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US Agricultural Exports to Cuba Fall

30 March 2010

CUBA – Agricultural exports to Cuba declined by more than $180 million in 2009, down from a record $715 million in exports set in 2008, according to a Texas AgriLife Extension Service economist.

The decline was a result of a number of factors, including the U.S. recession, which restricted money flowing from Cuban Americans back home, lower nickel prices, a slowdown in tourism to Cuba and restrictions on payment terms used by US exporters, said Dr Parr Rosson, AgriLife Extension economist and director of the Center for North American Studies at Texas A&M University.

“The lack of money being sent back home to Cuba resulted in less purchasing power and a big drop off in exports to Cuba,” he said.

“As a result, the Cuban government has decided to try to revitalize production of rice and milk.”

US exports to Cuba included corn, wheat, soybeans, oil, meal and frozen broilers. Texas-grown commodities exported to Cuba included cotton, wheat and broilers, according to Dr Rosson.

“The decline is a result of a combination of factors,” Dr Rosson said.

“Weak economies across the globe and a reduction in expenditures by tourists. That decline accounted for about 15 percent compared to 2008. The collapse in world nickel prices was also a big factor. The nickel price dropped from $24 per pound in the 2007-2008 to $7 per pound earlier this year.”

Tourism accounted for a large portion of money flowing into the Cuban economy, with Canadians among the most popular to frequent the country. Approximately 933,000 out of 2.4 million tourists visiting Cuba in 2009 were Canadian.

“The beaches are a big draw during the wintertime,” Rosson said. “(From Canada) there are direct flights and all-inclusive packages at the major beach resort, Varadero.”

Agricultural commodities imported into Cuba that support the tourism industry include beef steaks, chicken and pork, Dr Rosson said.

However, exports to Cuba could recover somewhat in the future. The country’s vegetable crops were wiped out by three hurricanes in 2008 and are struggling to recover, and US payment terms have been revised, allowing US exporters to be more competitive, Dr Rosson said.

“That’s why Cuba had such a large import bill in 2008,” he said.

“That, coupled with the decline of tourism and lower nickel prices means the government is having difficulty importing foods. As a result, US corn, wheat and soymeal exports to Cuba were all off by at least 50 per cent for the first two months of 2010 compared to 2009.”

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