Media Corner

Cuban market falls short; Rising political tension has limited Texas farmers' prospects

May 12, 2003, Monday SECOND EDITION


By Brendan M. Case/The Dallas Morning News

MEXICO CITY - Texas farmers and ranchers need all the export opportunities they can get, even when hot-button political issues threaten to cool commerce.

Rising political tension between the United States and Cuba has diminished last year's hope that the two countries would foster growing trade ties in 2003.

But U.S. companies are still allowed to export food and agricultural goods to the communist-run Caribbean island. And dozens of Texas farmers and ranchers will attend a workshop on "doing business in Cuba" this week in Austin.

"Direct contact between people in the United States and people in Cuba is something that's worked to foster better relations," said Cynthia Thomas, president of TriDimension Strategies LLC, a consulting firm in Dallas that helped organize the event. "That hasn't changed because of the current situation."

When it comes to U.S.-Cuba trade, politics and business have been intertwined since Cuban President Fidel Castro took power in 1959 and the United States later struck back with a trade embargo.

But new U.S. laws allowed American companies to ship food and agricultural products to Cuba beginning in 2001. This week's Austin conference shows how the U.S. business community remains eager to sell more.

Of course, the political strains are impossible to ignore. In recent weeks, Mr. Castro has cracked down on independent journalists and political dissidents. He also executed three men convicted of hijacking a boat to go to the United States.

Cuban officials accuse the U.S. government of fomenting unrest. U.S. officials once again branded Cuba a state sponsor of terrorism, along with the likes of North Korea, Iran, Syria and Sudan.

"U.S.-Cuba relations are a series of peaks and valleys," said John Kavulich, the president of the U.S.-Cuba Trade and Economic Council Inc. in New York. "The general consensus is that the current situation is not an abyss, but it is a deep valley."

Would-be Texas exporters might face economic headaches as well. Cuba is reportedly experiencing even harder economic times than usual this year, including a downturn in its large sugar industry.

The island imported about $ 140 million from the United States last year, according to Mr. Kavulich. That made Cuba the 50th largest export market for U.S. farmers.

But initial results suggest that U.S. shipments to Cuba fell slightly between January and March compared with the same period last year, Mr. Kavulich said.

Critical links

Still, Texas officials say, it's critical to develop commercial links with an island just a short boat ride away.

"There's no way the political part can't have an effect," said Glen Jones, the research director of the Texas Farm Bureau in Waco. "But we feel that agricultural exports are so important that we need to open up trade. Eventually, Cuba will be a trading partner."

Texas companies know all about unfulfilled expectations when it comes to Cuba.

Nearly all the state's rice exports went to Cuba before Mr. Castro took power in 1959. Gulf Coast ports once handled a bustling trade with the island.

No longer. Illinois, Florida and Georgia now hold the top spots. "Texas isn't even on the radar screen," Ms. Thomas said.

Indeed, one concern at this week's conference lies in generating opportunities for smaller producers. So far, the benefits of trade with Cuba have been concentrated among a handful of companies, such as Archer Daniels Midland Co., the agribusiness giant from Decatur, Ill.

Although Cuba's 11 million people rank it far behind giant world markets such as China or even Mexico, experts say, it pays to develop new markets at a time when economic weakness halfway across the world can hurt U.S. farms and ranches.

Moreover, smaller markets are nothing to sneeze at.

Over the last few years, Guatemala has significantly boosted its purchases of U.S. agricultural exports, according to Parr Rosson, an agricultural economics professor at Texas A&M University.

If something similar ever happens in Cuba, developing trade links now could lead to profits in the future.

"Things change rapidly as an economy improves," said Mr. Rosson. "For U.S. products, the transformation can be quite dramatic in a short period of time."

Tough question

Of course, the thorny question of U.S.-Cuba politics still looms over the emerging business opportunities.

For example, President Bush is reportedly considering a restriction of cash remittances from the United States to Cuba.

That move, and others designed to punish Mr. Castro for his recent crackdown, could hurt trade.

"Anybody who's doing business with Cuba right now is put back a little by what's been going on," said Georgia businessman Charles Joyner, chairman of the U.S. Poultry and Egg Export Council, referring to the ratcheting up of tensions on both sides.

"But the embargo has failed, and the Cuban people are suffering," he said. "Deep down, we truly believe that things will change in Cuba for the better."

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