Proposed Trade With Cuba Shows Little Benefit To Florida Agriculture

Chuck Woods (352) 392-1773 x 281
William Messina, (352) 392-1826, ext. 308

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GAINESVILLE—Pending congressional legislation allowing sales of food and medicine to Cuba could be the first step toward a $1 billion-a-year agricultural export market for the United States, says a University of Florida trade analyst.

However, it likely would take years for such a market to develop, and benefits to Florida agriculture would be limited.

“Cuba would certainly like to be able to buy U.S. agricultural products, but the most obvious question is how will they pay for these imports?” said William Messina Jr. with UF’s Institute of Food and Agricultural Sciences.

Messina is co-director of a research team in UF’s food and resource and economics department that has been studying Cuba’s agricultural sector since 1993 to assess the economic implications of lifting the trade embargo. Before the embargo, Cuba was the largest supplier of horticultural crops to the United States.

While details of the legislation are still being negotiated, the current House version stipulates that Cuba pay for U.S. goods with hard currency. U.S. government loans and credit, private financing in the United States and barter with American companies would not be permitted.

“Cuba’s hard currency reserves are in critically short supply,” Messina said. “For that reason, a large proportion of Cuba’s current imports, including those of food and agricultural commodities, are made under special credit terms or barter arrangements. This raises a question as to how much Cuba would be able to purchase from the U.S. in hard currency.”

Questions also arise regarding the extent to which U.S. agricultural commodities will be competitive in the Cuban market. Transportation costs from the United States to Cuba would offer savings over shipments from other countries. But, he said, those savings may not offset price differences of U.S. agricultural crops that may be of higher quality than what Cuba now purchases on the world market.

Passage of the legislation could lead to other developments, Messina said.

“Cuban officials have already criticized the proposed legislation’s failure to address the issue of their being able to export to the U.S.,” he said. “If the legislation passes, I suspect that industry groups in the U.S. will begin lobbying to allow Cuba to export to the U.S. to help generate the hard currency they desperately will need to pay for our exports.

“The question of Cuban exports to the U.S. will be even more politically charged than the lobbying efforts leading up to the provisions now under consideration,” he said.

Messina said such discussions would raise the stakes for Florida’s agriculture and marine fisheries industries because Florida and Cuba produce many of the same commodities — sugar, citrus, vegetables, tropical fruit and seafood products — in many cases on similar seasonal patterns.

“The U.S. has many sanitary and phytosanitary regulations in place that would govern imports of agricultural products from Cuba,” he added. “Satisfying these regulations would take time so this likely would not be an issue of immediate consequence for Florida’s agricultural sector.”

Messina said UF research has shown the potential for competitive challenges as well as opportunities for complementary trading relationships developing over time.

“We are aware of firms in Florida that come out on both sides of the issue of trade with Cuba,” he said.

The UF project is not intended to suggest any change in U.S. policy, he said. But it is designed to provide current and objective information for state and federal elected officials, government representatives, private sector companies, industry associations, consumer groups and other interested parties for discussion and debate on the controversial issue.

“In the final analysis, the short term impact of the legislation in its current form is not likely to be highly significant for Florida,” Messina said. “Cuba is a net importer of rice, and Florida does produce rice, but there are other factors that could affect the participation of Florida in rice exports to Cuba. Florida also produces potatoes, milk, poultry products, and limited quantities of corn, selected cereal grains and cotton, all of which are imported by Cuba.”

Cuba will be an important potential market for agricultural inputs (fertilizers, pesticides, animal feed, machinery and implements) as well, Messina said. However, while Florida eventually could be a major player in providing those products to Cuba, legislation now being negotiated does not include exports of agricultural inputs.



Posted: July 13, 2000

Category: UF/IFAS

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