U.S. food sales to Cuba may be in jeopardy

Cuban head of Alimport Alvarez addresses media at press conference
Pedro Alvarez, head of the Cuban food import agency Alimport, addresses the media at a press conference in Havana on Friday regarding new Bush administration rules, demanding payment before shipments for American food exports to Cuba.  Claudia Daut / Reuters
/ Source: NBC News

The Cuban government is nervous about losing its food supply from the United States.

A new Bush administration regulation demands that Havana make the cash payments for goods to suppliers before their purchases leave American ports.

Havana, in a statement released Friday, opposes that new measure, arguing that Cuban exiles who have won lawsuits against the Castro government in U.S. courts would be allowed to seize the property as part of their payment for claims.

In the United States, a number of agricultural states and their Congressional representatives are siding with the Cuban government, saying that trade with Cuba is important because it creates jobs and revenues, while recovering a natural market for American farm goods.

Cuba now a major U.S. partner
Since 2000, when the U.S. Congress allowed an exception to the 30-year-old trade embargo imposed on Fidel Castro’s government by authorizing food sales to Cuba, the island has purchased close to $800 million in food.

The majority of purchases are for basic foodstuffs such as rice, eggs, poultry, wheat, and powdered milk. Currently, an additional $250 million in sales and shipping fees is pending in 2005 and could be jeopardized by the new U.S. “cash-in-advance” rules that take effect in a month’s time, said Pedro Alvarez, head of the Cuban food import agency Alimport.

However Alvarez stressed that his company would not only stand by its signed contracts, but stands ready to make further purchases “subject to acceptable terms and conditions that are consistent with international business practices.”

Threat to large U.S. market
Tony Martinez, a Washington D.C.-based consultant on U.S. Food and Medical Sales to Cuba, is worried Alimport may already be looking for alternative sources of food.

“Other nations will likely get that business in the future," he said. "We are likely going to lose a billion dollar plus customer and affect the lives of millions of people. That money and commerce has helped many of our people in difficult economic circumstances back in their home states.”

Under the old U.S. regulations food exporters do not receive payment until Alimport takes possession of the cargo in Havana. Payment is made through a third country as the embargo prohibits Cuba from direct financial exchanges with U.S. banking institutions.

Senator Max Baucus, Democrat from Montana, believes his farm constituents have found an important new market in Cuba. “I’m outraged at this attempt by Treasury Department bureaucrats to choke off U.S. agricultural sales to Cuba,” he said in a statement.

In fact, according to Alvarez, the United States is now one of the island’s top ten trade partners.

Baucus, along with nine other Democrats and ten Republicans from farm states, introduced legislation two weeks ago designed to stop the new food export rules.

The bill would not only reverse the new regulation but also allow direct transactions between American and Cuban banks when making food sales.

On Friday, Alimport concluded negotiations with the Port of San Diego, promising to ship West Coast food purchases through that major hub.

Signing a memorandum of understanding with Alimport, Kourosh Hangafairn, Port Commissioner, urged all parties to stay “positive,” stressing “these types of situations tend to go back and forth.”