Little appetite for effort to bolster ag trade with Cuba

WASHINGTON – Minnesota Farm Bureau President Kevin Paap would happily sell soybeans from his Blue Earth County farm to Cuba. The U.S. government places so many restrictions on those sales they often don't happen.

With retaliation to President Donald Trump's protectionist tariffs threatening international sales of critically important U.S. crops, Paap and other Minnesota farmers are looking for new places to sell. Yet a bipartisan push to use the country's new five-year farm bill to open trade with Cuba will likely have little success.

Legislation that would have let Cubans buy U.S. agricultural products on credit instead of restricting purchases to cash in advance did not make it into the House or Senate versions of the farm bill. Chances of it being added in the conference committee meeting now are almost nil, most observers and participants agree.

Sen. Heidi Heitkamp, D-N.D., amended the Senate version of the farm bill to allow the U.S. Department of Agriculture (USDA) to use federal funds to develop Cuban markets.

"At a time when U.S. farmers are being squeezed by the trade war cutting off markets and lowering commodity prices, promoting exports to new markets like Cuba would be a welcome step for our ag economy," said Heitkamp, who sits on the conference committee.

For now, no one has tried to strip her Cuban marketing measure from the final farm bill. Rep. Collin Peterson, D-Minn., ranking member of the House Agriculture Committee and a conference committee participant, backs the Heitkamp measure. But he says it is not a deal breaker if it is not in the final bill.

While Cuban trade is important, it is a relatively small market. "It's not a silver bullet," Peterson said.

Bob Zelenka, executive director of the Minnesota Grain and Feed Association, understands Cuba is a nation of just 11.5 million people. But Zelenka knows Cuba imports 70 percent of its food. And Zelenka is painfully aware of the hit Minnesota's soybean, corn and wheat farmers take as they sell burgeoning harvests into tariff-tightened markets. "We're losing markets now because of tariffs," Zelenka said. "We're not making up for lost sales. Cuba is a small player compared to China. But it is one of those opportunities we have."

Paap's thinking is even more fundamental. The price of a bushel of soybeans has decreased $2.20 recently, to around $8.30. The USDA just determined that Trump's tariffs account for $1.65 or three-quarters of that decline.

"We are going through stress because of low prices," Paap said. "If you want to raise prices, you need to sell more. Why not give Cuba the same trade opportunities we give to other countries?"

The reason has more to do with politics than economics, according to Ted Piccone, a specialist in Latin American issues at the Brookings Institution. "It basically comes down to domestic politics in Florida," Piccone said.

Cuban refugees who fled Fidel Castro's communist revolution in the 1950s still hold enough sway at the ballot box to keep trade embargos in place, Piccone said. They object to Cuba's human rights abuses, jailing of dissidents, totalitarian regime and the government's control of much of the economy. The Trump administration is siding with them.

Humanitarian exceptions for food and medicine allow for some U.S. sales to Cuba, but cash-in-advance payment rules limit those sales. U.S. trade with Cuba totaled $711 million in 2008, shrank to $186 million in 2015 and rose under Cuban normalization policies put in place by President Barack Obama to $291 million in 2017.

What happens under Trump may or may not stop the growth.

The way Cuban expatriates in Miami look at it, Piccone said, "any U.S. taxpayer money that goes to help the communists is verboten … President Trump has rolled back normalization. There is very clearly a return to regime-change rhetoric."

Such talk will put "this administration on the wrong side of history in how they are handling Cuba," predicted Rep. Tom Emmer, R-Minn., a champion of freer trade with Cuba, who has traveled to the island nation.

Like Emmer, Democratic senators Amy Klobuchar and Tina Smith of Minnesota have actively lobbied for expanded Cuban trade.

"At a time of trade wars and tariffs we should at least be looking for new opportunities for Minnesota companies and farmers in new markets like Cuba," Klobuchar said. In May 2017, she offered legislation to lift the trade embargo and eliminate other restrictions, but it never got out of committee.

As lieutenant governor of Minnesota, Smith led a trade mission to Cuba that included Paap and others from the state's agricultural sector. "Expanding trade is good for Minnesota businesses," she said. "It is good for Minnesota agriculture. I think the president's chaotic negotiations around trade have been bad for Minnesota farmers."

Still, resistance to Cuban trade remains politically potent, said Paul Johnson, chairman of the U.S. Agriculture Coalition on Cuba. "Credit [sales are] definitely more important than marketing funds," he said. But the coalition, a collection of trade groups and businesses — including Minnesota-based agri-giant Cargill — still have not mustered enough clout to get private credit sales approved.

Heitkamp's marketing measure might help pave the way. If placed in the final farm bill, Johnson said, it would be the first legislation in 17 years that deals with Cuba.

One small concession in 17 years is a long way from what farmers like Paap need, trade supporters say.

Brookings' Piccone thinks the U.S. won't allow major reforms until the Cuban refugee community softens its stance and a much bigger national business constituency makes its case to Congress. Equally important, according to Piccone, Cuba must demonstrate a stronger commitment to human rights and private enterprise.

Until all of it happens, Cubans will continue to buy most of their soybeans from Argentina and Brazil, not Minnesota.

Jim Spencer • 202-662-7432