(Posted Fri. Jan 2nd, 2015)
Coarse grains exports could increase dramatically if United States-Cuba diplomatic relations are fully normalized, with the island nation having the potential to become the 12th largest market for U.S. corn if trade is truly open.
The Obama Administration’s announcement that it would seek to dismantle many of the 50-year-old restrictions on how U.S. companies and individuals interact with Cuba was welcome news to the agriculture industry, which has long supported changes to allow U.S. farmers to more freely sell to a market that is both import-dependent and just 90 miles from U.S. coastline.
The new movement related to Cuba policy has accelerated the U.S. Grains Council’s plans to reengage that country in early 2015 as part of the organization’s wider strategy focusing on coarse grains and co-products exports to the Western Hemisphere.
“This is another example of a situation that clearly illustrates both why the National Corn Growers Association’s work in promoting the trade policy, set forth by their growers, benefits U.S. corn farmers and bolsters the effectiveness of its work in collaboration with the U.S. Grains Council,” said NCGA Trade Policy and Biotechnology Action Team Chair John Linder, a farmer from Ohio. “Together, NCGA and USGC can affect real change by promoting policies that open markets by building the relationships that capitalize on the important grower policies of NCGA. While this work may seem ephemeral, the impact on corn demand has very concrete benefits for farmers.”
The Council strongly supports open trade and works in in the Cuban market despite the embargo’s restrictions, sending staff regularly to assess possibilities and offer trade servicing.
“We have worked in Cuba for a long time, and we understand the Cuban market as well as the restrictions that have typically gone along with it,” said Tom Sleight, USGC president and CEO.
“I have been to Cuba, as have many of our senior leaders. We look forward to reengaging with key players and taking advantage of this new environment to build markets for our members.”
The United States has sold corn to Cuba each marketing year since the early 2000s and distiller's dried grains with solubles since 2005. U.S. corn market share has varied, running as high as 100 percent in the 2007/2008 marketing year but as low as 15 percent in recent years due to regulatory changes that made achieving financing more challenging. U.S. DDGS market share in Cuba is at or near 100 percent. Overall, the market takes about 35.4 million bushels of corn each year has taken up to 150,000 tons of DDGS annually.
Though farm leaders now have reason to be optimistic about an increased presence in Cuba, political and financing challenges remain. The Obama Administration’s move will precipitate an intense political discussion and some of the existing restrictions related to Cuba cannot be changed by executive order and must be addressed by Congress.
The Council, of which NCGA is a founding member, will continue to gather details about the changes this week and undertake new activity ahead of 2015 market development planning.