Rice Farming

 - USA Rice Federation Update -

Federation presses for reopening
rice trade with Cuba

By Betsy Ward
USA Rice Federation
President and CEO

The potential for a major change in U.S. policy towards Cuba has been in the news since President Obama’s April 13 announcement that the United States will begin allowing Cuban families to visit Cuba and send money to relatives there. The USA Rice Federation welcomed the president’s actions, but used the opportunity of widespread news coverage to reiterate our primary objective of full and open trade with our Caribbean neighbor.

“We prefer to see the trade embargo on Cuba lifted altogether in the long run, and a return by the Treasury Department’s Office of Foreign Assets Control (OFAC) to the intent of Congress regarding payments for agricultural shipments in the near term,” USA Rice Chairman Jamie Warshaw said in a news release picked up by many media outlets, including Farm Press. “Another significant near-term step for the United States would be to allow direct payments from Cuban banks to U.S. financial institutions for agricultural sales,” Warshaw says.

Cuba – potentially a 400,000 to 600,000 metric ton (MT) market for Southern long-grain rice producers – was the largest export market for U.S. rice prior to the 1962 embargo. Agricultural trade resumed in 2002 after Congress passed the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREA) with U.S. rice exports to Cuba growing to 176,631.9 MT in 2004. Regulatory restrictions imposed by President Bush and implemented by the Treasury Department in 2005 obstruct agriculture’s ability to sell competitively to Cuba by “reinterpreting” the cash-in-advance clause so that Cuba has to pay for its rice shipments before they leave U.S. ports. The tighter rules caused U.S. rice exports to fall dramatically in 2008 to 12,620.4 MT.

Items specifically supported in the 111th Congress
When USA Rice submitted its industry trade priorities to the then-Obama transition team for the Office of U.S. Trade Representative, one of our top priorities was to restore normal commercial relations with Cuba. We have made trade with Cuba such a high priority because it is an ideal market for us. Cuba produces only one-fifth of its rice consumption needs, but has the highest per-capita consumption rate in the Western Hemisphere – almost 150 pounds per person annually – more than five times the consumption in the United States. To make up the difference, Cuba imports 600,000 MT of rice per year, making it one of the world’s top rice importers.

Logistics favor Southern U.S. exporters, and Cubans prefer the quality of U.S. rice. Under fair, open and two-way trade (allowing Cuba to generate foreign exchange), we estimate Cuba would quickly become the second-largest market for U.S. rice.

USA Rice has been consistently and actively engaged to overturn the February 2005 OFAC rule and pass legislation to open normal trade and travel relations with Cuba.

In the 111th Congress, the USA Rice Federation has supported bipartisan legislation designed to unambiguously address OFAC’s misinterpretation of TSREEA – H.R. 1737, Agricultural Export Facilitation Act of 2009, by Rep. Jerry Moran (R-KS), which (a) clarifies that cash in advance means payment occurs before Cuban purchasers take possession of the product, and (b) allows for direct payment from Cuban financial institutions to U.S. financial institutions for the payment of agricultural sales. USA Rice also supports H.R. 874 and S. 428, bipartisan bills to expand U.S.-Cuba travel opportunities, and H.R. 188, which would lift the U.S. embargo altogether.

USA Rice is also working to coordinate a congressional delegation to travel to Cuba in 2009, and we continue to meet as part of coalitions with members of Congress and their staffs.

What has the trade embargo cost the U.S. rice industry?
While we know it is going to be a slow process, we continue to press hard for a new U.S. approach because we estimate the trade embargo has cost the rice industry – and that includes everyone from growers to merchants – at least $3 billion in sales over the last half century and perhaps even thousands of jobs.

Administrations have changed in Washington since my last visit to Cuba just about one year ago, when we met with Cuban trade officials to talk about restoring the rice trade. USA Rice meets often with U.S. and Cuban officials and legislators and joins coalition activities whenever possible to move the Cuba trade agenda.

After 47 years, we don’t expect miracles, but we continue to do everything possible to ensure that Cubans will one day have open access to one of their most important and preferred foods. In the meantime, Vietnamese rice farmers will be among the chief beneficiaries of the U.S. embargo against Cuba.

For more about USA rice programs, visit www.usarice.com.