Normalized relations with Cuba seen positive for U.S. agriculture

Chicago | Reuters — The normalization of diplomatic relations between the United States and Cuba is an “important opportunity” for U.S. agriculture that will make exports of U.S. farm goods cheaper, easier and less time consuming for shippers, U.S. Agriculture Secretary Tom Vilsack said Wednesday.

President Barack Obama announced on Wednesday that the U.S. plans to restore diplomatic relations with Cuba more than 50 years after they were severed — a major policy shift after decades of hostile ties with the communist-ruled island.

U.S. law exempted food products from an embargo on U.S. trade with the Cuba, but cumbersome rules on how transactions were executed made transactions difficult and costly — hurdles the U.S. policy shift will eliminate.

Though U.S. agricultural trade with Cuba was allowed, payment was required in advance and rules stated that money must be routed through third parties to avoid direct contact between U.S. and Cuban banks.

“The policy change is that now payment can be made while goods are in transit, which is the normal course of business, and no longer does the money need to be routed through a third party,” Vilsack told reporters on the sidelines of the a U.S.-China Joint Commission on Commerce and Trade meeting.

“This removes a friction that makes it easier, less expensive and less time consuming to do business for American agricultural products.”

In addition, the U.S. enacted policy changes governing sales of farm equipment to Cuba, which would benefit U.S. manufacturers.

Vilsack would not speculate on which farm products could benefit the most and was unsure how lucrative the market could ultimately be for U.S. agricultural products.

“There’s no comparable market in the sense that you’re dealing with a fairly significant set of consumers 90 miles offshore,” he said.

He had also not analyzed how the normalization of relations would impact imports of Cuban agricultural products such as sugar.

David MacLennan, CEO of U.S. agrifood giant Cargill, said in a release Wednesday the history of trade liberalization “has clearly led to economic and social benefits for others.”

Cargill said it has long supported ending the U.S. embargo on Cuba and backed humanitarian exemptions on food shipments.

Devry Boughner Vorwerk, a Cargill vice-president and chair of the U.S. Agriculture Coalition for Cuba, added that the policy move “will create a new market for U.S. farmers, ranchers and food companies, and give the Cuban people improved access to affordable food.”

— Karl Plume reports on ag commodity markets for Reuters from Chicago. Includes files from Network staff.

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