South Florida Sun-Sentinel
Havana turning to friendlier nations
By Doreen Hemlock
Posted November 4 2006
HAVANA · Six years after Congress allowed U.S. companies to sell food to Cuba, annual U.S. sales to the communist-led island are slowing. Havana prefers trading with friendlier nations, including Venezuela.
The decline is clear at Cuba's premier international trade fair now under way in Havana, where the number of U.S. exhibitors is down sharply from previous years. And Americans are far from a top attraction. Visitors are crowding pavilions featuring vendors from 47 other countries, including China, Argentina, and Canada.
Florida-based entrepreneur Michael Mauricio can attest to the shift. He has attended trade fairs in Cuba for at least five years and seen many U.S. companies give up on the market. One reason: Recent U.S. rules require Cuba to pay cash in advance, while other countries extend credit to the island, he said.
"If you've got to pay cash, it becomes strenuous for any buyer," said Mauricio of Florida Produce Co. of Tampa, which supplies apples, onions, dried fruit and other wholesale items to the island with sales of hundreds of thousands of dollars a year.
Mauricio said his own sales to Cuba have remained steady in recent years, because he aggressively markets his products to the nation of his ancestors. For example, Florida Produce recently scored an order for peanuts, almonds and filberts for a new chocolate factory in Cuba, he said.
But competition is stiff and increasing, as Cuba's economy rebounds and more countries seek a slice of the island's growing trade, especially China.
"China is a force to be reckoned with in the Americas and all over the world," said Mauricio, noting the Asian giant has increased its credit to Cuba and beyond.
Last year, the value of U.S. agricultural sales to Cuba fell to $350.2 million, down about 11 percent from the previous year. And U.S. food sales to Cuba through August this year slid 5 percent from the same period last year, to $229.3 million, according to data compiled by the U.S.-Cuba Trade and Economic Council Inc., a New York-based group that monitors business with Cuba.
The cash-only requirement is not the only problem, however, according to a recent report by John S. Kavulich, a senior policy advisor to the council.
Kavulich said Havana has long prodded U.S. suppliers to seek changes in the four-decade-old policies that ban most business with Cuba, a strategy aimed to squeeze the island's communist government and hasten regime change. But Havana's purchases from U.S. food suppliers in more than 30 states have yet to change Washington's hard-line approach, so Cuba sees little leverage in buying from the United States.Cuba also has less reason to pay cash for food from the United States, now that it enjoys financial largesse from Venezuela, which provides subsidized oil, and from China, which offers hefty credit. Other countries including Brazil, Vietnam, Mexico, Canada, and France barter with or offer other trade assistance to Cuba, according to Kavulich.
Even so, many U.S. companies savor opportunity in Cuba's economic rebound, fueled by tourism, strong prices for its nickel exports and money sent back from Cubans abroad.
Through September, the island's total trade jumped 27 percent, compared to the same period last year. In all, imports and exports should top $10 billion this year, the largest value since the collapse of the Soviet bloc 15 years ago, Foreign Trade Minister Raul de la Nuez has said.
To tap expanding opportunities, many U.S. food companies new to Cuba are tailoring their sales pitch to the island's unique realities, including its serious cash shortage.
West Central Soy of Ralston, Iowa, is offering soy feed to boost milk production by Cuba's dairy cows. More local production will help Havana reduce its milk imports, saving cash, said Leopoldo Orozco, who works with West Central from Mexico.
Food distributor Cheney Brothers Inc., based in Riviera Beach, touts itself as a one-stop shop for a wide range of goods, with more than 16,000 items. Cuba can buy small volumes of many diverse products and receive them consolidated into one shipment, said Eduardo Mangel, a business development consultant for Cheney who works from Costa Rica.
Some U.S. food companies hope a foot in Cuba's door now will bode well for the long term, when Washington's embargo is lifted on all trade with the island. Executives note the United States was Cuba's top trade partner before the embargo and represents the logical business partner for a Caribbean neighbor just 90 miles off Florida's shore.
But for now, with the Castro brothers still in power, Venezuela holds the No. 1 spot among Cuba's foreign suppliers, followed by China and Spain. And China commands the largest presence among the more than 700 vendors at this week's trade fair in Havana, overshadowing the United States.
Doreen Hemlock can be reached at email@example.com.