Cuban relations thaw bodes well for U.S. chicken exporters
By Bloomberg News | Tuesday, March 22, 2016, 11:00 p.m.
Updated 1 hour ago
Less than 100 miles off the U.S. coast lies an island nation that can’t feed itself.
Cuba, which imports as much as 80 percent of its food, has developed a huge appetite for American chicken, despite the decades-long trade embargo. That’s why few businesses are as excited about normalized relations as poultry producers in Georgia, Alabama and Arkansas.
Chicken is one of Cuba’s top imports, and an exemption to the embargo for agricultural products has made the country the fifth-largest export market for U.S. poultry producers.
Over the past 15 years, more than $1 billion of U.S. poultry — nearly all of it frozen legs and thighs — has been packed aboard cargo ships for the short journey to Cuba. Much of the chicken departs from ports in Jacksonville, Fla.; Mobile, Ala.; New Orleans; and Savannah, Ga.
“They can place an order on a Monday and probably have the product on a Friday, if they need it,” said Jim Sumner, president of the USA Poultry and Egg Export Council in suburban Atlanta. “If they buy it from Europe or Brazil, it’s going to be 20 to 30 days.”
Congress authorized agricultural trade with Cuba in 2000, along with pharmaceuticals and medical devices, but five years later whacked U.S. exporters with a tough condition: Cuba’s official import agency had to pay cash before delivery, not when the goods arrive. Financing from U.S. lenders also was prohibited.
That measure has hampered development of the Cuban market for some U.S. goods, including rice. Rep. Rick Crawford, an Arkansas Republican whose district includes some of the largest U.S. rice producers, introduced a bill last year to repeal the financing restrictions and allow U.S. investment in some Cuban agri-businesses. The House bill has attracted 30 co-sponsors, and similar legislation is pending in the Senate.
“When you have a market that’s 90 miles off your coast, and you’ve got these really outdated policies, we’re the ones that lose,” Crawford said, arguing that America’s Cold War stance toward Cuba has been more detrimental to U.S. business than to the communist government. “We’re trying to look at this with a little more modern lens.”
The export-finance rules have effectively ended U.S. exports of rice and wheat to Cuba, and U.S. corn sales to the island have likewise plunged. Cuba buys the bulk of its rice from Vietnam and Brazil, its wheat from Europe and Canada, and corn from Argentina and Brazil, according to the U.S. Department of Agriculture. “It takes 36 days to get their rice from Vietnam,” Crawford pointed out, “and they can get it from us in 36 hours.”
Despite the strictures of U.S. law, chicken exports to Cuba have remained strong. Cuba’s import agency, Empresa Cubana Importadora de Alimentos (Alimport), considers the quality of U.S. broilers superior to those from Brazil and other Latin American sources, said Lee Ann Evans, a senior policy advisor at Engage Cuba, a trade association of large U.S. companies pressing for expanded commercial ties. Most of the U.S. chicken quarters—the most affordable protein available to Cuban consumers—end up in a variety of state-run and private food shops.
As U.S. policy adjusts and more Americans travel to Cuba, chicken producers and exporters are stirred by the idea of expanding their Cuba trade to new products. Among them: breast meat and the kinds of boneless, skinless cuts that dominate U.S. supermarkets. The communist nation can also expect to eventually discover the culinary joys of highly processed—and higher margin—chicken products such as “nuggets” and wings.
“The only limitations on the amount of product that goes there is limits on Cuba’s economy,” Sumner said. “So as we see Cuba’s economy improve and prosper, we would see more product going down.”
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