The Cuba Thaw Will Be Big for America's Frozen Chickens

The Cuba Thaw Will Be Big for America's Frozen Chickens
Poultry producers see a familiar, hungry, and very convenient
market—once trade restrictions are eased.
Justin Bachman
March 21, 2016 — 12:00 PM CET

Less than 100 miles off the U.S. coast sits an island nation that can't
feed itself. Cuba, which imports as much as 80 percent of its food, has
developed a huge appetite for American chicken, despite the decades-long
trade embargo. That's why few businesses are quite as excited about
normalized relations as poultry producers in Georgia, Alabama, and Arkansas.
Chicken is one of Cuba's top imports, and an exemption to the embargo
for agricultural products has made the country the fifth-largest export
market for U.S. poultry producers. Over the past 15 years, more than $1
billion of U.S. poultry—nearly all of it frozen legs and thighs—has been
packed aboard cargo ships for the short journey to Cuba. Much of the
chicken departs from ports in Jacksonville, Fla., Mobile, Ala., New
Orleans, and Savannah, Ga.
"They can place an order on a Monday and probably have the product on a
Friday, if they need it," said Jim Sumner, president of the USA Poultry
and Egg Export Council in suburban Atlanta. "If they buy it from Europe
or Brazil, it's going to be 20 to 30 days."
Congress authorized agricultural trade with Cuba in 2000, along with
pharmaceuticals and medical devices, but five years later whacked U.S.
exporters with a tough condition: Cuba's official import agency had to
pay cash before delivery, not when the goods arrive. Financing from U.S.
lenders was also prohibited.
That measure has hampered development the Cuban market for some U.S.
goods, including rice. Rep. Rick Crawford, an Arkansas Republican whose
district includes some of the largest U.S. rice producers, introduced a
bill last year to repeal the financing restrictions and to allow U.S.
investment in some Cuban agri-businesses. The House bill has attracted
30 co-sponsors, and similar legislation is pending in the Senate.
"When you have a market that's 90 miles off your coast, and you've got
these really outdated policies, we're the ones that lose," Crawford
said, arguing that America's Cold War stance toward Cuba has been more
detrimental to U.S. business than to the communist government. "We're
trying to look at this with a little more modern lens."
The export-finance rules have effectively ended U.S. exports of rice and
wheat to Cuba, and U.S. corn sales to the island have likewise plunged.
Cuba buys the bulk of its rice from Vietnam and Brazil, its wheat from
Europe and Canada, and corn from Argentina and Brazil, according to the
U.S. Department of Agriculture. "It takes 36 days to get their rice from
Vietnam," Crawford pointed out, "and they can get it from us in 36 hours."
Despite the strictures of U.S. law, chicken exports to Cuba have
remained strong. Cuba's import agency, Empresa Cubana Importadora de
Alimentos (Alimport), considers the quality of U.S. broilers superior to
those from Brazil and other Latin American sources, said Lee Ann Evans,
a senior policy advisor at Engage Cuba, a trade association of large
U.S. companies pressing for expanded commercial ties. Most of the U.S.
chicken quarters—the most affordable protein available to Cuban
consumers—end up in a variety of state-run and private food shops.
As U.S. policy adjusts and more Americans travel to Cuba, chicken
producers and exporters are stirred by the idea of expanding their Cuba
trade to new products. Among them: breast meat and the kinds of
boneless, skinless cuts that dominate U.S. supermarkets. The communist
nation can also expect to eventually discover the culinary joys of
highly processed—and higher margin—chicken products such as "nuggets"
and wings.
"The only limitations on the amount of product that goes there is limits
on Cuba's economy," Sumner said. "So as we see Cuba's economy improve
and prosper, we would see more product going down."

Source: The Cuba Thaw Will Be Big for America's Frozen Chickens -
Bloomberg Business -
http://www.bloomberg.com/news/articles/2016-03-21/the-cuba-thaw-will-be-big-for-america-s-frozen-chickens