Monday, March 30, 2009

If Cuba embargo eases, Florida would gain

St. Petersburg Times

By David Adams, Times Latin America Correspondent

In Print: Monday, March 30, 2009

Back in the days before the Kennedy administration slapped an economic embargo on Cuba, Tampa shipping agent A.R. Savage & Son was at the forefront of a lucrative trade with the island. The Tampa area was a major supplier of cattle, and ships brought tobacco for the local cigar industry. There was even a twice-weekly passenger ferry service.

In February 1962, the embargo brought all that to a halt.

Now, 47 years later, many Florida businesses wonder if another major change is in the offing.

Several bills working their way through Congress would make travel and trade easier. In the past, bills like these ran into strong White House resistance and died, but the Obama administration appears more flexible.

"This represents a huge opportunity for our state in these difficult times," said Arthur Savage, president of A.R. Savage & Son. "It's needed now more than ever."

Across the state, companies are dusting off their Cuba business plans, from cruise lines to paint suppliers, wondering what the future of trade with Cuba might look like.

• • •

Look no further than Splash Tropical Drinks, Florida's pioneer in the new Cuba market. Owner Richard Waltzer, 40, took advantage of a crack in the embargo seven years ago to start selling his juice and daiquiri concentrates — made with Florida citrus — for Cuba's tourist industry.

Under a 2000 law, the United States lifted trade restrictions on food, agriculture and some medical supplies. From $1.3 million in 1992, exports to Cuba rose to $718 million last year, just a taste of what full commercial relations might mean.

Waltzer's multimillion-dollar business with Cuba has grown at a 20 percent rate annually since he began. He added four jobs at his Fort Lauderdale firm just to handle Cuba.

Rancher John Parke Wright of Naples has helped arrange the sale to Cuba of 1,100 head of cattle, worth $3 million, including some from Florida. Last year, he brokered the shipment of 2,500 "straws" of Brahma bull semen to be shipped from Texas to boost the quality of the cattle on the island.

If the embargo were lifted, that kind of agricultural trade would grow significantly, concluded a 2007 government report by the International Trade Commission. Experts at the University of Florida calculated that Cuba's agricultural trade could be worth more than $1.7 billion.

Ultimately, the United States could provide more than half of Cuba's agricultural, fish and forest products, the report found, including fresh fruits and vegetables (an estimated $65 million annually); milk powder ($41 million); processed foods ($34 million); wheat ($33 million); and dry beans ($22 million).

Most of the existing Cuba trade consists of Midwest grains shipped from ports in Houston and New Orleans. Arthur Savage & Sons in Tampa handled 18 shipments last year. It has also shipped phosphate-based animal feed supplements produced by Florida companies, loaded at the Port of Tampa and Port Manatee.

"Cuba is a place you can do business," Jay Brickman, vice president of Jacksonville shipping company Crowley Maritime, told a Cuba Trade Expo in Miami last week, praising Cuba's increasingly modern port facilities.

The trade expo was the first time Miami has staged a major gathering of U.S. companies dealing with Cuba, a hot-button issue in the past for exiles. As a sign of the times, the meeting attracted only a handful of protesters.

"Normally we wouldn't care so much about trade with Cuba," said conference organizer Jonathan Bedard. "But in this rough economic climate it's worth thinking about how many more American jobs there might be if we open it up."

• • •

Even without the embargo, it is unlikely Cuba would be transformed overnight into a capitalist economy.

"Cuba is not a heroine in a romantic novel waiting to be ravaged by American businesses," said Robert Muse, a Washington attorney and legal expert on Cuba issues.

Still, Cuba's 11 million population makes it the largest market in the Caribbean and therefore an attractive opportunity for investment if the embargo ended.

If Cuba is serious about raising its food and energy production, the opportunities will surely be there, according to William Messina, a Cuba agriculture expert at the University of Florida. There would be strong demand for Florida farm equipment, as well as seeds, fertilizers, pesticides and herbicides as Cuba rebuilds its feeble agribusiness sector.

"That could all be supplied relatively easily," he said.

Another major beneficiary would be the travel and cruise industry. Florida would stand to benefit as Americans flocked to the island, by plane and ship. Between 550,000 and 1 million U.S. citizens would visit Cuba annually, the International Trade Commission estimated.

Cruise lines have long salivated at the idea of putting Cuba on their itineraries. "Right now the cruise lines hate Cuba because they have to sail around it," said John McAuliff, director of the Fund for Reconciliation and Development in New York, who supports lifting the embargo.

Perhaps the biggest immediate postembargo impact would be in container cargo as Cuban-American exiles flock to major outlets such as Home Depot, Office Depot and Costco, to ship goods not available in Cuba to their relatives.

If Cuba lifted restrictions on private enterprise, a move it has hesitated to make for fear of losing economic control, there could be a flourishing of small stores, selling domestic appliances, computer goods, dry foods, car parts and beauty products, suggests Jorge Pinon, a former oil executive and energy fellow at the University of Miami.

"The nickel and dime business is going to be humongous," he said.

The Port of Tampa would gain if Cuba became a hub for large ships coming through the Panama Canal, said port director Richard Wainio. Currently those ships must travel to New York to unload, and Tampa and central Florida end up receiving most container cargo by rail.

"If those shipments can be broken up and placed on smaller vessels, that would be huge for Tampa," said Wainio, noting that Port Ybor, a modern, $20 million facility, is virtually unused.

In the 1950s, Savage says, Cuba was his company's largest customer. "Those days would return very quickly once the embargo changes," he said. "I expect it will represent the largest challenge that I will see in my working life."

David Adams can be reached at dadams@sptimes.com.

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