Timothy J. Galvin
Administrator, Foreign Agricultural Service
U.S. Department of Agriculture
to the U.S. International Trade Commission
If sanctions against Cuba were lifted and the U.S. Department of Agriculture (USDA) could use all of its export programs such as credit guarantees, market development, and food aid, we estimate that U.S. agricultural exports to Cuba could reach $300 million within a year or two. This would amount to about half of Cuba’s estimated import market. We believe the actual value of U.S. exports will be dependent on the level of export credit guarantees available to facilitate trade. This program will be necessary because Cuba has a low level of foreign reserves and limited access to foreign trade credits. U.S. competitors such as the European Union (EU) have been successful when they offered similar arrangements.
With complete normalization of trade relations, Cuba could become a $1 billion market for U.S. agricultural producers within five years, making it our second largest market in Latin America after Mexico. However, this potential cannot be reached without substantial investments in Cuba’s economy and a strengthening of its trade balance. As Cuba’s economy responds to increased foreign investment, incomes will rise and food consumption will increase.
The U.S. commodities with the most market potential are wheat, feed grains, rice, beans, vegetable oil, and meat and dairy products, although other products may benefit as well.
Grains and Pulses: The United States is well positioned to supply most of Cuba’s grain demand if trade is normalized. Cuba imports over $320 million in grains, grain products and pulses annually -- making up almost 50 percent of its annual agricultural imports. The $100-million wheat market and $40-million flour market were dominated by Canada until the late 1980's. Now, the EU, notably France through the use of export credits, supplies 90 percent of Cuba’s wheat imports. Canada still has 95 percent of Cuba’s $40-million peas and beans market. Cuban rice imports total $86 million per year, supplied principally by Vietnam and China. Feed grain imports are low; however, the U.S. industry estimates that Cuba could import up to 500,000 tons a year (roughly $40 million) from the United States if trade restrictions were lifted.
Oilseeds: The lack of domestic oilseed supplies coupled with a significant livestock sector make Cuba a small but consistent market for protein meal. Cuba’s protein meal imports have averaged just under $50 million over the past five years. Most of the protein meal imported into Cuba is soybean meal from Argentina. Cuba's vegetable oil imports, primarily soybean and sunflowerseed oil, have averaged $50 million over the past five years, mainly from Argentina and China. With the use of USDA export programs, the United States could supply as much as half of Cuba's vegetable oil and soybean meal imports.
Poultry, Meat and Dairy: Cuba holds significant opportunities for the U.S. poultry industry. Poultry meat currently accounts for nearly 40 percent of total meat consumption in Cuba and nearly a quarter of this is supplied by Canada and France. Cuba represents a $22-million poultry market that could grow to around $100 million.
Cuba imports little beef or pork. The immediate potential for U.S. beef and pork exports would be to hotels and restaurants to supply Cuba’s developing tourist industry.
Cuba imports about $33 million worth of whole milk powder and nonfat dry milk, primarily from the EU and New Zealand. The short-term potential for U.S. dairy exports to Cuba is in the order of $10-$15 million for products such as milk powder and cheese. With increased economic growth, we estimate the long-term (3-5 years) potential for all U.S. dairy exports to Cuba to reach around $50-$60 million annually.Cotton: Cuba produces very little cotton. Its textile industry shrank dramatically after 1990, and Cuba’s cotton imports fell from about $60 million to $10 million. The United States could garner at least half of Cuba’s cotton imports, which could amount to $30 million if Cuba’s textile industry were to recover.
Fruits and Vegetables: Cuba has considerable potential for expanding its own fruit and vegetable production; however, U.S. growers could find a niche market in Cuba, especially as tourism grows. Cuban imports of horticultural products did not fall like other agricultural products during the 1990’s, with imports totaling $69 million in 1998. The major imported items were fresh potatoes, canned fruits and vegetables, wine, apples and dehydrated vegetables.
Overall, there clearly is potential for U.S. agriculture in Cuba if all trade restrictions are lifted. However, developing the market will take time and investment, and the use of U.S. export programs will be essential. Without the use of these tools, the market for U.S. agriculture will be about $25-$50 million annually. In addition, U.S. exporters face significant competition from established exporters already positioned in the market. But in the long run, with the opportunity to use U.S. export programs and with our proximity to the market and the quality and competitiveness of U.S. products, market access could pay off for American agriculture.