New U.S. rules needed if Cuba is to buy farm goods

New U.S. rules needed if Cuba is to buy farm goods

Cuba has bought animal feed, poultry from the United States previously

Cuba could be an important buyer of U.S. farm goods, particularly poultry meat and animal feeds, but changes are needed in Washington to allow the island nation to get credit to make such purchases.

Related: As Embassy announced, U.S. grain leaders visit Cuba

 "They are not buying from the United States anymore. They can't get credit, they pay cash and they are getting generous offers of credit from a number of other countries," William Messina, agricultural economist at the University of Florida who has studied Cuba trade issues, told Farm Futures. "The biggest thing is they have cash flow issues, so importing on credit is very important to them."

The Express Monrovia arrives December 16, 2001, at the Port of Havana, Cuba. The vessel is one of two commercial shipments to arrive in Havana from the U.S. since 1963. It carries a shipment of corn. (Photo by Jorge Rey/Getty Images)

The recent restoration of diplomatic relations under the Obama Administration may not produce a windfall in trade with Cuba until trade policies are changed in Washington, he said.

U.S. credit has been denied since passage in 2000 of the Trade Sanctions Reform and Export Enhancement Act, he said. The act allows for the trade of agriculture goods and medicine but on a cash basis.

While there have be some efforts in Congress to loosen those credit restrictions, Messina doubts there will be any movement until after the Presidential election in November 2016.

"Then the question is who gets elected. Some of the candidates want to reverse the opening of diplomatic relations," said Messina, speaking on the sidelines of the Oilseed and Grain Trade Summit in Minneapolis.

Related: Cuba has room for U.S. ag goods, panelists tell Senators

Cuba's buying of U.S. animal feed ingredients and poultry slowed after 2008 as other countries offered credit that allowed for delayed payments.

Cuba's proximity to the United States offers obvious shipping advantages, but the credit terms offered by other trading partners has offset those advantages. Messina said shippers have told him that lifting the trade barriers could save Cuba about $5 million a year in shipping costs.

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