Heitkamp bill would remove credit restrictions on ag sales to Cuba
WASHINGTON — Pat Wallesen, a partner with WestStar Food Co. in Corpus Christi, Texas, is the guy many North Dakota bean and pulse companies go to when they have products to be exported. Most of the beans Wallesen has shipped to Cuba in the past have come from North Dakota.
But it’s been almost five years since a shipment went to the Caribbean island nation.
“Every time that we’ve talked to a Cuban buyer, credit is always an issue. They say they can’t buy without credit,” Wallesen says. “It’s kind of stopped the dialogue between the two countries.”
Producers have been able to export agricultural commodities to Cuba since 2000. The Obama administration in January 2016 loosened export restrictions to allow companies to sell non-agricultural products to Cuba on credit, but agricultural product sales still require cash up front.
Since other nations offer credit to Cuban importers, the policy has kept trade to Cuba low, Sen. Heidi Heitkamp contends.
Heitkamp, D-N.D., and Sen. John Boozman, R-Ark., on Feb. 2, reintroduced their bill to lift the ban on private banks and companies offering credit for agricultural exports to Cuba.
“Our farmers rely on exports, and exports help create more American jobs. Any North Dakota farmer or rancher could tell you that,” Heitkamp said in a statement. “Financing restrictions are the No. 1 barrier facing North Dakota farmers who want to sell their crops to Cuba, and this bill would do away with that obstacle. Cuba is a natural market for North Dakota crops like dry beans, peas and lentils, and there’s no good reason for us to restrict farmers’ export opportunities — which support good-paying American jobs — by continuing this outdated policy.”
The U.S. once was the top supplier of agricultural commodities to Cuba but has dropped to fifth, behind Brazil, China, Argentina and Vietnam, according to Engage Cuba, a national coalition of private companies, organizations and local leaders dedicated to lifting the Cuban embargo.
According to a March 2016 report from the U.S. International Trade Commission, dry bean and pulse exports to Cuba have stalled in the past five years or more.
“Cuban consumers prefer the quality of U.S. dry beans, but Cuba is a price-sensitive, currency constrained market, and China offers extended credit terms unlikely to be matched by U.S. industry,” the report says. It also notes Canada is a highly cost-competitive producer of the products, too.
Wellesen explains there is only one buyer in Cuba: Alimport, a government agency that coordinates all overseas purchases. Officials with Alimport have said they get 180-day credit from China, which Wellesen maintains would be “hard terms to swallow.” It also brings up the point of who would back up such loans, he says. But the ability to offer credit would at least start a dialogue.
“It makes logistical sense that they buy from us because we’re so close,” he says, noting that the U.S. exports to nearby countries, including the Dominican Republic, Haiti and Brazil. “Obviously our prices work. We should be selling to them. If credit is the issue, we need to settle that problem.”
“Certainly anything we can do to open trade or have fewer restrictions is certainly going to be a benefit to our industry,” says Shannon Berndt, executive director of Northern Pulse Growers.
Dan Fugelsten, of Central Valley Bean Cooperative, says getting all business limitations out of the way for trade is a needed move to do more business with Cuba.
“Cuba eats a lot of dry beans,” he explains. “This will just help the U.S. be a little more competitive.”
James Williams, president of Engage Cuba, applauds the bill.
“American farmers can sell to Cuba, but with one hand tied behind their backs,” Williams says. “This commonsense legislation simply lets them compete. Removing arbitrary financing restrictions on selling to Cuba could significantly increase U.S. agricultural exports, create jobs across the country and provide the Cuban people with high-quality American food.”
Wellesen says past exports to Cuba were in large quantities — 5,000 metric tons, or 110,000 100-pound bags, at a time — and offering credit would allow smaller sales.
“They would buy smaller quantities from more people,” Wallesen says. “For the industry, that would be good.”
A bipartisan group of senators from across the country has signed on to the bill, which is not the first attempt by Heitkamp and Boozman to make it easier for producers to sell to Cuba. They first introduction their Agricultural Export Expansion Act in April 2015. The U.S. Senate Appropriations Committee approved the bill as an amendment to a financial services spending bill last year, as well as in July 2015.