Friday, February 11, 2011

The US Embargo Effect: Cuba is buying wheat from Canada, Argentina and the European Union rather than from the United States

Cuba represents missed wheat marketing opportunity

Tyler Jameson, U.S. Wheat Associates

Feb. 11, 2011 11:08 a.m


* With a population of 11 million people and wheat imports averaging over 800,000 metric tons (MT) Cuba is the largest wheat importer in the Caribbean.

* While the United States could supply the majority of these imports, the longstanding embargo and other barriers inhibit trade between the two countries.


With close proximity to U.S. ports, the Caribbean region is a natural destination for U.S. wheat exports.

Shipments from the Gulf of Mexico can reach destinations within a fraction of the time and cost it takes other wheat exporters to deliver their products to this region. As a result, the United States maintains a wheat market share of at least 80 percent in the Caribbean due not only to close proximity, but also high quality product and proven reliability as a supplier.

Unfortunately, American wheat farmers are missing out on a critical Caribbean market — Cuba.

With a population of 11 million people and wheat imports averaging over 800,000 metric tons (MT), Cuba is the largest wheat importer in the Caribbean. While the United States could supply the majority of these imports, the longstanding embargo and other barriers inhibit trade between the two countries.

American wheat farmers are missing out on at least $150 million in potential sales based on current export levels and prices. U.S. wheat sales to Cuba have fallen from a high of 500,000 MT in 2007 to 119,000 MT in 2009/10. Sales to date for 2010/11 to Cuba are only 32,500 MT, while U.S. wheat exports to the entire Mexico, Central America and Caribbean region are up 32 percent.

U.S. Wheat Associates has long supported elimination of sales barriers to Cuba and, with the entire U.S. wheat industry, has actively promoted open access to the Cuban market for more than 12 years. In early 1998, USW and state wheat commissions organized and funded charitable donations of wheat flour to humanitarian groups working in Cuba.

Industry representatives then traveled to Cuba over the next two years to expose their bakers to U.S. wheat flour, before the United States permitted sales of food and medicine. The Trade Sanctions Reform and Export Enhancement Act in 2000 finally allowed agricultural sales to Cuba. After a devastating hurricane in late 2001, Cuba made its first wheat purchase of 40,000 MT of hard red winter wheat and 10,000 MT of wheat flour in 2001.

U.S. wheat exports began to flow and exports increased every year until a change in the rules made agricultural sales more burdensome and expensive. As a result of tightened U.S. restrictions and the lack of credit for U.S. purchases, Cuba began sourcing more wheat from competitors such as the EU, Canada and Argentina.

Recently, the Obama administration announced it will take steps to allow more Americans to travel to Cuba for religious, educational and family purposes. While these changes are welcome, more steps are needed to ensure a steady supply of safe and high quality food produced by U.S. wheat farmers to the people of Cuba.

Source: Western Farm Press

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