Publication Number: 3932

Report Title: U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions

Investigation Number: 332-489

Author's name(s): John Reeder, Joanna Bonarriva, Roger Corey, Andrew Gately, Brad Gehrke, Fred Forstall, John Fry, Vincent Honnold, Joseph Kowalski

Date Published: July 2007

Report Description/Introductory Text: U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions provides an overview of Cuba’s purchases of agricultural products during 2000-06, an analysis of the effects that U.S. restrictions on trade and travel to Cuba by U.S. citizens have on those Cuban purchases, and estimates of likely U.S. agricultural sales if such restrictions are lifted. The study was prepared at the request of the U.S. Senate Committee on Finance.

In its report, the Commission describes trends in U.S.-Cuba trade from 2000 to the present. While in 2000-01, U.S. agricultural exports to Cuba were negligible, they grew rapidly so that by 2004 the United States was Cuba’s largest supplier. Although the value of U.S. exports have fallen slightly since then, the United States still supplies more agricultural products to Cuba than any other country, accounting for about a 30 percent share in 2006.

Commission analysis also indicates that U.S. regulations, such as those that require that the Cuban government pay for U.S. agriculture products in cash or through letters of credit drawn on third-country banks, raise the cost of U.S. goods for Cubans and likely limit U.S. sales. Other factors that increase costs are those related to port delays, high transport charges owing to limited shipping routes, foreign exchange transactions, exacerbated by the need for third-country financing, and the uncertainty surrounding visas for Cuban officials to inspect U.S. agriculture production facilities.

About 171,000 U.S. citizens visited Cuba in 2005. According to Commission estimates, in the absence of U.S. travel restrictions, approximately 550,000 to one million U.S. citizens would visit Cuba, likely causing demand to increase in Cuba for more and better quality food for tourists as well as increase demand for food by Cuban citizens that work in tourism and related services.

Commission estimates suggest that eliminating restrictions on trade, particularly those related to export financing, would likely have a larger impact on U.S. agricultural sales than lifting the travel restrictions on U.S. citizens. This is because most imported food from the United States consists of bulk commodities sold to Cubans rather than foods that are sold to tourists. With the elimination of all such restrictions, U.S. exports to Cuba could almost double from their 2006 level. The largest absolute gains would be for fresh fruits and vegetables, including potatoes; milk powder; processed foods; and poultry, beef, and pork.


Topics Covered: agriculture, Cuba, trade, sanctions, wheat, rice, corn, animal feed, soybeans, fats and oils, dry beans, poultry, beef, pork, dairy, processed food, beverages, fish, forest products, tourism, travel, financing restrictions

Countries: Cuba

Click here for full report