Thaw in relations with Cuba positive for US agriculture: USDA

Thaw in relations with Cuba positive for US agriculture: USDA

Exports of US agricultural products such as wheat, rice, soybeans and meat products stand to gain from a surprise US move toward repairing relations with Cuba, agriculture industry officials said on Wednesday.

US Department of Agriculture Secretary Tom Vilsack called the move an "important opportunity" that will make exports of US farm goods cheaper, easier and less time-consuming for shippers.

President Barack Obama announced on Wednesday that the United States would restore diplomatic relations with Cuba more than 50 years after they were severed.

US law exempted food from a decades-old embargo on US trade with the Cuba, but cumbersome rules on how transactions were executed made deals difficult and costly. The US policy shift should eliminate these hurdles.

"The policy change is that now payment can be made while goods are in transit, which is the normal course of business, and no longer does the money need to be routed through a third party," Vilsack told reporters on the sidelines of a US-China trade meeting.

Cuba imported nearly $350 million (S$460 million) of US agricultural products in 2013, including $146 million of poultry meat, $108 million of soy products, and $82 million of corn and feeds, according to US Department of Agriculture data.

Easing of financing restrictions opens up the market, just 90 miles (145 kilometers) from the world's largest agricultural exporter, to other products.

"Wheat hasn't traded there, rice hasn't either. Those are two new opportunities. With the enhanced tourism, the increased incomes could benefit higher-value products like beef and pork," said Devry Boughner Vorwerk, a Cargill vice president and chair of the US Agriculture Coalition for Cuba.

Cuba's purchases of US wheat and rice have been restricted by the higher cost of financing transactions compared with shipments from South America and Asia.

"Cuba has not imported any US wheat for five years. Opening trade has the potential to put that market back in our column as they like our wheat and it is loaded only a short sail from Cuba," said Steve Mercer, spokesman for the US Wheat Associates.

The trade group said Cuba could import at least 500,000 tonnes of US wheat a year if trade were easier. "We believe our market share there could grow from its current level of zero to around 80-90 per cent," Alan Tracy, president of the US Wheat Associates, said in a statement.

Cuba would likely buy mostly hard red winter wheat, a bread-making variety grown mainly in the US Plains states, as well as pasta-making durum and soft red winter wheat, used in pastries.

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