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Mensaje por Wajiro el Vie Oct 19, 2007 7:42 pm

State's Ag chief going to Cuba to scout possibilities for trade



Politics and high prices have hurt Minnesota farm exports, while leaders are wondering what business might look like after Castro.

By [email]Kevin Diaz[/email], Star Tribune

Last update: October 17, 2007 – 8:53 PM






WASHINGTON - Strolling on the veranda of Havana's Hotel Nacional on a humid September day in 2002, Jesse Ventura puffed on genuine Cuban puros and talked up a future of tall orders for Minnesota farmers.
Five years later, farmers like Ralph Kaehler have done millions of dollars in business with the Cubans, sticking it out through the ups and downs of Fidel Castro's turbulent relations with his Yanqui neighbors to the north.
Next month, Minnesota Agriculture Commissioner Gene Hugoson will go to Havana to check on the state's declining business prospects, and, with the aging dictator ailing, to see firsthand what a post-Castro business environment might look like. "A lot of it is just showing interest," Hugoson said. "I believe there will be more openness down the road."
Hugoson, who was part of Ventura's trade mission in 2002, is no stranger to Cuba. But it is likely to be a very different Cuba he sees.
"The communications back from Havana have been quiet lately," said Kaehler, a St. Charles farmer and a pioneer in cattle sales to Cuba.
Kaehler and other frequent business visitors to Cuba report just as much hunger for food buys, but more weariness about depending on U.S. suppliers who face many bureaucratic obstacles at home. Visitors see Castro far less often.
"We're seeing a post-Castro era unfold before our very eyes," said Kirby Jones, founder and president of the U.S. Cuba Trade Association, a Washington group that promotes open trade with the Communist island nation.
Kaehler, who has been to Cuba a dozen times since his sons, Cliff and Seth, became special guests at Castro's 2002 trade show, says the Cubans are still buying. Just not as much.
Minnesota agricultural exports to Cuba, which had grown to $22 million in 2005, dropped to $18.3 million last year, according to the Minnesota Agriculture Department.
Total U.S. farm exports to Cuba dropped to $321 million last year, down from $346 million in 2005.
The reason, according to Kaehler and others who do business with Cuba, is part price-squeeze and part politics.
Spiking worldwide prices in soybeans and corn have limited what the cash-strapped regime can buy. Soybeans and corn are Minnesota's leading farm exports to Cuba.
Another factor is crude-oil prices, which have hit record levels, taking shipping costs up with them.
That, along with Bush administration edicts requiring cash-up-front sales, has lessened the cachet of doing deals in Havana, where locals still carry food-rationing cards.
'Room for improvement'
"It's not easy," said Tim Courneya, vice president of the Frazee, Minn.-based Northarvest Bean Growers Association, which has seen U.S. sales of dried beans to Cuba level off to around 10 percent of the 80,000- to 100,000-ton market they once hoped it could be. Still, he says, there's hope for more.
In retrospect, it turns out Ventura's trip came at something of a high-water mark in trade relations between Cuba and the United States, which slapped an economic embargo on the Castro regime shortly after the 1959 revolution.
As Ventura announced his trip, Congress was considering easing travel restrictions to Cuba, and Minnesota food companies such as Hormel and Cargill were filling cash food orders that had been made legal under the 2000 Trade Sanctions Reform and Export Act.
Then came the 2002 trade expo, which was sanctioned by the U.S. government, even if top Bush administration officials remained critical of U.S. business ties to Cuba.
The following year, the regime imprisoned dozens of dissidents and journalists, and three men were executed after trying to hijack a ferry to leave Cuba. Support for loosening the trade embargo seemed to evaporate in Congress.
John Kavulich, a trade analyst who was involved in the 2002 expo with Ventura, said efforts to revive the show in 2003 were nixed by administration aides in the White House.
This year in Congress, the House voted 245-182 to reject an initiative easing restrictions on farm sales to Cuba, including a proposal to allow the Cuban government to pay for goods after they are shipped from a U.S. port, rather than before as now required.
Given the vagaries of U.S.-Cuban politics, most observers believe the Cubans have decided to diversify their line of suppliers, even if the United States still remains the Caribbean nation's top provider of food.
Where Cuba once favored U.S. food products in hopes of normalizing relations with the United States, it now looks elsewhere in hopes of pressuring the administration to ease trade restrictions, Kavulich said.
The Nov. 5-10 trade show Hugoson plans to attend is sponsored by the Cuban government. Nearly 2,000 companies from around the world are expected to attend.
In an invitation, Pedro Alvarez Borrego, chairman of Alimport, the regime's food-purchasing arm, calls it "a great opportunity to take the pulse of the Cuban market."
For Minnesota sellers like Kaehler, that means more competition for Cuba's limited food coffers. "All those other countries are sucking the money out," he said.
Kevin Diaz • 202-408-2753


Kevin Diaz • [email]kdiaz@startribune.com[/email]

Wajiro
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