Cuba's Oilseeds and Products Market
There is no indigenous oilseed production in Cuba, which leads to dependency on imports of protein meal for feed use and vegetable oil for food use. There is also no modern processing plant in Cuba, which limits potential for whole oilseed imports. Currently approximately 15,000 metric tons of soybeans are imported for soymilk. As the Cuban economy begins to show growth, the demand for oilseeds and products (mainly soybean meal and soybean oil ) is expected to increase.
Cuba’s economic condition creates a volatile supply situation for inputs for the livestock sector. Most utilization of soybean meal is to support the pork industry. Pork is the largest domestic livestock industry due to taste preferences. While pork enterprises can generally operate using whatever feedstuffs are available, poultry does not adapt as easily when quality feeds are not accessible.
In 1989, Cuba’s livestock output peaked with poultry and pork production each estimated at 100,000 tons; however, by 1994 production had fallen 50 percent. In 1993, the Cuban Government started to make changes in the agricultural sector that allowed for the privatization of the pork industry. Pork production has since rebounded to more than 70 percent of the 1989 level in 1999. The United Nation’s Food and Agriculture Organization (FAO) estimated Cuba’s annual poultry production at 62,000 to 64,000 tons annually, and its pork production at about 73,000 tons.
Privatization and the rebound in pork production has spurred conservative growth in protein meal demand. Soybean meal imports have averaged approximately 277,000 metric tons during the past five years. Soybean meal represents 93 percent of total protein meal (soybean meal, sunflowerseed meal, and some fish meal) imported. In 2000/01, Cuba’s protein meal import requirements are forecast to increase to 315,000 tons, still below 1989 record imports of more than 400,000 tons. Brazil and Argentina have been the sole suppliers of soybean meal since the U.S. sanctions on Cuba.
As with protein meal, Cuba is dependent on imports to supply its vegetable oil needs. Per capita vegetable oil consumption is currently estimated at 6.3 kilograms, down 65 percent from 17.5 kilograms in the mid-1980's due to the depression in Cuba following the break-up of the former Soviet Union and loss of trade and economic support. Soybean oil represents more than half of total vegetable oil consumed. In 2000/01, total vegetable oils imports are forecast at 70,000 tons with soybean oil accounting for 40,000 tons. This is 60 percent below peak trade and consumption of 173,000 tons reached in the 1986/87 marketing year. Sunflowerseed oil is the preferred oil in the country and historically was the sole vegetable oil traded. In 1988/89, soybean oil entered the market and captured market share in response to high prices for sunflowerseed oil, which at that time commanded a $65 per ton premium over soybean oil.
Exports and the U.S. Law
It is unclear what duties Cuba would apply to imports from the United States. Cuba applies non-Most Favored Nation (MFN) duties at roughly twice the MFN rate. Provided the U.S. proximity advantage is not negated by lower tariffs for competing suppliers or other barriers, the U.S. could capture a major share of Cuba’s future soybean meal imports. The United States could be very competitive in soybean meal trade based on price, quality and the ability to provide just-in-time shipments that would save Cuba millions in fiscal transaction and storage costs. Competition for the vegetable oil market will be intense, but opportunities will exist for the U.S. to supply soybean oil and sunflowerseed oil.
Logistically, Cuba’s ports and facilities are adequate. The roads are better than most Caribbean nations. However, most existing infrastructure needs improvement.
Since the Trade Sanctions Reform and Export Enhancement Act was signed into law in 2000, U.S. exporters have been allowed to sell agricultural commodities to Cuba. However, the changes in U.S. trade restrictions with Cuba were not comprehensive. Exporters should check with USDA, the U.S. Department of State, and the U.S. Department of the Treasury’s Office of Foreign Assets Control for the most up-to-date regulations and requirements for trade with Cuba.
For more information on this fact sheet please contact Flo Bradley at (202) 720-2257 or via email at email@example.com
For more information on trade with Cuba, see the Frequently Asked Questions: Trade With Cuba at http://www.fas.usda.gov/itp/cuba/cuba.html on the FAS website.