales easily could be 20 or even 30 percent higher.

Soybean products, particularly soybean meal, have experienced similar numerical growth. John Cassidy with Perdue AgriBusiness noted that the cooperation from both Virginia and Maryland agriculture officials was very valuable to them and helped cement an agreement for Perdue soya products with Alimport.

Tom Host of T. Parker Host, Inc., ship agents and brokers, Norfolk, also attended FIHAV. "It was a very productive trip," said Host, "and I appreciate the involvement of our state Department of Agriculture. It's nice to see our state officials actively involved in boosting business for Virginia companies and agribusinesses."

Cuba has become an important market for Virginia apples and soybeans, soybean oil and soybean meal. Opportunities exist for additional Virginia products, including poultry and meat products, wood products and other animal feedstuffs.

Virginia currently ranks in the top five states exporting to Cuba. Virginia’s agricultural exports to Cuba have increased dramatically, from just $838,000 in 2003, the first year in which agricultural exports from the Commonwealth to Cuba were sold since the imposition of the1961 trade embargo.

Virginia sent more than $32 million worth of agricultural exports to Cuba last year, and exports should increase substantially in 2008 and 2009.

Since The Trade Sanctions Reform and Export Enhancement Act of 2000 (the Act), the United States has become Cuba’s most important food provider, exporting around $400 million worth of grains, cereals, poultry and other products. U.S. companies had not been able to trade with Cuba since a congressional embargo was instituted in 1961, but the Act authorized the sale of agricultural commodities, medicine and medical devices directly from the United States to the island nation.

Many of the trade and travel restrictions of the 1961 embargo remain in place, however, making it difficult for agricultural exporters wanting to take full advantage of trade opportunities in Cuba.

One impediment to increasing Virginia’s agricultural sales to Cuba is U.S. restrictions on export financing terms which can be offered by U.S. exporters. The Trade Sanctions Reform and Export Enhancement Act of 2000 provides that agricultural products may be exported to Cuba as long as they are paid for through a letter of credit from a third country financial institution or by payment of cash in advance. These financing restrictions limit the amount of product which Cuba is able or willing to purchase at any one time.

The export financing restrictions add additional banking fees to the process when third party financial institutions are used. This artificially drives up the cost of U.S. agricultural products to Cuba and may provide a pricing advantage to competing foreign suppliers.

Another impediment is the requirement for a U.S. Commerce Export License and a travel license. Obtaining licenses can be time consuming and is another barrier that foreign competitors do not have.

“I am hopeful ta new Presidential administration and Congress will thoroughly examine the existing embargo and consider easing or eliminating some of the current trade and travel restrictions,” said Haymore.

At a press conference in Cuba, Haymore told the assembled participants that agriculture is the No. 1 industry in Virginia, but that the state is losing more than 20,000 acres of working farmland to development each year. “My duty as agriculture commissioner is to find every single opportunity I can to move products into the global marketplace,” he said, “particularly as we face the challenges of a shrinking land and farmer base. Over the last five years, Cuba has become a valuable trade partner, and I believe expanded export opportunities to this island nation will continue to provide a ready market for our goods.”

Trade with Cuba is important to Virginia agriculture, the Commonwealth’s No. 1 industry. A recent study found agriculture has a $55 billion annual economic impact in Virginia. When combined with its sister industry of forestry, that impact climbs to $79 billion a year and provides jobs for more than 500,000 people, or one of every 10 employed Virginians.

“Exports really add to the positive side of the Virginia agricultural equation,” said Commissioner Haymore, “and Cuba is a bright spot in that export scene.”

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