U.S.-Cuba Agricultural Trade: History, Current Status, and Future Potential Based in part on the ERS special outlook report written by: Steven Zahniser, Bryce Cooke, Jerry Cessna, Nathan Childs, David Harvey, Steven Zahniser and Nathan Childs Mildred Haley, Michael McConnell, and Carlos Arnade USDA Economic Research Service Webinar hosted by the University of Arkansas Cooperative Extension Service Little Rock, AR, and Washington, DC, October 28, 2015 Views expressed are those of the author and should not be attributed to the Economic Research Service, USDA, or other entities participating in this research.
U.S.-Cuba agricultural trade before 1959 was substantial • Annual averages for FYs 1956-58: – U.S. agricultural exports to Cuba = $139 million – U.S. agricultural imports from Cuba = $408 million • Annual averages for FYs 1956-58, valued at commodity prices for 2012-14: – U.S. agricultural exports to Cuba = $600 million – U.S. agricultural imports from Cuba = $2.2 billion • Leading U.S. agricultural exports to Cuba: – Rice, lard, pork, wheat flour • Leading Cuban agricultural exports to the United States: – Cane sugar (about 2.8 million metric tons per year), molasses, tobacco, coffee 2
Relaxation of embargo in 2000 allowed U.S. agricultural exports to Cuba to resume • Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000 – Authorizes U.S. exports of food, medicine, and medical equipment to certain countries, including Cuba – Does not provide a legal framework for the resumption of U.S. agricultural imports from Cuba – Cuban Liberty and Democratic Solidarity Act of 1996 defines conditions for suspending the embargo (transitional government takes power in Cuba) and ending it (freely elected democratic government takes power) • Following Hurricane Michelle in 2001, United States quickly establishes itself as Cuba’s leading supplier of agricultural imports • U.S. agricultural exports to Cuba: – Annual average, 2012-14 = $365 million – Leading commodities: chicken meat, corn, soybean meal, soybeans – U.S. exports are declining: Only $286 million in 2014 – January-August: $118 million for 2015, versus $223 million for 2014 3
Cuba’s agricultural imports from the world during 2012-14 were concentrated in grains, animal products, and oilseeds Nonfat dried milk 10% Chicken meat 11% Other products 35% Wheat 13% Source: Export data of national Corn Soybean oil governments, as 12% 5% cited by Global Rice Soybeans Trade Information 10% 4% Services. 4
U.S. sales limited by credit and payment restrictions associated with embargo 2,500 Upward trend Imports include: wheat from EU; corn, rice, 2,000 soybeans, soy products, poultry meat from Brazil; rice from Vietnam; and 885 Millions of dollars nonfat dried milk from 1,500 820 812 504 710 New Zealand 618 620 473 330 1,000 377 340 385 326 516 455 379 176 166 288 171 348 257 149 58 103 141 369 338 165 500 279 434 23 246 149 310 154 153 224 Sources: 37 685 525 57 USDA/FAS, and 193 459 431 384 346 349 353 350 321 286 248 export data of 217 140 national 0 5 governments, as 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 cited by Global Calendar year Trade Information United States European Union Brazil Rest of world Services. 5
China and the European Union are the leading buyers of Cuban agricultural exports 800 Main exports: Cane sugar 700 46 (about 90 percent), honey Fluctuates with fortunes 600 of sugar exports 53 76 44 500 Millions of dollars 61 13 36 50 420 74 38 43 400 67 51 281 21 173 118 173 46 247 25 45 68 171 30 18 300 58 26 146 53 85 48 104 100 103 200 157 119 103 154 137 142 303 280 229 226 211 100 195 189 166 Source: Import data of 128 121 111 96 91 88 national governments, as cited by Global Trade 0 Information Services. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 China and Hong Kong European Union Russia Rest of world 6 6
Cuba’s role as a sugar producer and exporter greatly diminished Millions of metric tons 0 1 2 3 4 5 6 7 8 9 1959/60 1961/62 after the dissolution of the Soviet Union 1963/64 1965/66 1967/68 1969/70 1971/72 1973/74 1975/76 1977/78 1979/80 1981/82 Marketing year 1983/84 1985/86 1987/88 1989/90 1991/92 1993/94 1995/96 1997/98 1999/2000 2001/02 2003/04 Source: USDA/FAS. 2005/06 2007/08 2009/10 Exports Production 2011/12 2013/14 7
Cuba’s sugar exports by destination, 2000-14 3,000 2,500 2,000 Metric tons (thousands) 1,500 1,000 500 Source: Import data of national governments, as 0 cited by Global 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Trade Information Services. China European Union Russia Rest of world 8
Cuban Natural Honey • Cuban exports, 2012-14 average: – Total: $17 million (about 6,000 MT) Mostly to Germany: $12 million (about 4,000 MT) o • “Artisanal” honey: Year-round, warm climate permits honey production in different parts of Cuba o throughout the year Free from chemical residues, as certified by a German lab o Cuban origin also emphasized in marketing o • Mixed economy approach Most producers organized in some type of cooperative (Credit and Service o Cooperatives, Basic Units of Cooperative Production, Agricultural Production Cooperatives) Output sold to the state-owned APICUBA o • Still a luxury good for most Cubans 9
Cuban Poultry Sector: Emphasis on Eggs over Meat? • Annual per capita consumption, broiler meat: 21 kg in Cuba versus 47 kg in United States • Mixed economy approach to production (state firms, associations, family production) • State firms’ share of egg production is larger than its share of the of overall poultry stock • Government institutions (Institute of Poultry Research includes a National Poultry Genetic Bank) • March 2015: 17 officials from state-run egg distribution company sentenced 5-15 years each for misappropriating more than 8 million eggs in 2012 and selling them on the black market • June 2015: Suspension of poultry imports from U.S. due to concerns about avian influenza 2008 2009 2010 2011 2012 2013 2014 Egg production Billions Cuba, total (ONE) 2.3 2.4 2.4 2.6 2.5 2.7 -- State poultry firms 1.9 1.9 1.9 2.0 1.9 2.0 -- State poultry firms, share (%) 81 77 78 75 76 75 -- U.S., total (NASS) 90.2 90.7 91.8 92.5 94.4 97.6 99.8 Arkansas (NASS) 3.2 3.0 3.0 3.0 3.0 3.0 3.0 Stock of birds, end of year Millions Cuba, total (ONE) 29.2 30.8 31.0 33.7 30.2 32.4 -- State poultry firms 12.6 13.3 13.4 14.5 13.0 14.3 -- State poultry firms, share (%) 43 43 43 43 43 44 -- U.S., total (FAOSTAT) 2,295.0 2,180.2 2,207.1 2,187.5 2,190.3 2,164.3 -- Broiler production Thousands of metric tons Cuba, total (PSD) 33 33 34 35 35 32 34 U.S., total (PSD) 16,561 15,935 16,563 16,694 16,621 16,976 17,299 Arkansas (using share reported by NASS) 2,095 1,929 2,001 1,952 1,927 2,003 2,025 Sources: Cuba, National Statistical and Information Office (ONE); USDA-FAS; USDA-NASS; and FAO. 10
Cuba’s agriculture-related exports have increased dramatically over the past 15 years 300 250 200 Millions of dollars 150 100 50 Source: Import data of national 0 governments, as 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 cited by Global Trade Ethanol (HS 2207) Cigars and cigarettes (HS 2402) Rum and tafia (HS 220840) Information Services. 11
U.S.-Cuba Possible Future • Executive Actions announced in December 2014 and September 2015 could lead to a more normal economic relationship with Cuba • Some of these actions may facilitate U.S. agricultural exports to Cuba: Revised definition of “cash-in-advance” reduces Cuba’s need to use third-country o financial institutions when paying for U.S. agricultural products Higher ceilings on remittances to Cubans other than close relatives could increase o Cuban disposable income as well as the capital available for business investments Allowing sales of agricultural equipment to small farmers could motivate additional o imports of agricultural products: for instance, equipment sales to poultry producers could lead to increased feedstuff imports Relaxed travel restrictions, development of telecommunications sector, and ability o to establish a physical presence in Cuba (i.e., an office or warehouse) could strengthen Cuban ties with the U.S. agribusiness and academic sectors and facilitate business travel to Cuba • Actions do not provide legal framework for: Resumption of Cuban agricultural exports to the United States o Use of credit and financing to leverage U.S. agricultural exports to Cuba o 12
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