Texas Farmers Skeptical About Trade Future With Cuba

By Laura Marina Boria

Reporting Texas

Now that the decades-long freeze between the U.S. and Cuba appears to be thawing, American companies including airlines, banks and credit card firms are laying the groundwork to return to the Communist-led island nation. Texas grain farmers are especially eager to sell their crops to a country that once was a valued market.

Grain exports are big business in Texas. In 2012, the state sent abroad $171 million and $119 million in shipments of grain products and rice, respectively, according to the Texas Department of Agriculture, and the industry would like to see those figures rise.

But not so fast. The obstacle — and it’s a big one — is the United States’ 55-year-old embargo that bans most trade with Cuba and creates complicated restrictions for what limited trade is allowed. Only Congress can end the embargo, and any moves to do so face strong opposition on Capitol Hill.

“As far as an immediate agriculture impact, I don’t expect a lot,” Texas Farm Bureau spokesman Gene Hall said of President Obama’s moves to open trade. “We’re going to have to see the embargo lifted … that has to be done in Congress, and it’s not happening any time soon.”

“We’ve done everything we can,” said John Gaulding, who grows rice and raises crawfish in Hamshire, southwest of Beaumont. “Anytime anybody speaks, we try to speak up, saying that there’s a benefit in trading with Cuba. Our frustration is that this embargo continues, and after 50 years, it hasn’t changed one thing.”

In a series of dramatic moves in recent months, the Obama administration has used executive orders to ease travel restrictions and has taken steps that will allow banks and credit card companies to do business in Cuba.

But lifting the embargo is a different matter. U.S. Sens. Ted Cruz, R-Texas, and Marco Rubio, R-Florida, both of Cuban heritage, are among critics who say it’s not time to end the embargo put into effect during the Kennedy administration in 1960 after Cuba nationalized U.S.-owned businesses without paying for them.

Texas grain farmers can see opportunity in Cuba, including the prospect of increased demand that the easing of travel restrictions on American tourism might bring, in tandem with the possible resumption of commercial flights by U.S. airlines.

“To take care of the increase in tourists, they would need more foods available for the people coming in. They’ll have to import quite a bit of the foods we grow in the U.S.,” Gaulding said. “Our prices may be a little bit higher, but they’d be getting rice of greater quality than what they’re getting from other countries.”

Because of the state’s proximity, market demand from Cuba would allow Texas grain farmers to grow more products like rice, corn and soybeans.

“We’re just miles away from the island, and that gives us a logistics advantage over other countries,” said Curt Mowery, a rice farmer in Rosharon, south of Houston. Rice production in Cuba is on a small scale due to in great part to the advanced deterioration of agricultural machinery.

But Texas isn’t the only foreign supplier in the game. U.S. rice was a major export to Cuba from 2000 to 2006, but in mid-2008, Vietnam took over the Cuban market with cheaper, lower quality rice, according to a 2011 report by the Texas A&M University AgriLife Extension Service.

American farmers have been able to sell some products to Cuba since 2000, when Congress relaxed the embargo slightly to allow sales of limited medicine and agricultural products. But Cuba must pay cash in advance for whatever it buys, with the payments routed through banks in a third country, and the regulations are complex and costly.

Mowery said President Obama’s recommendation that Cuba be removed from the list of state sponsors of terrorism is a positive step. If Congress does not block the recommendation, it could be an important step toward full diplomatic relations.

“It’s favorable, because that’s going to allow them better access to international credit,” Mowery said.

Earlier this year, the U.S. Agricultural Coalition for Cuba, a group of wheat producers from across the country, called on Congress to end the trade embargo. The Texas Wheat Producers Board and Association is a member of the group.

“The biggest thing we’re looking forward to is having our trade barriers and financial restrictions lifted,” said Katie Heinrich, director of communications and producer relations for Texas Wheat. “While we’re in the process of easing travel restrictions and increasing access to credit, we’re not going to fully realize if the embargo isn’t lifted.”

The U.S. Department of Commerce and Alimport, the Cuban food import agency, must license and approve all U.S. exports to Cuba. Sea-borne cargo leaving Houston goes first to Florida and is reloaded onto another ship bound for Cuba. “It’s expensive, cumbersome and time-consuming,” said Parr Rosson, an economist with the Texas A&M AgriLife Extension Service.

Cynthia Thomas has been to Cuba dozens of times and recently led a group of Texas wheat farmers on a trip there. She’s president of Tri-Dimension Strategies, a Dallas firm that helps companies navigate the trade restrictions, and founder of the nonprofit Texas-Cuba Trade Alliance.

Thomas said Cuba is a promising market for Texas wheat and cotton whenever financing trade becomes less daunting. “U.S. banks are apparently waiting for the elimination of Cuba from the State Department list of terrorist nations,” she said.

The Reagan administration added Cuba to the list of state sponsors of terrorism in 1982, on the argument that Cuba supported revolutionary movements in Latin America and Africa.