August 14, 2003

 

Cuba Could Become Significant Importer of U.S. Agricultural Products

Cuba could be a significant market for U.S. exports of wheat, wheat flour, rice, corn, pulses, poultry and dairy products if trade embargoes were lifted, according to a study by a North Dakota State University researcher.

“We analyzed Cuban agricultural production and trade to estimate potential agricultural trade flows that could occur between the United States and Cuba if the embargo was completely lifted,” says Jeremy Mattson, NDSU Center for Agricultural Policy and Trade Studies. He conducted the study with Won Koo, the center’s director.

The Trade Sanctions Reform and Export Enhancement Act of 2000 loosened U.S. sanctions on agricultural and medical exports to Cuba, allowing it to buy from the United States using cash but not credit. The legislation did not reverse the U.S. ban on imports from Cuba.

The Cuban economy declined sharply in the early 1990s with the fall of the Soviet Union. Before that Cuba had enjoyed guaranteed markets at premium prices for some commodities such as sugar.

“Cuba needs trade with the United States to stimulate its depressed economy,” Mattson says. “If the United States eliminates sanctions, the Cuban economy will start to grow through trade with the United States as well as U.S. investments in the country. Current production constraints limit their ability to export, and without increased exports, foreign exchange constraints limit their ability to import.”

The United States would have to compete with the European Union, Argentina, and Canada in supplying wheat to Cuba and Argentina in supplying corn. However, because the two countries are so close in distance, the United States should have an advantage. Other Caribbean countries import almost all of their wheat and corn from the United States.

“If the United States could achieve the market share that it had before the Cuban crisis and Cuba’s economy recovers to the early 1990 level, U.S. exports could total close to 1 million metric tons of wheat, 370 thousand metric tons of wheat flour, and 250 thousand metric tons of corn,” Mattson says. “At those levels, Cuba would become an important market for U.S. agriculture.”

There is concern that relaxing trade sanctions could hurt the U.S. sugarbeet industry.

Before the fall of the Soviet Union in 1991, sugar accounted for more than 90 percent of the total value of Cuban agricultural exports and about 75 percent of the value of total exports. But exports have dropped from 7.2 million metric tons in 1990 to 2.9 million metric tons in 2001 and the value dropped from $4.3 billion in 1990 to $580 million in 2001.

In the first five months of 2003, the United States exported $89 million worth of agricultural products to Cuba under the cash only program. Cuba is likely to continue importing agricultural products at the same levels, Mattson notes.

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Source: Jeremy Mattson, (701) 231-8945, jeremy.w.mattson@ndsu.nodak.edu
Editor: Rich Mattern, (701) 231-6136, richard.mattern@ndsu.nodak.edu