Cuba made its first US soyoil purchase in more than five years this month with the purchase of 7,600 tonnes, according to the US Department of Agriculture.
The transaction made headlines because the trend in exports from the US to Cuba has been declining since it peaked in 2008. Also, drought and heavy rains in South America have reduced supplies from traditional exporters to Cuba.
Cuba purchased more than $5.2 billion in US products from 2001 to 2015, largely agricultural products.
For many of those years, the US was Cuba’s largest supplier of agricultural products. US exports to Cuba rose from about $7 million in 2001 to a high of $712 million in 2008, far higher than in previous years. This increase was in part because of the rise in food prices and because of Cuba’s increased food needs in the aftermath of several hurricanes and tropical storms that severely damaged the country’s agricultural sector.
US exports to Cuba declined considerably from 2009 through 2011, rose again in 2012, and have fallen every year since then, amounting to just $180 million in 2015, the lowest level since 2002. The level of exports in 2015 dropped 40% from the previous year.
Looking at the composition of US exports to Cuba from 2012 to 2015, the leading products were poultry, soybean oilcake, soybeans, and corn, although corn exports declined considerably in this period. Poultry has been the leading US export since 2012—accounting for more than 40% of US exports—but the value of poultry exports declined almost 48% in 2015 from the previous year. According to press reports, Cuba reportedly suspended US poultry imports in August and September 2015 because of concerns about the outbreak of bird flu in the US but resumed purchases in October 2015. In the first quarter of 2016, US imports from Cuba continued to fall, amounting to just $53 million compared to $74 million in the first quarter of 2015, a 28% decline.
US commercial medical exports to Cuba have been authorized since the early 1990s pursuant to the Cuban Democracy Act of 1992, and commercial agricultural exports have been authorized since 2001 pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), but with numerous restrictions and licensing requirements. For medical exports to Cuba, the CDA requires on-site verification that the exported item is to be used for the purpose for which it was intended and only for the use and benefit of the Cuban people. TSRA allows for one-year export licenses for selling agricultural commodities to Cuba, although no US government assistance, foreign assistance, export assistance, credits, or credit guarantees are available to finance such exports. TSRA also denies exporters access to US private commercial financing or credit; all transactions must be conducted in cash in advance or with financing from third countries.
Among the reasons for the overall decline in US exports to Cuba in recent years, analysts cite Cuba’s shortage of hard currency; financial support from Venezuela; credits and other arrangements offered by other governments to purchase their countries’ products; Cuba’s preferences to purchase products from government-controlled entities; and efforts by Cuba to increase the motivation of US companies, organizations, local and state officials, and Members of Congress to push for further changes in US sanctions policy toward Cuba.
Some agricultural experts are skeptical as to whether the Obama Administration’s recent changes in policy will lead to a significant increase in U.S. agricultural exports to Cuba, pointing out that other countries will still be able to offer better terms to Cuba than the US because of restrictions on financing and credit.
Cuba’s total imports:
Source: US Government
