Despite the Obstacles, Cuba's Alimport Is Spending More Than Ever
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Vol. 15, No. 1 January 2007 www.cubanews.com In the News Despite the obstacles, Cuba’s Alimport is spending more than ever on U.S. food Rice exporters hopeful Cuba’s a big market, despite Alimport ban BY LARRY LUXNER since passage of the Trade Sanctions and on genetically modified rice ..........Page 3 elations between the United States and Reform Export Enhancement Act (TSRA) — a Cuba have never been worse — but that’s loophole which authorizes such exports in the hardly dampened the island’s ravenous first place — Cuba’s purchases from the United No more excuses R States have gone up. Raúl Castro tells National Assembly that appetite for American food products. And it’s not just food the Cubans are buying. In 2006, state-run purchasing agency Alim- Cuba must get its act together .....Page 4 Utility poles — because they’re made of wood port says it contracted for just over 1.4 million — qualify as an agricultural export under TSRA metric tons of U.S. agricultural commodities rules. In the last eight months, around 30,000 of Encouraging signs? worth $544.1 million. That was up slightly from them have been shipped to Cuba, 99% of them The number of political prisoners in Cuba the $540.9 million Alimport spent on 2005 pur- from Alabama (see our interview with Alabama and migrants stopped at sea by the Coast chases from U.S. suppliers, even though volume Agriculture Commissioner Ron Sparks, page 8). dropped from the 1.8 million tons of food com- Likewise, Alimport CEO Pedro Alvarez says Guard both fell in 2006 .................Page 5 modities shipped in 2005. his agency has purchased $37 million worth of It should be noted that not everyone accepts U.S. paper products since TSRA’s passage more Ethanol future Alimport’s numbers. John Kavulich of the U.S.- than six years ago. With proper planning, Cuba can cash in Cuba Trade and Economic Council Inc., quoting But grains still dominate U.S. exports to U.S. Commerce Department and USDA figures, Cuba, the most important being wheat ($402.7 on world ethanol boom .................Page 7 says 2005 U.S. food exports to Cuba came to million in 2006 exports) and yellow corn ($368.5 only $350.2 million, down 11% from 2004 sales. million). Other leading commodities include Newsmakers Yet if Alimport’s figures are to be believed, chicken; milled and paddy rice; soybean meal; Ron Sparks, Alabama’s commissioner of the obvious conclusion is that in every year See Alimport, page 2 agriculture, has become a poster child for U.S. food sales to Cuba .................Page 8 Regional cellular operators can’t wait Raúl ready to deal? Jaime Suchlichi says U.S. must play hard- to crack Cuba’s pent-up mobile market ball with Cuba’s new leader .........Page 9 BY VITO ECHEVARRÍA Formerly communist countries there enjoy uba — a country known around the globe some of the planet’s highest mobile penetration Nickel rebounds for its advances in education, medicine rates, led by Estonia (108 cellphones per 100), Record high prices make up for a drop in Cand biotechnology — is light-years behind the Czech Republic (115) and Lithuania (127). Cubacel (www.cubacel.cu), the cellular spin- Cuban nickel production ............Page 11 its neighbors when it comes to telecom. According to a 2006 study by the UN Confer- off of Cuban state telecom monopoly Etecsa, ence on Trade and Economic Development controls cellular services on the island, and lim- Business briefs (UNCTAD), Cuba has one of the world’s lowest its availability of such services to foreigners and Norway protests hotel’s anti-Cuba policy; mobile telephone penetration rates, with only Cubans who happen to reside abroad. Even without that restrictive policy, most IT revolution underway ..............Page 12 134,480 cellular subscribers for its 11.2 million inhabitants in 2005. Cubans would be priced out of the market even That translates into a penetration rate of just if they were allowed to have cellphone accounts, Provinces: Ciego de Avila 1.2 per 100, which is on par with Eritrea, the far- since current rates far exceed the monthly earn- Sparsely populated province hopes tour- flung Solomon Islands and the Democratic Re- ings of most local residents. For instance, Cubacel charges 50c per minute ism will take sugar’s place ..........Page 14 public of Congo. Even impoverished Haiti, the poorest country in the Western Hemisphere, for calls made to other cellphones, and 60c/min has far more cellphone lines in use than Cuba. for calls made to land lines. Unlike most cell CubaNews (ISSN 1073-7715) is published monthly Five years ago, the situation was even worse. operators abroad, Cubacel actually charges its by Luxner News Inc. © 2007. All rights reserved. subscribers for incoming calls (44c/min). Subscriptions: $429 for one year, $800 for two years. In 2001, according to UNCTAD, Cuba had only For editorial inquires, please call (301) 452-1105 8,579 subscribers. Yet the example of Eastern There’s no shortage of foreign telecom oper- or send an e-mail to: [email protected]. Europe suggests those numbers would sky- ators hoping to claim Cuba as their next emerg- rocket in a post-Castro Cuba. See Cellular, page 6 2 CubaNews ❖ January 2007 one of the major constraints we have in exported food to Cuba under TSRA. Since Alimport — FROM PAGE 1 exporting to Cuba,” complained Jim Guinn, December 2001, total contracted tonnage VP of international promotions for the USA comes to 8.16 million metric tons, with total soybeans; milk powder; refined soybean oil; peas, chickpeas and lentils; animal feed; Rice Federation, based in Virginia. “Cuba actual deliveries amounting to just under 7.0 beans and supermarket products (see chart at would seem like a natural market for us be- million tons valued at $2.08 billion. bottom of this page). cause long-grain rice is produced in Louisi- All these exports were transported by 815 One reason Cuba is buying more U.S. food ana” (see related story, page 3 of this issue). vessel journeys, 72% of that via U.S.-flagged — despite the Bush administration’s ever- Guinn’s organization is one of dozens ships. Alimport has made contact with over increasing hostility toward Havana — is that across the United States that have been lob- 4,300 companies in 45 states, and with 132 it has more money to spend. With a GDP growing at 12.5%, thanks to Venezuelan oil and record-high prices for nickel and other export commodities, Cuba’s economy is in better shape than at any time since TSRA was passed by Congress in 2000. But that’s not the only reason. “People are getting used to dealing with the obstacles,” says Kirby Jones, president of the US-Cuba Trade Association. “Everybody has to deal with them — the seller, the port, the shipper and Alimport. They all suck it up and jump through the hoops and over the hurdles. Having said that, I believe Pedro [Alvarez] when he says that if these obstacles were not there, he could buy $200-300 million more in U.S. imports.” RESTRICTIONS GIVE EXPORTERS A HEADACHE Those obstacles, Jones told CubaNews, in- clude OFAC’s demand that Alimport pays for the goods before they leave a U.S. port, as well as the letter of credit requirement. “The letter of credit process is very clum- sy,” said Jones, whose Washington-based organization has 55 member companies and bying Congress to force OFAC to relax its farm associations and federations in 32 states. associations. “It has to go from a Cuban bank rules on selling farm commodities to Cuba Barring any dramatic developments in to a third-country bank, which sends it to under TSRA. Cuba, that trade will continue into 2007. their corresponding bank in the U.S., and that “Obviously, we support opening up the Veteran Cuba analyst Phil Peters, vice-pres- bank sends it to the seller’s bank. So there are Cuban market,” said Chris Garza, director of ident of the Lexington Institute, said Fidel four banks involved, and that piece of paper legislative affairs for the American Farm Bur- Castro’s illness and transfer of power to his must be perfect. If a comma is misplaced, the eau Federation. “We’ve been working with the brother Raúl has had absolutely no effect on whole thing has to be corrected. Cubans to make sure they continue to pur- Alimport’s purchases of U.S. farm products. “Or, let’s say the contract calls for a ship- chase U.S. commodities, despite the barriers “I don’t see any real instability there. Busi- ping date of Jan. 15, and for some reason the we face in selling to them. The only way we ness decisions are being made, and the gov- ship is late; there’s a storm at sea, for exam- can justify to Congress and the administration ernment seems to be functioning normally,” ple, and they can’t do it until the 16th or the at this point is because we continue to see our Peters told CubaNews. 17th. The whole letter of credit sales to Cuba increasing.” “I don’t think Fidel’s absence and the 22 1.4 has to be changed.” Garza added: “What we’ve been hearing uncertainty about his health are having any 21 2.3 That frustrates U.S. agribu- from Congress is that their priority is dealing impact on basic government decisions, cer- 20 2.4 siness interests enormously. with the issue of Cuban-American travel to tainly not on something like this,” he said.