Cuba could be $1 billion market for U.S. Ag

If sanctions against Cuba were lifted and the USDA could use all of its export programs such as credit guarantees, market development, and food aid, it’s estimated that U.S. agricultural exports to Cuba could reach $300 million within a year or two, which would amount to about half of Cuba’s estimated import market.

So said Tim Galvin in testimony to the U.S. International Trade Commission, in September, 2000, in a hearing discussing the economic impact of U.S. sanctions on Cuba. Galvin, now a Senate Budget Committee staff member, was then administrator of the USDA-FAS.

The actual value of U.S. exports will be dependent on the level of export credit guarantees available to facilitate trade, said Galvin.  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,” he said.

Galvin said 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.

The United States is well positioned to supply most of Cuba’s grain demand if trade is normalized, said Galvin. Cuba imports over $320 million in grains, grain products and pulses annually, making up almost 50% of its annual agricultural imports.  Cuba’s $100-million wheat market and $40 million flour market were dominated by Canada until the late 1980s. Now, the EU, notably France through the use of export credits, supplies 90% of Cuba’s wheat imports.