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HEARING TO REVIEW U.S. AGRICULTURAL 

SALES TO CUBA

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

MARCH 11, 2010

Serial No. 111–44

(

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

COLLIN C. PETERSON, Minnesota, Chairman 

TIM HOLDEN, Pennsylvania, 

Vice Chairman 

MIKE MCINTYRE, North Carolina 

LEONARD L. BOSWELL, Iowa 

JOE BACA, California 

DENNIS A. CARDOZA, California 

DAVID SCOTT, Georgia 

JIM MARSHALL, Georgia 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

HENRY CUELLAR, Texas 

JIM COSTA, California 

BRAD ELLSWORTH, Indiana 

TIMOTHY J. WALZ, Minnesota 

STEVE KAGEN, Wisconsin 

KURT SCHRADER, Oregon 

DEBORAH L. HALVORSON, Illinois 

KATHLEEN A. DAHLKEMPER, 

Pennsylvania 

BOBBY BRIGHT, Alabama 

BETSY MARKEY, Colorado 

FRANK KRATOVIL, JR., Maryland 

MARK H. SCHAUER, Michigan 

LARRY KISSELL, North Carolina 

JOHN A. BOCCIERI, Ohio 

SCOTT MURPHY, New York 

EARL POMEROY, North Dakota 

TRAVIS W. CHILDERS, Mississippi 

WALT MINNICK, Idaho 

FRANK D. LUCAS, Oklahoma, Ranking 

Minority Member 

BOB GOODLATTE, Virginia 

JERRY MORAN, Kansas 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

MIKE ROGERS, Alabama 

STEVE KING, Iowa 

RANDY NEUGEBAUER, Texas 

K. MICHAEL CONAWAY, Texas 

JEFF FORTENBERRY, Nebraska 

JEAN SCHMIDT, Ohio 

ADRIAN SMITH, Nebraska 

ROBERT E. LATTA, Ohio 

DAVID P. ROE, Tennessee 

BLAINE LUETKEMEYER, Missouri 

GLENN THOMPSON, Pennsylvania 

BILL CASSIDY, Louisiana 

CYNTHIA M. LUMMIS, Wyoming 

PROFESSIONAL STAFF

ROBERT L. LAREW, Chief of Staff 

ANDREW W. BAKER, Chief Counsel 

APRIL SLAYTON, Communications Director 

NICOLE SCOTT, Minority Staff Director 

(II) 

(III)

C O N T E N T S 

Page 

Cuellar, Hon. Henry, a Representative in Congress from Texas, prepared 

statement .............................................................................................................. 5

Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, opening 

statement .............................................................................................................. 3

Prepared statement .......................................................................................... 4

Peterson, Hon. Collin C., a Representative in Congress from Minnesota, opening statement ........................................................................................................ 1

Prepared statement .......................................................................................... 2

Submitted letters on behalf of: 

Hubbard, Rev. Howard J, Bishop of Albany; Chairman, Committee 

on International Justice and Peace, United States Conference of 

Catholic Bishops .................................................................................... 71

Vivanco, Jose ́ Miguel, Executive Director, Americas Division, Human 

Rights Watch .......................................................................................... 71

WITNESSES

Stallman, Bob, President, American Farm Bureau Federation; Rice and Cattle 

Producer, Columbus, TX ...................................................................................... 5

Prepared statement .......................................................................................... 7

Johnson, Roger, President, National Farmers Union, Washington, D.C. ........... 10

Prepared statement .......................................................................................... 11

Wagner, Mike, Owner/Operator, Two Brooks Farm; Member, Board of Directors, U.S. Rice Producers Association, Sumner, MS; on behalf of USA Rice 

Federation ............................................................................................................. 33

Prepared statement .......................................................................................... 34

Supplementary material .................................................................................. 79

McReynolds, Jerry, President, National Association of Wheat Growers; Wheat 

Producer, Woodston, KS ...................................................................................... 44

Prepared statement .......................................................................................... 45

Supplementary material .................................................................................. 81

Wilson, John J., Senior Vice President, Marketing and Industry Affairs, Dairy 

Farmers of America; Member, Board of Directors, National Milk Producers 

Federation, Kansas City, MO .............................................................................. 49

Prepared statement .......................................................................................... 51

Schott, Barton, First Vice President, National Corn Growers Association; 

Corn, Soybean, and Wheat Producer, Kulm, ND .............................................. 54

Prepared statement .......................................................................................... 55

Fritz, Scott E., Owner/Operator (President/Treasurer), Fritz Black Sand 

Farm, Inc.; Member, Board of Directors, American Soybean Association, 

Winamac, IN ......................................................................................................... 58

Prepared statement .......................................................................................... 59

SUBMITTED MATERIAL

AgriLIFE Research, Texas A&M University, submitted reports ......................... 72

(1)

HEARING TO REVIEW U.S. AGRICULTURAL 

SALES TO CUBA 

THURSDAY, MARCH 11, 2010

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON AGRICULTURE, 

Washington, D.C. 

The Committee met, pursuant to call, at 1:45 p.m., in Room 

1300, Longworth House Office Building, Hon. Collin C. Peterson 

[Chairman of the Committee] presiding. 

Members present: Representatives Peterson, Holden, Boswell, 

Baca, Costa, Halvorson, Dahlkemper, Bright, Schauer, Boccieri, 

Murphy, Pomeroy, Minnick, Lucas, Goodlatte, Moran, Johnson, 

King, Neugebauer, Conaway, Smith, Roe, Luetkemeyer, Thompson, 

and Cassidy. 

Staff present: Aleta Botts, Tyler Jameson, John Konya, Clark 

Ogilvie, April Slayton, Debbie Smith, James Ryder, Mike Dunlap, 

Tamara Hinton, Kevin Kramp, Josh Mathis, Nicole Scott, and 

Sangina Wright. 

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A 

REPRESENTATIVE IN CONGRESS FROM MINNESOTA 

The CHAIRMAN. Good afternoon and welcome to today’s hearing. 

Right now, Cuba relies heavily on imported food to feed its people; and the United States provides about 30 percent of the food 

Cuba imports. Given our geographic location close to Cuba and 

high-quality, well-priced commodities, the U.S. International Trade 

Commission estimates that the United States could provide as 

much as 1⁄2 to 2⁄3 of the food and agricultural imports if current 

trade restrictions were lifted. These restrictions are limiting a very 

promising market for U.S. agriculture producers. To that end, I 

have introduced legislation H.R. 4645, along with Congressman 

Moran and other Republicans and Democratics, including Members 

of this Committee, to expand U.S. agriculture exports to Cuba. 

The bill we have introduced would eliminate the requirement 

that our farmers have to go through a third country bank to do 

business in Cuba, and would place agriculture exports to Cuba on 

the same terms for cash payment as other countries, requiring payment when the shipment changes hands, as opposed to what it is 

now. 

It will also make it easier for U.S. citizens to travel to Cuba, allowing American agriculture producers to more easily conduct business with Cuba and boosting demand for U.S. products in Cuba at 

the same time. 

2

However, it should be very clear that this bill will not end the 

U.S. embargo on Cuba, and will not allow U.S. banks to extend 

credit to Cuba. It will simply allow U.S. agriculture exporters to 

offer their products for sale in Cuba in the same way that they do 

for business with all of our other trading partners. 

American agriculture is eager to increase exports and grow this 

important sector of the U.S. economy. That is why many diverse 

agriculture groups have already voiced support for this bill, including the American Farm Bureau, The National Farmers Union, the 

National Milk Producers, the National Chicken Council, the National Corn Growers, the National Wheat Growers, USA Rice Federation, U.S. Rice Producers, American Soybean Association, American Cotton Shippers, National Council of Farmer Cooperatives, 

and U.S. Apple Association, and others. 

Before we begin, I think it is important to clarify one other thing 

right now. I do not think any of the Members here, or any of the 

witnesses at this table today, are supporters of the Castro regime. 

None of us support the Cuban Government’s detainment of political 

prisoners. However, these policies we have in place today have 

done nothing to remove the regime or to improve the situation for 

political prisoners. 

I have here and am entering into the record without objection 

letters from the Human Rights Watch and Conference of Catholic 

Bishops that support this legislation that I have introduced because they recognize the restrictions in place are failing the Cuban 

people. 

[The documents referred to are located on p. 71.] 

The CHAIRMAN. America’s current policies have failed to achieve 

their stated goal; and, instead, they have hand-delivered an export 

market in our own backyard to the Brazilians, the Europeans, and 

other competitors around the world. It is time we ask ourselves 

why we have in place policies that simply do not work and only 

harm U.S. interests. 

So, again, I want to thank all the witnesses for joining us today, 

and thank the Members for their interest in this important issue. 

I look forward to the witnesses’ testimony 

[The prepared statement of Mr. Peterson follows:]

PREPARED STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN

CONGRESS FROM MINNESOTA

Good morning and welcome to today’s hearing of the House Agriculture Committee. Right now, Cuba relies heavily on imported food to feed its people, and the 

United States provides about 30 percent of the food Cuba imports. However, given 

our geographic location close to Cuba and high quality, well-priced commodities, the 

U.S. International Trade Commission estimates that the United States could provide as much as 1⁄2 to 2⁄3 of Cuba’s food and agriculture imports if current trade 

restrictions were lifted. These restrictions are limiting a very promising market for 

U.S. agriculture producers. 

To that end, I have introduced legislation, H.R. 4645, along with Congressman 

Moran and other Republicans and Democratics, including many Members of this 

Committee, to expand U.S. agricultural exports to Cuba. 

The bill we have introduced would eliminate the requirement that our farmers 

have to go through a third country bank to do business in Cuba, and would place 

agricultural exports to Cuba on the same terms for cash payment as other countries, 

requiring payment when the shipment changes hands. It would also make it easier 

for U.S. citizens to travel to Cuba, allowing American agricultural producers to more 

easily conduct business with Cuba and boosting demand for U.S. products in Cuba. 

3

However, it should be very clear that this bill will NOT end the U.S. embargo on 

Cuba and will not allow U.S. banks to extend credit to Cuba. It will simply allow 

U.S. agriculture exporters to offer their products for sale to Cuba in the same way 

they do business with all of our other trading partners. 

American agriculture is eager to increase exports and grow this important sector 

of the U.S. economy. That is why many diverse agriculture groups have already 

voiced support for H.R. 4645, including the American Farm Bureau Federation, National Farmers Union, National Milk Producers Federation, National Chicken Council, National Corn Growers Association, National Association of Wheat Growers, 

USA Rice Federation, U.S. Rice Producers Association, American Soybean Association, American Cotton Shippers Association, National Council of Farmer Cooperatives, and U.S. Apple Association, among others. 

Before we begin, I think it’s important to clarify one other thing right now. I do 

not think any of the Members here or any of the witnesses at that table today are 

supporters of the Castro regime. None of us support the Cuban Government’s detainment of political prisoners. However, the policies we have in place today have 

done nothing to remove the regime or improve the situation for political prisoners. 

I have here, and am entering into the record, letters from Human Rights Watch and 

the Conference of Catholic Bishops that support the legislation I have introduced, 

because they recognize that the restrictions currently in place are failing the Cuban 

people. America’s current policies have failed to achieve their stated goal and instead they have hand-delivered an export market in our own backyard to the Brazilians, the Europeans, and our other competitors around the world. It’s time we ask 

ourselves why we have in place policies that simply do not work and that only harm 

U.S. interests. 

I thank our witnesses for joining us today to talk about this important issue, and 

I look forward to their testimony.

The CHAIRMAN. I will now recognize the gentleman from Oklahoma, the Ranking Member, for a statement. 

OPENING STATEMENT OF HON. FRANK D. LUCAS, A 

REPRESENTATIVE IN CONGRESS FROM OKLAHOMA 

Mr. LUCAS. Thank you, Mr. Chairman. 

I am glad we had an opportunity today to discuss the important 

role that exports play in the success of our farmers and ranchers. 

I look forward to hearing from a full set of witnesses who represent 

producers with agricultural export interests, several of whom are 

producers themselves. 

Exports are essential to the prosperity of American farmers, and 

we should consistently seek greater opportunities for exports. We 

have several such opportunities ready and waiting. The three pending free trade agreements the U.S. signed with Panama, Colombia, 

and Korea are worth more than $2.6 billion in new market access 

for American agricultural exports. The Korean agreement alone is 

the most economically significant agreement negotiated in 16 

years. 

Unfortunately, these agreements are being delayed unnecessarily. 

The Obama Administration has in recent weeks passed up three 

key opportunities to lay out a clear path for expanding U.S. agricultural exports. Neither the President’s budget proposal, his export initiative, nor this year’s trade policy agenda places an emphasis on finally implementing our pending trade agreements. Instead, 

the Administration seems narrowly focused on trade enforcement 

and technical assistance to expand trade. These are important activities, but they are inadequate when it comes to opening new 

markets. 

Today, we are here to talk about trade with Cuba. U.S. farmers 

are well positioned to supply food and agricultural products, which 

4

are exempt from the embargo on humanitarian grounds. Since 

2001, U.S. agricultural exporters have used licenses to send products to Cuba. Over the past decade, the U.S. share of the Cuban 

food market has risen dramatically. 

In 2005, some additional changes were made to regulations governing exports to Cuba; and this Committee is interested in hearing how those changes have been implemented. Of particular concern is the issue of specific and general licenses for exports and 

travel, and how these licenses have been administered. 

I hope that our witnesses can help us understand how these 

issues fit into our overall picture of expanding U.S. exports. I hope 

we can shed light on some of a few questions, such as regulations 

administered in an equitable and timely manner, are they? What 

changes can the Administration make to respond to your concerns? 

And what other avenues of exports do you see are a necessary component to our U.S. trade policy? 

As we discuss these topics today, it is important to understand 

that our priorities should be finding a way to increase agricultural 

exports to help meet the food needs of the Cuban people without 

supporting Cuba’s current oppressive government. 

I thank the Chairman for this hearing, and I yield back. 

[The prepared statement of Mr. Lucas follows:]

PREPARED STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN CONGRESS

FROM OKLAHOMA

Thank you, Mr. Chairman. 

I am glad we have an opportunity today to discuss the important role that exports 

play in the success of our farmers and ranchers. I look forward to hearing from a 

full set of witnesses who represent producers with agricultural export interests, several of whom are producers themselves. 

Exports are essential to the prosperity of American farmers, and we should consistently seek greater opportunities for exports. We have several such opportunities 

ready and waiting. The three pending free trade agreements the U.S. signed with 

Panama, Colombia, and Korea are worth more than $2.6 billion in new market access for American agricultural exports. The Korean agreement alone is the most economically significant agreement negotiated in 16 years. Unfortunately these agreements are being delayed unnecessarily. 

The Obama Administration has in recent weeks passed up three key opportunities 

to lay out a clear path for expanding U.S. agricultural exports. Neither the President’s budget proposal, his export initiative, nor this year’s trade policy agenda 

places an emphasis on finally implementing our pending trade agreements. Instead, 

the Administration seems narrowly focused on trade enforcement and technical assistance to expand trade. These are important activities, but they’re inadequate 

when it comes to opening new markets. 

Today, we are here to talk about trade with Cuba. U.S. farmers are well positioned to supply food and agricultural products, which are exempt from the embargo 

on humanitarian grounds. Since 2001, U.S. agricultural exporters have used licenses 

to send products to Cuba. Over the past decade, the U.S. share of the Cuban food 

market has risen dramatically. 

In 2005, some additional changes were made to regulations governing exports to 

Cuba, and this Committee is interested in hearing how those changes have been implemented. Of particular concern is the issue of specific or general licenses for exports and travel, and how those licenses have been administered. 

I hope that our witnesses can help us understand how these issues fit into their 

overall picture of expanding U.S. exports. I hope they can shed some light on a few 

questions, such as are regulations administered in an equitable and timely manner? 

What changes can the Administration make to respond to your concerns? What 

other avenues for exports do you see are a necessary component to our trade policy? 

As we discuss these topics today, it’s important to understand that our priority 

should be finding a way to increase agriculture exports to help meet the food needs 

of the Cuban people without supporting Cuba’s oppressive government.

5

The CHAIRMAN. I thank the gentleman. 

All the Members will be able to put a statement into the record 

if they so wish. 

[The prepared statement of Mr. Cuellar follows:]

PREPARED STATEMENT OF HON. HENRY CUELLAR, A REPRESENTATIVE IN CONGRESS

FROM TEXAS

Thank you Chairman Peterson and Ranking Member Lucas for holding today’s 

hearing of the House Committee on Agriculture to review United States agricultural 

sales to Cuba. I look forward to our hearings on this issue, as I believe there are 

both strong positives and negatives to changes to our current policy. 

When reviewing changes to our current relationship with Cuba, I must first and 

foremost represent my Congressional District and constituents. I understand the 

strong views that Cuba policy elicits, and I hope our hearings will serve to answer 

many questions about the short and long term implications this may lead to. 

American agricultural producers are the best in the world. They have every ability to compete and succeed in any marketplace, and I do believe that expanding 

markets for them during some of the toughest economic times in our lifetimes will 

help lessen the impact of our current recession. That is why I have supported in 

the past increased access and trade globally. In fact, this Congress I created the 

Pro-Trade caucus. Let there be no doubt—trade creates jobs for American workers. 

However, let us not be blind to the negatives of this legislation. Cuba is a communist country with a Dictator. There is no debating that. The United States has 

made a near 50 year commitment to ending the communist rule that lives only 90 

miles off our border. We must carefully consider if now is the time—or if changing 

the policy now puts our last 50 years to waste. 

Finally, we must try to ensure that by expanding trade into Cuba, we don’t only 

generate revenue for the Cuban Government, but also improve the quality of life 

for 11 million Cuban citizens. 

I have approached this issue with an open mind, and I will continue to learn of 

the impact this legislation will have in its current form. I look forward to a substantive and productive debate with my colleagues on the Committee on Agriculture, as I know many of them share my concerns. 

Again, I thank the Chairman and the Ranking Member for holding these hearings. I understand the emotions that any discussion of Cuba can bring out. I look 

forward to the testimony today, and our continued work on this Committee.

The CHAIRMAN. We welcome our first panel, the Presidents of our 

two major general farm organizations, Mr. Bob Stallman, the President of the American Farm Bureau, and Mr. Robert Johnson, the 

President of the National Farmers Union. 

So, gentlemen, we appreciate you being here with us today; and 

I guess, Mr. Stallman, you are up first. Welcome to the Committee. 

STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN 

FARM BUREAU FEDERATION; RICE AND CATTLE PRODUCER, 

COLUMBUS, TX 

Mr. STALLMAN. Thank you, Mr. Chairman and Ranking Member 

Lucas, Members of the Committee. 

I am Bob Stallman, President of the American Farm Bureau 

Federation and a rice and cattle producer from Columbus, Texas; 

and I certainly appreciate this invitation to share our views on U.S. 

agricultural exports to Cuba. 

The American Farm Bureau Federation supports H.R. 4645. We 

appreciate the leadership of the Chairman and Representative 

Moran for sponsoring this legislation, and the efforts of other 

House Members who worked together to develop this bill. 

H.R. 4645 will increase agricultural exports and supply food to 

the Cuban people. U.S. agricultural exports to Cuba do reach the 

Cuban people and are not solely placed in hard currency superVerDate 0ct 09 2002 14:30 Apr 16, 2010 Jkt 041481 PO 00000 Frm 00009 Fmt 6633 Sfmt 6601 I:\DOCS\111-44\55518.TXT AGR1 PsN: BRIAN
6

markets. Cuba’s agricultural production is not able to meet the food 

demands of the nation, so they must import agricultural goods. If 

not, many Cuban citizens would go hungry. On the average, the United States has exported $320 million in 

U.S. product per year since 2000. We have exported a variety of 

products, including corn, wheat, soybeans, rice, poultry, dairy products, pork, live cattle, dried beans and peas, and fresh and dried 

fruits, including apples, grapes, and pears. 

The International Trade Commission has reported that the value 

of agricultural imports by Cuba has more than tripled since 2000, 

but those sales values have fluctuated. Our submitted statement 

includes U.S. commodity export numbers. Given that my colleagues 

representing those commodity groups will be testifying, I will focus 

my comments on the legislation and its importance. 

The major factor contributing to sales fluctuations is that the 

U.S. is not viewed by Cuba as a reliable supplier due to our sales 

restrictions, and the ability of the U.S. Government to alter those 

restrictions on a whim. The United States should be the preferred 

supplier in Cuba, given our competitive prices, high-quality products and lower delivery costs due to the proximity of our countries. 

Instead, we have opened the door to countries like the European 

Union, Brazil, Canada, Vietnam, while hindering ourselves. Our 

competitive disadvantage in the market is not a result of partnerimposed trade reasons, but, rather, our own government-imposed 

restrictions. 

What we are asking for from Congress is to give U.S. farmers the 

competitive advantage in Cuba that they should rightly have, and 

the opportunity to increase U.S. agricultural exports. The provisions of H.R. 4645 include returning the so-called payment of cash 

in advance rule to normal commercial terms, as intended by Congress. The Office of Foreign Assets Control rule change in 2005 negated the original intent of Congress, created a special case that 

only applies to Cuba, thus increasing the cost of purchasing our 

products and negatively impacting our sales. The current definition 

does nothing to protect U.S. exporters, but was put in place to attempt to hinder U.S. exports. 

The additional dollars that Cuba now has to spend to purchase 

U.S. product does not go to the U.S. farmer, but, rather, the foreign 

bank carrying out the transaction. Payment of cash in advance was 

the method of doing business with Cuba prior to the change, and 

those who used this method previously are supportive of returning 

to what Congress originally intended. 

The legislation would also eliminate the requirement that Cuba 

wire any payment for U.S. goods through a third country bank. 

This process comes with a high fee, again increasing the cost of 

purchasing agricultural goods from the United States. While U.S. 

telecommunications companies are authorized to receive payments 

directly from their Cuban counterparts, U.S. agriculture is singled 

out for this expensive, unnecessary, and discriminatory requirement. 

The opposition has tried to argue against this bill based on 

Cuba’s creditworthiness and the risk to U.S. suppliers. This bill 

does not allow credit or are we asking for credit. This bill would 

still require Cuba to pay for U.S. purchases in cash. The issue of 

7

credit and Cuba’s ability to pay does not apply to what is being 

proposed. 

Finally, H.R. 4645 would lift the U.S. travel ban. Lifting the 

travel restrictions on U.S. citizens will have a direct impact on U.S. 

agricultural sales. Increased travel to Cuba by U.S. citizens will 

boost food demand in the country, and coupled with these other reforms U.S. industry would expect to meet the increased food needs. 

Remember, Cuba does not have the capacity to fully meet its own 

food needs. 

This need also brings with it the opportunity to sell Cuba higher 

valued products, increasing the overall value of our exports to the 

country. Given that Cuba would still be required to purchase product from the U.S. with cash, those dollars received from U.S. visitors would be spent to meet those additional food needs. 

Travel will also have a positive impact on the Cuban people and 

their food consumption. U.S. citizens traveling to Cuba will use dollars, and some of those dollars will flow back to the Cuban people. 

This will increase the income of the Cuban people, allowing them 

to purchase products they previously could not. 

U.S. agriculture’s goal is to make the United States the number 

one supplier in agricultural products to Cuba. In order to achieve 

this goal, Cuba must view the United States as its preferred supplier. Eliminating these restrictions will decrease the advantage 

the United States has given our competitors and restore the advantage to U.S. farmers. 

U.S. agriculture is not requesting the embargo be lifted, but rather for Congress to take the small step of lifting key restrictions 

that will increase U.S. agriculture’s competitiveness in the market. 

We urge Members of this Committee and this House to cosponsor 

and support H.R. 4645. 

Thank you, and I look forward to the opportunity to answer 

questions. 

[The prepared statement of Mr. Stallman follows:]

PREPARED STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU

FEDERATION; RICE AND CATTLE PRODUCER, COLUMBUS, TX 

My name is Bob Stallman. I am President of the American Farm Bureau Federation and a rice and cattle producer from Columbus, Texas. I appreciate the invitation to share Farm Bureau’s views on U.S. agricultural exports to Cuba. Farm Bureau is the nation’s largest general farm organization, with more than six million 

member families, representing producers of every commodity from every state as 

well as Puerto Rico. 

While the United States has only been exporting U.S. agricultural products to 

Cuba for just over 10 years, we have seen the promise the market holds. Unfortunately, because of restrictions on U.S. exports to Cuba, U.S. farmers have not been 

able to benefit from the full potential of the market. 

Because of the market potential, the American Farm Bureau Federation has been 

an advocate for easing restrictions on exports to Cuba and is a supporter of H.R. 

4645, The Travel Reform and Export Enhancement Act. We appreciate the leadership of Chairman Collin Peterson and Rep. Jerry Moran for drafting this legislation, 

and the efforts of other House Members who worked together to develop this bill. 

This legislation will eliminate costly obstacles for American farmers interested in 

exporting to Cuba and will expand the potential for increase food consumption providing an even greater opportunity to export U.S. products to the market. 

H.R. 4645 will increase agricultural exports and supply food to the Cuban people. 

U.S. agricultural exports to Cuba do reach the Cuban people and are not solely 

placed in hard-currency supermarkets. Cuba’s agricultural production does not meet 

8

the food demands of the nation so they must import agricultural goods, if not many 

Cuban citizens would go hungry. 

The Cuban Market 

U.S. agriculture has seen significant growth and experienced significant setbacks 

since being allowed to trade with Cuba in 2000. We have seen our sales increase 

and decline over the years, but on average the United States has exported roughly 

$320 million in U.S. product per year since 2000. The factors that have contributed 

to these fluctuations can be attributed to U.S. regulation changes, cost of doing business with the United States, commodity prices, transportation cost, etc., but the 

major factor is that the United States is not viewed by Cuba as a reliable supplier 

due to our sales restrictions and the ability of the U.S. Government to alter those 

restrictions at a whim. 

The United States has exported a variety of commodities to Cuba. Of those commodities grain and feed has consistently been the top export group with sales of 

$369 million making up more than half of our total exports in 2008. With an 81 

percent increase from 2007 to 2008, corn and wheat have been the largest beneficiaries of these sales. Rice on the other hand had seen major growth until 2006 

when exports reached a high of $39 million; since then rice sales have been on a 

sharp decline resulting in no rice sales in 2009. 

Oilseeds are the second largest group of exports to Cuba. The majority of what 

Cuba is importing from the United States in this group consists mainly of soybeans 

and soybean products. Of these products the United States exported $135 million 

in 2008 and has seen a growth of 119 percent since Cuba began purchasing these 

products in 2002. 

Since 2001 Cuba has been an importer of U.S. meats and dairy products. A majority of these sales have come from poultry purchases by Cuba. U.S. poultry sales 

showed nearly 80 percent growth in 2008 from 2007, with sales reaching a high of 

$139 million. U.S. dairy sales have been less regular with dramatic sales increases 

and decreases. In 2008, the United States exported more than $15 million in dairy 

products but those sales were a little more than half of what we exported during 

our top year, 2005 ($30 million). 

While the above mentioned products represent our largest exports, the United 

States also exports products like pork, live cattle, dried beans and peas, fresh and 

dry fruits including apples, grapes and pears. U.S. agriculture sales to Cuba exponentially increased until around 2005; however, after 2005 sales dropped as Cuba 

increasingly turned to our competitors to fill its needs. This shift in purchases was 

a result of the increasingly complex sale requirements, which caused Cuba to view 

the United States as an unreliable supplier. The Foreign Agriculture Service, 

United States Department of Agriculture, trade data comparing the export information for 2009 compared to the same period in 2008 shows our exports dropped by 

23 percent. 

According to the U.S. International Trade Commission (ITC) report, ‘‘U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions,’’ Cuba’s value of 

agricultural imports more than tripled from approximately $500 million in 2000 to 

more than $1.8 billion in 2008. There is much more opportunity to expand the U.S. 

market share. The United States should be the preferred supplier in Cuba given our 

competitive prices, high-quality products and lower delivery cost due to proximity 

of our countries. Instead, we have opened the door to countries like the European 

Union, Brazil, Canada and Vietnam while hindering ourselves. At this point our 

competitive disadvantage in the market is not a result of the usual trade reasons, 

tariffs, partner-imposed sanitary and phytosanitary measures or other non-tariff 

barriers, but rather our own government-imposed restrictions. 

Making U.S. Agriculture Competitive in the Cuban Market 

The American Farm Bureau is not currently advocating fully lifting the embargo, 

but we believe now is the time for Congress to take action to ease some of the current restrictions. President Obama early last year took action to eliminate the restrictions placed on Cuban American travel and remittances, as well as restrictions 

allowing U.S. telecommunication companies to do business in Cuba. Steps have also 

been taken by the Administration and some within Congress to engage with Cuba. 

This Congress passed a 1 year measure to ease restrictions on ‘‘cash payment in advance,’’ and a measure to allow travel to Cuba for agricultural sales to be done on 

a general license, which is currently being implemented. 

What we are asking for from Congress and the Administration is to give U.S. 

farmers the competitive advantage in Cuba that they should rightly have and the 

opportunity to increase U.S. agricultural exports. We believe the way to make that 

happen is to return ‘‘payment of cash in advance’’ to the commercial terms as inVerDate 0ct 09 2002 14:30 Apr 16, 2010 Jkt 041481 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 I:\DOCS\111-44\55518.TXT AGR1 PsN: BRIAN
9

tended by Congress, eliminate the need to go through third country banks, issue 

visas for Cuban agriculture inspectors and eliminating all travel restrictions on U.S. 

citizen travel to Cuba. 

The Office of Foreign Assets Control (OFAC) re-defining ‘‘payment of cash in advance’’ negated what was the original intent of Congress, ignored the commercial 

definition to create a special definition that only applies to Cuba, increased the cost 

of purchasing our products and negatively impact our sales. The current definition 

does nothing to protect U.S. exporters but was put in place in an attempt to hinder 

U.S. exports. ‘‘Payment of cash in advance’’ was the method of doing business with 

Cuba prior to the change, and those who used this method previously are supportive 

of returning to what Congress had intended. 

The opposition has tried to argue against this bill based on Cuba’s credit worthiness and the risk to U.S. suppliers. This bill does not allow credit nor are we asking 

for credit. This bill would still require Cuba to pay for U.S. purchases in cash. The 

issue of credit and Cuba’s ability to pay does not apply to what is proposed. 

U.S. citizen travel to Cuba will create a new demand for food in the market, increasing the opportunity to sell U.S. agricultural product. To meet the demand Cuba 

will have to import more food. Cuba does not have sufficient agricultural production 

to meet its own consumption. Travel will also have a positive impact on the Cuban 

people and their food consumption habits. U.S. citizens traveling to Cuba will use 

dollars and many of those dollars will flow back to the Cuban people. This will increase the income of the Cuban people allowing them to purchase higher valued food 

products they previously could not afford. 

Payment of Cash in Advance 

On Feb. 22, 2005, the OFAC issued a regulation narrowing the application of the 

term ‘‘payment of cash in advance’’ for sales to Cuba. Under the new OFAC definition, cash payments for U.S. agricultural goods sold to Cuba are restricted to payments received prior to shipment of the goods from U.S. ports. This restriction is 

contrary to the Trade Sanctions Reform and Export Enhancement Act of 2000 (Export Enhancement Act), which allows for the shipment of agricultural goods under 

a broader interpretation of ‘‘payment of cash in advance’’ terms, consistent with 

practices successfully used by U.S. exporters. 

Most contracts made with the Cuban Government for the purchase of U.S. agricultural products have used ‘‘payment of cash in advance’’ as the method of payment. Under its original interpretation, U.S. agricultural products could be shipped 

to Cuba but all certificates, title and ownership of the goods would only be transferred once payment was received from Cuba. Contracts now being made with Cuba 

are done under letters of credit from third party banks. These letters of credit have 

increased the cost of doing business with the United States which translates into 

a higher price for our commodities. The additional dollars Cuba spends for these 

transactions do not go to the U.S. farmer but rather the foreign bank carrying out 

the transaction. 

Third Country Banks 

Currently, Cuba must wire payments for U.S. goods through a third country bank 

in order for U.S. banks to receive the cash for the U.S. product to be delivered. This 

process comes with a high fee for handling the transaction, increasing the cost of 

purchasing agricultural goods from the United States. Having to go through a third 

country bank puts U.S. products at a disadvantage to those of our competitors. 

While U.S. telecommunications companies are authorized to receive payments directly from their Cuban counterparts, U.S. agriculture is singled out by law for the 

expensive, unnecessary and discriminatory requirement that payments must flow 

through foreign banks. 

Removal of the Travel Ban 

Lifting the travel restrictions on U.S. citizens will have a direct impact on U.S. 

agricultural sales. Increased travel to Cuba by U.S. citizens will boost food demand 

in the country and, coupled with other reforms, U.S. industry would expect to meet 

the increased food needs. The ITC study mentioned previously in this statement 

concurs that visitors would boost the demand for imported agricultural products. 

U.S. farmers have the capability to fulfill the demands of the Cuban citizen and the 

added demand of the country’s visitors. This new demand also brings with it the 

opportunity to sell Cuba higher-valued products, increasing the overall value of our 

exports to the country. 

Increased travel will also bring much needed funds to purchase U.S. commodities. 

Given that the United States would not extend credit to Cuba, Cuba would still be 

required to purchase product from the U.S. with cash. Those dollars received from 

U.S. visitors would be spent to meet those food needs. 

10

Denial of U.S. Visas 

Cuban travel has been denied by the United States for important meetings for 

Cuban officials, like veterinary officials, to confer with U.S. suppliers, inspect facilities, discuss sanitary and phytosanitary issues and verify U.S. procedures and 

standards associated with the sale of U.S. food and agricultural exports to Cuba. 

Visits of this type are routinely conducted by U.S. officials and U.S. importers in 

markets that sell to the United States. It is also customary practice for foreign purchasing agents and government technical teams to travel to the U.S. to meet with 

U.S. suppliers and tour facilities. The denial of the visas associated with these commercial visits from Cuban officials has drastically limited the export of some U.S. 

products, hindering our trade growth and is contrary to the spirit of the Export Enhancement Act.

Conclusion 

U.S. agriculture’s goal is to make the United States the number one supplier of 

food and agricultural product to Cuba. In order to achieve this goal, Cuba must also 

view the United States as its preferred supplier. Our competitors do not have the 

same obstacles in trading with Cuba we face. Eliminating these restrictions will decrease the advantages the United States has given our competitors and restore the 

advantage to U.S. farmers. These actions will make it easier for Cuba to purchase 

U.S. commodities and most importantly will reduce the cost of purchasing our commodities. U.S. agriculture is not requesting the embargo be lifted but rather for 

Congress to take the small step of lifting key restrictions that will increase U.S. agriculture’s competitiveness in the market. 

We hope that Members of this Committee, and the House, will support Chairman 

Peterson’s and Rep. Moran’s Travel Reform and Export Enhancement Act, H.R. 

4645. The bill will reverse the restrictions on ‘‘payment of cash in advance,’’ eliminate the third country bank requirement and lift the ban on travel. Passage of this 

bill will make agriculture a strong player in the Cuban market and will increase 

U.S. agricultural exports.

The CHAIRMAN. Thank you, Mr. Stallman, I appreciate that. 

Mr. Johnson, welcome to the Committee. 

STATEMENT OF ROGER JOHNSON, PRESIDENT, NATIONAL 

FARMERS UNION, WASHINGTON, D.C. 

Mr. JOHNSON. Thank you, Mr. Chairman and Members of the 

Committee. 

For the record, my name is Roger Johnson. I am President of National Farmers Union, and a farmer from North Dakota. I am formerly the North Dakota Agriculture Commissioner and in that capacity I have personally lead eight trade-related missions to Cuba. 

So I speak with some firsthand experience. 

The National Farmers Union has long supported ending the 

Cuban embargo. We think it is simply not achieving the goal that 

it was intended to achieve. And so, consequently, we clearly are in 

support of the Travel Restriction Reform and Export Enhancement 

Act that is before us today. It at least goes in the right direction 

by doing the right things. Allowing for direct financial transactions 

will allow for significant efficiencies in the marketplace to be realized, allowing for the same sorts of payment requirements that are 

afforded to other countries for our exporters, and, of course, allowing U.S. citizens to travel to Cuba. 

Since the passage of the 2000 TSRA, U.S. farmers have earned 

about $4 billion from sales to the Cubans. They have had an excellent repayment record. I know of no one who has not been paid in 

the extensive trips that I have had there and the contacts that I 

have made with U.S. suppliers. 

Between 2000 and 2006, Cuba’s food and export and ag imports 

nearly doubled. We have picked up a significant share of that, as 

has already been pointed out. We are very well positioned to supply 

11

this market. One might argue that we are the best positioned of 

any country in the world to supply the Cuban market. 

U.S. ag producers have already experienced positive impacts 

since the passage of TSRA. Nonetheless, the current policy is tepid 

and inconsistent with the policy that this country has towards a 

number of other countries in the world; and, frankly, the current 

policy which allows for the cash sale of food and medicine to Cuba 

is getting a little old. 

We need to continue to advance in this current policy. Trade is 

based on relationships, and our word means something and relationships mean something between trading partners. We need to 

get beyond where we are at and get beyond the diplomatic slaps 

in the face that the 2005 change in policy, already referenced, that 

was intended to provide. 

The current cash-only sales policy may seem to be in our best interest. However, it is an inefficient system characterized by small 

sales, the absence of long-term contracts, unnecessarily high transaction costs, and exchange rate losses, all of which hurt our competitiveness. Direct banking transfers, if they were permitted between the U.S. and Cuba for these products, would also add additional efficiencies. 

Our policy currently is designed to use food as a weapon, and we 

would argue that that policy has failed. Just under 50 years ago, 

60 percent of Cuba’s food imports came from the U.S. We ought to 

get back to that goal. 

The International Trade Commission predicts that lifting the ban 

on ag products would increase U.S. exports to Cuba to between 

$900 million and about $1.2 billion, leading to an increase of somewhere between $1⁄4–$1⁄2 billion annually. We ought to do this. This 

bill would get us a long ways down the road towards making that 

accomplishment. 

That report also pointed out a number of factors that are both 

positive and negative with respect to our relationship. They are detailed on page four of my testimony. You can see the three positive 

factors that we have deal with our competitive prices and high 

quality of products, our lower cost of delivery, and the smaller volumes that, because of our proximity, we are able to move into that 

market on a just-in-time basis. 

But that report also details eight factors that hinder our ability 

to access that market. This bill would go a long ways towards 

eliminating a majority of those eight factors. 

I realize that there are political factors to consider as well when 

lifting the ban on travel to Cuba. As the Chairman stated at the 

opening of this hearing, we have never been supportive of military 

dictatorships. We do, however, feel this embargo has failed. It is 

time to move on, and passing this bill would at least be a significant step in the right direction. Thank you. 

[The prepared statement of Mr. Johnson follows:]

PREPARED STATEMENT OF ROGER JOHNSON, PRESIDENT, NATIONAL FARMERS UNION, WASHINGTON, D.C. 

Chairman Peterson, Ranking Member Lucas and Members of the Committee, 

thank you for the opportunity to testify about the importance of agricultural trade 

with Cuba. My name is Roger Johnson and I am President of the National Farmers 

Union (NFU). NFU is a national organization that has represented family farmers 

12

and ranchers and rural residents for more than 100 years. As a point of reference, 

during my career I have personally led eight trade-related missions to Cuba, so I 

speak from firsthand experience. 

NFU has long supported ending the Cuban embargo and establishing trade relations with Cuba. For this reason, NFU supports the Travel Restriction Reform and 

Export Enhancement Act sponsored by House Agriculture Committee Chairman 

Collin C. Peterson, Agriculture Appropriations Chair Rosa L. DeLauro, Representative Jerry Moran and Representative Jo Ann Emerson. 

This bill would allow direct financial transactions for agricultural sales to Cuba; 

require agricultural exports to Cuba to meet the same payment requirements as exports to other countries; and would allow U.S. citizens to travel to Cuba. 

Since January 2009, 13 bills have been introduced in Congress to ease restrictions 

on travel, financial transactions or agricultural trade with Cuba. Clearly, in this 

case, politics is blocking good policy decisions. 

Trade with Cuba 

Since passage of the 2000 Trade Sanctions and Reform Act (TSRA), U.S. farmers 

have earned $4 billion from sales to the Cuban market and Cubans have had an 

excellent payment record. However, due to continued arbitrary restrictions on U.S. 

agricultural sales driven by Executive Orders rather than Acts of Congress, U.S. 

producers have failed to unlock the full market potential in Cuba. Cubans have 

begun to shift their purchases of several commodities to other suppliers, such as 

Vietnam, Canada, Brazil and the European Union (EU). 

Expanding exports and trade are critical to expanding opportunities for U.S. agricultural producers and will allow producers to provide the highest quality food products to people around the world. Cuba relies on imports for most of its food needs. 

Between 2000 and 2006, Cuba’s food and agricultural imports nearly doubled. Passage of such legislation will increase exports, meaning millions of dollars for U.S. 

agriculture. 

U.S. producers are well-positioned to supply Cuba with additional commodities, 

with the ability to reach three major Cuban ports in 1 day or less, compared to 25 

days from Brazil. Current U.S. policy hampers our ability to supply the Cuban market, a market we once dominated. 

Effects of U.S. Trade Restrictions with Cuba 

U.S. agricultural producers have already experienced positive impacts from the 

sale of agricultural products into the Cuban market since the passage of TSRA. 

Nonetheless, our current policy is tepid and inconsistent with policy the United 

States has with other countries. Current policy allows for cash sale of food and medicine to Cuba, yet direct banking exchanges are not allowed. 

The current ‘‘cash only’’ sales policy may seem to be in the best interest of the 

U.S.; however, it is an inefficient system, characterized by small sales, the absence 

of long-term contracts, unnecessarily high transaction costs, and exchange rate 

losses. This policy needs to be changed so U.S. producers can benefit from full and 

normalized trade relations with Cuba. If direct banking transfers were permitted between the U.S. and Cuba for the purchase of American-made products by Cuba, notable positive impacts on both countries’ economies would be possible, creating a 

win-win situation. Current U.S. policy is designed to use food as a weapon, and it 

has failed. 

Just under 50 years ago 60 percent of Cuba’s food imports came from the U.S. 

Our policy should allow domestic producers to reach that level once again. More recently, agricultural trade with Cuba reached a value of approximately $750 million 

before additional regulations, which were designed as a diplomatic slap in the face, 

were put in place during the Bush Administration. Following the additional restrictions, agricultural sales have steadily declined with a recent report by the International Trade Commission (ITC) showing approximately $290 million in agricultural cash sales to Cuba. 

Parties in both Cuba and the U.S. have increasingly cited how cumbersome agricultural trade has become. Some are considering abandoning trade altogether, with 

Cubans left to source their commodities from other origins. The current embargo is 

not working. 

Last year the U.S. Government purchased more than $300 million in surplus U.S. 

agricultural goods in an attempt to support the market; while opening the Cuban 

market would not fully offset these purchases, it would certainly help. Ending the 

Cuban embargo would both save taxpayer dollars and assure Cuba a consistent 

source of reasonably priced, high-quality food. 

As this cumbersome trade process continues, we have seen a ten percent decrease 

in imports from the U.S. to Cuba in 2005 and an additional decrease of four percent 

13

in 2006. Looking at the percentage of market access the U.S. has in Cuba, clearly 

grains are the easiest commodity to move because of the uncertain timeframe it will 

take to get all of the necessary paperwork in line. Shipping is clearly not the problem. The U.S. has almost no market share of value-added or processed foods, which 

are usually more perishable and more costly to ship, allowing Brazil and the EU 

to fill this demand. Value-added goods also tend to yield higher returns for U.S. exporters and create more jobs and economic activity than commodity sales. The very 

type of food exports we most want are the ones our current restrictive policy preclude. 

The ITC predicts lifting the ban on agricultural goods would increase U.S. exports 

to Cuba by between $924 million and $1.2 billion. This would also increase the U.S. 

market share in Cuba compared to other competing countries from the current 38 

percent to between 49 percent and 64 percent. 

U.S.—Cuba Trade Policy Recommendations 

Lifting the current restriction on tourism would provide Cuba with more U.S. dollars, which could then be used to purchase more U.S. products, particularly more 

value-added agricultural products for the food service and hotel trades. Many of 

these products could have a significant impact on economic growth and support for 

rural farm and ranch families. 

Passage of this legislation would mean millions of dollars in agricultural exports 

for U.S. producers and the economy. According to the ITC report released in June 

2009, there are only three major factors that enhance the competitiveness of U.S. 

agricultural exports to Cuba:

1. U.S. exporters offer competitive prices and high-quality products.

2. U.S. exporters benefit from lower cost of delivery than competing suppliers.

3. U.S. exporters can provide smaller volumes of individual shipments on a justin-time basis to smaller Cuban ports.

However, according to the same report, U.S. exporters are hampered by eight 

major factors making the U.S. a less desirable trading partner and decreasing market access:

1. U.S. exports cannot offer credit to Cuba for the purchases while other trading 

partners to Cuba make concessions for trade with Cuba.

2. The U.S. Government requires payment from Cuba in cash in advance channeled through third-country banks, driving up transaction fees.

3. When purchasing U.S. products, ALIMPORT may incur additional storage 

and demurrage costs if the transactions paperwork is not completed on schedule.

4. U.S. exporters wishing to travel to Cuba in order to complete sales contracts 

find the travel licensing process to be cumbersome, nontransparent and time 

consuming.

5. The U.S. restricts visits by Cubans for sales negotiations and for sanitary and 

phytosanitary inspections of U.S. products and processing facilities.

6. U.S. agriculture trade associations cannot use industry-generated funds or 

U.S. Department of Agriculture Market Access Program money for market research and promotion activities in Cuba.

7. U.S. regulations penalize foreign vessels that dock in Cuban ports, resulting 

in less competition among carriers and higher maritime transportation costs.

8. The Cuban Government makes purchases from certain countries based on 

geopolitical motivations. 

Travel to Cuba 

The Obama Administration has, by Executive Order, lifted part of the travel ban 

for Cuban Americans to travel to Cuba to visit family. Every American should be 

free to travel to and from Cuba. 

The aforementioned ITC report clearly indicates that lifting the travel ban will 

result in an influx of U.S. tourism. An enhanced tourism industry would boost the 

demand for imported agricultural products, particularly high-valued products from 

the U.S., and bring more hard currency into the country, allowing ALIMPORT to 

buy more U.S. agricultural products for the domestic Cuban population. 

I realize there are political factors to consider when lifting the ban on travel to 

Cuba. This is a sensitive topic, and as an organization NFU may be criticized for 

supporting lifting this ban, but I want to clearly state NFU has never been supportive of a military dictatorship. However, this 50 year embargo has not worked 

14

for our nation’s farmers and ranchers and has only caused the Cuban people, not 

the Cuban Government, to suffer. 

Conclusion 

NFU has clear, common-sense policy on Cuba. It is our recommendation that the 

Cuban embargo be lifted. If that is not possible, at minimum the eight impeding 

roadblocks outlined by the ITC must be dissolved in order to increase U.S. exports 

to Cuba. Passage of the Travel Restriction Reform and Export Enhancement Act 

would be a significant step toward tearing down artificial walls put in place by past 

Administrations and Congressional actions. I appreciate the opportunity to testify 

today and look forward to responding to any questions Committee Members may 

have.

The CHAIRMAN. Thank you, Roger—Mr. Johnson, Mr. President. 

Mr. JOHNSON. You are welcome. 

The CHAIRMAN. He is my neighbor. I can call him Roger. 

Mr. Stallman, you mentioned that we are not viewed as a stable 

supplier, and we have this 1 year fix that was put in and it is apparently being implemented on part of this. Do you think that is 

going to be enough to make any difference? Or do we need a more 

permanent fix to make this work? 

Mr. STALLMAN. No. I mean, obviously, as much as it is—it is 

good, but it is not enough. You need more long-term certainty when 

you are dealing with trade. 

That is what I meant by not being viewed as a reliable supplier. 

We made the change back in 2005, on a short-term basis. And for 

longer term trade you need to have certainty about what policy will 

be in terms of transactions. Having the short-term implementation 

is good, but it is not enough. 

The CHAIRMAN. Thank you. 

Mr. Johnson, you have been to Cuba a bunch of times, as you 

mentioned. Could you just tell us what the effects of that travel 

were both in the United States and Cuba? And why did you travel 

to Cuba? And how did that travel relate to U.S. agriculture? Can 

you just elaborate a little bit more on that, and on how the current 

policy is negatively affecting the smaller sales? 

Mr. JOHNSON. Sure, I would be pleased to, Mr. Chairman. 

All of my trips to Cuba were in the order of trying to advance 

trade. We led trade delegations, usually of North Dakota companies, but often for our neighboring Minnesota companies, as well, 

that went down with agricultural products. We had to get specific 

licenses. That has been changed now, so a general license will get 

folks down there. We are still finding out how that will play out. 

It was a fairly cumbersome process. To get the licenses, you had 

to license each individual participant, and you had to demonstrate 

that their reason for traveling exclusively related to selling food or 

ag products. 

I can tell you that the way the financial transactions have to be 

handled is extraordinarily cumbersome. The way it used to be is 

the goods would dock at the port, usually in Havana; and before 

they could be off-loaded, the money had to be received. But that is 

just a little piece of it. The money would normally get wired across 

the ocean, converted into a foreign currency, and then converted 

into the U.S. dollar. So you would have two conversions, both of 

which would lose you some money in transaction costs. 

And then, because of time changes, a day later they would get 

transferred back to the U.S. bank. It would get in the bank in 

15

which—that would be paying the seller. In that case, the North Dakota company or Minnesota company that would be selling the 

products, or their broker. 

And then that would have to be confirmed by the Federal Government before word could be send back to Cuba, ‘‘Yep, we have 

the money. It is in the bank. Now you can offload the ship.’’

This is very inefficient. The Cubans told us repeatedly five to 15 

percent right off the top they accounted for just because of that 

process. 

Now, in 2005, when the Administration made that change—and 

essentially same process, except that all this now had to happen at 

the port in the U.S., instead of the port in Cuba—there was a long 

period of time, 6 to 9 months, where the policy had changed, but 

there was no official recognition of the change. You saw enormous 

uncertainty in the market. 

I think it was intended as a diplomatic slap in the face. Clearly, 

that is what it was received as by the Cubans. There were lots of 

concerns about that. We can go into that if you want to pursue it 

more. But the system is extraordinarily inefficient. 

The last point I would like to make about this, we have—on 

three of the trips, specifically the Cubans were interested in potatoes coming out of the Red River Valley, both table stock and seed 

potatoes. On two of those trips, we specifically negotiated deals to 

sell table stock and seed potatoes to Cuba. None of those sales have 

yet occurred, because of the complexities of getting all these travel 

arrangements to allow the Cuban inspectors to come up and to get 

our sanitary and phytosanitary standards reconciled between the 

two countries, since USDA can’t talk to Cuba, only the State Department can. 

We were left in our Department and the Minnesota Department 

of Agriculture and the Department of Agriculture in the State of 

Maine trying to negotiate those requirements with the Cubans and 

then coming back to the State Department and to USDA. We never 

got it all done. It just never happened, and the sales have never 

happened as a result of it. 

The CHAIRMAN. Thank you. 

The gentleman from Oklahoma. 

Mr. LUCAS. Thank you, Mr. Chairman. 

I do appreciate this hearing today, and I am very pleased to have 

knowledgeable witnesses. Part of these hearings, of course, is the 

exchange of information to better enlighten the Committee to understand what is really going on. 

First, before we move directly into the Cuba issue, on the free 

trade agreements, can you reiterate, gentlemen, your organizations’ 

position, if you have a position, on the timely efforts to move the 

free trade agreements with Panama, Colombia, and Korea? 

Mr. STALLMAN. Our Bureau has been supportive of passing those 

agreements. We supported negotiating them, and we supported 

passing them once they were negotiated. That applies to Colombia, 

Panama, and South Korea. They are absolutely good for American 

agriculture. We need to pass those agreements, and obviously there 

are issues holding those up. We have communicated that to the Administration and also to this Congress. 

Mr. LUCAS. Thank you, Mr. Stallman. 

16

Mr. Johnson. 

Mr. JOHNSON. I don’t believe that the Farmers Union has taken 

a specific position on those three agreements. 

I will say as a general matter our policy argues that trade needs 

to be much more fair and that, in particular, we want labor requirements to be part of trade agreements and environmental requirements, currency rates, those sorts of things. I will say that our 

annual convention begins in 2 days, and I expect we may very well 

end up debating this issue there. But, right, now I don’t think we 

have a policy on those three particular agreements. 

Mr. LUCAS. After the convention, if you decide to be consistent, 

I would be most appreciative to know that and if you would forward it to me. 

Gentlemen, you are both obviously very good farmers or you 

would not have been elected by your farm organization, so you understand production agriculture hands on. Mr. Johnson, you alluded to several trips to Cuba. Mr. Stallman, have you been to 

Cuba? 

Mr. STALLMAN. Yes, I have, not as many times as Mr. Johnson, 

but I have been there. 

Mr. LUCAS. Absolutely. My question for both of you is, when you 

have been in that country, have you spent any time out in the 

countryside in addition to the being in the urban areas working on 

the trade issues? 

Mr. STALLMAN. We absolutely did. We went down with multiple 

goals, one, obviously, to talk to all important government officials, 

also to look at their port facilities and determine what the transportation infrastructure was. But we also went out into the countryside to try to get what was, frankly, a superficial assessment of 

what their ability was to produce food and what the opportunities 

were for imports. So we did travel some in the country. 

Mr. LUCAS. I will admit I have not been there. So I ask you this 

question, what were your observations about the quality of the soil. 

Most assuredly good people, well-educated people, would you say 

that if their system would permit it that they have the potential 

to greatly increase their own agricultural production? 

Mr. STALLMAN. They definitely have potential. They have, obviously, a tropical climate and soils decent enough to grow a lot of 

crops suitable for that climate. They lack capital. The people are 

willing to work. When I was there they were just beginning to open 

up, I guess you would say, farmers markets that would allow producers to come in and actually sell their products, as opposed to 

having it sold to the government. So that was a small step. The potential is there, but the restriction on their system and lack of infrastructure investment and capital is hindering their ability. 

Mr. LUCAS. The reason I bring that question up, when we do 

business with the Cuban Government, we facilitate their ability to 

not only meet the needs of their constituencies down there, but to 

also continue to exist. It is one of the few examples of Soviet-style 

communism that still exists in the world, which means not a market-driven economy but a government-dominated economy. Even in 

places like mainland China, where the Communist party still attempts to maintain absolute political control, they have adopted a 

17

more market-oriented process and, consequently, have seen dramatic economic growth in the last 10 to 20 years. 

I guess what I am getting at is, in your observations the soil is 

good, the potential is there, good people clearly, but don’t you think 

that the system that they have that controls the resources, isn’t 

that impeding their ability? And would we therefore—second question—would we therefore be continuing the problems they have by 

directly or indirectly helping the system survive? 

That is a good question for you, Bob. I look forward to the answer. 

Mr. STALLMAN. The first part of that answer is that, yes, there 

is no question their form of government and the type of control that 

comes from the top from the Castro family, and the military, inhibits their ability to do this. 

In terms of what would happen based on our engagement and 

opening up the travel ban, I think the more opportunity that we 

have to interact with Cubans at all levels and the greater opportunity there is for them to see the truth about America versus the 

web of propaganda and lies that they are given by the government. 

It enhances the opportunity to, ultimately, move more towards 

democratic reforms. I think it is that interaction and exchange that 

we want. 

The government has maintained themselves in power over the 

years by putting all of their problems on the backs of the United 

States, or trying to, because of our policies. That is what the government has done. But if the truth is known by the Cuban people 

about Americans and about our form of government and our capitalistic system, I think that will provide a great opportunity for 

that exchange of information and ideas to occur. 

Mr. LUCAS. Mr. Johnson? 

Mr. JOHNSON. There were a whole bunch of questions, Ranking 

Member. Let me see if I can kind of remember them in order. 

First of all——

Mr. LUCAS. The basic question is, do we—by making it easier for 

the Cuban Government to buy things here, do we facilitate their 

ability to hold on and keep the Cuban people in this place they are 

trapped in now? 

Mr. JOHNSON. I understand that question, and I agree fully with 

what Mr. Stallman said. I firmly believe that the best way to bring 

light, if you will, to the people down there is to open up travel. I 

think the influx of American tourists that would come into that 

country, and the exchange of views that would occur between our 

citizens and their citizens, would be healthy for both of our people. 

And if you look at what has happened, the policy we put in place 

some 50 years ago was designed to get rid of a system of government. Ten U.S. Presidents have come and gone, and all we have 

done is move from one Castro to a younger brother who is not very 

young. We would argue that the policies we have used to try and 

make the changes that I think you and I agree ought to be made 

have simply not worked. 

Mr. LUCAS. And the contagion has spread to other countries in 

Central and South America. 

Tolerate me one more moment, Mr. Chairman. I can see where 

the need to meet the basic food needs of the Cuban people should 

18

be met. That is a humanitarian issue, meeting things that are on 

those ration cards. And I understand they have an amazing system 

for allocating out the calories that people get. Meeting those needs, 

I can’t argue with that for a moment. 

I just don’t want to facilitate things that wind up enabling the 

regime to hold on and to spread its style of governance around by 

using access to things that the average Cuban citizen never sees. 

They probably don’t drink much bourbon, and they don’t see any 

lobster tails, but those kind of things help facilitate a tourism industry that brings real, hard cash into the country. Those are the 

kind of things we need to look at. 

I realize that is more than the scope of this bill and, perhaps, 

more than the scope of this hearing, but it is the kind of thing we 

need to think about in our overall policies. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

The gentleman from Pennsylvania, Mr. Holden. 

Mr. HOLDEN. Mr. Johnson, I am having a rough time grasping 

how this cash-in-advance provision works. I know you have elaborated on it in some detail. Can you maybe elaborate a little more 

and how the provisions in the Chairman and Mr. Moran’s bill 

would change that? 

Mr. JOHNSON. Yes, I would be pleased to. 

The basic provision of this bill relative to cash in advance is simply to put in law what you already did with the last appropriation 

bill, I think it was, that put it in place for this year but that expires at the end of this fiscal year. So this would simply extend 

that provision, going forward. 

It would essentially return us to the policy that was in place 

from the beginning in 2000 when we first had some opening under 

the TSRA Act to the point in 2005 when the Administration put 

a different definition on the term cash in advance than what is 

used anywhere else in the world. So it would put us back to the 

normal definition, if you will. 

Now, related to that is the ability to do direct financial transactions, which is also in this bill. It is essential to get rid of 90 percent of that garbage that I talked about in that very convoluted 

system. If you did that, instead of sending the Cubans’ money over 

to Europe, converting that into a Euro or some other currency and 

then reconverting to a dollar and then sending it back, you would 

just directly send the dollars to the U.S. bank. That would take 

probably 2 or 3 or 4 days of delay out of the system, and it would 

take the inefficiencies of currency conversions out of the system, 

which can be very substantial if they need to happen in a very 

rapid basis, as they always do in these kinds of transactions. 

Mr. HOLDEN. Mr. Stallman, I believe you said that EU and 

Brazil and Canada are the three biggest—where Cuba imports 

most of the agriculture products from; is that correct? 

Mr. STALLMAN. Yes. 

Mr. HOLDEN. And I also believe you said that all sectors of the 

U.S. agriculture economy would benefit from this legislation. What 

sector do you think would benefit the most? 

Mr. STALLMAN. Oh, gosh, that would be difficult. It would probably vary over the years. I mean, rice was a huge export to Cuba 

19

in the past. You know, they obviously eat a lot of pork. Their market for dried beans—the whole list that I read are potentials, and 

I don’t know, ultimately, which one would benefit. 

The point is, in the aggregate, if we can remove some of these 

restrictions that we have been talking about, you will enhance the 

opportunity, basically, for all commodities that would be desired by 

the Cubans to purchase. 

Mr. HOLDEN. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. I recognize the gentleman from Kansas, the cosponsor, and thank him for his leadership. Mr. Moran. 

Mr. MORAN. Mr. Chairman, I thank you for holding this hearing; 

and I am pleased to be your ally in regard to this legislation. 

I appreciate the testimony of the two Presidents of our farm organizations. I don’t have any questions. I just want to kind of outline the history and my understanding of what we are about here. 

In July of 2000, I offered an amendment on the House floor, as 

a relatively new Member of the House of Representatives, that 

would prohibit the use of any money in an appropriation bill from 

being used to enforce sanctions for food, medicine, and agriculture 

products in a sale to Cuba. 

The end result of that amendment—and it was a controversial 

day. I remember it as part of my time in Congress. It will stand 

out to me. But, ultimately, despite being suggested that this bill or 

this amendment would be overwhelmingly defeated, it passed by 

301 to 116. A majority of Republicans, a majority of Democratics 

said it is time to change the policy. 

It changed the history of our relationship between the United 

States and Cuba, a history that had been in existence for 40 years, 

of which there were no sales of any of those products to Cuba. 

Again, we are not talking about trade. We are talking about sales. 

So the end result of that amendment and the broad support here 

in that Congress, July of 2000—and, in fact, all the Members to my 

right voted for that amendment. It is so long ago that there is no 

one here that voted against that amendment. They just weren’t 

here at the time. So broad support among the Agriculture Committee and a broad set of supporters among all Members of the 

House; 301 to 116 said let’s do something different. 

I remember my conversation on the House floor that said, ‘‘In 

Kansas, we will try something once. If it doesn’t work, we probably 

will try it again. We might even try it a third time. But after about 

40 years, Kansans would decide let’s try something different. If our 

goal is to change the leadership of Cuba, let’s do something different than what we are doing, because it is not working.’’

And I will admit that my interest in this was very provincial. It 

was about Kansas farmers. It was how do we get another market 

in a very difficult economy in which we can sell our products to. 

And, as a result, the Trade Sanctions and Reform Export Enhancement Act of 2000 became law. 

We were doing just fine until 2005 when the Treasury Department decided to change the regulations and say that cash in advance no longer meant, as it does every other place in our relationship, it no longer means when the ship arrives in Havana. It 

means when the ship leaves the United States. So we added anVerDate 0ct 09 2002 14:30 Apr 16, 2010 Jkt 041481 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 I:\DOCS\111-44\55518.TXT AGR1 PsN: BRIAN
20

other set of 4, 5, 6, days, 2 weeks in which the Cubans had to pay 

that much earlier. 

We also said from the very beginning you have never been able 

to finance this. There are no government subsidies in these sales. 

We restricted the ability to use a U.S. bank in those regulations. 

And so they then had to go to a third party bank in a foreign country, get a letter of credit, and we increased the cost of doing business with the United States. 

As a result, after the 2005 change in regulations, we lost 20 to 

30 percent of our exports. And so year after year I have offered the 

amendment again to an appropriation bill that says, no money can 

be spent in this appropriation bill to enforce those new regulations 

which make no sense. And that amendment has passed the house 

time and time again. That is what is in this bill. It has been approved as most recently as last year in an appropriation bill. We 

have said it is okay, and sometimes when I have offered my 

amendment it has been adopted by voice vote. And so the controversy that sometimes surrounds this issue is pretty limited 

when it comes to the agricultural side of what we are doing here. 

As a result of the change in our laws, and despite the fact that 

these restrictions made it more difficult and we were losing market 

share, we are seen by the Cubans as an unreliable selling partner, 

again not a trading partner, a selling partner. We sold $708 million 

worth of agriculture commodities to Cuba in 2008, and it is rice. 

They import rice from Vietnam and China if they are not buying 

it from us. 

This idea of whether or not the food actually gets to the Cuban 

people, I don’t understand that issue. Because when we don’t sell, 

all we are doing—this is a unilateral sanction. All we are doing is 

restricting our ability for our farmers and our agribusinesses to 

conduct business in Cuba. 

And yet France, Argentina, Canada, they love our embargo. They 

love the fact that we made this market more restrictive because 

they fill it. 

And so if you are interested in whether or not the Cuban people 

are getting the food, that is not this bill. We can’t necessarily affect 

that. Because when we don’t sell, somebody else does. Those decisions are already made by someplace down the road, not whether 

or not we agree to take cash. 

All the agricultural side of this legislation does is return us to 

the common days, the days before 2005, in which we operated normally. And it is normal compared to around the world. 

And we deal with Communist countries on an ongoing basis in 

a trading relationship in which we offer them credit. Who is the 

United States biggest creditor? China. And yet we are nervous 

about selling for cash up front agriculture commodities, food, and 

medicine to a country 90 miles off our shore. What a double standard we have created in this country. 

In Kansas—and I hope to ask my Kansas witness today—we 

would not object to selling Boeing aircraft to China, and yet we 

worry whether or not we are going to sell wheat to Cuba. I don’t 

understand how we got ourselves in this position in which we 

worry about this issue, cash up front, no government subsidy. We 

21

are taking money out of the Cuban Government and putting it into 

the pockets of farmers and American business, agribusiness. 

Finally—my time has expired a minute and 18 seconds ago—I 

would just add my provincial interest started with Kansas farmers 

and a desire to see that we have one more market. You may recall 

the year 2000 was not a perfect year on farms across this country, 

and every market mattered to us for our success. 

And, again, Cuba is not the end all. It doesn’t solve all of our 

problems or doesn’t make us all wealthy. But having spent some 

time on this issue I am convinced, as has been indicated today, 

that this is not just about the United States. This is about how we 

change the Cuban people’s opportunities. 

Because economic freedom, the market system that we all say we 

believe in, the free market system causes the Cuban people, when 

they have the ability to buy consumer goods—in this case, I am 

just talking about food, fill their diet. The more contact we have 

with them economically, the more demands they will make upon 

the Cuban Government to change for the opportunity for liberty 

and freedom. That ultimately is what this is about. 

Again, as I started out as just a provincial Kansas Congressman 

wanting to take care of Kansas wheat farmers, I think there is a 

much more noble cause to this than just that, which is we can 

make a greater difference in the lives of Cubans by dealing with 

them than by ignoring them. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman for his passion and eloquent statement and for his persistence on the issue. I recognize 

the gentleman for Iowa, Mr. Boswell. 

Mr. BOSWELL. Thank you, Mr. Chairman. Thanks for having this 

hearing. 

And, Mr. Moran, I firmly confirm what you have said. If I had 

7 minutes, I would give it back to you and let you say it again. Because you have said everything, and I totally agree with you. 

I, too, have been down there, Mr. Presidents, both of you. I appreciate that but assume that you know who Mr. Alvarez is. I 

spent a lot of time with him. I spent quite a bit of time with Mr. 

Castro. Sometimes we would be entertained. I can tell you about 

that a little bit. 

But we went out in the country, and I think that Mr. Moran is 

exactly right. I think you all have it right. We are just denying ourselves markets. Because they can go elsewhere, and they are, and 

learn about the process of getting the money to pay for it and what 

they had—it cost them more, but they still did it. And there we sat 

not being able to send a product that we could have on the way 

down there so quick. And they want it, and they can use it. 

And as far as the other parts of the political side of it, how many 

years do we have to wait to figure out that this is not working? 

And it is not working. It is silliness to keep this up. 

So I am very supportive of the bill, in fact, if left up to me, Mr. 

Chairman, I would probably expand it. We really are just spiting 

ourselves by not taking advantage of this market; and we are denying our producers, the farmers of Kansas, Iowa, Minnesota, Texas, 

Oklahoma, and everywhere, the opportunity to have a place to 

sell—not even trade, just to sell. I think this ought to be done. 

22

So I yield back the balance of my time. Or I could give it to Mr. 

Moran, I suppose. 

The CHAIRMAN. I think we heard enough out of him. 

Mr. BOSWELL. We agree. It is time to do something. 

The CHAIRMAN. All right. I thank the gentleman. 

The gentleman from Texas, Mr. Neugebauer. 

Mr. NEUGEBAUER. Thank you. 

I want to echo a lot of things that my good friend from Kansas, 

Mr. Moran, said. I opposed the Administration’s plan when they 

went to cash before you ship it, cash in advance. I think it is a little ridiculous that we have to pretend like we are not having relations with Cuba and we have to trade through a third country 

bank. I think that doesn’t make sense as well. 

I, too, have been to Cuba; and I know that that is a wonderful 

country. It is unfortunate that such wonderful people are having to 

live under this dictatorship, one that has truly kept that country 

in the dark ages for a number of years. 

I think when I look at this bill—H.R. 4645 I believe is the number on it—is that I agree with most of the things that the two witnesses said. I think that one of the things that I am a little concerned about is that we can enhance business travel. Where we are 

focusing on these trades, we are facilitating people being able to 

put those deals together so we can increase and expand the market 

for American agriculture. 

I am not to the point, personally today, that I am ready to open 

up the tourist trade, although for family members or people who 

have family in Cuba, we should continue that process. But when 

I was down there, it was represented to me by the Cuban people 

that live in that country—there were some wonderful hotels along 

the beach. The Cuban people are not allowed to go into the lobbies 

of those hotels. I think it would be an affront to the Cuban people 

for us to embrace the support of those hotels when the Cuban people themselves cannot go in there. 

So, Mr. Chairman and Mr. Moran, I have a great deal of respect 

for both of you; and I support a lot of the concepts of your bill and 

would look forward to seeing that we could limit some of the travel 

pieces of that where we could facilitate being able to expand American agricultural markets, but at the same time respecting and not 

causing a great injustice for us to open up an opportunity that the 

Cuban people themselves do not have. 

I don’t really have any questions for the panel, but I would give 

them an opportunity to respond to the two or three statements that 

have been made here. So, Mr. Stallman. 

Mr. STALLMAN. Just a response from my visit out there, being 

out in the streets and moving around the country. There were tourists from a multitude of other countries from around the world. 

They were moving around pretty freely and had interactions with 

the Cuba people. And while you are absolutely correct in your description of their resort hotel system that they have there, having 

that opportunity for, once again, the Cuban people to interact with 

American tourists, to be able to hear about America, to me that undermines the messages they receive from their government. And, 

once again, I think that would be the quickest way to actually 

23

make progress on this country’s goal of figuring out how to change 

regimes and the form of government there. 

Mr. NEUGEBAUER. Thank you. 

Mr. Johnson. 

Mr. JOHNSON. Yes, I certainly agree with what was just said. 

On the issue of the Cubans not being allowed into hotels, I think 

that was the case, but it is my understanding that in the transition 

between Fidel Castro to Rau ́l that that was one of the changes that 

has been made under the new government there, that there is no 

longer a prohibition against the Cubans using the hotels. 

The fact of the matter is that their income levels are so low that 

most of them couldn’t afford to pay the room rates that you and 

I pay when we go down there. I don’t think it is a prohibition. I 

think it is just a matter of the income level to support it. 

And, frankly, in some small part, this bill is about helping to 

boost their income just a little bit, too. By getting the food to them 

in a more efficient fashion at a lower cost, getting it spread out a 

little further, maybe that helps boost that income so a few of them 

can use those hotels and resorts. 

Mr. NEUGEBAUER. I hear what you are saying, but my observation is that none of that money really funnels to the Cuban people. 

You can increase the GDP in that country substantially, but, unfortunately, it stays in a very small number of hands. And that really 

the overall quality of life—and I am sure both of you know what 

the allocation of food is, and it is a pretty nominal amount of sustenance that the people themselves receive. So while it may increase 

the GDP of the country, I don’t think it increases the income of the 

Cuban people. 

With that being said, I am supportive of the trade pieces of that 

and have been—do feel like—I don’t understand the logic behind 

the changes made in 2005, it wasn’t the right thing to do. I am 

supportive of returning to the way we were doing it before, because 

that, as you both testified, that was working. 

Thank you, Mr. Chairman. 

The CHAIRMAN. The gentlelady from Illinois, Mrs. Halvorson. 

Mrs. HALVORSON. I have had a lot of people tell me of their concern about the travel portion of the bill versus the ag portion. I 

know I have heard all of the reasons that you believe it would help 

if we had travel, but this question will be two-fold, I suppose. How 

you feel it would affect your bottom line in agriculture? But, also, 

could you still support the bill if the two were separated, if it did 

not have the travel? If the travel wasn’t expanded but we still fully 

supported or expanded the ag portion? 

So if the two of you could answer that, how you felt about if the 

two were separated, or if they need to be together, or what the bottom line on agriculture is. 

Mr. JOHNSON. Well, I think I made it clear in my testimony that 

we would go much further than the bill. And so, obviously, anything that moves in the right direction is something that we would 

be supportive of. 

I would argue that in some small part, besides allowing the tourists to come in and begin to change the system, which has been 

adequately explained here and I fully concur with, another part of 

that is the tourists will bring some dollars. 

24

And so while this bill is not about trade, as Congressman Moran 

so eloquently stated, it is about sales. There is a little bit of the 

other part of the trade that happens with the tourism, because it 

will bring some dollars into the Cuban economy. Now, that does a 

couple of things, but, for agriculture, one of the big things it does 

is it allows more income into the system so that they can purchase 

more agricultural products. 

Number two, in my written testimony I didn’t talk about this because of time. I talked about the value-added in agriculture that 

many of us, many of you have spent a lot of time and effort working on to try and expand value-added in agriculture so that we can 

export higher-value products instead of just raw commodities. 

The tourism industry—bringing U.S. tourism helps that part of 

our export market a whole lot more than just doing the ag piece 

that is in the bill. It will—number one, there will be a demand for 

more of these value-added products from the tourists who have 

higher expectations, if you will. 

And, number two, that provides an opportunity—one of the 

things that I discovered early on with the trade missions that I led 

from North Dakota was that the Cubans are very astute business 

people. They are not going to spend any more than they have to. 

They were very tough negotiators, as they ought to be, as we all 

are. Very capitalistic, frankly, in that regard. They saw no need to 

spend any more than what they absolutely had to. 

We tried to sell value-added products. In fact, our Lieutenant 

Governor was the chair of the board of a pasta company, number 

three in North America in terms of size, and went down with me 

and on his own a couple of times trying to sell pasta. I think we 

might have sold a little tiny piece of one container. 

Frankly, there just isn’t the ability to pay for those value-added 

products. We mostly sold—I would say 99 percent of the products 

sold out of North Dakota—probably the same is true across the 

board in the U.S. We mostly sold raw commodities that ended up 

going into that ration distribution system that has been talked 

about. It was to meet the fundamental humanitarian needs of the 

Cuban people. And if they had more income they would put more 

of that food into that system. 

Mrs. HALVORSON. Mr. Stallman. 

Mr. STALLMAN. We certainly support the travel provisions that 

are in this bill. We have always, as my colleague has said, supported any measures that move the ball forward with respect to 

our trading relationships with Cuba. 

Opening up the travel and the tourism, while all of that GDP 

growth obviously does not go to the Cuban people, there will be a 

lot of casual exchange of dollars. We did that when we were down 

there, so some of those dollars will find their way into Cuban’s 

hands, and it will increase some Cuban’s purchasing power. That 

is in addition to what we have already talked about, the interaction 

and exchange of ideas. 

We would still support the bill even if it went back to purpose 

specific travel, because it does move the ball forward, but we would 

prefer to see all the provisions that are in the bill remain. 

Mrs. HALVORSON. Thank you. I yield back. 

25

The CHAIRMAN. I thank the gentlelady. The gentleman from 

Texas, Mr. Conaway.

Mr. CONAWAY. Thank you, Mr. Chairman. I am supportive of the 

ag issues in terms of being able to sell more U.S. products, whether 

value-added or not, to Cuba. I have been there. Mr. Moran and I 

went, he and I were there; there were ten of us on the trip, nine 

of whom supported unlimited lifting of the embargo with Cuba and 

one guy who didn’t. He got thrown under the bus at every single 

meeting that we had with the head of the communist party and all 

those folks, and that guy was me. But it was a great trip, very eyeopening. 

I am not convinced that the lifting of the tourist travel will have 

any impact that would help us further our goal of freeing up the 

Cuban people. The Cuban people right now, in my view, are muddling along reasonably okay. There is not enough misery in the system for them to rear up against the totalitarian government that 

they live under. There, they control everything down to the point 

that they won’t allow the Cuban people to know the box scores on 

baseball games. I guess they are afraid that the few Cuban players 

who have defected, fled that regime, are doing really well, and they 

don’t want their folks at home to know that there is a life on the 

other side of the deal. 

I also hope, Mr. Stallman, Mr. Johnson, that the same passion 

you bring to defending this, trying to do something against this 

communist country, that you would bring to the table when we talk 

about our one free, democratic friend in South America, and that 

is Colombia. 

Mr. Johnson, I hope next month at your meeting you will be just 

as passionate for doing a free trade agreement. The labor issues 

aside, that is false. We all know that. That is a stigma and may 

have been true 20 years ago, but it is not the case today. And so 

we have a great friend there that we poke a stick in his eye every 

day that allows Hugo Cha ́vez to do that. 

So I am not convinced that U.S. travel—there is unrestricted 

travel from around the world—Canadians and anybody else can go 

in there—and it has not had any kind of impact on the deal. So 

I support the Chairman and Mr. Moran’s bill with respect to all 

things agricultural-wise. I can’t support, at this stage, the lifting of 

the travel ban or tourist travel ban that would be a part of it. So 

I hope that we can count on your support for Colombia, Panama, 

and South Korea’s free trade agreements, because those are our 

friends and we ought to treat our friends almost as good as we 

treat someone that is not our friend. If we did this, in order for 

that totalitarian government to remain in control, they have to 

have a bogeyman, and that bogeyman will be the United States—

is the United States. If we had lifted all this and tried to argue 

that the United States was not the bogeyman, then the Cuban community in Miami would be. Somebody is going to be the bogeyman 

for this totalitarian government to maintain their strict controls 

over everything that has been going on down there. 

So I appreciate your comments, and look forward to your help on 

the Colombia Free Trade Agreement, and Panama and South 

Korea. 

26

With that, Mr. Chairman, I yield back, short of the 7 or 8 minutes. 

The CHAIRMAN. I thank the gentleman for his brevity. The gentleman from California, Mr. Costa. 

Mr. COSTA. Thank you very much, Mr. Chairman. I do support 

your efforts on this legislation, and I think that, frankly, we have 

tried numerous efforts to deal with the oppressive regime in Cuba, 

from the Kennedy Administration to the present-day Administration. And all of those efforts have been unsuccessful, if the ultimate 

judgment for success was removing Castro from power and creating 

a more democratic regime. 

By all standards, all of the efforts with both Democratic and Republican Administrations have been unsuccessful, and Castro, 

much to everybody’s surprise, has outlived many Presidents since 

that time, since that policy has been in place. 

My view is that, I mean, we have dealt with a lot of repressive 

regimes, regimes that don’t respect human rights as we understand 

them today, whether it be in China or whether it be in other parts 

of the world, and yet we do trade with them. For the life of me, 

I can’t understand why that same sort of even-handedness should 

not be applied to Cuba. 

As a matter of fact, frankly, we have seen changes in places like 

China and others when we have engaged with them, and we have 

seen greater freedoms become available to the populations. So it 

seems to me that we ought to just create the good old Yankee 

know-how and allow American farmers and ranchers, dairymen, 

and others to engage in active trade. 

I went to Cuba in 2002. I have viewed their efforts on agriculture 

production both as it relates to fruits and vegetables, and as it relates to dairy and livestock. And from my own firsthand observations, having been a dairy farmer for three generations, I think I 

know something about that business, they have a long ways to go. 

What they do well is sugar, and we don’t need that. So the fact of 

the matter is this legislation is good. 

I want to get to a few questions. Mr. Johnson, you talked about 

current policy that restricts producers to making smaller sales and 

reduced long-term contracts. Can you elaborate on that and how we 

can change them? 

Mr. JOHNSON. Sure. Just the fact that you can’t do direct transactions makes it really impossible. 

Mr. COSTA. So that has to change? 

Mr. JOHNSON. Yes. That has to change, the uncertainty that 

swirls around what our policy is going to be. 

Mr. COSTA. Mr. Stallman made that point in his opening comments. How much do third country banks charge on sales on the 

average, and how should we change that in financing, when we 

hopefully will change the policy whether through this legislation or 

other activities? 

But the financing, when I was there in 2002, was also an issue 

because, obviously, the limit—everything they were doing was in 

dollars at that time. 

Mr. JOHNSON. Yes. What the Cubans have told me repeatedly is 

that it is from five to 15 percent. Perhaps in a couple of cases as 

much as 20 percent of the total value of what they bought was 

27

eroded because of that convoluted transaction arrangement I described. How much of that is from——

Mr. COSTA. There has got to be a better way to do that. 

Mr. JOHNSON. Of course. And this bill would in fact solve the biggest part of that problem. 

The ITC report, if I remember, concluded—I believe they said 

from 21⁄2 to ten percent of the value of the sales was being chewed 

up in that exchange process. 

Mr. COSTA. Okay. 

Mr. Stallman, you talked about, in your testimony, the need for 

visas to be issued for Cubans to visit the U.S. for trade-related purposes. Is this not included under the Travel Restriction Reform and 

Export Enhancement Act? And if not, should we include it in this 

legislation? 

Mr. STALLMAN. We need to have that ability to have those government officials from Cuba to come over. And it is the same type 

of visa and courtesy that we actually provide every other country 

in the world with respect to trade. They come over to inspect facilities, look at phytosanitary issues, and we are restricting government officials from coming to do that. 

Now, frankly, that hasn’t impacted that many sales yet because 

of the other restrictions. 

Mr. COSTA. Quickly, before my time is up, you talked about 60 

percent—before the Castro regime—of food was exported from this 

country to Cuba. Obviously, we couldn’t get back to that overnight. 

But what market share at this point do the Europeans and the 

South Americans have? 

Mr. STALLMAN. Well, the Cubans increased their agricultural im- ports, and I am probably thinking about 2008 figures, to $1.8 billion. We think we could have up to 2⁄3 of that. So if we had what 

we should have and got about $1.2 billion, then that would leave 

about $600 million for the rest of the world, and we would be more 

than happy with that because we would have the advantage. 

Mr. COSTA. Thank you. My time has expired. 

The CHAIRMAN. The chair thanks the gentleman. The gentleman 

from Missouri. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

This is an interesting bill from the standpoint that we have agriculture and then we have tourism mixed in the same bill, which 

is kind of a head-scratcher to me. In one situation we are putting 

money in our pockets by trading with these folks, and the other, 

by the tourism part of it, we are putting money in their pockets, 

which is kind of—why would we want to do that? 

Question number one: What is the potential for Cuban trade on 

the agricultural portion of this? Do you gentlemen have a figure on 

that by any chance? 

Mr. STALLMAN. Well, as I said, their total ag imports are about 

$1.8 billion. So that would be the top of the line. We obviously 

wouldn’t get all of that. We think we could get 2⁄3 of it. 

Mr. LUETKEMEYER. You think you could get 2⁄3? 

Mr. STALLMAN. Yes. If we did not have the restrictions that exist. 

Mr. LUETKEMEYER. If I remember your calculations, we get about 1⁄3 of it right now. 

Mr. STALLMAN. Roughly. 

28

Mr. LUETKEMEYER. So we would be able to double our exports to 

them. Is that roughly what you both agree on? 

Mr. STALLMAN. Approximately. 

Mr. LUETKEMEYER. Okay. I am just kind of curious. I have had 

many jobs over my lifetime before I got here, and one of them happened to be the Director of Tourism for the State of Missouri. I 

can’t go along with any of the analogies of what you just told about 

what is going to happen with the tourism aspect of this bill. It 

doesn’t work that way. 

The people in Cuba right now, Mr. Stallman, you made the comment that we need to interact with them. I think Mr. Johnson also 

made the same comment, that we need to interact with them so 

they can understand how good a country we are, and that way they 

will overthrow their government and be willing to look at other 

issues. 

I think they already know that. I think by the number of people 

that try to escape from that country every chance they get, I think 

they already know that. They are being oppressed because they 

don’t want anybody to have enough freedom to even think about 

getting out. The longer we keep them depressed—our government 

keeps them depressed, I think that they are headed there. 

So I am very curious about this, because I have grave concerns 

about the travel portions of the bill. I think the ag portion is good. 

But whenever we are setting there, Mr. Stallman, you made the 

comment that purpose-specific travel, I think that is where we 

need to head with this bill. I think if we had purpose-specific travel 

restrictions or enhancements in this bill, that would be what we 

need to do. But I don’t think we need to get into an area that is 

not agricultural. To say that we are going to improve the wherewithal of the people of Cuba by tourism, so they can buy our agricultural products, is a stretch beyond which I can’t go, because I 

can tell you that is not the way it works. 

So I kind of take exception to some of your testimony from my 

own past, but I agree with what you—I appreciate your position on 

the agricultural portion, because it is going to be imperative that 

as we look for new areas for our own economy, with our ag economy to expand, this is one of those places where we can actually 

go. 

I will yield back the balance of my time, Mr. Chairman. But I 

do want to reiterate that I think that you and Mr. Moran, as sponsors of the bill, I would hope and urge you to somehow redefine this 

tourism portion of this, get a little more travel-specific, purposespecific in their travel there, because we have gone well beyond 

what is in the best interest of ourselves as trading partners. 

Mr. LUCAS. Would the gentleman yield before he yields back? 

Mr. LUETKEMEYER. Yes, I would. 

Mr. LUCAS. Just an observation on the tourism issue. You have 

to bear in mind, of course, that in an economic system that is so 

dysfunctional as they have down there, their version of Communism, they have to have a way to generate the capital to buy 

the agricultural goods. 

Mr. LUETKEMEYER. But you also have a country dominated by 

the government which generates those things. It controls all that. 

Mr. LUCAS. That is exactly right. 

29

Mr. LUETKEMEYER. Whenever you dump the money in there as 

a tourist, that money does not go to the individuals. That money 

goes back to the government. The government controls everything. 

Mr. LUCAS. You are exactly right. 

Mr. LUETKEMEYER. The few pennies that fall through the cracks 

that the people get will only barely feed their families, whatever 

they have to. That is not going to come back to us as a trading 

partner. 

The tourism aspect of this bill is, quite frankly, it just doesn’t 

wash. I can tell you from being in the business, it does not wash. 

But, again, I thank the sponsors of the bill, certainly urge them to 

continue on with this. I think it is imperative we do this for our 

agricultural community. But I would ask them to pare down this 

travel portion of this. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. The gentleman from Nebraska, Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman, and thank you to the witnesses. This is interesting. I will say that I appreciate the enthusiasm for increased velocity of trade. I have been amazed at the 

heavy lifting, as Mr. Conaway pointed out, the heavy lifting that 

these trade agreements, aside from the Cuban issue, have been. 

Now, to confirm. You suggested that our exports to Cuba would 

double if the travel restriction is lifted. 

Mr. STALLMAN. If the transactional restrictions and travel restrictions are lifted, the potential is there for that to happen. Yes, 

sir. 

Mr. SMITH. And that would be done with about how many dollars’ worth of travel and tourism generated? If we are going to double the exports, that would be done with how many dollars of tourism existing in Cuba? From either one of you. 

Mr. JOHNSON. I think we are both going to guess. 

Mr. SMITH. Okay, That is fair. 

Mr. STALLMAN. I am not even going to guess. 

Mr. JOHNSON. Let me not guess then. Let me suggest that probably the best answer to that is from the ITC report that actually 

came to the same conclusion that we both have said a number of 

times. The $1.8 billion is recorded in that report to be roughly 60 

to 65 percent ability to recapture ag markets. And I believe if you 

read the report, it will give you the assumptions. Perhaps it will 

give you the level of tourism expected. 

My memory tells me that a couple of years ago there was an ex- pectation that it might be as much as $1 billion worth of tourism 

revenues that would accrue if it were opened up wide from the U.S. 

to Cuba. And I will try to reconfirm that. And if that is wrong, I 

will try to get back for the record, Mr. Chairman. 

Mr. SMITH. One concern that I have is that there is a lot more 

competition amidst the world of travel and tourism than there 

would be with—of course, I am a bit biased, too—with an exporting 

district in terms of agriculture. With high-quality products that are 

available and accessible on demand and otherwise, that there is 

just—it would be a lot harder for Cuba to get tourism dollars than 

it would be for us to market the agricultural products. Would you 

share that concern? 

30

Mr. JOHNSON. Frankly, I would disagree. I think if Cuba was 

open to U.S. tourism, you would see an awful lot of interest from 

Americans to travel to Cuba. It has been the place you can’t travel 

to. For those who have been traveling, it is the place you can’t go. 

One of the interesting things that I observed of all the times I 

have been to Cuba, when there were more than one state delegation there for different trade fairs, et cetera, the largest state delegation every single time was from Florida. And I thought, well, 

isn’t that interesting? I mean, why are the Floridians so interested 

in opening up trade with Cuba. 

You know, you think about sugar, you think about citrus, you 

think about what is their angle. It is their tourism industry overwhelmingly. Why? Because a lot of their tourism has to do with 

these cruise ships that travel around. And the one place that is forbidden is Cuba. So they can sail everyplace, and they have a lot 

of repeat customers. Apparently people that go on cruise ships like 

to go. I wouldn’t know firsthand. But the one place that they want 

to go next is, they want to stop in Cuba. 

Mr. SMITH. That is very interesting. And, Mr. Stallman, would 

you wish to comment as well? 

Mr. STALLMAN. I was just going to add on, and I don’t think it 

has been brought up, U.S. citizens can travel to Sudan, can travel 

to Iran, but we are not allowed to travel to Cuba. You know, philosophically, that makes no sense whatsoever. 

Mr. SMITH. I hear you. And I hope that we can arrive at something. Clearly, our strategy to date hasn’t gotten us a lot of reforms. And so I hope that we can arrive at something where we can 

move forward, promote democracy and freedom, and at the same 

time opportunity here at home. 

So with that I yield back. Thank you. 

The CHAIRMAN. I thank the gentleman. The gentleman from 

Iowa, Mr. King. 

Mr. KING. Thank you, Mr. Chairman. I appreciate being recognized, and I appreciate the testimony of the witnesses. 

I will say that I was of your opinion back in the 1990s, and I took 

the initiative to go on a trip down to Cuba. I was with the People 

to People mission, entirely legal and supported, of course. And I 

went down there because I intended to, with personal experience, 

ratify my opinion that we should open up trade with Cuba. 

There is nothing like going somewhere to learn the things that 

support your position, that gives a person the authority and the 

credibility to then come back and advocate for such a position. And 

I can’t think of another time in my life that I went somewhere actually for that reason, or certainly had not had an experience that 

turned me 180 degrees, like the time I spent in Cuba. 

If I had stayed with the People to People mission, we spent our 

days being handled by Castro’s minders, going from place to place, 

listening to people in gray smocks answer questions that were 

translated from English into Spanish, that were not the questions 

that we were asking, and the answers that they were giving were 

not the answers to the questions that were being asked. It took me 

a little while to figure that out. 

And myself and then state Senator David Miller went off on our 

own, and we ended up picking up an individual; he actually apVerDate 0ct 09 2002 14:30 Apr 16, 2010 Jkt 041481 PO 00000 Frm 00034 Fmt 6633 Sfmt 6601 I:\DOCS\111-44\55518.TXT AGR1 PsN: BRIAN
31

proached us down along Havana Harbor, and he became our guide 

for 3 days. And we went all over that island in 3 days. And he was 

a communist, a Marxist, and he was proud of Cuba and he was a 

Cuban historian. 

But throughout those long days I learned some things, in spite 

of his intent to give us a 3 day commercial, and two of those things 

stood out for me that I can’t get past. One of them is that when 

Castro nationalized the real property in Cuba, which I think was 

1963, 25 percent of that real property, the deeds to that property, 

were in the hands of Americans. The Americans are the only ones 

that have not been compensated for that real estate. They hold 

their deeds today. And if there were to be investments from Americans into Cuba, having witnessed the Mariel boatlift, I can’t imagine Castro doing anything except selling that real property that belongs to Americans back to other Americans to pit them against 

each other. That would be one point. 

Another point that was a surprise to me was to learn at that 

time the exchange rate of the peso to the dollar was 21:1. And one 

would think that Americans trading in Cuba, tourists going to 

Cuba, would give the Cubans an opportunity to make some money 

off of that endeavor, so maybe it lifts them up economically and exchanges a little spirit of free enterprise. 

But what really happens is—it has changed a little bit now but 

the effect is the same—is that Cubans could at that time earn 

American dollars, and they can hold them but they couldn’t spend 

them, unless they went to a dollar store where an American dollar 

was worth 1 Peso, not 21 Pesos. Castro was picking up the 20 peso 

villancicos out of the 21 Pesos to the dollar. And that was going, 

and still goes, into his treasury and into his coffers to fund the Administration, to fund his brutal communist dictatorship. 

Those are just two points that I couldn’t get past. I couldn’t find 

a way to rationalize that, even though I went down there to be able 

to ratify an opinion to opening up trade to Cuba. 

So where I sit today is that we have invested nearly a half a—

well, we have—a full half a century into waiting out the ideological 

solution in Cuba. And I can’t imagine we can wait very much 

longer. But I am more patient than the witnesses before us here. 

I am willing to wait out this ideological solution because we have 

invested so much in it. And I would say that Castro has been an 

exporter of his Marxist ideology in the Western Hemisphere, and 

that changes the argument on whether we allow trade into China 

or into Iran. 

I understand the philosophy that has been voiced here, and I 

would only draw that distinction. It is our back door. He has exported his brand of Marxism. He has been influential not just in 

the Western Hemisphere, but in places like Angola as well. 

I am not opposed to getting food to Cubans. And I would hope 

that if we do something here, we can limit our endeavor to getting 

food to Cubans, rather than inadvertently propping up a communist regime. When that day comes of the ideological solution, if 

we don’t have a plan in place, if we don’t have a way to encourage 

the Cubans anymore than we have encouraged the Iranians when 

they took to the streets, then those 11 million Cubans down there 

that have been now cursed with a half a century of living under 

32

the slavery of the communist dictator Castro may well see another 

half of a century. 

So that is how I look at this. And I hope we can find a solution 

that doesn’t play into the hands of Castro. And I am going to just 

pass up my chance to ask a question, Mr. Chairman. I appreciate 

being recognized, and I appreciate the witnesses. 

The CHAIRMAN. I thank the gentleman. Would the gentleman answer a question? Are you in favor of selling Boeing Aircraft to 

China and other things that we are doing which are propping up 

that communist regime? 

Mr. KING. Let’s figure out how to work on that endeavor as well, 

Mr. Chairman, because it does light up my attention. 

The CHAIRMAN. I thank the gentleman. 

I want to thank the witnesses for being with us. You guys did 

a great job, as usual, and we appreciate your taking the time and 

being patient. 

I will call the next panel. We have Mr. Mike Wagner with the 

U.S. Rice Producers Association and Owner/Operator of the Two 

Brooks Farm on behalf the USA Rice Federation from Sumner, 

Mississippi; Mr. Jerry McReynolds, wheat producer and President 

of the National Association of Wheat Growers from Woodston, Kansas. 

Mr. Moran, do you want to say something? 

Mr. MORAN. I am happy to say something about Mr. McReynolds. 

I am delighted that he is here as a witness. Mr. McReynolds is a 

farmer in my home county of Rooks County, Kansas. He and his 

family are highly respected and highly regarded, and anything that 

happens good in our home county usually involves somebody with 

the last name of McReynolds. And Jerry has continued that commitment, especially in agriculture. 

He is now the President of the National Association of Wheat 

Growers, was a previous President of the Kansas Association of 

Wheat Growers, and serves on our Kansas Farm Bureau Board of 

Directors since 1998. Just an all around good guy and somebody 

who has a lot of credibility with lots of Kansans. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. And welcome, Mr. 

McReynolds. 

Mr. John Wilson, Senior Vice President of Marketing and Industry Affairs for DFA, on behalf of the National Milk Producers Federation of Kansas. 

Mr. Barton Schott, corn producer and First Vice President of National Corn Growers, from Kulm, North Dakota. Home of Angie 

Dickinson, right? She is a little bit better looking than you, but not 

much. 

And, Mr. Scott Fritz, soybean producer and Board Member of the 

American Soybean Association from Winamac, Indiana. 

Gentlemen, welcome to the Committee. We look forward to your 

testimony. 

And we will start with Mr. Wagner. You are recognized for 5 

minutes. Your statements will be made part of the record. And welcome to the Committee. 

33

STATEMENT OF MIKE WAGNER, OWNER/OPERATOR, TWO 

BROOKS FARM; MEMBER, BOARD OF DIRECTORS, U.S. RICE 

PRODUCERS ASSOCIATION, SUMNER, MS; ON BEHALF OF 

USA RICE FEDERATION 

Mr. WAGNER. Thank you, Mr. Chairman. Mr. Chairman and 

Members of the Committee, I am Mike Wagner, a rice farmer from 

Sumner, Mississippi. I appear today on behalf of the U.S. Rice Producers Association and the USA Rice Federation. I would like to acknowledge Mr. Jackie Loewer, a fellow farmer from Branch, Louisiana, who is here today. Our organizations represent rice producers in all rice producing states, as well as rice millers, merchants, and exporters. 

I would like to preface my statements by stating we do not support Castro’s regime. 

As a first-time witness before Congress, I am especially honored 

and humbled to appear before you today. After almost 50 years, 

one thing is clear: Our Cuban policy is ineffective. It punishes U.S. 

farmers and costs U.S. jobs. 

In the 1950s, Cuba was the largest export market for U.S. rice. 

In 1959, Cuba accounted for 51 percent of all U.S. rice exports. 

After Congress provided for agricultural trade with Cuba in 2000, 

Cuba rapidly became our fastest growing market for U.S. rice. In 

2004, the Cubans bought $64 million worth of U.S. rice, providing 

1,400 U.S. jobs. As the chart from page five of my prepared statement reflects, it established Cuba as our fourth largest milled rice 

customer. 

In 2005, OFAC issued a rule revising the rules governing the 

payment terms for these sales to Cuba. As this chart from page 

seven of my prepared statement indicates, U.S. rice sales to Cuba 

plummeted from $64 million in 2004 to zero in 2009 and 2010. 

At the same time of the rule’s imposition, the Cubans had purchased more than $1 billion in U.S. food and farm goods. Cuban 

buyers generally paid by cash and paid promptly. There was no extension of credit to Cuba. 

Cuba has the potential to once again become a top export market 

for U.S. rice. But no reasonable buyer can rely on an export seller 

for food supplies, knowing that the exporting country’s government 

can and will change export policies at a whim. As a result, U.S. agriculture has been relegated to a residual supplier of rice and other 

farm goods to Cuba. 

Current policy drives most payments for sales to Cuba to be 

made by a letter of credit issued by a third country bank. This increases transaction costs, enriches foreign banks at the expense of 

U.S. farmers, and drives U.S. jobs overseas. 

We appreciate that this week OFAC redefined temporarily the 

term cash in advance for purposes of agriculture sales to Cuba. 

This needs to be made permanent, and payments should be authorized to be made directly to U.S. banks. 

By contrast, U.S. law authorizes telecommunications companies 

to make payments directly to Cuba. Eight U.S. companies did make 

payments totaling hundreds of millions of dollars directly to Cuba. 

As illustrated by the comparative charts from page ten of my statement, this discriminates against U.S. agriculture. If U.S. multinationals can make payments directly to Cuba, then why should 

34

U.S. farmers be forced to use foreign banks? Congress should 

change the law to allow payments for U.S. agriculture products to 

be made directly to U.S. banks. 

The U.S. International Trade Commission concluded that removing these restrictions would increase U.S. rice exports to the island 

by $43 million per year, to more than $80 million. Instead, U.S. 

policies have driven rice exports to zero. 

Our travel restrictions impose ever-changing bureaucratic red 

tape on travel to Cuba to seek new agriculture sales. We are disappointed that our government continues to restrict the freedom of 

Americans to engage with the people of only one country on Earth, 

Cuba. 

The ITC concluded that if restrictions on travel of U.S. citizens 

to Cuba were lifted, gains valued in millions of dollars per year 

would be made in exports of U.S. processed foods, poultry, beef, 

pork, and fish. 

The damage done since 2005 to our reputation as a reliable supplier can be repaired, but not until the Cubans are convinced that 

our government will not unilaterally void contracts or otherwise restrict trade. 

We agree with much of what President Obama said in his State 

of the Union address about the need to increase our exports and 

support U.S. jobs. Unfortunately, our Cuba policy ignores the President’s wise advice. It reduces U.S. employment by choking off trade 

with Cuba; it decreases U.S. exports, and cedes this important 

market to our competitors. 

To begin to address this, the President should state publicly that 

the United States Government will not impose any new restrictions 

on sales of food and agriculture products to Cuba. This would reassure producers, exporters, and Cuba that our government will not 

prevent us from reliably supplying the Cuban market. 

To better address all of these issues, we strongly support the enactment of H.R. 4645. I look forward to addressing any questions 

you might have. 

[The prepared statement of Mr. Wagner follows:]

PREPARED STATEMENT OF MIKE WAGNER, OWNER/OPERATOR, TWO BROOKS FARM; 

MEMBER, BOARD OF DIRECTORS, U.S. RICE PRODUCERS ASSOCIATION, SUMNER, MS; 

ON BEHALF OF USA RICE FEDERATION

Introduction 

Good morning Mr. Chairman and Members of the Committee. I am Mike Wagner, 

a rice farmer from Sumner, Mississippi. I am the current President of the Mississippi Rice Council, and serve on the Board of Directors of the U.S. Rice Producers 

Association. My testimony today is on behalf of both the U.S. Rice Producers Association and the USA Rice Federation. Together our organizations represent rice producers in all of the major rice producing states of Arkansas, California, Louisiana, 

Missouri, Mississippi, and Texas—as well as rice millers, merchants, exporters and 

related industries. As a first time witness before the Congress, I am especially honored and humbled to appear before you today. 

Thank you for holding this timely hearing to review the state of U.S. agricultural 

sales to Cuba. It is unfortunate that this once-vibrant market for U.S. agricultural 

goods is being thwarted by U.S. policies. It is especially frustrating to rice producers 

and the rice industry that successive Administrations continue to implement policies 

contrary to Congressional intent to the detriment of rice producers, the U.S. rice industry, and indeed all of U.S. agriculture. 

Similarly, it is sad that our antiquated, ineffective policy restricts the rights of 

American citizens to travel to Cuba. It is the ONLY country in the world that our 

government prohibits American citizens to visit. After almost 50 years of the United 

35

1 A total of 1.7 MMT, based on U.S. Department of Commerce estimates (See Attachment A). 2A Review of U.S. Trade Restrictions and Grain Exports, Foreign Agriculture Service, 

U.S. Department of Agriculture, http://www.fas.usda.gov/grain/circular/1997/97-09/feature/

trdlrstr.htm.

States unilaterally choking off exports and travel to Cuba, one thing is clear: it is 

a policy that is not only ineffective, but one that also punishes U.S. farmers, and 

costs U.S. jobs in related businesses. 

We applaud the efforts of Chairman Peterson and Congressman Moran to enact 

legislation to begin to create jobs in the United States by rationalizing agricultural 

sales to Cuba and to open travel there for all U.S. citizens. 

Cuba: America’s Largest Natural Rice Market 

In 1951, Cuba was the destination for 252,878 metric tons of U.S. rice, approximately $52 million in sales that represented 51% of U.S. rice exports at that time. 

Rice exports to Cuba during the period between 1951 and 1960 averaged approximately 169,000 metric tons, valued at $37 million annually and accounted for 25% 

of all rice exports for the decade.1 Following the overthrow of the Batista Government in 1959, the unilateral U.S. embargo closed the Cuban market in 1960. 

The U.S. rice industry has grown tremendously in the past 40 years. U.S. rice production is projected to increase from last year to approximately 237 million 

hundredweights (cwts) in 2010, up 17 million cwts from 2009 production. On average, approximately 50% of the U.S. crop moves into export channels. For the 2009 

marketing year, USDA projects 99 million cwts in rice exports. 

In addition to shutting off exports to Cuba, export embargoes imposed unilaterally 

by our government represent one of the greatest impediments to the enhanced exports of U.S. rice. For example, the largest market for U.S. rice in the 1950s was 

Cuba, in the 1970s it was Iran, and in the 1980s it was Iraq. Unfortunately for rice 

producers and the rice industry, unilateral embargoes imposed by our own government later negatively affected each of these important markets. 

Rice farmers have known for decades what the U.S. Department of Agriculture 

concluded in 1997, that ‘‘Of all grains exported by the United States, rice has been 

particularly hard-hit by trade restrictions.’’ 2 The Department went on to note that 

such unilateral trade restrictions had put more than 13 percent of projected global 

rice import demand off-limits to U.S. farmers and exporters. 

Fortunately, as policymakers have recognized the ineffectiveness of trade embargoes, each of these embargoes has been lifted. Only the embargo against trade with 

and travel to Cuba remains. It is widely recognized as having been a failure, and 

it should be ended. 

The 2000 Export Enhancement Act Reopens Rice Trade With Cuba 

Thanks to the leadership of Senators Byron Dorgan, Richard Lugar, Representative Jo Ann Emerson and many others, Congress provided for the resumption of 

trade with Cuba when it passed the Trade Sanctions Reform and Export Enhancement Act of 2000. The Act sought to achieve its goal of enhancing U.S. agricultural 

export opportunities by explicitly exempting sales of food and medicine from the exercise of any economic embargo. In order to prevent the extension of credit to Cuba 

by any U.S. entity, the Act limited the financing terms of sales to Cuba to either—

(A) Payment of cash in advance; or 

(B) Financing by third country financial institutions (excluding United States 

persons or Government of Cuba entities), except that such financing may be 

confirmed or advised by a United States financial institution.

Cuba first made purchases of U.S. agricultural products under the new Export 

Enhancement Act authorities in December 2001. Between 2001 and early 2005, 

Cuba contracted to purchase approximately $1.25 billion worth of U.S. agricultural 

goods. These purchases included shipments of nearly 320,000 tons of U.S. rice, 

worth a reported $81 million. In 2004 the Cubans bought $64 million worth of U.S. 

rice—more than their purchases of any other commodity. This established Cuba as 

our fastest growing market overall, and one of the top five customers for long grain 

rice. 

36

Annual Growth Rate of Rice Exports 2000–2004 Tonnage Basis

The majority of this trade was conducted on a cash basis, pursuant to licenses 

issued by the Department of Commerce. Cuban purchasers generally paid promptly, 

and there was no extension of credit to Cuba by U.S. entities. Clearly, the bipartisan improvements made by Congress in the 2000 Act were working to enhance exports on a cash basis, as Congress had intended. 

In 2004 alone, the U.S. exported 177,000 tons of rice to Cuba worth an estimated 

$64 million with a total economic impact on local U.S. economies of $220 million 

and provided for up to 1,400 jobs. 

Cuba has the potential to once again become a top export market for U.S. rice, 

representing a 400,000 to 600,000 MT export market under normal commercial 

trade and travel relations. 


11144003
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3Section 903(a) of the Export Enhancement Act (22 U.S.C. 2207(a)) reads as follows:

‘‘Sec. 903. Restriction.

‘‘(a) NEW SANCTIONS. Except as provided in sections 7203 and 7204 of this title and notwithstanding any other provision of law, the President may not impose a unilateral agricultural 

sanction or unilateral medical sanction against a foreign country or foreign entity, unless—

‘‘(1) not later than 60 days before the sanction is proposed to be imposed, the President 

submits a report to Congress that—

‘‘(A) describes the activity proposed to be prohibited, restricted, or conditioned; and 

‘‘(B) describes the actions by the foreign country or foreign entity that justify the sanction; and

‘‘(2) there is enacted into law a joint resolution stating the approval of Congress for the 

report submitted under paragraph (1).’’

Section 902(6) and 902(2)(E) of the Act make clear that the prohibited unilateral agricultural 

sanctions under section 903(a) include ‘‘any prohibition, restriction, or condition on carrying out’’ 

‘‘any commercial export sale of agricultural commodities’’. 

Largest U.S. Milled Rice Export Markets, 2004

Source: USITC Trade DataWeb. 

OFAC’s Cash in Advance ‘‘Reinterpretation’’ Imposed Unwarranted Trade 

Restrictions and Crippled U.S. Exports 

Beginning in November of 2004 the Treasury Department’s Office of Foreign Assets Control (OFAC) began holding up payments to U.S. sellers doing business with 

Cuba, and began imposing new regulatory reviews and/or licensing requirements on 

U.S. sellers and their banks. On February 22, 2005, OFAC issued a Final Rule revising the regulations governing the payment terms permitted for the sale of licensed agricultural products to Cuba (70 Fed. Reg. 9225; the ‘‘Final Rule’’). The 

Final Rule was published without any prior notice to Congress or to the exporting 

community, nor was any opportunity afforded for comment on the Final Rule by the 

agricultural or exporting communities. 

Rice producers and the rice industry were particularly disappointed that in imposing this new restriction on exports to Cuba, OFAC ignored the requirement in section 903 of the 2000 Export Enhancement Act that prohibits the President from imposing any new restriction or condition on commercial export sales of agricultural 

commodities unless the President submits a report to Congress regarding the restriction 60 days before its imposition, AND the Congress enacts a joint resolution 

approving the report.3 It is difficult for rice farmers to agree with OFAC that the 

new ‘‘interpretation’’ was not a restriction or condition on trade when the interpretation rendered invalid $250 million worth of open agricultural export contracts, and 


11144004
38

imposed expensive new requirements to finance trades through banks in foreign 

countries. 

As we predicted at the time of the imposition of the Final Rule, it devastated the 

market for sales of U.S. rice to Cuba. As the following chart indicates, U.S. rice 

sales to Cuba plummeted from $64 million in 2004 to ZERO in 2009.

Why did this happen? The Rule and its heavy-handed imposition sent the clear 

message to ALIMPORT, the Cuban food importing agency, that the United States 

could not be trusted as a reliable supplier of food and agriculture products to feed 

the Cuban people. At the time of the Final Rules’ imposition, the Cubans had purchased more than $1 billion in U.S. food and farm goods. Despite the dire warnings 

of those opposed to food exports to Cuba, the Cubans paid cash for all of these deliveries, and had done so in a timely manner. As a reward for building this excellent 

trade relationship, the U.S. Government in the Final Rule unilaterally imposed a 

new interpretation of the ‘‘cash in advance’’ requirement that made illegal the terms 

of the trade that had been contemplated by Congress and proven by commercial success. 

No reasonable buyer can rely on an export seller for critical food supplies knowing 

that the exporting country’s government can (and will) change export policies at a 

whim. As a result, U.S. agriculture has been relegated to a position as a secondary, 

residual supplier for rice and many other agricultural goods to Cuba. 

Another result of the Rule has been to drive most if not all payments for remaining U.S. agricultural sales to Cuba to be conducted via a letter of credit issued by 

a third country (non-Cuban) bank. As illustrated in the chart below, this requirement drives up the transaction costs to U.S. sellers and Cuba alike, and reduces 

the competitiveness of U.S. agricultural products to Cuba. These costs will fall disproportionately on small exporters, many of whom will be run out of the market by 

the increased costs and complexities of the trade. The costs of these reduced sales 

will ultimately be borne by U.S. farmers. Effectively the Rule enriches foreign banks 

at the expense of U.S. farmers, processors, and exporters; and drives the jobs associated with these activities to overseas competitors.


11144005
39

If allowed to remain in place, OFAC’s unilateral changes in the terms of these 

sales threaten opportunities for future sales and brand U.S. agriculture as an unreliable supplier in world agricultural markets. 

Congress Should Clarify and Reiterate the Operation of Cash Sales Under 

the Enhancement Act 

We strongly urge Congress to enact legislation reiterating the intent of Congress 

that the payment of cash in advance under the 2000 Export Enhancement Act was 

indeed intended to enhance trade, not to restrict it. This issue is addressed in H.R. 

4645, the Travel Restriction Reform and Export Enhancement Act, which was introduced on February 23, 2010 by Chairman Peterson and cosponsored by Representatives Jerry Moran, Jo Ann Emerson, Rosa DeLauro, and 36 other Members of the 

House of Representatives. We urge the swift enactment of this legislation to reiterate the intent of Congress that exports financed by the payment of cash in advance be allowed to continue on the same basis that had been successfully used for 

$1 billion in exports during 2001 through 2004, before the U.S. rice sales to Cuba 

were killed off by the OFAC 2005 Final Rule. 

Congress Should Begin To Correct the Discriminatory Treatment Of U.S. 

Farmers By Authorizing Direct Transfers From Cuba to U.S. Financial 

Institutions 

As described above, current U.S. law discriminates against American farmers and 

agricultural exporters. It prohibits Cuba from directly paying U.S. sellers for their 

purchases. Even safe and secure payments by bank letters of credit are required to 

be routed through third country banks. This requirement unnecessarily drives up 

the cost of U.S. exports, discourages U.S. sales, and costs U.S. jobs. There is no offsetting benefit to this policy except to enhance the profits of foreign banks. 

By contrast, U.S. law authorizes telecommunications service providers to make 

service related payments directly to Cuba. In fact, eight U.S. companies make payments totaling hundreds of millions of dollars directly to Cuba. According to published reports, these payments totaled $150 million in 2007 and $120 million in 

2008, and will likely increase since the Obama Administration has broadened the 

services that U.S. telecom firms may provide to Cuba. The obvious discriminatory 

disparity between the treatment afforded U.S. farmers and exporters, and multinational telecommunications companies is illustrated by the following comparative 

flow charts.


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4 ‘‘U.S. Agricultural Sales to Cuba; Certain Economic Effects of U.S. Restrictions’’; Investigation No. 332–489; USITC Publication 3932; July 2007. 

Congress should address this disparity in the treatment of U.S. farmers and multinational telecom providers. Over the past 8 years the Cubans have purchased almost $4 BILLION in U.S. food and farm goods. While the U.S. and global banking 

systems nearly collapsed, Cuba has continued to maintain an exemplary record of 

payments for their U.S. agriculture purchases. 

Opponents of agricultural sales to Cuba argue that allowing direct payments by 

Cuba to U.S. sellers will somehow benefit the Cuban Government. But at the same 

time, some of these opponents SUPPORTED legislation providing for the direct payment of HUNDREDS OF MILLIONS OF DOLLARS TO THE CUBAN GOVERNMENT EACH YEAR as compensation for services provided by U.S. telecommunications companies. 

If U.S. multinationals can make payments directly TO Cuba, then why should 

U.S. farmers be disadvantaged? Congress should change the law to allow U.S. farmers and their exporters to be paid directly by Cuba. 

Legislation to begin to correct this discrimination is included in the Travel Restriction Reform and Export Enhancement Act (H.R. 4645). Rice producers and the 

rice industry strongly support the enactment of this provision to stop the discrimination against U.S. agriculture and to support U.S. employment. 

Together, these modest rationalizations of agricultural export terms would significantly enhance U.S. exports. A comprehensive study by the U.S. International Trade 

Commission (ITC) during the Bush Administration concluded that the Treasury Department’s restrictions on agricultural payment terms had a ‘‘substantial negative 

effect on the sales of agricultural products to Cuba.’’ The ITC also found that removing these restrictions would increase annual U.S. agricultural sales to Cuba by more 

than $300 million.4

In the case of rice, the ITC concluded that the lifting of these unnecessary restrictions could increase U.S. rice exports to the island by $43 million per year. As of 

2006, U.S. rice enjoyed a 77 percent share of Cuban imports, for sales valued at $40 

million. The restrictive policies of the United States have driven those exports to 

zero. The enactment of H.R. 4645 could reverse this trend and give U.S. rice producers, processors, exporters and those whom they employ a fighting chance to regain this key market. 

Congress Should Open Travel for All U.S. Citizens to Cuba: A Mutual Benefit for Both U.S. and Cuban Citizens 

The rice industry also strongly supports the freedom of U.S. citizens to travel to 

and from Cuba. We continue to be disappointed that our government continues to 

restrict the freedom of Americans to travel to and engage with the people of only 

one country on Earth: Cuba. These restrictions also frustrate the intent of the Export Enhancement Act of 2000 by imposing ever-changing bureaucratic red tape requirements for travel to Cuba to facilitate new agriculture sales. This policy is widely acknowledged to be a failure, and should be relaxed to allow U.S. citizens to travel to Cuba. 

Specifically, we support the reform of these burdensome and costly travel restrictions as provided for in H.R. 4645. We also support H.R. 874, the ‘‘Freedom to TravVerDate 0ct 09 2002 14:30 Apr 16, 2010 Jkt 041481 PO 00000 Frm 00044 Fmt 6633 Sfmt 6621 I:\DOCS\111-44\55518.TXT AGR1 PsN: BRIAN

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5 According to the CNN/Opinion Research Corp. poll conducted April 3–5, 2009, 64 percent of 

the 1,023 Americans surveyed by telephone thought the U.S. Government should allow citizens 

to travel to Cuba. And 71 percent of those polled said that the U.S. should reestablish diplomatic relations with Cuba. 6 According to the 2009 Bendixen & Associates poll, 2⁄3 of Cuban and Cuban American 

adults—67 percent—support the lifting of travel restrictions for all Americans so that they can 

also travel to Cuba freely. 

el to Cuba Act,’’ introduced by Congressman William Delahunt, and currently cosponsored by 178 other Members of the House. 

The legislation would lift all restrictions on U.S. citizens traveling to Cuba, and 

will have a direct impact on U.S. agricultural sales. Increased travel to Cuba will 

boost food demand in the country and provide the funds to purchase U.S. commodities. U.S. producers and the agriculture industry would expect to meet the increased food needs. 

The U.S. International Trade Commission concluded that if restrictions on travel 

of U.S. citizens to Cuba were lifted, gains in exports valued in the millions of dollars 

per year would be made in exports of U.S. processed foods, poultry, beef and pork, 

and fish. 

In addition, lifting the travel ban will reflect the desires of the American people. 

Public opinion polls show that about 64 percent of Americans 5 and 2⁄3 of CubanAmericans 6 support the freedom of U.S. citizens to travel to Cuba. 

We strongly support the enactment of this provision and H.R. 4645 in its entirety, 

and urge each of the Committee’s Members to cosponsor and support the enactment 

of this important legislation. 

Congress Should Insist on Strict Compliance With Section 903 of the 2000 

Export Enhancement Act 

Congress should insist that OFAC, and Administrations both now and in the future respect the requirement in section 903 of the 2000 Export Enhancement Act 

that prohibits the imposition of new trade restrictions or conditions absent the prior 

notice to, and approval by, Congress. Rice producers are very concerned that absent 

this vigilant protection of Congress’ rights, there will be nothing to stop the total 

shut down of exports to Cuba by future unwarranted ‘‘interpretations’’ of the Act 

by overzealous or politically driven Administrations. 

The President Should Reassure U.S. Agriculture and Our Cuban Customers 

That the Administration Will Not ‘‘Go Backwards’’ on Agricultural Sales 

to Cuba 

The damage done since 2005 to our reputation as a reliable supplier of agriculture 

and food products to Cuba can be repaired over time. But until the Cubans are convinced that our government will not unilaterally void contracts or otherwise restrict 

trade, we will continue to be relegated to a residual supplier to the Cuban market. 

There is one thing that the Administration could do immediately to repair U.S. 

agriculture’s reputation as a reliable supplier and to reassure Cuban and other buyers. This would not cost any money, nor does it involve changing the embargo in 

any way. 

To accomplish this, the President should simply state publicly that the United 

States Government will not impose new restrictions on sales of food and agriculture 

products to Cuba. That progress made in opening and servicing these markets will 

not be opposed or destroyed by government intervention. Such a statement, and its 

faithful implementation by the Administration, could go a long way to reassuring 

U.S. producers and exporters, and Cuba, that the United States Government will 

not prevent U.S. agriculture from reliably supplying the Cuban market. 

Conclusion: A No-Cost, One-Way Trade Opportunity That Benefits U.S. 

Farmers, Workers, and the Public 

Rice producers and the rice industry have paid a high price for our government’s 

failed policy toward Cuba. First in 1960, and again in 2005, Democratic and Republican Administration’s alike have driven exports to one of our largest rice markets 

from robust levels to literally nothing. 

The U.S. rice industry in the Mississippi Delta and along the Gulf Coast has a 

tremendous transportation advantage over their Asian competitors in reaching the 

Cuban rice market. In the 1950’s and again between 2001 and 2005, U.S. rice farmers and millers had built sales to the Cuban rice market with high-quality rice that 

Cuban consumers prefer over Asian rice. Unfortunately, actions by our own government effectively killed that market. The Cuban demand for food imports is largely 

being met by a number of U.S. agriculture’s key competitors in the global market 

42

such as Canada, Brazil, and Vietnam. And this is the result almost entirely of actions by our own government. 

U.S. rice farmers have been told that export markets are our markets of the future. We agree with much of what President Obama said in his State of the Union 

speech last month about the need to increase our exports:

‘‘We need to export more of our goods. Because the more products we make and 

sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal: We will double our exports over the next 5 years, an 

increase that will support two million jobs in America. To help meet this goal, 

we’re launching a National Export Initiative that will help farmers and small 

businesses increase their exports, and reform export controls consistent with national security.

We have to seek new markets aggressively, just as our competitors are. If America sits on the sidelines while other nations sign trade deals, we will lose the 

chance to create jobs on our shores. But realizing those benefits also means enforcing those agreements so our trading partners play by the rules. And that’s 

why we’ll continue to shape a Doha trade agreement that opens global markets, 

and why we will strengthen our trade relations in Asia and with key partners 

like South Korea and Panama and Colombia.’’

Rice farmers and the entire rice industry support these goals to increase exports 

and support U.S. jobs. Unfortunately, with respect to Cuba, our government’s policy 

ignores all of the President’s wise advice. U.S. Government policy reduces U.S. employment by choking off trade with Cuba. That policy continues to decrease U.S. exports, and cedes this important market to our global competitors. Rather than aggressively contending for the Cuban market, our government does indeed sit on the 

sidelines, while blocking our own team from taking the field. 

When these markets are closed off, everyone in the industry is hurt, and farmers 

predictably pay the ultimate costs of lost markets from their own pockets. These are 

unnecessary costs that rice farmers should not be asked to pay, especially when 

pending budget proposals would reduce the farm safety net on which farmers depend here at home. 

All we are asking is that the law governing food sales to Cuba be allowed to operate as Congress intended; that the discriminatory treatment of U.S. farmers in regard to these sales be corrected; and that American citizens be allowed to travel to 

Cuba and take the engagement of our values and economic activity with them—as 

they can often do in every other country on Earth. 

We strongly support the enactment of the H.R. 4645 Travel Restriction Reform 

and Export Enhancement Act. This legislation represents a modest, sensible first 

step to fulfilling the intent of the Export Enhancement Act of 2000 and the promise 

brought by the engagement of the U.S. people with those we seek to feed in Cuba. 

I look forward to addressing any questions that you may have. 

Thank you.

43

* Alvarez, J. and W.A. Messina, Jr., Cuba’s Rice Industry: Potential Imports From Florida,

International Working Paper 92–27, Food and Resource Economics Department, Institute of 

Food and Agricultural Sciences, University of Florida, Gainesville, Florida, September 1992.

ATTACHMENT A 

Cuba’s Share of Total U.S. Rice Exports, by volume and value, 1951–1961 *

Table 9. Cuba’s share of total U.S. rice exports, by volume and value, 1951–1961

Year U.S. exports Cuban imports from U.S. Cuba’s share a

Quant. Value Quant. Value Quant. Value 

Metric tn million $’s metric tn million $’s —%—

1951 493,498 94 252,878 52 51.2 55.3

1952 800,402 157 219,282 50 27.4 31.8

1953 707,332 154 253,786 50 35.9 32.5

1954 568,862 107 162,532 38 28.6 35.5

1955 454,454 81 96,702 21 21.3 25.9

1956 824,010 132 144,826 27 17.6 20.4

1957 740,928 124 187,048 40 25.2 32.3

1958 573,856 97 187,048 40 32.6 41.2

1959 690,080 105 171,612 36 24.9 34.2

1960 893,472 130 15,890 17 1.8 13.1

1961 806,758 106 (b) (b) (b) (b) 

a Calculated by the authors. 

bMinimal amounts before the economic embargo was totally enforced. 

Source: U.S. Department of Commerce (various issues). 

44

The CHAIRMAN. Thank you very much, Mr. Wagner. I appreciate 

it. 

Mr. McReynolds, welcome to the Committee. 

STATEMENT OF JERRY MCREYNOLDS, PRESIDENT, NATIONAL 

ASSOCIATION OF WHEAT GROWERS; WHEAT PRODUCER, 

WOODSTON, KS 

Mr. MCREYNOLDS. Thank you, Chairman Peterson, Ranking 

Member Lucas, Congressman Moran, and Members of the Committee. 

My name is Jerry McReynolds. I am a wheat and sorghum farmer from Woodston, Kansas, and currently serve as President of the 

National Association of Wheat Growers. Thank you for holding this 

hearing and allowing me to share some of my experiences regarding our efforts to sell wheat to Cuba. 

I visited Cuba; had the opportunity in 2003 with my daughter as 

part of a small group of Kansas wheat producers on an educational 

mission. Seeing the situation firsthand was a unique experience for 

me, and we found that the Cuban people were very warm, very 

open, and enjoyed discussing American life. 

As a part of this mission, our group had the opportunity to meet 

with Pedro Alvarez, who is the head of ALIMPORT, Cuba’s food 

import company. Mr. Alvarez expressed to us his sincere desire and 

eagerness to purchase Kansas wheat, both for quality and for the 

country’s needs. In fact, he held pen in hand and was ready to sign 

an agreement, which we did not have and could not have because 

of the restrictive policies. 

My take-home message from this trip was simply that the Cubans want and need our wheat. However, current policy with respect to agricultural trade and travel with Cuba is unnecessarily 

impeding U.S. sales of wheat to the island. 

With no domestic production of wheat, Cuba is the largest importer of wheat and wheat products in the Caribbean. Over the 

past 3 years, Cuba’s population of 11.4 million consumed, on average, 800,000 metric tons of wheat per year, and the nation’s grain 

consumption is increasing, driven by both population and income 

growth. 

The bottom line is this: The Cubans need the wheat, and will 

continue to source it wherever it is most competitive. 

The U.S. should be able to boast about maintaining a lion’s share 

of that growing Cuban market just as we do elsewhere in the Caribbean. Instead, we have maintained roughly 38 percent of the 

market compared to an 85 percent share in other Caribbean nations. 

A 2007 report by the U.S. International Trade Commission said 

we could hold 65 percent of the Cuban market if the financial and 

travel restrictions were removed, constituting an additional $34 

million of export. We would argue our market share could and 

should be actually closer to the 85 percent level, contributing closer 

to $100 million in market gains. 

Despite our clear competitive advantage on transportation and 

logistics and, arguably, the superior quality of wheat, our European 

Union, Canadian, and Argentine competitors continue to hold a significant portion of that market. This is attributable to their more 

45

favorable trade terms; specifically, the fact that these countries are 

not subject to the financing and travel restrictions that we face. 

This year’s situation is a perfect example. Sales to the Cuban 

market are down 65 percent from last year. The entire 113,000+ 

metric tons sold have already been shipped, and there are no outstanding sales on the books to load out. Moreover, the Cubans do 

not have the budgetary resources to make any more purchases 

from the U.S. this year, virtually handing that market to our Canadian and European Union competitors. 

The current year’s dire sales situation highlights an often overlooked reason for our declining sales: Cuba lacks cash, which U.S. 

law requires in advance for purchases of food and medicine. This 

only encourages Cubans to go to our competitors, such as Canada, 

as they can access lines of credit to purchase their wheat. 

We encourage and recognize the challenges associated with offering lines of credit to Cuba, and are not advocating any movement 

in that direction presently. But we recognize what can be done to 

infuse cash into the country to enable them to purchase our agricultural products: Lift the ban on travel. Coupled with eased trade 

restrictions on agricultural exports, increased travel to Cuba will 

boost food demand in the country which U.S. growers will be able 

to fulfill. And it will also bring needed funds to citizens of Cuba for 

purchases of U.S. commodities. 

All in all, we believe existing policies that impede travel and 

sales of our agricultural products to the nation seem to serve no 

function other than to decrease our sector’s competitiveness. We believe the time is right for some meaningful act and a meaningful 

change. 

The Travel Restriction Reform and Export Enhancement Act, 

H.R. 4645, sponsored by Chairman Peterson and Representative 

Moran, would be a great catalyst to provide an opportunity for significant new sales of wheat to Cuba, boosting income in the United 

States, in the U.S. heartland, and adding critical resources to the 

U.S. economy. The legislation would make incremental changes 

that would allow the U.S. farmer the ability to conduct a more normal business function with a country that needs our agricultural 

goods to feed people. 

At a time when our economy needs every possible boost, and 

when President Obama has made a popular pledge to double U.S. 

exports—and it is only 90 miles off of our coast. 

I want to thank you, Chairman Peterson and Congressman 

Moran, and all of you Committee Members here today. We look forward to working with you and we urge you to support H.R. 4645. 

Thank you for this opportunity to testify. 

[The prepared statement of Mr. McReynolds follows:]

PREPARED STATEMENT OF JERRY MCREYNOLDS, PRESIDENT, NATIONAL ASSOCIATION

OF WHEAT GROWERS; WHEAT PRODUCER, WOODSTON, KS 

Chairman Peterson, Ranking Member Lucas and Members of the Committee, my 

name is Jerry McReynolds. I am a wheat and sorghum farmer from Woodston, Kansas, and currently serve as the President of the National Association of Wheat 

Growers. Thank you for holding this hearing and allowing me the privilege of coming here today to share some of my personal experiences, and the experience of the 

industry in which I operate, with respect to our ability to sell wheat to Cuba. 

46

The wheat industry has long been engaged in the discussion surrounding U.S. 

trade policy toward Cuba. Though we do not profess to be foreign policy experts on 

most occasions, we do know enormous amounts about selling wheat around the 

world, and, in an average year, we export about half of our production. 

I visited the island nation of Cuba with my daughter as part of a small group 

of U.S. wheat producers on a 2003 educational mission. Seeing the situation firsthand was a unique experience, and we found the Cuban people warm and very open 

to discussing ‘‘American life’’. We also saw that Cuban farmers lacked the tools, 

equipment and supplies that they needed to produce their own food. Planting and 

harvesting equipment was outdated and in ill-repair, and most farmers there cultivated small gardens by hand, leaving the oxen for use in larger fields. And we 

learned that Cuba has to import wheat for all of its consumption needs. 

As a part of this mission, our group had the opportunity to meet with Pedro Alvarez, the head of ALIMPORT, Cuba’s food import company. Mr. Alvarez expressed 

to us a sincere eagerness to purchase Kansas wheat, recognizing both the quality 

of our product and the country’s need for it. In fact, he held a pen in hand, ready 

to sign an agreement to buy U.S. wheat, but was simply unable due to our country’s 

restrictive policies. 

My take-home message from this trip was this: The Cubans want and need our 

wheat. However, current policy with respect to agricultural trade and travel with 

Cuba is unnecessarily impeding U.S. sales of wheat to the island nation. 

Cuban Market Potential 

With no domestic production of wheat, Cuba is the largest importer of wheat and 

wheat products in the Caribbean. Over the past 3 years, Cuba’s population of 11.4 

million consumed on average 800,000 metric tons (MT) of wheat per year, and the 

nation’s grain consumption is increasing, driven by both population and income 

growth. Despite three hurricanes and a global economic crisis, Cuba’s economy grew 

4.3 percent last year. Five new pasta plants have been built, a flour mill doubled 

in capacity and a new milling facility has been built. 

Despite this news of recent economic growth, the fact hasn’t changed that Cuba 

remains reliant on agricultural imports. With no resources available to purchase fertilizer or pesticides, it’s my understanding that the Cuban Government is now relying on small organic farms for food production. While a respectable and novel approach to solve Cuba’s food needs, these farms are simply too small and production 

techniques too limited to produce enough food on a large scale to sustainably feed 

Cuba’s growing population. Bottom line: the Cubans need wheat and will continue 

to source it where it is most competitive. 

Impact of Trade and Travel Restrictions on U.S. Wheat Sales to Cuba 

The U.S. should be able to boast maintaining a lion’s share of the growing Cuban 

wheat market just as we do elsewhere in the Caribbean. Instead, we have maintained roughly 38 percent of the market compared to an 85 percent share in other 

Caribbean nations. A 2007 report by the U.S. International Trade Commission (ITC) 

indicates that the U.S. could hold 65 percent of the Cuban market if the financial 

and travel restrictions were removed, contributing an additional $34 million dollars 

of exports. We would argue our market share could, and should, reach closer to 85 

percent, contributing closer to $100 million in new market gains. 

While Cuba’s proximity to major U.S. export facilities gives the U.S. a clear competitive advantage on transportation and logistics, and we continue to boast a product of superior quality, our European Union, Canadian and Argentine competitors 

continue to hold a significant portion of the Cuban market due to their more favorable trade terms. 

Despite our clear competitive advantage in the country, our unrealized market 

share can be attributed largely to the financing and travel restrictions in place that 

are not constraining the ability of our competitors to sell their product to Cuba. 

As background, the wheat industry has been allowed to sell into the Cuban market since the Trade Sanctions Reform and Export Enhancement Act (TSRA) took effect in 2001. On Feb. 22, 2005, the Treasury Department’s Office of Foreign Assets 

Control (OFAC) amended the regulations regarding payment to sellers. The change 

required cash payment in advance or letters of credit from a foreign third-party financial institution on all agricultural commodity sales to Cuba. This change meant 

that exporters would have to receive payment before the shipment even leaves port 

for Cuba. This put an end to the ability of ALIMPORT, Cuba’s food import agency, 

to directly pay sellers upon arrival of the shipment, as is consistent with normal 

business practices, and quickly depressed our sales into the market. 

After payment rules were amended, wheat sales to Cuba dropped more than 25 

percent in marketing year 2006, to only 28 percent of the Cuban wheat market. 

47

Sales rebounded the following 2 years, driven largely by global economic concerns, 

but have again fallen sharply this past year. 

U.S. Share of Cuban Wheat Market

* USDA Production, Supply and Distribution database.

The 2007 ITC report stated that the new financial regulations have ‘‘had a substantial negative effect on the sale of agricultural products to Cuba.’’ Easing the 

payment restrictions will allow U.S. wheat growers to capitalize on several comparative advantages in regards to wheat exports. Proximity provides a logistical and 

price advantage for U.S. growers. Freight rates from U.S. ports to Cuba are about 

33 percent less than rates from Europe and significantly less than from Canada. Domestic storage and internal infrastructure require Cuba to purchase smaller shipments that arrive exactly on schedule, so a limited transit time is particularly crucial in this market; a shipment from U.S. ports takes a matter of days as compared 

to 25 days when shipped from Brazil. Other competitive advantages that could be 

enjoyed by U.S. growers include world-class marketing capabilities and the handling 

capacity of U.S. ports. 

Despite these clear competitive advantages, Cuba will look to other sources for 

their food needs while financial and travel restrictions are still in place. This threat 

of continued diminishing market share has hit home this year more powerfully than 

ever, as current year wheat sales to the country are less than a third of where they 

should be. 

This year’s sales into the Cuban market are down 65 percent, totaling 113,100 

metric tons versus 357,700 metric tons for the same time period in the 2008–2009 

marketing year. The entire 113,100 metric tons has already been shipped, and there 

are no outstanding sales on the books to load out. Moreover, the Cubans do not have 

the budgetary resources to make any more purchases from the U.S. this year, virtually handing the market to our Canadian and European Union competitors who 

will offer them credit. 


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Cuban Purchases of U.S. Wheat

* Data from USDA’s Foreign Agricultural Service.

The current year’s dire sales situation highlights an often-overlooked reason for 

our declining sales levels. In addition to the cumbersome and cost-prohibitive environment created by our restrictive financing terms, another significant reason cited 

for these declining sales levels is Cuba’s lack of cash, which U.S. law requires in 

advance for purchases of food and medicine. This only encourages Cubans to go to 

our competitors, such as Canada, where they can access lines of credit to purchase 

their wheat. 

Though we recognize the challenges associated with offering lines of credit to the 

country and are, therefore, not advocating any movement in that direction, it is important to recognize that there is something more reasonable that can be done to 

infuse cash into the country to enable them to purchase our agricultural products—

lift the ban on travel. 

Removing the restrictions on agricultural trade alone will not be enough to maintain (or restore) our ability to sell wheat into the Cuban market. This is why we 

support coupling these changes with a lifting of the travel ban. Coupled with eased 

trade restrictions on agricultural exports, increased travel to Cuba will boost food 

demand in the country which U.S. growers will be able to fulfill. And, as cited 

above, it will also bring much needed funds to citizens of Cuba for purchase of U.S. 

commodities. 

The Time Is Right for Legislative Action 

A number of bills have been introduced to clarify the payment rules and ease 

travel restrictions hamstringing our ability to sell wheat to Cuba. Countless attempts have been made in annual appropriations processes to include language to 

resolve some of these longstanding issues. Just recently we have begun to see some 

positive movement, signaling the time is right for some real, meaningful change. 

The Omnibus Appropriations Act of 2009 amended the TSRA to permit travel related to commercial marketing, sales negotiation, accompanied delivery or servicing 

of agricultural commodities. The FY 2010 Financial Services Appropriations bill 

clarified that ‘‘payment of cash in advance’’ should be interpreted to mean payment 

of cash when the buyer takes physical possession of the product rather than prior 

to it leaving U.S. ports. These both were positive steps, but we need more than temporary fixes; we need a permanent solution. 

The Travel Restriction Reform and Export Enhancement Act (H.R. 4645) sponsored by House Agriculture Committee Chairman Collin Peterson and Rep. Jerry 

Moran would be a great catalyst to providing an opportunity for significant new 

sales of wheat to Cuba, boosting income in the U.S. heartland and adding critical 

resources to the U.S. economy. 

This legislation will eliminate the need to go through third country banks to conduct a normal business transaction, thereby eliminating the added cost of doing 

business that is currently hindering sales and decreasing the competitiveness of 

U.S. wheat. It will also permanently clarify the ‘‘payment of cash in advance’’ provision and bring it in line with the requirements of exports to other countries. Thirdly, the legislation will allow all U.S. citizens freedom of travel to Cuba, reducing the 


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red tape for us as farmers and agricultural trade associations to make sales to the 

country. This will also allow us to conduct the technical and trade servicing activities that we conduct as part of our export development business around the world 

resulting in an increased demand for our exports to feed the growing number of visitors to Cuba. 

As important as it is to recognize what this legislation would accomplish, it is 

equally beneficial to clarify what it does NOT do. The legislation does not lift the 

embargo on the country. It does not allow Cuba to export their products to the U.S., 

nor does it change the travel restrictions for Cubans to visit the U.S. It does not 

even allow us to extend credit to the country. 

The legislation simply would make incremental changes that would allow the U.S. 

farmer the ability to conduct more normal business functions with a country that 

needs our agricultural goods to feed its people. 

Existing policies that impede travel and sales of agricultural products to the nation seem to serve no function other than to decrease our sector’s competitiveness. 

Canada, Argentina and even the European Union all have access to the Cuban market and are taking market share that should be ours. 

At a time when our economy needs every possible boost, and when President 

Obama has made a popular pledge to double U.S. exports, I would contend there 

is no better time than to re-examine just why exactly we are being out-competed 

in a market just 90 miles off our shore. 

The time is right for the U.S. to consider incremental, common-sense policy 

changes that would enable our industry to realize the full potential of the Cuban 

market. 

Conclusion 

I, a Kansas farmer, recognize that many are tied to maintaining our current policy toward Cuba at all costs. My question to them is this: to what end? If the goal 

in maintaining our policy is to affect change in the nation, perhaps it is time to reevaluate the means to achieving that end. Let’s start on a small, incremental scale 

by re-evaluating the restrictions placed on agricultural trade and travel. 

I would like to thank Chairman Collin Peterson and Congressman Moran, as well 

as other Committee Members here today who have long been champions of making 

these incremental improvements and common-sense changes to our policy. I would 

respectfully urge the rest of the Committee and others in Congress to help us 

achieve this long-awaited change by supporting H.R. 4645, the Travel Restriction 

Reform and Export Enhancement Act. 

Thank you for the opportunity to testify today on behalf of our nation’s wheat 

growers.

The CHAIRMAN. Thank you, Mr. McReynolds. I appreciate that. 

Mr. Wilson, welcome to the Committee. 

STATEMENT OF JOHN J. WILSON, SENIOR VICE PRESIDENT, 

MARKETING AND INDUSTRY AFFAIRS, DAIRY FARMERS OF 

AMERICA; MEMBER, BOARD OF DIRECTORS, NATIONAL MILK 

PRODUCERS FEDERATION, KANSAS CITY, MO 

Mr. WILSON. Thank you. Chairman Peterson, Ranking Member 

Lucas, and Members of the Agriculture Committee, thank you for 

the opportunity to testify about the importance of expanding U.S. 

agricultural trade to Cuba. 

My name is John Wilson, and I am Vice President of Marketing 

and Industry Affairs for Dairy Farmers of America. I also serve on 

the Board of Directors for National Milk Producers Federation and 

the Board of Directors for the U.S. Dairy Export Council. DFA, National Milk, and USDEC have worked in a complementary way for 

several years to expand the prospects for U.S. dairy exports, including to the Cuban market. 

I would like to begin by expressing our strong appreciation to the 

many Members of this Committee that worked tirelessly with us 

over the past year to address a dire price/cost squeeze throughout 

the producer community. That catastrophic situation was brought 

on in large part due to an abrupt decline in exports of dairy marVerDate 0ct 09 2002 14:30 Apr 16, 2010 Jkt 041481 PO 00000 Frm 00053 Fmt 6633 Sfmt 6601 I:\DOCS\111-44\55518.TXT AGR1 PsN: BRIAN
50

kets demand that began in 2008 and persisted throughout much of 

2009. 

National Milk believes that efforts to help regain the ground that 

we lost last year with our exports are essential to helping stimulate 

further recovery for farmers, and in putting the U.S. dairy industry 

on a firmer footing, going forward. 

One such positive step in the right direction for the dairy industry is the subject of this hearing today. In National Milk Producers 

Federation’s view, there are two critical sides to the coin in terms 

of stimulating greater dairy product sales to Cuba. The first involves unnecessary technical and regulatory barriers to greater 

sales. The second involves the greater demand that eliminating the 

restrictions on Americans’ rights to travel to Cuba would generate. 

We are greatly pleased to see that Chairman Peterson and Congressman Moran have just introduced legislation that would tackle 

both these important sides of the equation. We are urging all Members of Congress to support the Travel Restriction Reform and Export Enhancement Act. In our view, it is a very beneficial step forward for American agriculture. 

As this Committee is aware, legislation was passed in 2000 that 

allowed for the export of agricultural products to Cuba. This enabled us to sell dairy products to a new market. The peak years 

for our industry were in 2004 and 2005, during which we approximately sold $30 million worth of dairy products each year, before 

new restrictions on agricultural sales were introduced by the previous Administration. 

In 2005, however, the Administration redefined the meaning of 

TSREEA’s cash in advance requirement in a way that dramatically 

impacted future contracted sales and violated the express intent of 

Congress to encourage noncredit agricultural sales to Cuba. That 

regulatory change dramatically impacted future contracts of dairy 

products with Cuba. This was seen by a drop in sales of U.S. dairy 

products to Cuba of more than half the following year. 

Compared to a strong increase in U.S. dairy exports to most 

other markets over the past 5 years, sales to Cuba since 2005 have 

never again even approached their prior level. 

The Fiscal Year 2010 appropriations language on this issue was 

very helpful; but because it is not a permanent change and will 

only be in effect for this fiscal year, it does not provide the certainty businesses need to enter into longer-term contracts with 

Cuba. 

Besides addressing technical matters related to the ease of conducting agricultural sales to Cuba, we firmly believe that stimulating additional demand by allowing Americans to travel freely to 

Cuba would also provide a much-needed additional boost to U.S. 

sales of dairy products. Wider travel by the American people to 

Cuba would also stimulate greater sales of dairy products there, as 

the additional influx of visitors bring demand for more value-added 

products such as cheese. 

On behalf of America’s dairy producers and the many dairy processors who are also supportive of the measures mentioned in my 

testimony, I respectfully ask Congress to pass the Travel Restriction Reform and Export Enhancement Act to help expand the export opportunities for the U.S. dairy industry. 

51

We look forward to enjoying the impact that this legislation 

would have on our ability to more easily provide the Cuban people, 

and those Americans wishing to travel to Cuba, with the nutritious 

and safe foods that we produce in such abundance here in the 

United States. 

Again, thank you for the opportunity to testify about this important matter. 

[The prepared statement of Mr. Wilson follows:]

PREPARED STATEMENT OF JOHN J. WILSON, SENIOR VICE PRESIDENT, MARKETING

AND INDUSTRY AFFAIRS, DAIRY FARMERS OF AMERICA; MEMBER, BOARD OF

DIRECTORS, NATIONAL MILK PRODUCERS FEDERATION, KANSAS CITY, MO 

Chairman Peterson, Ranking Member Lucas, and Members of the Agriculture 

Committee: thank you for the opportunity to testify about the importance of expanding U.S. agricultural trade to Cuba. My name is John Wilson and I am the Sr. Vice 

President of Marketing & Industry Affairs for Dairy Farmers of America (DFA) and 

I also serve on the Board of Directors for the National Milk Producers Federation 

(NMPF). 

Dairy Farmers of America is a dairy marketing cooperative that serves and is 

owned by dairy farmers in 48 states. DFA is one of the country’s most diversified 

manufacturers of dairy products, food components and ingredients, and is a leader 

in formulating and packaging shelf-stable dairy products. Our cooperative’s success 

is built on the success of its producer-members, who raise their dairy herd, and 

their families, on family farms across the nation. 

NMPF develops and carries out policies that advance the well being of dairy producers and the cooperatives they own. The members of NMPF’s 31 cooperatives 

produce the majority of the U.S. milk supply, making NMPF the voice of more than 

40,000 dairy producers on Capitol Hill and with government agencies. I am offering 

this testimony on the behalf of NMPF’s nation-wide membership. DFA is also a 

member of the U.S. Dairy Export Council, which has long worked jointly with 

NMPF on issues relating to expanding U.S. dairy exports, including to the Cuban 

market. 

I would like to begin by expressing strong appreciation to the many Members of 

this Committee that worked tirelessly with DFA and NMPF over the past year to 

address a dire price-cost squeeze throughout the producer community. That catastrophic situation was brought on in large part due to an abrupt decline in export 

market demand beginning in mid-2008. 

That shortfall in export demand was brought on due to an ill-fated combination 

of cyclically high prices that began to weaken demand just at the onset of the global 

economic crisis, combined with a resurgence of milk supplies in Oceania as New 

Zealand and Australia’s drought problems abated. This combination of events contributed to a sudden imbalance whereby global demand fell significantly short of 

available supplies. Because the U.S. market had gradually increased production to 

respond to the international market signals being sent in recent years that indicated higher demand for U.S. dairy products, U.S. producers found the rug pulled 

out from under them when such a significant portion of the market for U.S. milk 

evaporated in the latter part of 2008. 

In addition to the strong efforts by this Committee and by the U.S. Department 

of Agriculture to help support dairy producers’ economic recovery this past year, 

NMPF believes that efforts to help regain the ground lost in 2009 in U.S. participation in the global dairy market are essential to helping stimulate further recovery 

in the dairy sector and to putting the U.S. dairy industry on a firmer footing going 

forward. It is because of this that NMPF supports measures designed to expand 

U.S. dairy exports and offer positive net trading opportunities to America’s hardworking dairy producers. 

One such item that would be a positive step in the right direction for the dairy 

industry pertains to expanding agriculture trade to Cuba. Cuba is a market where 

we should be a natural preferred seller due to our strong proximity advantages, but 

regulatory hurdles imposed by our own government have thwarted our ability to 

best supply this market. A June 2009 International Trade Commission Updated 

Study on U.S. Agricultural Sales to Cuba found that doing away with all of the financing and travel restrictions on U.S. agricultural exports to Cuba would have 

boosted 2008 dairy sales to Cuba from $13 million to between $39 and $87 million 

and increased our market share that year from a mere 6% to a much more respectable 18 to 42 percent. Although current legislation would not extend that far and 

52

NMPF is not actively seeking an end to the ban on extending credit to Cuba, these 

figures clearly suggest that easing the agricultural trade and the overall travel restrictions now in place would yield impressive gains for U.S. dairy exports. 

In NMPF’s view there are two critical sides to the coin in terms of stimulating 

greater dairy product sales to Cuba. The first involves unnecessary technical and 

regulatory barriers to greater sales, introduced either by the prior Administration’s 

interpretation of the 2000 Trade Sanctions Reform and Export Enhancement Act 

(TSREEA) or by TSREEA itself. The second pertains to abolishing the restrictions 

on Americans’ rights to travel to Cuba. The latter is relevant because greater travel 

to Cuba by American tourists would be expected to significantly boost sales of U.S. 

agricultural products to that country as well as to improve the ease with which our 

members could make the necessary in-person connections to better conduct business 

with Cuba. 

Because it addresses both these critical sides of the equation, NMPF and its members, as well as both dairy producers and processors in the U.S. Dairy Export Council, are extremely supportive of the newly introduced Travel Restriction Reform and 

Export Enhancement Act, H.R. 4645. In our view, this bill, sponsored by Chairman 

Peterson and Representative Moran, provides the best prospect for addressing the 

most significant issues hindering greater sales of U.S. agriculture products to Cuba. 

As mentioned earlier, expanding U.S. dairy exports, particularly in a way that provides net benefits to American dairy farmers, is viewed as a key ingredient to helping restore profitability in our dairy industry. 

Technical/Regulatory Issues of Concern: 

TSREEA allowed for the export of agricultural products, including dairy, to Cuba. 

This enabled us to sell dairy products—primarily nonfat dry milk but also other 

products—to a new market. The peak years for our industry were in 2004 and 2005 

during which approximately $30M of dairy products were sold each year before further restrictions on agricultural sales came into effect. 

TSREEA requires payment of ‘‘cash in advance’’ in order to ensure that no credit 

is extended to the Cuban Government. NMPF agrees with this legislative intent and 

is not disputing the clear desire of Congress and of many throughout America to 

not extend credit to the Cuban authorities. 

Under the first several years of TSREEA, products were exported using procedures normally followed when selling on payment terms commonly known as ‘‘cash 

in advance,’’ as required in the original Office of Foreign Asset Control (OFAC) regulations. Specifically, the procedure entailed (1) shipping the product from a U.S. 

port, and (2) advising the Cuban buyer of its shipping status (an ‘‘on-board’’ bill of 

lading is prepared by the shipping company). At this point, the process began for 

full payment in advance of the buyer having ownership of the product. Once full 

payment is received, the ‘‘on board’’ bills of lading—the shipping documents that 

allow the buyer to gain control of the product—were released to the buyer. It is important to note that under this commonly used international trading practice, the 

Cuban buyer did not gain control and ownership of the product until payment was 

made. This practice fully complied with the spirit and the letter of TSREEA. 

In 2005, however, OFAC ‘‘redefined’’ the meaning of the ‘‘cash in advance’’ requirement in TSREEA in a way that dramatically impacted future contracted sales 

and violated the express intent of Congress to encourage non-credit agricultural 

sales to Cuba. In effect, the new OFAC ruling required cash payments from Cuba 

before the U.S. commodities could even leave the U.S. port. Although a letter of 

credit option was also permitted as another payment avenue, the overall impact was 

to add further complexity and cost to making the sale. 

That regulatory change dramatically impacted future contracts of dairy products 

with Cuba. This was seen by a drop in sales of U.S. dairy products to Cuba of more 

than half the following year (to $13 million in 2006). Rather than growing as global 

U.S. dairy exports did between 2004 and 2008, sales to Cuba since then have ranged 

from minimal (e.g., approximately $1 million in 2007 and approximately $3 million 

in 2009) to only half of peak sales in prior years (e.g., $16 million in 2008 when 

global demand was quite tight and so Cuba was likely driven to seek out alternative 

sellers). 

NMPF urges Congress to act to clarify the intent of Congress with respect to the 

‘‘cash in advance’’ requirement before further opportunities are foregone in Cuba. 

We greatly appreciate the clarity provided by Congress in the FY 2010 Omnibus Appropriations bill on this point and are looking forward to a rule being issued by 

OFAC on this matter. However, while very welcome, the appropriations process only 

provides resolution and clarity for the length of the fiscal year. As a business that 

frequently enters into supply contracts over long periods, this uncertainty is not 

helpful to securing business. Therefore, we believe strongly that a more permanent 

53

1 According to the CNN/Opinion Research Corp. poll conducted April 3–5, 2009, 64 percent of 

the 1,023 Americans surveyed by telephone thought the U.S. Government should allow citizens 

to travel to Cuba. And 71 percent of those polled said that the U.S. should reestablish diplomatic relations with Cuba. 2 According to the 2009 Bendixen & Associates poll, 2⁄3 of Cuban and Cuban American 

adults—67 percent—support the lifting of travel restrictions for all Americans so that they can 

also travel to Cuba freely. 

resolution in statute is required. That is why the inclusion of this element in the 

Travel Restriction Reform and Export Enhancement Act is so critical in our view. 

Along similar lines, we applaud the Travel Restriction Reform and Export Enhancement Act’s addressing the unnecessary cost involved in TSREEA’s ‘‘direct 

banking’’ provision which requires routing of payment through a third-country bank 

to conduct agricultural trade. This prohibition against allowing direct payments to 

be made to U.S. banks for agricultural sales serves no useful purpose in our view. 

It merely makes sales transactions more complicated and costly due to the fees 

charged for these additional transactions. We agree with Chairman Peterson and 

Mr. Moran that it is time for Congress to eliminate those TSREEA regulatory measures that have been found to serve no useful purpose, are not in keeping with the 

spirit of TSREEA, and have served only to make sales more costly without serving 

a logical policy goal (such as the direct banking provisions). 

It is clear that we are now among the least-preferred of suppliers given these 

technical and regulatory impediments to U.S. agricultural sales to Cuba. The U.S. 

should be actively working to expand agricultural exports—in line with the longstanding goals of many bipartisan Congressional leaders and with the President’s 

recently stated aim to double U.S. exports over the next several years. 

Americans Traveling to Cuba: 

NMPF believes that permitting all Americans to travel to Cuba without restriction would provide an additional boost to U.S. sales of dairy products to Cuba. 

Eliminating travel restrictions to Cuba would open up new opportunities for our 

members to more easily travel to Cuba to further encourage sales of U.S. dairy products there. Additionally, wider travel by the American people to Cuba would stimulate greater sales of dairy products in that dairy-importing nation. This would benefit America’s dairy industry through greater sales opportunities but would also 

bring our policy with respect to Cuba more in line with how the U.S. treats other 

countries, including dictatorships and repressive regimes that surely rival the 

Cuban Government’s oppressiveness and humanitarian violations. 

Rather than being a sanction on Cuba, the ban on travel by Americans is a restriction placed by our own government on American citizens. The U.S. Government 

does not restrict travel to any other country, including state sponsors of terrorism 

like Iran, Syria, and Sudan, as well as North Korea, Burma, and Uzbekistan. Additionally, although the travel ban is very strongly supported by an extremely vocal 

and active minority in the U.S., recent public opinion polls show that 64 percent 

of Americans 1 and 2⁄3 of Cuban-Americans 2 support the freedom of U.S. citizens to 

travel to Cuba. 

NMPF strongly supports an end to the restrictions on Americans’ ability to travel 

freely where they choose. That is why we are so pleased to see the Travel Restriction Reform and Export Enhancement Act marry action related to American travel 

with the technical changes necessary to better facilitate non-credit sales of agricultural products to Cuba. 

Conclusion: 

We respectfully ask the Members of this Committee and others in Congress to 

support the Travel Restriction Reform and Export Enhancement Act which will 

greatly improve American agriculture’s ability to provide the Cuban people and 

those Americans wishing to travel to Cuba with the nutritious and safe foods that 

we produce in such abundance here in the United States. The U.S. dairy industry 

firmly believes that it is critical that we work to expand opportunities for our dairy 

exports to allow our dairy producers, as well as their dairy manufacturing partners, 

to grow and prosper. Improving our ability to export to Cuba by doing away with 

many of the barriers the U.S. Government has erected to us in that market is a 

very important step in the right direction.

The CHAIRMAN. Thank you, Mr. Wilson, for your testimony. 

Mr. Schott, you are recognized. 

54

STATEMENT OF BARTON SCHOTT, FIRST VICE PRESIDENT,

NATIONAL CORN GROWERS ASSOCIATION; CORN, SOYBEAN, 

AND WHEAT PRODUCER, KULM, ND 

Mr. SCHOTT. Chairman Peterson and Members of the Agriculture 

Committee, thank you for the opportunity to testify about the importance of expanding U.S. trade to Cuba. 

My name is Barton Scott. I am the First Vice President of National Corn Growers. I am a family farmer from Kulm, North Dakota. I farm with my three sons. We grow soybeans, wheat, and 

corn on our farm. And I am here today on behalf of NCGA, which 

represents 35,000 dues-paying corn growers. NCGA and its affiliated state associations work together to advance corn growers’ interests. 

If I can leave you one thing to remember today, it is that the 

Cuban embargo is working. It is working against U.S. farmers and 

ranchers. Everyone at this table has felt the economic effect of this 

embargo, but I cannot believe that we were the group meant to be 

targeted. 

U.S. ranchers and farmers need the increased one-way trade that 

the newly introduced Travel Restriction Reform and Export Enhancement Act provides, and I thank Chairman Peterson and Mr. 

Moran for the support of this important legislation. 

This bill ends the embargo’s effect on corn farmers by providing 

an opportunity, not only to protect and preserve current and trendline goal of U.S. sales to Cuba, but also to increase the demand for 

DDGS and other value-added products such as poultry. 

Despite numerous weather issues in 2009, U.S. producers set alltime records in national average yields and total production. Our 

growers produced 13.1 billion bushels of corn, have met all market 

demands, and are building stocks. To maintain stocks in an appropriate level that does not negatively impact pricing, we must pursue both export markets for corn and U.S.-produced livestock products. 

Corn farmers are more fortunate than other U.S. commodities. 

We currently do move some bulk corn to Cuba. According to USDA 

Foreign Agricultural Service data, during the 2008–2009 marketing 

year, Cuba was our tenth largest exporting market. Corn farmers 

currently have 91 percent average share of the Cuban corn imports. However, we make these sales under competitive disadvantage and in spite of the cash in advance and the third-party banking restrictions in place right now. 

As I mentioned earlier, we are producing a record amount of corn 

in the U.S., while at the same time our strong regional competitors, 

such as Brazil and Argentina, do not face these same obstacles to 

export with Cuba. The immediate elimination of both of these costs 

would help, certainly, maintain our current exports of bulk corn in 

light of ever-increasing international competition. 

This bill would also help increase sales of DDGS at a critical 

time. A past increase in Cuban imports of DDGS from marketing 

year 2007 and 2008 to marketing year 2008 and 2009 was almost 

50 percent, indicating fast-growing interest in this product. 

Corn markets: U.S. corn markets are also directly impacted by 

increased export sales of value-added products such as meat. U.S. 

chicken producers export relatively significant quantities of meat to 

55

Cuba. In 2008, poultry exports to Cuba, primarily chicken, reached 

146,000 metric tons. During 2009, a slight retraction saw exports 

over 138,000 metric tons. 

To put this into perspective, it takes approximately 79 bushels 

of corn to produce 1 metric ton of poultry under the 2:1 conversion 

ratio of corn to white and/or dark meat. So to meet 2009 poultry 

exports to Cuba, the U.S. corn industry fed 10.9 billion bushels of 

corn. 

This bill also lifts travel restrictions to Cuba. A portion of this 

bill is integral to actually increasing demand for corn. Without 

travel, the increased demand for value-added products would not 

be significant. U.S. tourism in Cuba will boost demand for American products. This increased economic activity will also lead to improvements to the Cuban diet. And as their consumers sought out 

more animal proteins, and over the past decade as Cuban chicken 

consumption has increased, Cuban chicken production declined. Export projections for these value-added products would certainly increase past and current trend lines. 

Actual increase in corn demand here in the U.S. from trade with 

Cuba is an important component to the benefits from better trade 

with Cuba, especially in light of their record corn production. As an 

example, one of the best ways to predict future growth is to look 

at consumption patterns of other Caribbean islands, specifically the 

Dominican Republic. Through the last decade, Dominican Republic’s per-capita chicken consumption has been just over twice the 

amount of Cuba. In our estimation, it is reasonable to assume that 

Cuban chicken consumption would grow over time to match that of 

the Dominican Republic. If the import of domestic production ratio 

of chicken remains somewhat the same, doubling U.S. chicken exports to 277,000 metric tons would require almost 22 million bushels of corn. 

In conclusion, I ask for this Committee’s support to end the 

embargo’s effect on farmers like myself across America. Sometimes 

there are unintended consequences from a decision, and here we 

have a perfect opportunity to fix it. 

We strongly believe that U.S. corn farmers can continue to be the 

number one reliable supplier to our customers around the globe, 

but we need the changes this legislation can do, and I think the 

time is right for those changes. 

Again, I greatly appreciate the opportunity to testify on this important opportunity for corn farmers. Thank you. 

[The prepared statement of Mr. Schott follows:]

PREPARED STATEMENT OF BARTON SCHOTT, FIRST VICE PRESIDENT, NATIONAL CORN

GROWERS ASSOCIATION; CORN, SOYBEAN, AND WHEAT PRODUCER, KULM, ND 

Chairman Peterson, Ranking Member Lucas, and Members of the Agriculture 

Committee, thank you for the opportunity to testify about the importance of expanding U.S. agricultural trade to Cuba. My name is Bart Schott and I am the First Vice 

President of the National Corn Growers Association (NCGA). I am a third generation farmer from Kulm, North Dakota where I farm with my sons, raising corn, soybeans and spring wheat. I am here today on behalf of NCGA, which was founded 

in 1957, and represents over 35,000 dues-paying corn growers. NCGA and its affiliated state associations work together to help protect and advance corn growers’ interests. 

56

1 Average calculated based on USDA FAS data from marketing years 2006–07, 2007–08 and 

2008–09. 2 Estimated value calculated based on USDA National Agricultural Statistics Service average 

U.S. corn price for that year. 3Data source USDA FAS. 

4Data source USDA FAS. 

U.S. Corn Production 

Despite numerous weather issues in 2009, U.S. corn producers set all time records 

in national average yields and total production. Our growers produced over 13.1 billion bushels of corn, have met all market demands and are building stocks. To 

maintain stocks at an appropriate level that does not negatively impact prices, we 

must pursue both export markets for corn and U.S. produced livestock products.

U.S Corn Supply and Demand 

(mil bushel) 2007–08 2008–09 2009–10

Carry-in 1,304 1,624 1,673

Average Yield 151 153.9 165.2

Production 13,038 12,092 13,151

Supply 14,362 13,729 14,834

Feed & Residual 5,913 5,246 5,550

Ethanol 3,049 3,677 4,200

FSI 1,338 1,276 1,270

Export 2,437 1,858 2,050

Carry-out 1,624 1,673 1,764

Source: USDA, WASDE. 

Corn Sales to Cuba 

Cuba is currently an important market for U.S. corn. According to the United 

States Department of Agriculture (USDA) Foreign Agricultural Service (FAS) data, 

during the 2008–2009 marketing year, Cuba was our tenth largest export market. 

U.S. corn farmers currently have a 91 percent 1 average share of Cuban corn imports. In calendar year 2009, U.S. corn exports to Cuba were down to 24 million 

bushel, off the then peak in 2008 of 30.9 million bushels. The estimated value 2 of 

Cuban corn imports was $134.0 million during marketing year 2007–08 and $104.6 

million in marketing year 2008–09. This is a significant change from when our corn 

producers first entered the Cuban market in 2001, exporting that year slightly less 

than 1 million bushels of corn. 

The growth in corn-based ethanol production has led to the increased production 

of Distillers Dried Grains (DDGS). This high protein feed is a direct co-product of 

the ethanol industry. In marketing year 2008–09, Cuba imported 146,500 metric 

tons of DDGS from the U.S.3

Value-Added Products 

U.S. corn markets are directly impacted by increased exports of value-added products such as meat. U.S. chicken producers export relatively significant quantities of 

meat to Cuba. In 2008, poultry exports to Cuba, primarily chicken, reached 146,000 

metric tons.4 During 2009, a slight retraction saw exports of 138,000 metric tons. 

To put this into perspective, it takes approximately 79 bushels of corn to produce 

1 metric ton of poultry, under a 2:1 conversion ratio of corn to white and/or dark 

meat. So, to meet 2009’s poultry exports to Cuba, the U.S. broiler industry fed 10.9 

million bushels of corn. 

Unnecessary Restrictions to Agricultural Trade with Cuba 

The 2000 Trade Sanctions Reform and Export Enhancement Act (TSREEA) created exemptions that allow for the export of U.S. medical supplies and food (agricultural products) to Cuba. However, in 2005, the Office of Foreign Asset Control 

(OFAC) changed the meaning of ‘‘cash in advance’’ under TSREEA to require cash 

payments from Cuba before food leaves a U.S. port instead of allowing for payment 

prior to change in title of goods, which generally occurs at the port of destination. 

While NCGA appreciates the clear direction to roll back this requirement in the FY 

2010 Omnibus Appropriations bill, this law only provides resolution regarding this 

issue for the rest of the fiscal year. It is not a permanent fix, and American producers will eventually continue to function with this disadvantage which is not 

shared by our competitors in supplying the Cuban market with food. Simply put, 

the time value of money can be a significant factor in the decision of where and from 

whom to buy a commodity or any other product. 

57

5 In 2009, approximately 14 percent of the chicken consumed in Cuba was locally produced. 

TSREEA also involves a ‘‘direct banking’’ provision which necessitates payments 

from Cuba to U.S. suppliers through a third-country bank. This requirement adds 

yet another additional cost to each transaction involving the sale of agricultural 

goods to Cuba. 

Currently, there are significant restrictions on American citizens’ travel to Cuba. 

Unfortunately, this greatly limits the opportunities for increased agricultural trade 

with this country. Increased travel to Cuba by Americans would boost sales of U.S. 

agricultural products, especially value-added agricultural products. 

The Travel Restriction Reform and Export Enhancement Act 

NCGA strongly supports the newly introduced Travel Restriction Reform and Export Enhancement Act regarding Cuba and thank Chairman Peterson and Mr. 

Moran for their support of this important legislation. This bill provides an opportunity not only to protect and preserve current and trendline growth of U.S. sales 

of corn to Cuba, but to increase demand for DDGS and other corn value-added products such as poultry. 

Corn farmers are more fortunate than other U.S. commodities, as we currently 

do move some bulk corn to Cuba. However, we do so under a competitive disadvantage and in spite of the two requirements mentioned earlier, the definition of cash 

in advance and the third party banking restriction. As mentioned, we are producing 

record amounts of corn in the U.S., while at the same time our strong regional competitors, such as Brazil and Argentina, do not face these same obstacles to export 

with Cuba. The immediate elimination of both these costs would certainly help 

maintain our current exports of bulk corn in light of ever increasing international 

competition. 

These changes would also help increase sales of DDGS at a critical time. A past 

increase in Cuban imports of DDGS from marketing year 2007–08 to marketing 

year 2008–09 was almost 50 percent, indicating fast growing Cuban interest in this 

product. We need to capitalize now on this opportunity, but unfortunately, policies 

such as cash in advance and third party banking disproportionately penalize more 

expensive agricultural products, such DDGS. 

This bill would also lift travel restrictions to Cuba. This portion of the bill is integral to actually increasing the demand for corn. Without travel, the increased demand for value-added agricultural products will not be as significant. U.S. tourism 

in Cuba will boost demand for American products. This increased economic activity 

would also lead to improvements in the Cuban diet, as their consumers sought out 

more animal proteins. Over the past decade, as Cuban chicken consumption has increased, Cuban chicken production declined.5 As such, export projections for these 

value-added products would certainly increase past their current trendlines. Actual 

increases in corn demand here in the U.S. from trade with Cuba is a very important 

component of the benefits from better trade with Cuba, especially in light of recent 

record corn production. 

As an example, one of the best corollaries to examine regarding predictions for 

future growth is to look at the consumption patterns of other Caribbean islands, 

specifically the Dominican Republic, which has some of the same general cultural 

background as Cuba. Through the last decade, the Dominican Republic’s per capita 

chicken consumption has been just over twice the amount of Cuba. In our estimation, it is reasonable to assume that Cuban chicken consumption could grow over 

time to match that of the Dominican Republic. If the import to domestic production 

ratio of chicken remained somewhat the same, doubling U.S. chicken exports to 

277,000 metric tons would require almost 22 million bushels of corn. 

Conclusion 

NCGA respectfully requests that the Members of this Committee and others in 

Congress support the Travel Restriction Reform and Export Enhancement Act. Our 

members want to preserve our current corn exports, increase our export of DDGS 

at a critical point in the Cuban market and importantly, significantly increase demand for corn through opportunities in value-added corn products through travelrelated economic activity. We believe that U.S. corn farmers can continue to be the 

number one reliable supplier to our customers around the globe, but need the 

changes wrought in this legislation and believe the time is right for those changes. 

Again, I greatly appreciate the opportunity to testify on this important opportunity 

for corn farmers.

The CHAIRMAN. Thank you, Mr. Schott, for your testimony. 

And, Mr. Fritz, welcome to the Committee. 

58

STATEMENT OF SCOTT E. FRITZ, OWNER/OPERATOR

(PRESIDENT/TREASURER), FRITZ BLACK SAND FARM, INC.; 

MEMBER, BOARD OF DIRECTORS, AMERICAN SOYBEAN

ASSOCIATION, WINAMAC, IN 

Mr. FRITZ. Good afternoon, Mr. Chairman. And thank you, and 

thanks to the Members of the Committee and the fellow members 

of the panel and staff that are here in the room today. 

I am Scott Fritz, a soybean and corn farmer from Winamac, Indiana, and a Member of the Board of Directors of the American Soybean Association, or ASA. ASA is the advocate and representative 

of the U.S. soybean farmers on policy issues. We are pleased to 

have the opportunity to appear before you today on the important 

issue of agriculture trade with Cuba. 

ASA commends you, Mr. Chairman, and the Members of the 

Committee, for seeking to normalize trade and travel between the 

United States and Cuba. An initial step in this direction was taken 

with the enactment of the Trade Sanctions Reform and Export Enhancement Act, or TSRA, in the year 2000, which lifted sanctions 

on commercial sales of U.S. agriculture commodities to Cuba. 

As a result of this legislation, Cuba has become a key importer 

of U.S. soybeans, soybean meal, and soybean oil. According to the 

U.S. International Trade Commission, soybean and soybean product exports to Cuba more than doubled from $61.6 million in the 

year 2002 to $134.7 million in the year 2008. Soybeans, soybean 

meal, and soybean oil represent 19 percent of the value of total 

U.S. exports to Cuba in the year 2008, and was 25 percent of the 

total value in the year 2009. 

While this performance certainly represents an improvement 

after the long-standing trade embargo, there is significant potential 

to further increase soy exports to Cuba. In 2008, Cuba imported a 

total of 496,000 metric tons of soybean, soybean meal, and soybean 

oil from all sources. Of this total, 282,000 metric tons, or 58 percent, were purchased from the United States. 

However, the U.S. soybean industry is uniquely positioned to significantly increase its share of the Cuban market. U.S. ships can 

reach the three major Cuban ports in 1 day, compared to up to 25 

days from Brazil or Argentina. As a result, our shipping costs are 

much lower than for our South America competitors, giving us a 

natural advantage in supplying the Cuban market. 

Unfortunately, TSRA imposes significant financing and licensing 

conditions on U.S. export sales to Cuba. All transactions must be 

paid in cash prior to shipment, commercial and government financing or credit is prohibited, export licenses are required, and all 

transactions must be handled by a third-party bank. 

A list of these and other factors that weaken the competitive position of U.S. agriculture exports to Cuba is attached to my statement. These restrictions nullify our natural competitive advantage 

in exporting to Cuba. Their elimination would enable the U.S. to 

further increase its market share of soybean and soybean products 

exports to that country. 

ASA strongly supports the Travel Restriction Reform and Export 

Enhancement Act, which would eliminate the financing and travel 

restrictions affecting trade with Cuba. 

Necessary policy changes include the following: 

59

Allow direct banking. At present, all financial transactions with 

Cuba must be handled by third-party banks outside the United 

States. 

The second point: The payment-in-advance rule should be eliminated. In fact, the U.S. does not impose this requirement on sales 

to any other country. 

The third point: Unrestricted travel to Cuba should be allowed. 

Currently, farmers and companies selling goods to Cuba must 

apply for a license before traveling there, and there is no guarantee 

the licenses will be granted in a timely manner. And the time and 

resources required to apply for license are burdensome, particularly 

to farmers and small businesses. 

U.S. economic sanctions against Cuba have cost U.S. farmers and 

businesses billions of dollars in exports to the Cuban market. In a 

time of economic downturn, we can no longer sit on the sidelines 

and watch our competitors continue to supply a market where we 

have a natural competitive advantage. 

ASA strongly supports the Travel Restriction Reform and Export 

Enhancement Act which eliminates financial and travel restrictions 

on Cuba, and which would be consistent with the Administration’s 

goal to double exports in the next 5 years. U.S. farmers stand 

ready to meet Cuban demand on soybean products, but U.S. policy 

must change. 

Thank you again, Mr. Chairman, for the opportunity for the 

American Soybean Association to present its views on this important issue. And I would be happy to respond to any questions. 

[The prepared statement of Mr. Fritz follows:]

PREPARED STATEMENT OF SCOTT E. FRITZ, OWNER/OPERATOR (PRESIDENT/

TREASURER), FRITZ BLACK SAND FARM, INC.; MEMBER, BOARD OF DIRECTORS, AMERICAN SOYBEAN ASSOCIATION, WINAMAC, IN 

Good morning, Mr. Chairman and Members of the Committee. I am Scott Fritz, 

a soybean and corn producer from Winamac, Indiana, and a Member of the Board 

of Directors of the American Soybean Association (ASA). ASA is the advocate and 

representative of U.S. soybean farmers on policy issues. We are pleased to have the 

opportunity to appear before you today on the important issue of agricultural trade 

with Cuba. 

ASA commends you, Mr. Chairman, and other Members of the Committee, for 

seeking to normalize trade and travel between the United States and Cuba. An initial step in this direction was taken with enactment of the Trade Sanctions Reform 

and Export Enhancement Act, or TSRA, in 2000, which lifted sanctions on commercial sales of U.S. agricultural commodities to Cuba. As a result of this legislation, 

Cuba has become a key importer of U.S. soybeans, soybean meal and soybean oil. 

According to the U.S. International Trade Commission, soybean and soybean product exports to Cuba more than doubled, from $61.6 million in 2002 to $134.7 million 

in 2008. Soybeans, soybean meal and soybean oil represented 19 % of the value of 

total U.S. exports to Cuba in 2008. 

While this performance certainly represents an improvement after the long-standing trade embargo, there is significant potential to further increase soy exports to 

Cuba. In 2008, Cuba imported a total of 496,000 metric tons of soybean, soybean 

meal and soybean oil from all sources. Of this total, 282,000 metric tons, or 58 percent, were purchased from the United States. However, the U.S. soybean industry 

is uniquely positioned to significantly increase its share of the Cuban market. U.S. 

ships can reach the three major Cuban ports in 1 day, compared to 25 days from 

Brazil or Argentina. As a result, our shipping costs are much lower than for our 

South American competitors, giving us a natural advantage in supplying the Cuban 

market. 

Unfortunately, TSRA imposes significant financing and licensing conditions on 

U.S. export sales to Cuba. All transactions must be paid in cash prior to shipment, 

commercial and government financing or credit is prohibited, export licenses are reVerDate 0ct 09 2002 14:30 Apr 16, 2010 Jkt 041481 PO 00000 Frm 00063 Fmt 6633 Sfmt 6621 I:\DOCS\111-44\55518.TXT AGR1 PsN: BRIAN
60

quired, and all transactions must be handled by a third-party bank. A list of these 

and other factors that weaken the competitive position of U.S. agricultural exports 

to Cuba is attached to my statement. These restrictions nullify our natural advantage in exporting to Cuba. Their elimination would enable the U.S. to further increase its market share for soybean and soybean product exports to that country. 

ASA strongly supports the Travel Restriction Reform and Export Enhancement 

Act, which would eliminate financing and travel restrictions affecting trade with 

Cuba. Necessary policy changes include the following:

• Direct Banking Should Be Allowed—At present, all financial transactions 

with Cuba must be handled by third-party banks outside the United States. 

This requirement results in unnecessary costs and delays for U.S. businesses, 

which must receive payment from Cuba through a third-country bank, rather 

than a U.S. bank.

• The ‘‘Payment in Advance’’ Rule Should be Eliminated—Under the Payment in Advance Rule, a product sold to Cuba must be paid for in cash prior 

to shipment from U.S. ports. This contrasts with the normal business practice 

of paying for goods after arrival, when title to the goods changes hands. The 

U.S. does not impose this requirement on sales to any other country.

• Unrestricted Travel to Cuba Should be Allowed—Currently, farmers and 

companies selling goods to Cuba must apply for a license before traveling there. 

There is no guarantee that licenses will be granted in a timely manner, and the 

time and resources required to apply for the license are a burden, particularly 

to farmers and small businesses.

Removing the financing restrictions will make U.S. agricultural products more 

competitive because it would reduce Cuba’s cost of purchasing U.S. products. The 

ITC estimates that such costs would be lowered by from 2.5 to 10 percent of the 

purchase price. The Commission also estimates that, in the absence of financing restrictions, U.S. exports to Cuba would have been from 11 to 26 percent higher in 

2008. 

If the travel ban is eliminated, the number of U.S. citizens traveling to Cuba annually would increase to between 500,000 and 1.0 million. This growth in travel to 

Cuba would bring in more hard currency, enabling the Cuban state-trading agency, 

ALIMPORT, to buy more U.S. agricultural products. Ending the travel ban would 

also benefit the U.S. economy by creating much-needed American jobs in the tourism and airline industries. 

U.S. economic sanctions against Cuba have cost U.S. farmers and businesses billions of Dollars in exports to the Cuban market. In a time of economic downturn, 

we can no longer sit on the sidelines and watch our competitors continue to supply 

a market where we have a natural advantage. ASA strongly supports the Travel Restriction Reform and Export Enhancement Act, which eliminates financial and travel restrictions on Cuba, and which would be consistent with the Administration’s 

goal to double exports in the next 5 years. U.S. farmers stand ready to meet Cuban 

demand for soybean products, but U.S. policy must change. Legislation can ‘‘correct 

an economic blind spot that has allowed other countries to chip away at America’s 

international competitiveness.’’ 

Thank you, again, Mr. Chairman, for the opportunity for the American Soybean 

Association to present its views on this important issue. I would be happy to respond to any questions.

Source: ‘‘U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions’’ U.S. International Trade Commission, June 2009. http://www.usitc.gov/

publications/332/workinglpapers/ID-22.pdf.

Factors Weakening the Competitive Position of U.S. Agricultural Products 

in the Cuban Market 

• U.S. exporters cannot offer credit to Cuba for the purchase of U.S. products. 

Most U.S. competitors make concessions to finance trade with Cuba.

• U.S. regulations require U.S. exports to Cuba to be paid ‘‘cash in advance.’’ Payments are made through letters of credit through third-country banks. The regulations are a particular concern for small and medium-sized exporters because 

they do not have established commercial relationships with the appropriate foreign banks.

• When purchasing U.S. products, ALIMPORT may incur additional storage and 

demurrage costs if the transactions paperwork is not completed on schedule.

61

• U.S. exporters wishing to travel to Cuba in order to complete sales contracts 

find the travel licensing process to be cumbersome, nontransparent, and time 

consuming.

• The United States restricts visits by Cubans for sales negotiations and for SPS 

inspections of U.S. products and processing facilities.

• U.S. agricultural trade associations cannot use industry-generated national 

Checkoff funds, USDA Foreign Market Development funds, or USDA Market 

Access Program allocations for market research and promotion activities in 

Cuba.

• U.S. regulations penalize foreign vessels that dock in Cuban ports prior to arrival in the U.S., resulting is less competition between carriers and higher 

transportation costs.

The CHAIRMAN. Thank you very much, Mr. Fritz. 

And I thank all of the panel members for their testimony. 

I was visiting with my staff about the discrepancy between the 

different commodities in terms of how it has impacted you. 

Mr. Wagner, do you know why rice has been—it seems like you 

are hit harder than the others in terms of the markets you have 

lost. Is there an easy explanation for this? 

Mr. WAGNER. I think I can say that Mr. Alvarez was quite miffed 

that he had to pay cash in advance in the fashion that he did. And 

every time in the last 30 or 40 years that sanctions have been imposed, it has been the rice farmers that have really lost. We lost 

the Cuban market, we lost the Iranian market, we have lost the 

Iraqi market. The Vietnamese have captured the Cuban rice market. 

The CHAIRMAN. I think corn and soybean—corn went up, actually, in terms of the percentage of the market that you have. Am 

I right about that? 

Mr. SCHOTT. Currently, we are selling them 91 percent of their 

corn needs. 

The CHAIRMAN. And you used to be, rice used to be, what, 50, 

60 percent or more? 

Mr. WAGNER. Of our exports? Yes. 

The CHAIRMAN. Of the imports that Cuba was getting, you were 

a big percentage of that market at one time. 

Mr. WAGNER. Fifty percent of our exports went to Cuba. 

The CHAIRMAN. And they were buying the majority of their rice 

from the U.S. at that time. 

Mr. WAGNER. Correct. 

The CHAIRMAN. So I guess I was wondering, is it a difference of 

freight rates or something? Is that having an impact? 

Mr. WAGNER. Presently? 

The CHAIRMAN. Well, corn I guess is bulkier than wheat or rice 

in terms of—is that some of the impact? I mean, how is Vietnam 

able to send it over here? Are they giving them some kind of better 

terms? 

Mr. WAGNER. One, they offer credit, which we do not. Two, they 

have an inferior product which is more affordable since they are so 

cash-strapped. 

The CHAIRMAN. So that is part of the deal. 

Mr. WAGNER. That is a lot of it. 

The CHAIRMAN. And the corn, I heard you say you are starting 

to sell DDGS now to Cuba. Is that correct? 

62

Mr. SCHOTT. Yes, Mr. Chairman. There is a big demand for 

DDGS for their livestock and poultry industry. They want to grow 

their dairy industry down there. And because of the price of DDGS 

and the protein, they are real interested in purchasing more of 

that. 

The CHAIRMAN. And apparently, Mr. McReynolds, there has been 

an increase in where they have built some new pasta plants and 

milling capacity in Cuba. Am I correct about that? 

Mr. MCREYNOLDS. My understanding, yes. 

The CHAIRMAN. Has that increased your sales to Cuba or does 

that have any impact, or has that gone some other place? 

Mr. MCREYNOLDS. Well, of course, our sales at this point in time 

are really down, about 14 percent of—and at one time we were at 

the 48 percent level. 

The CHAIRMAN. So the Canadians have picked a lot of this up? 

Mr. MCREYNOLDS. Competitors have picked that up, which they 

are going to get the product somewhere. 

The CHAIRMAN. I understand. I am just trying to figure out 

where it is coming from. I guess Canada is probably our biggest 

competitor with Cuba. 

Mr. MCREYNOLDS. Generally. 

The CHAIRMAN. Probably more than Argentina. Argentina has 

got that export tax. 

Mr. MCREYNOLDS. Right. 

The CHAIRMAN. And with the corn, that basically would have to 

come from Argentina, too, because Brazil doesn’t really grow that 

much corn. I mean, they have some. They grow it as a kind of secondary crop. But they are more a competitor in soybeans, I would 

guess, Brazil would be. Right? 

Mr. SCHOTT. Right. But Brazil is increasing their corn acres pretty quick. 

The CHAIRMAN. Because they are increasing their soybean acres. 

I mean, they are using it kind of as a rotation crop or a second crop 

with soybeans, as I understand it. 

Mr. SCHOTT. That is correct. 

The CHAIRMAN. But they are not really focused on corn. When I 

was down in Argentina the last time, there was a lot of transition 

going, in Argentina, to corn in what would be their equivalent of 

our corn belt. You know, they have plowed up a lot of pasture land 

and are planting corn. If the government down there doesn’t kill 

them off before they get started, they might be our best allies in 

that regard. But I was just trying to get some sense of why it was 

different in different areas. But I guess Vietnam has lower quality 

rice, it is probably cheaper, and they are giving them some kind 

of break, financing and whatever. 

Mr. WAGNER. Correct. It has been about a third cheaper per metric ton last year. 

The CHAIRMAN. But if we get back under normal situations, you 

would probably get a fair amount of that market back, I would 

guess. 

Mr. WAGNER. We would, especially when you put some money 

into the Cubans’ pockets. 

The CHAIRMAN. All right. Thank you very much. The gentleman 

from Oklahoma. 

63

Mr. LUCAS. Thank you, Mr. Chairman. And just the question I 

had asked the previous panel and I ask you: On the free trade 

agreements out there that are pending—Panama, Colombia, 

Korea—I assume, gentlemen, your organizations are all supporters 

of those? 

Mr. SCHOTT. NCGA, their policy is in support of the FTAs. Correct. 

Mr. FRITZ. The American Soybean Association does indeed support the FTAs. 

Mr. WILSON. The National Milk Producers and Dairy Farmers of 

America both would say yes. 

Mr. MCREYNOLDS. National Association of Wheat Growers supports those. 

Mr. LUCAS. Thank you very much. 

And let’s focus for a moment on what the Chairman was looking 

at just a moment ago, talking about the freight rates and the competition and the economics of it all. 

Mr. Wagner, once again, you said the chief competitor for the 

Cuban market in rice were the Vietnamese. Do you know what the 

freight rate difference is between shipping from New Orleans or 

wherever the main port would be for that sort of product and, say, 

shipping from Vietnam? 

Mr. WAGNER. Two years ago, if I remember right, it was ten 

times. It was something like, $1,000 per metric ton to ship from the 

Far East to that market. I couldn’t say what it would have been 

for us because we weren’t players in the market, but it is substantially less. Obviously, it is a 30 to 40 day trip from Vietnam or 

Thailand through the Panama Canal to Cuba. We can make it in 

2 days. We can ship it on smaller vessels. All those costs are—savings in costs are passed on to the Cubans and they could buy more 

product. 

Mr. LUCAS. Mr. McReynolds, I assume as was mentioned a moment ago, the Canadians would be the leading competitor on 

wheat. Do you have any idea what the freight difference is between 

shipping Canadian wheat to Cuba versus from New Orleans or Galveston, wherever, in the United States? 

Mr. MCREYNOLDS. Well, I don’t have those off the top of my 

head. We can get those to you and to the Committee. But in days, 

it takes about 2 days, as was stated earlier. And from Canada, it 

takes 7 to 8 days to make that trip. So the transportation costs are 

certainly higher. 

Mr. LUCAS. It was a fascinating statistic, Mr. Wilson your commodity group’s estimate. 

Mr. WILSON. I certainly should get you a better number. If I can 

guess, if you would like for me to take a guess, probably something 

north of 10¢ a pound on whether it be nonfat dry milk or cheese. 

Mr. LUCAS. And your leading competitor in the Cuban market 

right now would be New Zealand? 

Mr. WILSON. Probably New Zealand, Australia and Europe. We 

are not exactly sure what the combination is but they would be the 

three biggest competitors. 

Mr. LUCAS. And the product that you would primarily be selling 

down there would be powder. 

64

Mr. WILSON. Most likely nonfat dry milk. That is what we were 

selling the most before. But certainly with the tourism aspect to 

this, we think it could be a very viable market for cheese and many 

other dairy products, for that matter, as Americans go down there 

and eat. 

Mr. LUCAS. Mr. Schott, on your commodity group your leading 

competitor would be from where? 

Mr. SCHOTT. Well, we are targeting Argentina and Brazil. 

Mr. LUCAS. So how would the freight rates—would you estimate 

or can you find me information later between shipping from the 

U.S. and coming from South America? 

Mr. SCHOTT. I am not prepared to answer that question but I can 

get you the data. 

Mr. LUCAS. That is a good answer. 

Mr. FRITZ. As I stated in my written statement, we think it is 

1 day to ship from the United States to Cuba, where it could be 

up to 25 days of shipping time from South America. Now I realize 

that South America would be coming out of a northeastern port or 

it could be coming out of Argentina. I have heard the number, I 

am sorry I don’t have the number, the cost of Panamax ships per 

day—the difference would be somewhere between 15 to 20 days, 

and it doesn’t take long for that to add up quickly. 

Mr. LUCAS. So a substantial trade difference given an equitable 

situation then. I think, gentlemen, you will find that most of us on 

this Committee want your producers to have an opportunity to do 

their business and to demonstrate their economic efficiency. 

As you have heard various comments and the various Members 

of all perspectives, there is a sensitivity about the government 

down there. I suspect my good colleagues with their legislation will 

perhaps in some modified form have more success than they might 

realize today. But, nonetheless, we do need to remember we are 

dealing with a country that, because of its horrible economic and 

political system, cannot feed itself. If they didn’t have the political 

system, the economic system they have right now, they would be 

dramatically less dependent on you and on the farmers that I represent, that you represent too. 

So in the actions we take here, while we want to make sure our 

farmers have access to those opportunities, we also need to bear in 

mind the consequences to the people that we are affecting and to 

the region as a whole. 

I appreciate the Chairman tolerating my editorial comment at 

the end there, and I yield back. 

The CHAIRMAN. Thank you. The gentleman from Kansas. 

Mr. MORAN. I remember hearing at least one time, Mr. Wagner, 

that Cuba imports 1⁄5 of the world’s rice. Is my recollection at all 

correct? And the point that was made to me is while they consume 

20 percent of the world’s rice, they are consuming not U.S. rice, but 

China, Vietnamese—you are shaking your head so maybe my recollection is wrong. 

Mr. WAGNER. They import up to half a billion metric tons a year. 

Mr. MORAN. And rice would be a major product in the Cuban 

diet. 

Mr. WAGNER. Oh, yes. They eat up to 150 pounds a year. They 

started eating rice in 1512. It is written in history. 

65

Mr. MORAN. And let me join in the comments about the Cuban 

Government. Nothing that anybody is doing with this legislation or 

any efforts here is to put any stamp of approval upon the dictatorship that has lasted so long and has created so many economic and 

freedom burdens upon the Cuban people. I just want to comment, 

and most of my focus in my time in Congress, almost exclusively, 

has been on the agricultural side. Although as I said earlier, I believe that the other component of this legislation, the ability to 

travel by U.S. citizens to Cuba, enhances the opportunity for 

Cuban freedom, liberty, and economic opportunity. 

But I do want to comment about the conversation that we have 

had on this Committee. Somehow we got on the conversation about 

tourism. This is not a bill that creates tourism. This is a bill that 

authorizes travel by United States citizens. If you want to talk 

about it from the Cuban perspective, you can, I suppose. But, what 

we are really doing here is creating freedom and liberty for Americans, United States citizens, about what country they can visit. As 

has been indicated, we do not place restrictions like we do on Cuba 

on any other travel by U.S. citizens to any other country. 

One of the leaders in this effort in regard to travel has been the 

Congressman from Arizona, Mr. Flake. And every time I have 

heard him speak about this issue, it is not about boosting the 

Cuban economy, it is about liberty for American citizens. And part 

of what I came to Congress to do is to promote freedom and liberty 

in the United States. 

I believe one of the primary responsibilities we have as Members 

of Congress is to see that another generation of Americans have 

the liberties and freedoms that we are authorized and guaranteed 

under our United States Constitution. 

I think the focus of the comments of some of my colleagues on 

the Committee, as they talk about creating a tourism industry in 

Cuba, is really misguided. What we are talking about here is authorizing the liberty of American people to travel to another country. 

I yield back and therefore give back the 21⁄2 minutes that I exceeded the last time I was given the microphone. 

The CHAIRMAN. So recognized, and I thank the gentleman. 

The gentleman from Iowa, Mr. King. 

Mr. KING. Thank you, Mr. Chairman. I really didn’t anticipate to 

have Mr. Moran inspire me quite so much, but a point that I made 

earlier is about the liberty of the Cuban people. And I think that 

is something we should take into consideration. We are the vanguard of liberty for the world. And it is part of what remains of 

the Monroe Doctrine. It is our global position that has put our 

troops in harm’s way on every continent that I can think of. 

But I take you back to these circumstances. There is a limit to 

what the Cubans can buy. In fact they are limited, they can’t buy 

anything from you. All business is conducted by ALIMPORT, which 

is Castro’s organization. He decides who gets the proceeds and who 

does not. He is able to distribute the foodstuffs to the people who 

support him, and he is able to keep it away from the people who 

do not support him. He does use it as a tool. I am just not hearing 

this in the dialogue on how Castro would be able to use some of 

this as a tool. 

66

Here are some things: I just asked them to put together for me 

some of the items that are on the ration card. And I haven’t heard 

dialogue either about the rationing in Cuba, and this is updated exactly today. Here are the rations: If you are between 0 and 7 years 

old or a pregnant woman—I don’t know any other gender that can 

become pregnant—you can purchase a liter of milk every day and 

meat when available. The ration per person per month, 5 pounds 

of rice; 4 pounds of sugar; 1–2 bags of salt, whatever size they are; 

one tube of toothpaste for up to four persons in a household; 8 

ounces of grains, other types of grains than rice; a quarter pound 

of cooking oil per person per month; a half a bar of soap per person 

per month; two bags of coffee per person per month; four eggs per 

person per month. A couple of omelettes a month would be the ration on the eggs. 

I think we need to think of this in the context of what it is like 

in a country that is so politically manipulated that people are 

scared to death to even get to know their neighbor, and having food 

used as a tool against them for political purposes. 

And so I just pose this question this way, to each of you, and 

maybe I can articulate it enough so that it can allow you to each 

provide an answer. I know that we have talked about the economics of this, and my life has been wrapped up in the economics of 

ag commodities and the necessity for us to have good markets. It 

is everywhere around me. I look from my house and I will see either corn or soybean. I love that. I love that in the middle of my 

life for all these years that I have been blessed with. 

But this discussion that we have had is about the economic impact on our ag producers, and that is the only focus that I have 

heard. And I am not charging that you have a responsibility beyond that, but I would just ask the question, starting with Mr. 

Wagner: Has a discussion about the promotion of this liberty that 

Mr. Moran so eloquently talks about promoting it to the Cuban 

people, has that also been a part of the discussion as you look at 

your policy. Or have these policies by your organization and each 

of you been confined to the economic question solely as your testimony apparently has been? 

Mr. WAGNER. No, we have talked about the moral side of this as 

well and it—something came to mind last night. How can you export freedom when there is such a shortage of it in this country? 

If we don’t have the freedom to travel there and carry on commerce 

there, I don’t know how we are going to export and change those 

people’s way of life. 

Mr. KING. Mr. Wagner, though, is it then this rationale—it 

doesn’t have to be the position of your organization—but is it the 

rationale that Americans traveling to and trading with Cubans 

does export freedom and liberty to them because it is contagious? 

That is what I believed when I went there, but I no longer believe 

that. But is that close to the position that is being discussed? 

Mr. WAGNER. I think we have some evidence of that in history 

in the USSR and China to some degree, and in Vietnam. That we 

are open trading partners with Vietnam now. We just finished a 

war with them, what, 30 years ago. 

Mr. KING. Thank you, Mr. Wagner. Mr. McReynolds. 

67

Mr. MCREYNOLDS. I just go back to my experiences there and realize it wasn’t a long period of time. But the Cuban people were 

very eager to communicate with us and just eager to—just little 

things; know a little more about the United States, about America, 

about schools and universities. I was overwhelmed with their eagerness to have a better understanding of our life and what we did 

in our lifestyles and our families. 

And so, when you have that free travel opportunity, you open a 

whole new world up to people that have that opportunity. And to 

restrict U.S.—I don’t see the rationale there at all. And we have 

the opportunity to go to other places in the world, why would we 

be restricted there? I think it opens up a whole new world to 

Cuban people. 

I think even our interaction with our guide and with the people 

that we associated with, which was a cross-section of individuals, 

I got the impression that they benefited from us being there. I 

guess I would like to think that. But I certainly did. 

Mr. KING. I learned to love the people and to that sentiment I 

would agree. That result, of course we did not, but I would ask, Mr. 

Chairman, if I could allow the witnesses on down the line to respond to a similar question with the time we have. 

Mr. Wilson? Thank you, Mr. Chairman. 

Mr. WILSON. Well, I would say our initial reason is economic, because we do see it will benefit U.S. dairy farmers by being able to 

adequately compete with dairy farmers from other parts of world. 

However, along those lines, you can’t avoid getting into the other 

aspects of this argument. I think in one sense you would say, okay, 

we have been doing this for my whole lifetime essentially. 

Mr. KING. Castro’s whole lifetime. 

Mr. WILSON. And we really haven’t made any progress there. I 

guess we look back from 100,000 feet in the world and you see how 

communication, partly through the Internet, but communication 

has changed the world just in the last few years, really. And it has 

changed a lot of countries and the way they treat their people in 

the last few years. 

And so perhaps allowing U.S. citizens the freedom of going to 

Cuba, whether it be tourists or whether it be on business or whatever. There has to be some interaction with the common people in 

those——

Mr. KING. You recognize that enriches the regime. Every dollar 

spent down there, a large share of it goes into the hands of Castro. 

Mr. WILSON. We are not going to change that overnight, but we 

have to take this in steps. And we would believe that it is a positive step to allow people from the United States to go there. How 

are they any different from China? We have said that before here. 

Mr. KING. Thank you. Mr. Schott. 

Mr. SCHOTT. Yes. Our policy is economic as well, and I am not 

reinventing the wheel here; we talked with our leadership about 

these issues and we know what you are talking about. But we do 

look at China and say, we are sending food to China right now and 

that is an oppressive nation. And so that is how we deal with the 

situation on the corn board. 

Mr. KING. Thank you. Mr. Fritz. 

68

Mr. FRITZ. Thank you, Mr. King. I think this answer is perhaps 

in two parts. The American Soybean Association, of course, had a 

long history of supporting free and open trade and opposing restrictions. With that said, I have promoted U.S. export cost savings in 

many countries of the world, serving on the ASA Trade Policy and 

International Affairs Committee. 

What you learn when you travel is you learn the cultures of the 

country and you learn to understand the people. You learn to tolerate other cultures and you appreciate them for what they are. 

Specifically, what I see happening in Cuba is that when we have 

visitors, any visitors, American visitors or visitors from other parts 

of the world in Cuba, in effect we are holding the government accountable because we have eyes on the ground. We have people 

seeing what is going on. We have the ability to bring back those 

stories of discrimination and poor respect for human rights. 

Specifically to this bill, we exported 496,000 metric tons of soybean meal and soybean oil to Cuba. That is a lot of food and a lot 

of protein for a lot of people, not just members of the regime. So 

in regards to this bill, I see this bill as a way of doing business and 

doing business better than what we had before. But what is it all 

about? It is all about feeding hungry people. 

Mr. KING. Thank you, Mr. Fritz. 

In conclusion, Mr. Chairman, I want to thank all the witnesses. 

And I want to just put this into the record: that one of my goals, 

one of my very high goals and dreams in life, is to swim ashore at 

the Bay of Pigs and walk out onto a free Cuba. I hope we all live 

to see that day. 

The CHAIRMAN. Mr. King, I think from your comments that you 

must have supported the Russian grain embargo. 

Mr. KING. I think what I saw——

The CHAIRMAN. Maybe you are not old enough to remember that. 

Mr. KING. I am a very youthful individual, Mr. Chairman. What 

I saw happen with the Russians——

The CHAIRMAN. The problem is the people are going to get this 

stuff someplace. Just us cutting it off, all we are doing is hurting 

ourselves. Whether they buy it from the U.S. or buy it from Vietnam or wherever they buy it, isn’t going to do a thing about the 

problems we are talking about. 

We have groups here that I don’t always agree with, the Human 

Rights Watch and so forth, that have exactly the opposite position 

that you do, that they say that this bill will help these human 

rights problems. So we are cutting off our nose to spite our face 

here. This is crazy, and we are going to disagree on that, but it has 

gone on long enough. 

Mr. KING. Thank you for the endorsement of my sanity, and I 

yield back the balance of my time. 

Mr. LUCAS. I think the Chairman has many words of wisdom 

there. Let’s pass those three free trade agreements and get on with 

it everywhere. 

The CHAIRMAN. All right. 

So, Mr. Lucas, that is the final word? 

Mr. LUCAS. Final word. 

The CHAIRMAN. All right. So under the rules of the Committee, 

a record of today’s hearing will remain open for 10 calendar days 

69

to receive additional material and supplemental written responses 

from the witnesses to any questions posed by a Member. And this 

hearing of the Committee on Agriculture is adjourned. 

[Whereupon, at 4:00 p.m., the Committee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

70

71

SUBMITTED LETTER BY HON. COLLIN C. PETERSON; ON BEHALF OF REV. HOWARD J. 

HUBBARD, BISHOP OF ALBANY; CHAIRMAN, COMMITTEE ON INTERNATIONAL JUSTICE

AND PEACE, UNITED STATES CONFERENCE OF CATHOLIC BISHOPS

March 10, 2010

Hon. COLLIN C. PETERSON, Chairman,

Committee on Agriculture, 

U.S. House of Representatives, 

Washington, D.C.

Dear Chairman Peterson:

As Chairman of the Committee on International Justice and Peace of the United 

States Conference of Catholic Bishops (USCCB) I write to express support for H.R. 

4645, the Travel Restriction Reform and Export Enhancement Act. This bipartisan 

bill removes obstacles to legal sales of United States agricultural commodities to 

Cuba and ends restrictions on all Americans traveling to Cuba. Our Conference of 

Bishops supports both objectives of this legislation as ways to advance the goal of 

increasing engagement with the people of Cuba. 

The USCCB has for many years consistently called for relaxing the sanctions 

against Cuba. These policies have largely failed to promote greater freedom, democracy and respect for human rights in Cuba. At the same time, our nation’s counterproductive policies have unnecessarily alienated many other countries in the hemisphere. Improving the lives of the Cuban people and encouraging democracy and 

human rights in Cuba will best be advanced through more, rather than less, contact 

between the Cuban and American people. Removing the barriers to agricultural exports to Cuba, and thus deepening the trade relationship, is one step toward this 

goal. 

While our Conference welcomed the Administration’s lifting of travel restrictions 

for Cuban Americans, ongoing restrictions on the ability of other Americans to travel to Cuba, even when accompanying their Cuban American relatives, remain objectionable. No one should be prevented from supporting a spouse in visiting a dying 

relative or attending a family funeral simply because he or she is not Cuban American. We welcome H.R. 4645 because it lifts all restrictions on travel by all U.S. citizens to Cuba and removes unnecessary obstacles to trade. 

Sincerely yours,

Most Reverend HOWARD J. HUBBARD,

Bishop of Albany and Chairman,

Committee on International Justice and Peace. 

SUBMITTED LETTER BY HON. COLLIN C. PETERSON; ON BEHALF OF JOSE ́ MIGUEL

VIVANCO, EXECUTIVE DIRECTOR, AMERICAS DIVISION, HUMAN RIGHTS WATCH

Washington, D.C.—March 11, 2010

Hon. COLLIN C. PETERSON,

Chairman,

Committee on Agriculture, 

U.S. House of Representatives, 

Washington, D.C.

Dear Mr. Chairman,

I would like to congratulate you on convening this timely and important hearing 

of the United States House of Representatives Committee on Agriculture on U.S. 

travel and agricultural trade with Cuba. Human Rights Watch fully supports the 

Travel Restriction Reform and Export Enhancement Act (H.R. 4645), which would 

remove obstacles to legal sales of U.S. agricultural commodities to Cuba and abolish 

restrictions on travel to the island. We believe the proposed legislation, as well as 

similar legislation in the United States Senate (S. 1089), represents a necessary 

step towards ending a U.S. policy that has failed for decades to have any impact 

whatsoever on improving human rights in Cuba. 

In November 2009, Human Rights Watch released a 123-page report (http://

www.hrw.org/en/node/86554) on human rights in Cuba under Rau ́l Castro. The report concludes that rather than dismantle Cuba’s repressive machinery, Rau ́l Castro 


11144001
72

has kept it firmly in place and fully active. Scores of political prisoners arrested 

under Fidel Castro continue to languish in Cuba’s prisons, and Rau ́l Castro’s Government has used Draconian laws and sham trials to incarcerate scores more who 

have dared to exercise their fundamental freedoms. 

The death in custody on February 23, 2010, of political prisoner Orlando Zapata 

Tamayo after an 85 day hunger strike served as a tragic reminder of the abuse suffered by those who dare to criticize the Castro Government, and the lack of recourse 

for victims of repression. In the aftermath of Zapata’s tragic death, some have argued that the U.S. embargo policy should not be changed, or that restrictions on 

trade and travel should be tightened further. Human Rights Watch disagrees. 

Efforts by the U.S. Government to press for change by imposing a sweeping ban 

on trade and travel have proven to be a costly and misguided failure. The embargo 

has done nothing to improve the situation of human rights in Cuba, and imposes 

indiscriminate hardship on the Cuban population as a whole. It has provided the 

Cuban Government with an excuse for its problems and pretext for its abuses. Rather than isolating Cuba, the policy has isolated the United States, enabling the Castro Government to garner sympathy abroad while simultaneously alienating Washington’s potential allies. 

There is no question: the Cuban Government bears full and exclusive responsibility for the abuses it commits. However, so long as the embargo remains in place, 

the Castro Government will continue to manipulate U.S. policy to cast itself as a 

Latin American David standing up to a U.S. Goliath, a role it exploits skillfully. 

Ending the travel ban and removing obstacles to agricultural trade are steps in the 

right direction toward reforming this failed policy, and Congress should act swiftly 

to pass the Travel Restriction Reform and Export Enhancement Act. 

Eliminating barriers to agricultural trade and lifting the travel ban will not, by 

themselves, bring an end to the Rau ́l Castro Government’s repression. As a result, 

Human Rights Watch recommends that the U.S. Government replace its failed embargo policy with a more effective, multilateral approach. Our report lays out a proposal for the United States to work with allies in the European Union, Canada, and 

Latin America to forge a new coalition that will exert targeted pressure on the Rau ́l 

Castro Government to end its human rights abuses. 

I would ask that you please share this statement with Members of your Committee, and I would be very grateful if you would include this letter in the record 

of your hearing. 

Sincerely,

JOSE ́ MIGUEL VIVANCO, 

Executive Director, Americas Division, 

Human Rights Watch. 

SUBMITTED REPORT BY AGRILIFE RESEARCH, TEXAS A&M UNIVERSITY

Estimated Economic Impacts of the Travel Restriction Reform and Export 

Enhancement Act of 2010

March 11, 2010

Introduction 

The following report was prepared for submission to the House Committee on Agriculture, United States House of Representatives, March 11, 2010 related to the 

public hearing on H.R. 4645, the Travel Restriction Reform and Export Enhancement Act. 

The analyses and report were prepared by the Center for North American Studies 

(CNAS). Contributors were, Principal Author, C. Parr Rosson III, Professor and Director; Co-author, Flynn J. Adcock, International Program Coordinator; and Research Assistant, Eric Manthei. All are located in the Center for North American 

Studies, Department of Agricultural Economics, Texas AgriLife Research/AgriLife 

Extension, Texas A&M University. 

Key Findings, Assumptions and Limitations of the Analysis 

In 2009, U.S. exports to Cuba were $528 million, supported $1.6 billion in total 

business activity, and provided 8,600 jobs throughout the U.S. economy. If U.S. travel and financial restrictions are removed, up to $365 million/year in additional U.S. 

exports could result, requiring $1.1 billion in business activity and 6,000 new jobs. 


11144002
73

While U.S. agriculture is estimated to receive major economic gains from increased 

exports, non-agricultural sectors such as business and financial services, real estate, 

wholesale and retail trade, and health care are also important beneficiaries of increased exports to Cuba, receiving up to 45 percent of the gains in some cases. 

The results of this analysis assume that any increase in U.S. exports to Cuba is 

a ‘net’ increase in the U.S. export position. Otherwise, the economic impacts presented here would overestimate the effects of U.S. exports to Cuba on the U.S. economy. A second assumption is that Cuba’s tourist industry follows a similar developmental pattern to other Caribbean countries in terms of food and beverage consumption and imports. Third, the results of a report by the U.S. International Trade 

Commission (U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions, USITC 3932, July 2007) were used to estimate the value of U.S. exports 

to Cuba if travel and financial restrictions are modified. Displacement of U.S. tourism is assumed to be minimal. Finally, the results should not be combined, or added 

together, because they were estimated using separate economic impact analyses and 

double counting would result. 

Importance of Legislation for Improving U.S. Competitive Position in Cuba 

Allowing U.S. citizens/permanent residents to travel to Cuba and U.S. firms to 

utilize modified financing methods will improve the U.S. competitive position in the 

Cuban market. New financing provisions would allow U.S. exporters to recover lost 

markets for rice and forest products, for example, creating new jobs and economic 

activity. 

It is also important to maintain the U.S. competitive position for wheat, corn, and 

soybean meal. For January–February 2010, U.S. exports of corn to Cuba were down 

47 percent compared to the same period in 2009, while wheat exports are off 69 percent and soybean meal exports had fallen 55 percent. The majority of these declines 

in exports are attributed to increased costs associated with financial restrictions, demurrage on vessels, currency conversion costs, and higher costs associated with 

using letters of credit (ALIMPORT staff, 3/2/2010). Recently implemented cash in 

advance rules will provide a temporary respite, but will not alleviate the problem 

entirely. 

Consequently, Cuba appears to be diversifying its suppliers by shifting away from 

U.S. firms in favor of Brazil, Canada, China and Vietnam. Credit terms are often 

offered by these countries, allowing ALIMPORT (Importada de Alimentos—the 

Cuban Food Import Agency) to conserve its hard currency and use credit to make 

larger purchases over a longer period of time. The net result is a loss of U.S. competitiveness and market share, followed by declining exports. If conditions do not 

improve and if alternative markets are not developed, negative economic impacts 

will occur in terms of lost business activity and employment. 

Background 

The Trade Sanctions Reform and Export Enhancement Act of 2000, allows certain 

exceptions for the exportation of U.S. agricultural products and medicines to Cuba. 

Since passage of the TSREEA, U.S. agricultural and food exports to Cuba have expanded, reaching a record $711 million in 2008. This was almost 2⁄3 higher than 

2007. Last year (2009) was quite different however, as U.S. exports to Cuba declined 

26 percent to $528 million. This large drop-off was attributed to a 15 percent decline 

in Cuba’s per capita tourist earnings, a 30 percent drop in Cuban export earnings 

from nickel sales, and weak export sales of sugar and tobacco. Another major set 

of factors was the relative high cost of U.S. products due to somewhat onerous U.S. 

financial requirements. Together, these factors severely limited the ability of 

ALIMPORT to purchase U.S. products on a cash basis. Despite this decline, Cuba 

remains the sixth largest U.S. agricultural market in the Latin American/Caribbean 

region. 

U.S. exports to Cuba are highly concentrated in a few key sectors. For 2009, the 

major U.S. exports to Cuba included frozen broilers/turkeys and other poultry ($144 

million), soybeans and soybean products ($133 million) corn ($120 million), and 

wheat ($73 million). These four product categories represented 89 percent of total 

U.S. agricultural exports to Cuba. Other important U.S. exports were animal feeds 

($26 million), pork ($11 million), dry beans ($4.3 million), and processed foods and 

phosphate fertilizers ($3 million) each. Minor exports were apples, pears and grapes 

($2.6 million), margarine ($2.2 million), and treated poles ($1.7 million). 

U.S. agricultural exports to Cuba of $528 million in 2009 required 8,588 jobs and 

generated $1.6 billion in total economic activity. CNAS estimates indicate that for 

every $1 of U.S. agricultural exports to Cuba in 2009, an additional $1.96 in business activity was required to support those exports. 

74

These economic impacts of food and other agricultural exports to Cuba were estimated using IMPLAN, an input/output model. IMPLAN is maintained by Minnesota 

IMPLAN Group, Austin, Minnesota. Economic multipliers for each sector of the 

economy were used to estimate how a change in one sector affects business activity 

and employment in the other sectors of the economy. 

Business activity refers to the total output of a sector, such as corn, and the value 

of all purchased inputs used to produce corn for export. Business activity also includes employee compensation, proprietor income, rents and royalties, and payment 

of indirect business taxes. Employment is reported as total jobs, with full-time and 

part-time jobs counting the same. 

Economic Impacts of Removing U.S. Travel Restrictions to Cuba 

Two scenarios were analyzed to estimate the economic impacts of removing U.S. 

travel restrictions to Cuba. Both scenarios focus only on the export of high value 

products, mainly processed foods, beverages, horticultural products and seafood. 

This analysis assumes that all travel restrictions are removed and that visitors remain in Cuba between 4.5 and 7 days. 

Scenario 1: Short Run (Years 1–2) 

The short run analysis provides estimates of U.S. exports and economic activity 

before Cuba has time to adjust to the increased number of tourists/visitors from the 

United States by increasing hotel room capacity, and improving critical infrastructure such as power generation and transportation. It also assumes that visitors remain in Cuba for 4.5 days. Based on the USITC report, 538,000 additional visitors 

were estimated to arrive and spend $50/day for food/drink. CNAS estimates that the 

U.S. share of tourist expenditures on food/drink would be 40 percent. 

This results in additional U.S. food/drink exports to Cuba of $48.4 million/year 

(table 1). Major exports would be frozen broilers/turkeys/eggs ($8 million), beef, 

pork, edible offal ($6.3 million), miscellaneous processed foods ($5.5 million), flour/

malt ($3.3 million), dry milk/cheese ($3 million), canned fruits/vegetables ($2.9 million), soft drinks ($2.5 million), distilled spirits/wines/beer ($2.4 million), fruits ($2.4 

million), fats/oils ($2 million). Other exports include condiments, vegetables/melons, 

snack foods, refined sugar, seafood, and frozen desserts. 

The additional $48.4 million in exports would be expected to require $116.7 million in additional business activity, creating a total economic impact of $165.1 million and 786 new jobs. About 38 percent of the economic impact would be attributable directly to new exports. The largest share of new economic activity (62 percent, or $102 million), would result from input purchases and household spending 

in sectors that support exports, but do not actually export. About $14 million of this 

new total business activity is agriculturally related activities such as grain and oilseed production, ranching, forestry, fishing, and corn milling. Together, these sectors 

require 153 new jobs to support new U.S. exports to Cuba. 

Business services, such as legal, accounting and technical consulting require $11 

million in business activity and 84 new jobs. Additional food processing supports $8 

million in business activity, while real estate, wholesale trade and finance require 

$7.3 million, $7 million, and $6.4 million in business activity, respectively. These 

sectors also require 89 new jobs. Other sectors required to support new exports include: petroleum ($8.8 million), transportation ($4.8 million), wood processing ($3 

million), and retail trade and food/drink establishments ($4.7 million). 

Scenario 2: Long Run (Minimum of 5 Years) 

Two long run scenarios are reported. The first assumes that U.S. tourists to Cuba 

stay 4.5 days, while the second scenario assumes tourists stay 7.0 days and daily 

food expenditures rise to $60 per day. Over the long run, it is also assumed that 

Cuba’s tourist industry adjusts to the increased demand for services by renovating 

existing hotels and facilities, building new facilities and improving critical infrastructure. As these improvements occur, it is estimated that 2.0 million U.S. tourists 

would visit Cuba annually. 

Assuming new tourists stay 4.5 days, U.S. exports are estimated to increase by 

$180 million/year million to meet the increased demand for high value foods/drink 

products (table 1). This would lead to a total economic impact of $614 million in 

business activity and 2,923 new jobs. As was the case in Scenario 1, slightly more 

than 1⁄3 of the economic impact would occur in sectors that are exporting products 

to Cuba. Slightly more than half ($200 million) of the non-export related business 

activity is expected to occur in other agriculture activities, business services, food 

production, real estate, wholesale trade and finance. About 55 percent of the new 

jobs associated with increased exports, 2,252, would occur in the previously noted 

non-export sectors of the economy. The remainder of the new jobs, 671, would be 

75

in petroleum, transportation, health care, food/drink establishments, retail trade 

and other sectors.

Table 1. Estimated Economic Impacts of Increased U.S. Tourism to Cuba 

(Million Dollars) 

Short Run

4.5 Day Stay

538,000 New

Tourists 

Long Run

4.5 Day Stay

2 Million New

Tourists 

Long Run

7 Day Stay

2 Million New

Tourists 

Exports 

Total 

Business 

Activity 

Exports 

Total 

Business 

Activity 

Exports 

Total 

Business 

Activity 

Top Exported Products 

Poultry Meat and Eggs $8.1 $13.6 $30.0 $50.5 $56.0 $94.2

Pork, Beef and Products $6.3 $8.8 $23.4 $31.9 $43.6 $59.6

Miscellaneous Food Products $5.5 $5.8 $20.9 $22.0 $39.2 $41.3

Flour and Malts $3.3 $4.1 $12.4 $15.4 $23.2 $28.8

Dry Milk and Cheese $3.0 $4.0 $11.3 $15.1 $21.1 $28.3

Canned Fruits/Vegetables $2.9 $3.4 $10.7 $12.5 $19.9 $23.3

Soft Drinks $2.5 $2.8 $9.3 $10.3 $17.4 $19.2

Spirits/Wine/Beer $2.4 $2.8 $9.1 $10.6 $17.0 $19.7

Fruits $2.4 $2.9 $8.9 $10.7 $16.6 $20.1

Top Supporting Sectors 

Ag Related Activities N/A $14.0 N/A $51.9 N/A $96.9

Business Services N/A $11.1 N/A $41.2 N/A $76.8

Oil, Gas, and Petroleum Products N/A $8.7 N/A $32.4 N/A $60.4

Other Food Production N/A $8.0 N/A $29.9 N/A $55.8

Total Estimated Impacts 

Business Activity $48.4 165.1 $180.0 $614.2 $336.0 $1,146.5

Employment (# of Jobs) 181 786 671 2,923 1,252 5,456

Assumptions for 4.5 day stay scenarios are that $50 per day per person spent by 538,000 visitors in the Short Run and 2.0 million visitors in the Long Run. These assumptions are taken from 

the U.S. International Trade Commission Report entitled U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions, USITC Publication 3932, July 2007. For the Long Run 7 day stay scenario, 2.0 million visitors spend $60 per day each. For all scenarios, it is assumed 

that the U.S. achieves 40 percent of the market share for these food expenditures and the export 

pattern follows the U.S. export pattern to other Caribbean nations for consumer-oriented food 

products. 

Note: for supporting sectors, there are no exports resulting in N/A for those export values. 

Assuming U.S. visitors remain in Cuba for a 7.0 day stay and spend $60/day on 

food results in additional U.S. exports of $336 million/year (table 1). These additional exports would require $810.5 million in business activity, for a total economic 

impact of $1.15 billion, which would support 5,456 new jobs. 

The total business activity due solely to new exports is $433.6 million. In terms 

of the impacts by sector due to increased exports, $94.2 million is attributed to frozen broilers/turkeys and eggs, $59.6 million to pork, beef and edible offal, $41.3 to 

processed foods, $28.8 million to flour and malt products, $28.3 dry milk and cheese, 

$23.3 to canned/preserved fruits and vegetables, $20.1 million to fruits, $19.2 million to soft drinks, $18.7 to wine/beer/distilled sprits, $17.6 to fats/oils, $14 million 

to bakery goods, and $10.4 million to vegetables and melons. Other important impacts occur in snack foods, sugar, breakfast foods, confectionaries, seafood and frozen desserts. 

The business activity attributed to important non-export sectors includes: other 

agriculture such as grain and oilseed production, ranching, forestry and fishing 

($96.9 million), business services ($76.8 million), petroleum ($60.4 million), other 

food processing ($55.8 million), real estate ($50.5 million), finance ($48.4 million), 

transportation ($33.5 million), food, drink and retail ($30.6 million), health care 

($27.5 million), and forestry ($21.3 million). 

More than 3⁄4 of the jobs associated with these additional exports, 4,202, occur in 

the non-export sectors. Other agriculture accounts for 1,062 jobs, followed by business services (582 jobs), food and drink retail (507), health care (303), wholesale 

trade (247), transportation (194), finance (186), and real estate (181). All of the 

other sectors account for 785 jobs. 

76

Economic Impacts of Modifying Payment Terms and Financial Requirements 

Reducing the cost and time necessary to process payment for U.S. exports to Cuba 

would have major economic impacts in terms of increased exports and economic activity. U.S. exports to Cuba would be expected to rise by $271.2 million/year, requiring an additional $561.9 million in business activity for a total economic impact of 

$833.1 million and supporting 4,478 new jobs (table 2). 

Processed and other food products sectors are estimated to require $246.6 million 

in business activity and 1,228 new jobs to support additional exports to Cuba. Grain 

sectors, mainly corn, rice and wheat, would require $87 million in additional business activity and 767 new jobs. Dairy products would require $40.3 million in additional business activity, followed by poultry products ($30.9 million), forestry products ($23.2 million), beef, pork and edible offal ($20 million), seafood ($12.1 million), 

soybean meal and oil ($12.2 million), and animal feeds ($9.9 million). There would 

be 1,138 new jobs required to produce and market these additional exports to Cuba. 

Most of these jobs would be concentrated in the grains sector (767), poultry (141) 

and forestry (97). 

Important economic impacts would occur among the non-export sectors as well. 

In fact, about 42 percent of the business activity and 47 percent of the jobs are associated with non-export sector production. Other agriculture business activity is estimated to be $72 million, followed by petroleum at $34.6 million, business services 

($32.2 million), real estate ($30 million), food, drink and retail ($23.8 million), finance ($22.9 million), wholesale trade ($20.5 million), health care ($13.2 million), 

and forestry ($6.8 million). 

There are 2,112 new jobs required in the non-export sectors to support additional 

exports to Cuba. The major sectors impacted are other agriculture (641), business 

services (250), health care (145), food, drink and retail (133), real estate (120), 

wholesale trade (105), finance (95) and transportation (85).

Table 2. Estimated Economic Impacts of Elimination of U.S. Restrictions on Financing Exports and 

Restrictions on Travel to Cuba 

(Million Dollars) 

Removal of Finance

Restrictions 

Removal of Finance and Travel 

Restrictions 

Exports Total Business 

Activity Exports Total Business Activity 

Top Exported Products 

Grains (Rice, Wheat, Corn) $78.7 $87.2 $122.7 $134.7

Other Food and Ag Products $49.5 $161.6 $57.5 $187.8

Dry Milk and Other Dairy $35.0 $40.4 $50.0 $57.8

Poultry Meats $27.3 $30.9 $35.2 $40.0

Processed Food Products $26.0 $84.9 $34.5 $112.7

Wood Products (Lumber) $21.5 $23.2 $21.5 $23.3

Pork, Beef and Products $14.5 $20.0 $18.8 $25.9

Seafood Products $11.5 $12.1 $15.0 $15.8

Soy Complex $5.9 $12.2 $8.1 $16.7

Top Supporting Sectors 

Other Ag Related N/A $72.0 N/A $92.1

Business Services N/A $32.2 N/A $43.6

Real Estate N/A $29.7 N/A $41.6

Financial Services N/A $22.9 N/A $31.6

Wholesale Trade N/A $20.5 N/A $27.9

Total Estimated Impacts 

Business Activity $271.2 $833.1 $365.2 $1,104.1

Employment (# of Jobs) 2,366 4,478 3,104 6,004

Assumptions for increased exports are based upon the U.S. International Trade Commission 

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

USITC Publication 3932, July 2007. USITC estimates of the percentage changes for 2006 baseline 

exports were applied to 2009 exports. The actual USITC estimated dollar value of exports was 

used for rice, dairy products, beef, seafood and wood products. Other Food and Ag Products include fresh horticultural products, cotton, livestock, and seeds for planting. 

Note: for supporting sectors, there are no exports resulting in N/A for those export values. 

Economic Impacts of Removing Financial Constraints and Allowing Travel 

to Cuba 

There are some additional economic benefits of allowing increased travel, while 

simultaneously removing financial constraints on U.S. exports to Cuba. U.S. exports 

77

are estimated to rise by $365.2 million/year, while the total economic impact would 

be $1.1 billion, requiring 6,004 new jobs (table 2). 

As in the previous analyses, most of the major gains in business activity would occur for food products and processed foods ($300.5 million), grains ($134.7 million), 

dairy ($57.8 million), poultry ($40 million), beef/pork ($25.9 million), forestry ($23.3 

million), seafood ($15.8 million), the soy complex ($16.9 million), and animal feeds 

($13.3 million). 

Major gains in business activity would also occur for non-export sectors as well. Other agriculture would require $92 million, followed by petroleum ($48.3 million), 

business services ($43.6 million), real estate ($41.6 million), finance ($31.6 million), 

wholesale trade ($27.9 million), food, drink and retail ($32.4 million), transportation 

($18.4 million), health care ($17.8 million), food processing ($11.3 million) and forestry ($9.2 million). 

Employment occurring in non-export sectors would be expected to increase by 

2,864 jobs. Major gains in employment would occur for other agriculture (857), business services (339), food, drink and retail (326), health care (196), real estate (172), 

finance (131), wholesale trade (143), and transportation (114). All other sectors 

would require 536 jobs to support additional exports to Cuba. 

Summary and Conclusions 

If H.R. 4645, the Travel Restriction Reform and Export Enhancement Act, is implemented as proposed, it is estimated that it would have substantial positive economic impacts on the U.S. economy. Exports to Cuba would increase by $365 million/year and would support $739 million in additional business activity for a total 

economic impact of $1.1 billion, requiring 6,000 new jobs. While there are major economic gains for U.S. agriculture, there are also important economic gains for nonagricultural sectors such as business services, financial institutions, real estate, 

wholesale and retail trade, petroleum and health care services. 

If only the travel restrictions are removed, it is estimated that U.S. exports would increase by $48.4 million/year in the short run and by $336 million/year over the 

long run, requiring 5,456 new jobs. Alternatively, if only the payment and financial 

restrictions are modified, U.S. exports are estimated to increase by $271.2 million/

year, requiring an additional $561.9 million in business activity for a total economic 

impact of $833.1 million and supporting 4,478 new jobs. 

The results of these analyses indicate that U.S. agricultural producers, input suppliers, agribusiness firms, food processors, business services suppliers, the financial 

sector, real estate, health care, oil, gas and petroleum suppliers, transportation companies, trade facilitators, and port authorities in many parts of the United States 

can expect additional economic gains if H.R. 4645 is implemented and U.S. exports 

to Cuba expand. Improved access to the Cuban market is more important now that 

new competition has emerged and the U.S. market share is threatened, especially 

for dominant U.S. products such as soybean meal, corn, wheat, rice, poultry and dry 

milk. Increased access for U.S. travelers is also important for stimulating demand 

for U.S. foods in Cuba over the next few years as economic recovery occurs and U.S. 

firms become better positioned to respond to global market opportunities. 

For further information, please contact Parr Rosson, Extension Economist and Director, Center for North American Studies, Department of Agricultural Economics, 

Texas A&M University, College Station, Texas. Tel: [Redacted] or E-mail: [Redacted]. http://cnas.tamu.edu.

SUBMITTED REPORT BY AGRILIFE RESEARCH, TEXAS A&M UNIVERSITY

Tourism and Agriculture in Cuba 

March 22, 2010

Introduction 

The economic impacts of increased travel and spending by U.S. visitors to Cuba 

are documented in Estimated Economic Impacts of the Travel Restriction Reform 

and Export Enhancement Act of 2010 by the Center for North American Studies, 

Texas AgriLife Research, Texas A&M University, which was submitted for the 

record to the House Committee on Agriculture, United States House of Representatives, March 11, 2010 on H.R. 4645, the Travel Restriction Reform and Export Enhancement Act. The following comments are submitted as a supplement to that report. 

Travel and Tourism in Cuba 

A record 2.4 million tourists visited Cuba in 2009, spending about $2.1 billion 

(ONE). While the potential increases in U.S. food and agricultural exports to Cuba 

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attributed to open travel were estimated to range from $48 million (short run) to 

$336 million/year (long run), requiring $1.1 billion in total business activity and creating up to 5,500 new jobs, these estimates included only the additional spending 

incident to travel by new U.S. visitors to Cuba. What is not included, and what is 

more difficult to quantify and estimate, is how much of these new tourism earnings 

may be spent by the Cuban Government to purchase additional U.S. bulk commodities and intermediate agricultural products intended for local consumption. Such an 

increase in additional spending on bulk products would be anticipated not only because Cubans would increase consumption with additional resources, but because 

U.S. suppliers could regain market share lost in 2009–2010 to competitors who offer 

credit and extended payment terms to Cuba. 

Cuban revenue from tourism was reported to be $2.1 billion in 2009 and was a 

major source of foreign exchange. It was equivalent to 57 percent of all Cuban merchandise exports in 2009 and 28 percent of the balance of all services trade for 2007. 

Further, as Cuban tourism earnings increased by twenty-eight percent from 2003 

to 2008, U.S. exports grew by 181 percent. As Cuba’s earnings from tourism declined 11 percent in 2009, U.S. exports fell by 25 percent. While numerous other 

factors also influenced U.S. exports, tourism in Cuba appears to be one important 

factor in maintaining a viable export market for U.S. products. 

The following is submitted in response to comments by Members regarding Cuba’s 

policy allowing Cuban citizens to utilize local hotels, resorts and other tourist facilities. 

Changes implemented by Rau ́l Castro in April 2008 allow Cubans to stay at local 

tourist hotels and resorts for the first time since the early 1990s (Dominican Today

and The Washington Post). Most of the four and five star facilities are out of the 

price range of many locals who earn the equivalent of about $20/month. During the 

low season of 2009 (August), however, many of the two and three star hotels in 

Varadero, Cuba’s major tourist beach resort area, booked 1 week stays for locals for 

a fixed, all inclusive price of $200/week (Global Post). 

With about 60 percent of Cubans having access to hard currency, either from remittances, factory and farm bonuses, or tips, these ‘new’ tourists are creating additional demand for U.S. food products (Calgary Herald). Remittances are likely to increase in 2010 as more Cuban-Americans are allowed to make an unlimited number 

to visits to relatives in Cuba, thereby increasing funds available to locals. As Cubans obtain more hard currency, it is highly likely that the Government of Cuba 

will purchase additional high value products from U.S. exporters to supply the state 

operated stores that serve the needs of Cuban consumers. This would assist U.S. 

exporters to regain market share lost in 2009–2010. 

While many other forces also influence U.S. exports, and cause-effect may be debatable, there does appear to be an established linkage between the amount of 

money Cuba earns from tourists who visit the island and the amount of food it can 

afford to import from the United States and other potential suppliers. 

Other economic and non-economic factors influence Cuban food import purchasing 

decisions as well. One is foreign exchange earnings from nickel exports, which declined 58 percent from 2007 to 2010. Nickel represented about 40 percent of total 

Cuban merchandise exports in 2008, down from 57 percent in 2007. A second factor 

is the price competitiveness of U.S. products, which is affected by the exchange rate 

of the U.S. dollar, commodity/supply demand balance and payment/financing regulations imposed by U.S. law (see above referenced report). Finally, Cuba may decide 

that despite the availability of competitively priced U.S. products, it may be in their 

best long term interests to diversify sources of supply. 

Agriculture in Cuba 

The following is in response to Member questions about soil quality and the productive capacity of Cuban agriculture. 

Cuba has a tropical climate characterized by a dry season (November–April) and 

a rainy season (May–October). The annual average temperature ranges from 75 degrees in the West to 80 degrees in the East. Humidity averages about 80 percent 

and average annual rainfall is 52 inches, with about 39 inches falling during the 

rainy season (Cuba Weather). 

About 50 percent of Cuba’s land is classified as agricultural, with 75 percent of 

that land area in relatively flat to gently rolling terrain and suitable for tropical and 

subtropical agricultural production (USDA). About 76 percent of Cuba’s population 

lives in urban areas (CIA). According to the Food and Agriculture Organization, 

about 70 percent of Cuba’s arable land has low organic matter content, while 45 percent is characterized by low fertility, 42 percent is eroded and 40 is poorly drained. 

These soil conditions are attributed to poor land management, including continuous 

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tillage, overgrazing, lack of fertilization, and inadequate or improper use of irrigation and drainage systems. 

Cuba’s agricultural land is about evenly split between cropland (46 percent) and 

pasture (54 percent) (USDA). Recently, a large, but so far undocumented, amount 

of Cuba’s cropland was taken out of permanent crop production and placed in native, unimproved pasture (USDA). It is suspected that this was done in an attempt 

to increase milk production, which has declined about ten percent since 2003. This 

occurred as milk output per cow actually increased 25 percent over the same period 

(ONE). 

Sugarcane, coffee, tropical fruits (plantains, bananas and mangoes), roots/tubers, 

and vegetables/melons accounted for 80 percent of harvested area in 2008 (ONE). 

Cereals, primarily rice and corn, accounted for most of the balance of harvested 

area. Production of these cereal crops has declined from about 1.1 million metric 

tons (mt) in 2003 to 762,000 mt in 2008 (ONE). Cuba’s corn yields averaged about 

41 bushels/acre from 2003–2008, about 1⁄4 of those obtained by U.S. corn producers. 

Cuban rice yields have averaged 2,750 pounds/acre since 2003, less than half the 

yields obtained in the United States. Soybean and other oilseeds production are very 

limited. 

Because of poor soil conditions, high humidity, timing and amounts of rainfall, 

high insect infestation and lack of pesticide or biological controls, Cuba’s ability to 

produce grain and oilseed crops is limited and likely to remain so over the long 

term. As a result, Cuba will remain one of the top grain and oilseed product markets in the Caribbean region provided the economic conditions there are conducive 

to market growth and the utilization of imported products. 

References 

Food and Agriculture Organization of the United Nations. Land Resources Information Systems in the Caribbean. 2000. 

Office of Global Analysis, Foreign Agricultural Service, USDA. Cuba’s Food and 

Agriculture Situation Report, March 2008. 

Oficina Nacional de Estadisticas (ONE). Republic of Cuba, 2008 Series. Located 

at www.one.cu.

Cuba Weather.org—Weather in Cuba. www.cubaweather.org.

CALGARY HERALD. Cubans Allowed to Stay at Tourist Hotels. March 31, 2008. 

www.canada.com/calgaryherald.

Central Intelligence Agency. World Factbook, Cuba. www.cia.gov.

DOMINICAN TODAY. Cubans Can Stay in Hotels. April 1, 2008. 

www.dominicantoday.com.

GLOBAL POST. At Cuban Resorts, the End of Tourism Apartheid. August 10, 2009. 

www.globalpost.com.

THE WASHINGTON POST. Cuba Repeals Ban on Its Citizens Staying in Hotels on 

Island. April 1, 2008. 

For further information, please contact Parr Rosson, Extension Economist and Director, Center for North American Studies, Department of Agricultural Economics, 

Texas A&M University, College Station, Texas. Tel: [Redacted] or E-mail: [Redacted] 

http://cnas.tamu.edu.

SUPPLEMENTARY MATERIAL SUBMITTED BY MIKE WAGNER, OWNER/OPERATOR, TWO

BROOKS FARM; MEMBER, BOARD OF DIRECTORS, U.S. RICE PRODUCERS

ASSOCIATION; ON BEHALF OF USA RICE FEDERATION

March 22, 2010

Hon. COLLIN C. PETERSON, Hon. FRANK D. LUCAS,

Chairman, Ranking Minority Member,

Committee on Agriculture, Committee on Agriculture, 

House of Representatives, House of Representatives, 

Washington, D.C.; Washington, D.C. 

Dear Chairman Peterson and Ranking Member Lucas,

On behalf of the U.S. Rice Producers Association and USA Rice Federation, I 

would like to take this opportunity to clarify and supplement our responses to a few 

of the matters discussed at the hearing to review U.S. agricultural sales to Cuba 

held on March 11, 2010. The hearing once again reaffirmed the irrationality of our 

foreign policy with regard to Cuba. 

80

It was certainly interesting to respond to questions about pending Free Trade 

Agreements. One of the major purposes of these agreements is to eliminate any nontariff trade barriers enacted by other countries. 

Yet the U.S.’s misguided Cuba policy does exactly that against our own producers. 

Through the implementation of onerous bureaucratic requirements we have essentially unilaterally eliminated all U.S. rice sales to Cuba. We heartily agree with 

Congressman Moran’s point that this is not an issue regarding trade. Trade is bilateral. This is an issue about SALES, and our inability to make them because of U.S. 

policies. 

We disagree with the argument that the several pending Free Trade Agreements 

should somehow ‘‘go first’’ before rationalizing U.S. agriculture sales and travel to 

Cuba. This suggests a false choice between two desirable policy changes. If anything, changing our trade and travel policies toward Cuba is EASIER than negotiating and enacting Free Trade Agreements, since changing our policy toward Cuba 

requires only unilateral changes in U.S. policy. 

There are a few pertinent points that we would like to further elucidate. Cuba 

is a major player in our hemispheric rice trade. In 2004, when Cubans were able 

to pay for agricultural goods before the change of title at the Cuban port, the U.S. 

exported 176,631 metric tons of rice to Cuba, valued at over $64 million. This 

amounted to almost 10% of the total U.S. rice exports in the Western Hemisphere 

for that year. Since 2004, U.S. rice sales to Cuba have diminished with the addition 

of onerous restrictions on payment. In 2007 and 2008, Cuba bought more than 

650,000 tons of rice annually, less than 2% of which came from the United States. 

Cuba is buying an increasing volume of farm goods from Canada and other U.S. 

competitors, who offer a high quality product free of bureaucratic red tape. The U.S. 

used to be the principal supplier of rice to Cuba, and our sales have now plummeted 

to zero because of self-inflicted wounds to our export sales. Cuba spent more than $2.5 billion on purchases of agricultural products in 2008, which represents an increase of more than 50% with respect to the $1.6 billion of 

agricultural imports from 2007. Only 16% of Cuba’s imports in 2007 and 2008 were 

U.S. bulk commodities. Our inability to provide credit or be a reliable supplier has 

disproportionally affected rice as seen in our current non-existent exports. As rice 

is a key staple in the Cuban diet, Vietnam has stepped in and provided credit and 

reliable rice supplies to the Cuban people, who number over 11.2 million. As in the 

earlier grain embargoes, our competitors benefit most from our unilateral sanctions. 

The cost of these sanctions is borne by U.S. farmers and the Cuban people. 

Not only does this hurt us economically, but in today’s current worry of climate 

change many have adapted the mantra of eating locally produced food. In rice trade 

with Cuba, we are the locals. Gulf Coast ports can have rice shipped to Cuba in 

3 days, while our competitor Vietnam takes several weeks. The magnitude of difference in the carbon footprint of these transactions is vastly different. 

I would also note that the 500,000 tons of rice required by Cuba (or more), represents all of Mississippi’s annual rice production-supporting thousands of Mississippi farm and related jobs. 

We would also note the Administration’s recently announced trade strategy to increase exports. Rice could substantially contribute to this effort, at no cost to the 

government. A simple change in our bureaucratic processes could immediately result in millions of dollars in increased rice and other agricultural sales to Cuba. 

ALIMPORT, Cuba’s leading food importing agency, has estimated that Cuba could 

buy agricultural products from the U.S. valuing upwards of $21 billion over 5 years 

if normal trade and no economic embargo restrictions were in place. This of course 

would be most significant to U.S. farmers, processors, exporters, and those in related industries. 

It was also raised several times in the hearing that Cuba imports food and agriculture products through a single desk trading entity—ALIMPORT. Trading with 

State Trading Entities is not new. The U.S. traded agriculture goods with STEs in 

many other countries in the past, including Australia, Mexico, the Soviet Union, 

Vietnam, and many others. Arguably that engagement helped to drive some centrally controlled economies toward more open markets, and to encourage the more 

open economies to move toward entering into Free Trade Agreements with the 

United States. We expect that trading with Cuba can move toward the same desirable result. 

Similarly, we believe that granting American citizens the right to more freely 

travel to Cuba will yield positive economic benefits, as well documented by the U.S. 

International Trade Commission and more recent work by Texas A&M University. 

Enhancing the engagement between our peoples can have other salutary benefits, 

as we believe was the case in the former Soviet Union, its several satellite states, 

and other formerly closed countries. 

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For all of these reasons and those spelled out in our testimony before the Committee, we continue to strongly support the enactment of the H.R. 4645 Travel Restriction Reform and Export Enhancement Act. 

Thank you again for holding the very timely hearing and for accepting these comments to supplement the testimony that we provided at the hearing. 

Respectfully Submitted,

MIKE WAGNER.

SUPPLEMENTARY MATERIAL SUBMITTED BY JERRY MCREYNOLDS, PRESIDENT, 

NATIONAL ASSOCIATION OF WHEAT GROWERS; WHEAT PRODUCER, WOODSTON, KS 

April 8, 2010

Hon. COLLIN C. PETERSON, Hon. FRANK D. LUCAS,

Chairman, Ranking Minority Member,

Committee on Agriculture, Committee on Agriculture, 

House of Representatives, House of Representatives, 

Washington, D.C.; Washington, D.C. 

Dear Chairman Peterson and Ranking Member Lucas:

Thank you for your interest in the issue of agricultural trade and travel with 

Cuba as discussed in the House Agriculture Committee hearing on March 11, 2010. 

I appreciated the opportunity to testify on behalf of the National Association of 

Wheat Growers (NAWG) regarding the importance of this issue to growers across 

the country and would ask that this additional information be included in the record 

for the March 11 hearing. 

This letter specifically addresses the question regarding freight rate differentials 

on shipments to Cuba from different wheat origins. As requested, below are some 

general freight indications that U.S. Wheat Associates has compiled based on current values and sailing time for Cuba. Note that values change routinely based on 

market conditions such as ship availability and back-haul options. We believe these 

numbers speak very clearly as to the competitive advantage of U.S. wheat growers 

in shipping to the Cuban market.

Origin Freight Rate Sailing Time 

Canada/St. Lawrence $48/metric ton 7 days 

Argentina $46/metric ton 17 days 

U.S. Gulf $26/metric ton 2 days 

I hope this information is helpful and please don’t hesitate to contact me or the 

staff of NAWG if you have any additional questions regarding this vital subject. 

Thank you again for your work on behalf of U.S. agriculture and we look forward 

to continuing the dialogue about this and other issues of importance to our industry. 

Sincerely,

JERRY MCREYNOLDS, 

President.

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