Wednesday, February 21, 2024

Restored diplomatic relations with Cuba: What does it mean for U.S. poultry exports?

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By Jim Sumner

Special to Poultry Times

STONE MOUNTAIN, Ga. — When the Republic of Cuba hoisted its flag over Washington, D.C., last July at the formal dedication of the opening of the Cuban Embassy to the United States, the ceremony marked the end of half a century of diplomatic silence between the two countries. The historic event also offered a glimmer of hope for the U.S. poultry industry that Cuba can become an even more attractive market for U.S. chicken than it already is.

Over the last 15 years, Cuba has become the fifth-largest export market for U.S. chicken. In 2014, our industry shipped nearly 144,000 metric tons of chicken — mainly leg quarters — to Cuba worth $147.6 million. And, although trade restrictions resulting from the avian influenza crisis in the U.S. this year hit poultry exports hard across the board, Cuba was still an important export market. Sales to Cuba through the third quarter of 2015 totaled more than 75,000 tons valued at more than $63 million.

U.S. chicken actually accounts for almost half of total U.S. exports to Cuba, and is the single largest export commodity to the island nation. The story of how this came to be began when President Clinton relaxed the trade embargo to allow U.S. exports of food and medicine to Cuba. If it weren’t for a hurricane, however, U.S. chicken might never have become so popular.

In November 2001, Cuba bore the brunt of Hurricane Michelle, which destroyed thousands of homes and displaced thousands of Cuban citizens. President George W. Bush quickly offered help in the form of food aid, but Cuban President Castro rejected U.S. handouts. Instead, Castro said he welcomed the offer of food, but only if Cuba paid for it. A shipload of chicken was the first to reach Cuban shores after the hurricane.

I have traveled to Cuba many times over the years as a participant in U.S. agricultural trade missions, and have met with President Castro on several occasions. On one of my first visits, our delegation was invited to an audience with Castro over dinner. One of the things he said was that he had come to realize that Cuba could never produce poultry competitively, and that he would rather see his country concentrate on those commodities that it produces well, such as fruits, sugar cane and tobacco, and import those commodities that it cannot, such as poultry.

Castro understood something that many other world leaders never did — import what you need and produce the products at which you’re most efficient. This has served our industry well over these intervening years, and has given us a market that we had not had before. This was especially significant this year, because of the AI-related import restrictions in many markets around the world that have negatively affected exports.

Even with the restoration of diplomatic relations between the U.S. and Cuba, however, the U.S. trade embargo against Cuba remains intact, which is a limiting factor in further expansion of the market. Under the old regulations, exporters could not accept payment for their shipments through U.S. banks, which forced them to employ financial institutions in third countries. Although the new rules allow payments through U.S. banks, they still require cash-in-advance before any shipments depart U.S. ports. The new rules also do not allow credit, which actually works to our advantage, as we have seen many reports of exporters in other countries having to wait many months for payment — if they were paid at all.

We do see these recent developments as reasons for hope over the long term, however. As are many other countries, Cuba is primarily a market for chicken leg quarters, which is the world’s most affordable source of animal protein. But as we have seen recently, the potential is huge for Cuba to become a tourist mecca, especially as travel restrictions for U.S. citizens are becoming increasingly being relaxed.

In Cuba currently, it is often impossible to find a hotel room, and new hotels cannot be constructed quickly enough to meet demand. To our industry, this means that Cuba can quickly become not simply a market for low-cost commodity products, but also for a range of further processed products that our industry produces for food service use.

As has been shown time and again, as a country’s per capita income increases, so does its consumption of meat and poultry protein. If U.S.-Cuba relations continue to improve, tourism could very likely give Cuba a much-needed economic boost that will benefit both sides.

USAPEEC participated in a large food show in Havana recently with several of our member companies. Our booth was hugely popular and our members were besieged with inquiries about U.S. poultry products from Cuban buyers.

It’s difficult for us to know what to expect because Cuba has long been a political lightning rod. But from where I sit, I firmly believe that Cuba will provide many great opportunities for U.S. poultry exports for many years to come.

Jim Sumner is president of the USA Poultry & Egg Export Council with offices in Stone Mountain, Ga.

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