Shipments are up since relaxing of embargo, but critics urge caution

By BRENDAN M. CASE / The Dallas Morning News

CANCÚN, Mexico – Long a forbidden fruit, U.S. farm exports to Cuba are ballooning into a growth industry for rural America, U.S. executives and Cuban officials
said Monday.

U.S. companies have signed contracts worth more than $250 million with Cuba since the U.S. Congress began allowing food and agricultural exports in late 2001.
Goods worth $210 million have been delivered and paid for.

And total shipments to the communist-controlled Caribbean island could rise quickly in coming years despite ongoing restrictions from the 40-year-old U.S. trade
embargo.

"The trade door was opened a crack, and now products are flowing through that crack," said Steve Appel, vice president of the American Farm Bureau, who is also
a wheat farmer in Washington state. "We expect the crack to grow wider and wider."

Dozens of U.S. executives, farmers, ranchers and government officials met with Cuban officials at the second annual U.S.-Cuba Business Conference in this
Mexican resort town.

The meeting, which included a large delegation from Texas, showed how eager many U.S. exporters are to end the longstanding trade embargo entirely.

Caution is urged

To be sure, staunch supporters of the embargo remain. They warn U.S. farmers to beware the Cuban government's promises, saying that Cuba's market potential is
easy to overstate.

Some European and Canadian investors have reportedly grown frustrated with their ventures in Cuba. And Cuban President Fidel Castro's regime owes hundreds of
millions of dollars to many non-U.S. commercial suppliers.

"The Cubans realize they can't fool the Europeans anymore, so now they want to fool the Americans," said Dennis Hays, executive vice president of the Cuban
American National Foundation, which vehemently opposes Mr. Castro. "Everyone who has done business with Cuba now regrets it."

But U.S. law stipulates that farmers can be paid only in cash, giving Cuba little room to become a deadbeat debtor.

And U.S. executives see a growth market.

Cuba broke into the top 50 world markets for U.S. farm goods last year. But with the demise of the embargo on food, Cuban officials said, U.S. producers could
quickly increase their sales due to their high quality, competitive costs and geographical proximity.

Eventually, the United States could account for well more than half of Cuba's food imports. Cuban officials said U.S. food shipments could total $1 billion in just a
few years.

'Ready and willing'

Some skeptics said that figure might prove optimistic, while some proponents said Cuba could become a leading Latin American market for U.S. farm exports.

"Cuban purchases over the last 15 months show that Cuba is ready and willing to normalize commercial relations between our two countries," said Foreign Trade
Minister Raúl de la Nuez.

Even staunch Castro critics such as Mr. Hays, who did not attend the conference, said U.S. companies should take any cash-based deals they can get.

"My advice to American business is, if you can sell for cash, take the cash," he said.

Many U.S. executives came to Cancún to do just that. Their ranks included grain farmers, fruit and vegetable growers, ranchers, multinational executives and even
some financiers.

Gary McGehee hopes to find new markets for the sheep and goats he raises near San Angelo.

U.S. sales of his wool, mohair and meat products have been declining, he said. So he's been seeking new markets from South Africa to Mexico.

Mr. McGehee, who is also a Texas Farm Bureau board member, has found a promising market among U.S. Latinos. And he has wooed U.S. Muslim customers by
building a facility to slaughter animals according to Islamic dietary law.

For him, Cuba represents another opportunity.

"We have great quality stuff, but we have a limited market where we can move it," he said. "The more marketplaces we have, the better the opportunities we're going
to have. One of these days, Cuba is going to be a marketplace."

Complications

About 85 U.S. companies have been involved in sending goods to Cuba. Nine American seaports have helped move the goods, and Cuba received 95 U.S.
shipping deliveries last year, according to Cuban officials.

But while the U.S. trade embargo might be slowly crumbling, it can still make doing business with Cuba fiendishly difficult.

A branch of the U.S. Commerce Department typically issues export licenses in about two weeks. But obtaining shipping licenses can take more than a month.

U.S. companies may not invest in their own operations on the island, nor offer trade financing to the cash-strapped Cuban government.

U.S. law even bars exporters from executing transactions with Cuba in dollars, so many companies handle deals in euros. Currency exchange costs have cost the
Cuban government millions of dollars. That makes U.S. goods more expensive.

"These are losses for Cuba," said Pedro Alvarez, the chairman of Alimport, Cuba's food import agency. "But it places American business in a disadvantage
compared to their competitors from other countries."

U.S. farmers have little patience for the prospect of remaining shut out of a market 90 miles from U.S. shores. For many, the time has come to bury the 40-year-old
trade embargo.

"The embargo has gone on too long, especially for agriculture," said Mr. Appel, the American Farm Bureau vice president. "Shutting us out of the Cuban market just
means that our competitors step in to serve it."