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Cuba and the Illinois Farm Bureau

Guajiros for Change!

by BENJAMIN WILLIS

US agricultural exports are usually the last thing the casual observer of the US-Cuba conundrum thinks about. It’s not a sexy topic like the Cuban 5. It’s not politically charged like Alan Gross’ situation. It doesn’t engender the emotional response from within the Cuban-American community that travel restrictions and remittance allowances do.  It doesn’t draw the ire of the mediocre Miami-based “think-tanks” that divide their time between denouncing the Cuban government and pushing uber-capitalist “solutions” for Cuba’s future.  In fact, most Americans have no idea that the United States actually does business with Cuba to the tune of several hundred millions of dollars a year.

Almost all of these transactions are in the form of food exports to the island nation and because of this most of the agriculture sector in the US is mostly opposed to the embargo imposed upon Cuba.  Despite a fifty-year period of economic strangulation implemented by its neighbor to the north this communist country ranks relatively high as an export market for US agriculture products.

After the passing of the TSRA (Trade and Sanctions Reform and Export Enhancement Act) in 2000 the United States has been supplying the Cuban market with a number of food products.  This legislation in no way makes selling agricultural products to Cuba easy. The onerous regulations of this bill make it extremely difficult for the average producer of products like corn, soybeans, and wheat to export their harvests from a country that declares it self to be the greatest champion of free trade and open markets in the world.

Despite these obstructions to free trade several American organizations have been building relations with Cuban organizations in charge of procuring and growing food products for just over eleven million Cubans plus the annual onslaught of foreign tourists.  Between June 28th and July 2nd a delegation organized by the Illinois Farm Bureau (IFB) will be doing its part to reinforce the unique relationship between Illinois farmers and the Cuban people.

Tamara Nelsen, the Senior Director of Commodities at the IFB, articulated the goals of the market study trips that the bureau takes regularly.

Since we are a grassroots membership organization of farmers, the overall goal of all of our Market Study Tours is to train a cadre of farmer leaders on agricultural trade and marketing issues.  This enables us to have a strong voice of volunteer leaders on agricultural, marketing, and trade issues on a local, state, and national level.  Our members make their voices heard through support of legislation at those same levels, to facilitate improved agricultural trade and economic development.  For Cuba, we expect to meet with government officials and importing companies to help build relationships necessary to further trade between our nations.

The group consists of eighteen farmers and other members from the IFB, the Illinois Agriculture Department, and Prairie Farmer Magazine.  They are mostly fourth and fifth generation farmers who manage family farms that range in size between 500 and 5800 acres.  They grow corn, soybeans, wheat, hay, sorghum and manage a mix of livestock including cows, steers, hogs, goats, hens, and some freshwater shrimp.  They are members of their local 4-H clubs, county farm bureau boards, churches, and other agriculture and social organizations within their local communities.  In short, they are typical farmers, salt of the earth.  People who produce your food that are usually never thought about when you sit down at the dinner table or catch a snack on the go.  These are our ambassadors for normalization with Cuba and they are going down to La Habana to do something about it.

The IFB is a state association affiliated with the American Farm Bureau Federation that states as part of its policy:

We support immediate normalization of trade and travel relations with Cuba.

The national organization also calls for the US government to “…enhance its procedures and responsibilities to protect US interests…” in several free trade agreements and classifies “…sanctions and embargoes that affect U.S. agriculture…” as “…unfair practices.”  The IFB’s policy book goes even further:

We support resumption of normal trading relations with Cuba (including elimination of restrictions on U.S. citizens traveling to Cuba and simplifications of licensing and shipping requirements for sales to Cuba).

Even without normalization of relations between US and Cuba there is still potential for increased agricultural trade between the two nations. Is it necessary to revise the TSRA or ultimately, repeal, the odious Helms-Burton Act or are there other ways of bolstering a potentially robust exchange between the two sovereign nations?  Hopefully the delegation from Illinois will be able to better determine that during their four-day stay in La Habana.

Land of Lincoln and Cuba

Illinois’ involvement with reaching out to Cuba started when then-sitting Republican governor George Ryan made his historic visit to La Habana in 1999.  He and a delegation representing Illinois’ various business sectors met with Fidel Castro and other members of the government in order to engage in negotiations that would allow for the export of certain products that this state offered on the world market.

Curiously, a Republican controlled House with speaker Dennis Hastert, another Illinois Republican, and majority deputy whip Tom DeLay hammered the TSRA (Trade and Sanctions Reform and Export Enhancement Act) through in 2000. Bill Clinton, always looking for a sweet deal, signed it.

US exports from 1992 to 2001 averaged a little over 5 million dollars a year in a variety of agricultural, pharmacological, and other products.  After Hurricane Michelle leveled a large percentage of Cuba’s harvests and stocks in 2001 the United States began to export products totaling in the hundreds of millions of dollars.

According to the U.S. Department of Agriculture by 2002 the US had become Cuba’s largest agricultural import supplier by providing roughly 20% of that nation’s imports.  This market share would rise to 36% in 2004.  Much of these products such as corn, soybeans and other derivatives from soybeans such as oils, meals and cakes, livestock, broiler meat, and other processed goods originated in Illinois.

The people of the land of Lincoln have remained steadfast in its argument for an end to the embargo. In September of 2011 a sizable delegation from the Illinois State House went to Cuba to try and reinvigorate the exporting of both agricultural and pharmacological and other medicinal products.  The majority of market share that Illinois once enjoyed has dwindled to a fraction of what it was just a few short years ago and the state representatives and organizations like the IFB are willing to go to Cuba and try to learn what that they can do to regain a larger portion.

The Illinois Soybean Association took a Market Study Trip in March of this year and met with several government representatives, including ALIMPORT, Cuba’s state-run department that is in charge of all procurements of imports to the country.  Illinois soybean producers use to account for roughly 75% of Cuba’s soybean imports. Now Brazil supplies Cuba with 75% of its soybeans.  This loss of market share reflects the trend of waning influence by Uncle Sam throughout Latin America.

The mission of the IFB’s trip is not only to increase market share but also try and provide assistance to the Cuban agronomy. Tamara Nelsen explains:

Illinois farmers are always interested in helping lesser developed countries improve their ag sectors because rural ag sectors in developing countries act as a major impetus of those nations’ long term growth and economic health.  Thus, those countries are more likely to become customers of our higher value ag products if they have healthy economic development and growth – which starts from improvements in the rural ag sectors.

Most people would be surprised to know that Cuba’s economy enjoyed a growth rate of about 7.5% between 2001 and 2007 and is expected to continue to grow at a healthy pace for the near future.  The reported growth in the agricultural sector was 4.2 % in 2011.  It wasn’t always this bullish of an outlook for the island. Cuba’s GDP dropped by a third and the national caloric input plummeted below 2000 calories a day per person during the special period experienced after the Soviet Union broke up and left Cuba to fend for itself in the early 1990′s.  During the nearly three decades of Soviet dependence Cuba’s agriculture was heavily geared towards selling sugar at heavily subsidized rates.  Most food was imported from the Soviet Bloc and when this came to an end Cuba had to reevaluate its methods of how to feed its population.  This led to a breakup of state-controlled farms into smaller cooperatives run by groups of citizens who would sell their harvests to the State.  The government mandated what these cooperatives grow.  Although these cooperatives do provide Cubans with an avenue to go into business there are very strict controls that are the norm for the centralized style of governance and planning that has both helped Cuba in some regards while hindering it in others.

The spreadsheets available on the ONE website, Oraganizacion Nacional de Estadistica (National Organization of Statistics), reveals both the struggles and successes that Cuban food producers have experienced in the last decade. From 2005 to 2010 the yields of most agricultural products have either dropped or remained flat even though more land has been put into production.  Yields on staples in the Cuban diet like tubers and roots such as potatoes, malanga, and boniato have all decreased. Other yields on products such as rice, tomatoes, beans, oranges, mangoes, and guavas have dropped as well.  Livestock numbers have remained flat over that same time period. Yet citrus fruits such as grapefruit and limes and some tropical fruits have seen a marked increase in yields.

A revitalized agriculture sector with more freedom for producers on the island could provide more food products for its own population and help supply the nascent mixed economy with more prima materia for the paladares and other restaurants and food services that are a vital part of the new Cuba.  This means that there will be plenty of opportunities for Cuban producers of food to supply this demand and improve the Cuban diet.  Also, Cuba is ranked as the fifth most visited tourist spot in Latin America.  When Cuba opened up tourism in the 1990′s in response to the collapse of Soviet Union almost all of the products used to stock hotels where imported.  Gradually, Cuban products have become more a part of the average vacationing Canadian or European tourist’s diet.

What really needs to happen in order for the Cuban food producers to become more productive is the lifting of the embargo.  Cuban officials don’t refer to the exchange of agriculture products from the U.S. as trade, and rightly so because Cuban products are prohibited from being sold in the U.S. Trade is a two-way street. If real trade were to transpire between the two countries than Cuba’s agronomy could burgeon into a major asset for the Cuban people and American growers would find a welcome partner more prepared for advanced trade.

Cubans often speak in the superlative when describing the fruits of the island.   Just ask my Cuban suegro.  My father-in-law worked in a grocery chain in Miami after my wife’s family immigrated to the United States in 1995.  He echoes the sentiments of many Cubans when he boasts of the quality of Cuban produce. “Cuban guavas are the most delicious on earth.” “Cuban mangoes are the juiciest in all of Latin America.” “No Mexican lime can hold a candle to a Cuban lime.”  Shouldn’t these claims be put to the test on the open market?  If these items are so good than they will be highly sought out by consumers throughout the United States.  Because of the proximity of the island these fruits and vegetables will also be fresher than items shipped from Thailand, Chile, and China.  Only through this real trade will Cuba then have the purchasing power to really be a valuable market for higher value agriculture products coming from the U.S.

Logistics 

US exports to Cuba are unique in that they yield tangible results that reinforce the idea that reconciliation between the two nations would be beneficial for all concerned.   Paradoxically, the process of realizing these exports to Cuba demonstrate both the potential benefits of normalizing relations as well as remind those involved in the process of the current and historic distrust shared by both countries.

The proximity of the two nations would potentially make trading fast and cheap.  However, the strict regulations of the TSRA make it a hassle to export to Cuba. Tamara Nelsen explains shipping agricultural products to the island should be cheap but “…shipping restrictions with Cuba due to the embargo and…within our own country (Jones Act)…” hinder effective shipping.  She continues by saying that shipments cannot “…be efficiently arranged at the present time unless one is shipping an entire vessel of something (e.g., of grain).  If the embargo were completely lifted, then in theory, shipping something to Cuba would be as cheap as shipping it to Haiti or the Bahamas or any of the Caribbean nations.”

All shipments from the United States must be paid in full before a ship can leave port.  This causes major delays that can result in heavy fines.  The USDA stated in 2007 that:

Smaller U.S. firms that have been selling smaller quantities to Alimport have been leaving the Cuban market.  Small quantity sales have a higher cost of packing and shipping, thereby making a small quantity sale less competitive in the negotiations. The export licensing and overhead costs incurred by these firms cannot be spread throughout large export quantities, thereby making their goods less competitive with the larger U.S. firms.  For smaller exporters, Cuba shipments are likely to be less than a full shipload.  Because each separate shipment requires a confirmed letter-of-credit before the ship can leave the U.S. exporting port, any delay for any single letter-of-credit delays all shipments on that vessel.  The recent USITC (United States International Trade Commission) study reports that this kind of delay varies from one to ten days and can raise total shipping costs by $20,000 to $40,000.

These restrictions make it harder for regular farmers and smaller export businesses and allow countries that are farther away, like Brazil, to be more competitive.  For these reasons the embargo needs to be lifted.  The boon that it would have on local economies across the U.S. would be significant.  The IFB estimates that in Illinois alone almost 11 million dollars a year would be generated by increased exports and “…additional business activity.”

Illinois isn’t the only state that stands to gain with a lifting of the embargo.  The College of Natural and Agricultural Sciences (CNAS) reported in 2009 that every dollar of U.S. exports to Cuba generated an additional $1.96 in business activity throughout the U.S. economy.  In that year Louisiana topped the list of farm exports to Cuba valued at $240 million.  Florida exported $79 million; Virginia – $53 million; Texas- $45 million; Mississippi- $22 million.  These states aren’t even considered to be “grain states”.   Such potential economic growth is exactly what the United States needs to lift itself out of the current economic malaise that it has been suffering.

Democracy (In)action

Despite the obvious rewards that could be reaped by the constituents of politicians from states where agriculture plays a major role some key proponents of normalizing relations with Cuba have backed off from their positions recently.  On June 17th Senators Richard Durbin (D-Ill.) and Jerry Moran (R-Kan) declared that they were taking a “hiatus” from advocating for normalization with Cuba.  Both cite the Alan Gross debacle as the reason for their sudden change of heart.  Gross’ precarious state of health has become a problem and it is now causing the most important figures in Congress to abandon their roles in seeking a thaw in US-Cuba relations.

Alan Gross’ negligence and opportunism (after all, he was paid roughly $600,000 to “promote democracy”) has been the single most dominant factor in prolonging the impasse between Cuba and the U.S. in recent years.  Solidarity with him has become a convenient excuse for proponents such as Sens. Durbin and Moran to abdicate their responsibilities to their constituencies.  The fact of the matter is the reason why these legislators are backing off of support for a reset in US-Cuba relations is much more sinister.

The “free and fair” elections in this country have engendered an election season that is far too long to get anything productive done in Congress.  Every other year Congressional representatives are effectively “gagged” by the fear of saying or acting upon something that could be detrimental to their political party’s position or their own prospects of getting re-elected.  Absolutely nothing will get done between now and the first Tuesday in November because all of the players are too paranoid that anything they do or say will be used as a weapon for their political foes.  Is this what the founding fathers had in mind?

At the present moment there are several pressing issues that face this nation and our leaders are too scared of their own shadows to address the problems associated with the economy, social services, the environment, and foreign policy.  Once again, it looks like Cuba is just going to have to wait.  American citizens need to make it a priority to implore their elected representative that Cuba cannot wait any longer.  The people of this nation cannot afford more wasted opportunities.  Hopefully, ambassadors like the delegation sent by the IFB to Cuba will help to bring about a more sane policy that will be mutually beneficial for our two nations.

Benjamin Willis is a musician living in Queens and is a founding member of CAFE (Cuban Americans for Engagement). You can contact him at benjamin@cafeporcuba.com