The Current Situation

An economic, commercial, and financial embargo has been in place on Cuba since 1962. Exports of U.S. agricultural products, including wheat, have been allowed since 2001 under the Trade Sanctions Reform Act (TSRA) but travel and financing restrictions make it difficult to conduct a free flow of trade. The Treasury Department’s Office of Foreign Assets Control (OFAC) enforces the embargo, which negatively affects U.S. wheat producer export potential in the Cuban market.

USW advocates ending the trade embargo with Cuba

USW advocates ending the trade embargo with Cuba

In 2005, OFAC amended the regulation to require Cuba to obtain and present letters of credit from a third-party, foreign bank, with the cash payment coming from the bank, not directly from Alimport, the Cuban food importer. The change increased the cost of buying U.S. wheat, and added an excessive and unnecessary administrative burden on Alimport that has had the largest effect on U.S. export potential. After payment rules were amended, the volume of U.S. wheat sales of Cuba dropped more than ten percent in 2006.

The most restrictive aspects of the embargo to the U.S. wheat industry are:

Travel restrictions and licensing requirements through OFAC
Financing restrictions that force Cuba to go through third party banks and pay cash up front.
Travel restrictions on Cuban officials to the U.S.
A negative policy environment between the U.S. and Cuba that is not conducive to doing business.

Potential for U.S. Wheat Exports
With sales totaling $135 million, wheat was the one of the top U.S. commodities exported to Cuba in 2008, second only to corn. Total U.S. agricultural exports to the island have been declining slightly for a number of years and while the dollar value is up in 2008 due to high commodity prices, the full potential for wheat exports is far from realized. With no domestic wheat production, Cuba represents substantial potential for U.S. wheat growers. Cuba’s 11.4 million people consumed and average of 890,000 MT of wheat per year over the past ten years. According to USDA’s Foreign Agricultural Service, Cuba is the largest importer of wheat and wheat products in the Caribbean.

Bakery in Cuba

The island’s proximity, historical and cultural ties should make Cuba a natural trading partner for the United States. Instead, the United States is sharing a substantial portion of the Cuban market with Europe. In neighboring Caribbean markets, U.S. wheat has maintained an average 85 percent market share over the last decade while averaging around 35 percent of the Cuban market since TSRA was enacted. USW estimates an annual loss of $40 million in wheat exports because of the restrictions placed upon U.S. wheat producers that do not burden our competitors.

U.S. Wheat Industry Position
The U.S. wheat industry believes easing travel restrictions, increasing access to USDA commercial loan programs, and overturning the 2005 regulation change will level the playing field and give U.S. wheat producers the best opportunity to realize its full sales potential in Cuba. Such changes will also benefit the Cuban economy and its people, which in turn will create an economic environment that is more conducive to democratic reform.

Trade Agreements

Study Confirms Trade Agreements Lift U.S. Farm Exports; Progress is Needed

A new study shows trade agreements directly increase U.S. ag exports, cash prices, and job growth, yet the U.S. risks falling behind its more aggressive export competitors. “There is a lot of talk about trade right now and this study offers proof that existing trade agreements are working for American agriculture,” said USW Director of Policy Rebecca Bratter. “We hope this new information will finally end the delay on ratifying pending free trade agreements.”

U.S. Consumers Support Plant Biotechnology as Sustainable Production

The International Food Information Council (IFIC) 2010 “Consumer Perceptions of Food Technology” survey found that consumers support the use of food biotechnology when they consider its potential benefits for reducing environmental impact. The survey indicated that 80% of consumers would be likely to purchase food containing wheat grown using plant biotechnology if produced with sustainable practices.