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S. HRG. 114–147 

OPPORTUNITIES AND CHALLENGES FOR 

AGRICULTURE TRADE WITH CUBA 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

APRIL 21, 2015 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

Available via the World Wide Web: http://www.fdsys.gov/ 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

PAT ROBERTS, Kansas, Chairman 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

JOHN BOOZMAN, Arkansas 

JOHN HOEVEN, North Dakota 

DAVID PERDUE, Georgia 

JONI ERNST, Iowa 

THOM TILLIS, North Carolina 

BEN SASSE, Nebraska 

CHARLES GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

DEBBIE STABENOW, Michigan 

PATRICK J. LEAHY, Vermont 

SHERROD BROWN, Ohio 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

JOE DONNELLY, Indiana 

HEIDI HEITKAMP, North Dakota 

ROBERT P. CASEY, Jr., Pennsylvania 

JOEL T. LEFTWICH, MAJORITY STAFF DIRECTOR

ANNE C. HAZLETT, MAJORITY CHIEF COUNSEL

JESSICA L. WILLIAMS, CHIEF CLERK

CHRISTOPHER J. ADAMO, MINORITY STAFF DIRECTOR

JONATHAN J. CORDONE, MINORITY CHIEF COUNSEL

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Opportunities and Challenges for Agriculture Trade with Cuba ........................ 1 

Tuesday April 21, 2015 

STATEMENTS PRESENTED BY SENATORS 

Roberts, Hon. Pat, U.S. Senator from the State of Kansas, Chairman, Committee on Agriculture, Nutrition, and Forestry ................................................. 1 

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan ..................... 2 

Leahy, Hon. Patrick J., U.S. Senator from the State of Vermont ....................... 4 

Panel I 

Scuse, Hon. Michael T., Under Secretary, Farm and Foreign Agricultural 

Services, U.S. Department of Agriculture, Washington, DC ............................ 5 

Borman, Matthew S., Deputy Assistant Secretary for Export Administration, 

U.S. Department of Commerce, Washington, DC .............................................. 6 

Smith, John, Acting Director, Office of Foreign Assets Control, U.S. Department of the Treasury, Washington, DC ............................................................. 8 

Panel II 

Beall, Michael V., President & CEO, National Cooperative Business Association, Washington, DC ........................................................................................... 25 

Harris, Terry, Senior Vice President, Marketing and Risk Management, 

Riceland Foods, Stuttgart, AR ............................................................................ 27 

Kaehler, Ralph, Farmer and Owner, Kaehler Cattle Company, St. Charles, 

MN ......................................................................................................................... 30 

Keesling, Doug, Fifth Generation Owner, Keesling Farms, Kansas Wheat, 

Chase, KS ............................................................................................................. 32 

Rosson, C. Parr, III, Ph.D., Professor & Department Head, Department of 

Agriculture Economics, Texas A&M University, College Station, TX ............. 34 

APPENDIX 

PREPARED STATEMENTS: 

Beall, Michael V. .............................................................................................. 44 

Borman, Matthew S. ........................................................................................ 49 

Harris, Terry ..................................................................................................... 52 

Kaehler, Ralph .................................................................................................. 58 

Keesling, Doug .................................................................................................. 60 

Rosson, C. Parr, III .......................................................................................... 64 

Scuse, Hon. Michael T. ..................................................................................... 73 

Smith, John ....................................................................................................... 77 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Hon. Pat Roberts: 

Bipartisan group of former Secretaries of Agriculture, prepared statement ............................................................................................................... 86 

U.S. Agriculture Coalition for Cuba, prepared statement ............................ 88 

Florida Department of Agriculture and Consumer Service, prepared statement ............................................................................................................... 89 

Page

IV 

Hon. Pat Roberts—Continued 

U.S. Agriculture Coalition for Cuba, Charter part I, prepared statement .. 91 

U.S. Agriculture Coalition for Cuba, Charter part II, prepared statement . 95 

Beall, Michael V.: 

The National Cooperative Working Group ..................................................... 98 

National Cooperative Business Association letter to Commerce Secretary . 101 

U.S. Cuba Cooperative Working Group Report ............................................. 103 

National Cooperative Business Association letter to Treasury Secretary ... 120 

QUESTION AND ANSWER: 

Beall, Michael V.: 

Written response to questions from Hon. Pat Roberts .................................. 124 

Written response to questions from Hon. Debbie Stabenow ......................... 125 

Borman, Matthew S.: 

Written response to questions from Hon. Pat Roberts .................................. 128 

Written response to questions from Hon. Debbie Stabenow ......................... 129 

Written response to questions from Hon. Kirsten Gillibrand ....................... 130 

Harris, Terry: 

Written response to questions from Hon. Pat Roberts .................................. 131 

Written response to questions from Hon. Debbie Stabenow ......................... 132 

Kaehler, Ralph: 

Written response to questions from Hon. Pat Roberts .................................. 134 

Written response to questions from Hon. Debbie Stabenow ......................... 135 

Keesling, Doug: 

Written response to questions from Hon. Pat Roberts .................................. 137 

Written response to questions from Hon. Debbie Stabenow ......................... 138 

Rosson, C. Parr, III: 

Written response to questions from Hon. Pat Roberts .................................. 140 

Written response to questions from Hon. Debbie Stabenow ......................... 142 

Scuse, Hon. Michael T.: 

Written response to questions from Hon. Pat Roberts .................................. 145 

Written response to questions from Hon. Debbie Stabenow ......................... 145 

Written response to questions from Hon. Kirsten Gillibrand ....................... 147 

Smith, John: 

Written response to questions from Hon. Pat Roberts .................................. 149 

Written response to questions from Hon. Debbie Stabenow ......................... 151 

Written response to questions from Hon. Kirsten Gillibrand ....................... 152 

(1) 

OPPORTUNITIES AND CHALLENGES FOR 

AGRICULTURE TRADE WITH CUBA 

Tuesday, April 21, 2015 

UNITED STATES SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC 

The Committee met, pursuant to notice, at 10:25 a.m., in room 

328A, Russell Senate Office Building, Hon. Pat Roberts, Chairman 

of the Committee, presiding. 

Present: Senators Roberts, Boozman, Hoeven, Ernst, Sasse, 

Thune, Stabenow, Leahy, Brown, Klobuchar, Bennet, Gillibrand, 

Donnelly, and Heitkamp. 

STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE 

STATE OF KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

Chairman ROBERTS. Good morning. The Committee will come to 

order. I call this meeting of the Senate Committee on Agriculture, 

Nutrition, and Forestry to order. 

At the beginning of this Congress, I was extremely hopeful that 

trade would be one area where we could work across the aisle to 

find agreement. I still maintain that hope. We certainly hope that 

is the case. We are working very hard on the Finance Committee 

to make that happen, as well as this Committee. 

Tomorrow the Senate Finance Committee will mark up the 

Trade Promotion Authority bill. That allows our negotiators to garner the best deal possible for American exporters. TPA is good for 

agriculture, and I look forward to getting it passed. 

International trade of American agriculture products is critical, 

absolutely critical to the Nation and to the Nation’s economy and 

critical to our Kansas farmers and ranchers. We are talking about 

71,000 jobs, about $12 billion. 

I have long fought to eliminate barriers to trade, and I believe 

that we should continue to work toward new market access opportunities for agriculture products, and that is what we are here to 

talk about today. 

The United States and Cuba certainly have a long history full of 

contention and instability. There is no shortage of opinion from 

Members of Congress about the relationship between our two countries, both present and future. 

Some are concerned about human rights, rightfully so, others 

about socioeconomic ideology. But those concerns are not what this 

Committee will focus on this morning. Today we are here to discuss 

the role of agriculture, opportunities and challenges in Cuba. 

2 

For over 50 years, agriculture exports to the island have seen 

many ups and downs, sometimes due to the politics and sometimes 

due to Mother Nature and the tropical storms that she brings. This 

is not an issue we are going to be able to fix overnight. It will take 

effort, hard work, in addition to bills in Congress to truly normalize 

trade with Cuba. 

The decisions that are made regarding increased trade with 

Cuba must be made very carefully. Four months ago, the President 

announced a major shift in U.S. policy towards Cuba. It is my hope 

that in the future the President will work with the Congress to determine the best path forward. Foreign policy does not happen in 

a vacuum. We have to take a realistic approach and work out a 

step-by-step plan towards lifting the embargo. This is a goal that 

should include Congress, will include Congress. 

Today we will hear from an impressive panel of experts, from the 

regulators responsible for writing our policies toward Cuba to the 

producers who seek to grow the market for their products. I understand that, like myself, many of our witnesses here have traveled 

to Cuba to see firsthand what challenges and opportunities do 

exist. I look forward to hearing about what we might be able to 

achieve with more trade with Cuba, but we also need to hear about 

the difficulties that lie ahead. If we want to be successful in creating a new system of engagement with Cuba, we are going to have 

to really put in the work. 

Agriculture has long been used as a tool, not a weapon, a tool 

for peace and stability. It is my hope that Cuba will embrace the 

practices of free trade, enterprise, and commerce so that both countries will gain from increased relations. 

Earlier this year, the U.S. Agriculture Coalition for Cuba was 

launched. They have shared a statement and additional information in support of our work today, and I ask unanimous consent 

that it be entered into the record at this point. Without objection. 

[The following information can be found on page 88 in the appendix.] 

Chairman ROBERTS. I look forward to hearing from our witnesses, and with that, I will recognize our distinguished Chairwoman Emeritus, Senator Stabenow, for any of her remarks. 

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR 

FROM THE STATE OF MICHIGAN 

Senator STABENOW. Thank you very much, Mr. Chairman. It is 

great to have an opportunity to talk about this topic. I really appreciate the opportunity to work with you on trade opportunities between the United States and Cuba and to work with all the Committee. We thank those who are with us, the officials and industry 

representatives testifying today, for your part in the process. We 

look forward to hearing from you. 

Improving trade with Cuba represents not only a great opportunity for American farmers and ranchers and manufacturers, but 

a meaningful way to help rebuild trust between our two countries. 

After more than 50 years of stalemate, it is time for a new policy 

in Cuba. 

When I visited Cuba earlier this year with Senator Leahy, who 

is really one of the Senate’s experts if not the expert, I think, on 

3 

various pieces of Cuban culture and economy and so on for so many 

years, we visited just days after the President eased trade restrictions. This is the second time I had the opportunity to be in Cuba 

with Senator Leahy and Senator Flake and others, and it was very 

different the second time with people—instead of being very reserved and cautious, Cubans were coming up to us and were very 

eager to develop a new relationship. It was just a very different 

tenor. But we can only do that with meaningful steps that will soften the barriers that exist between us and eventually eliminate 

them. 

America’s farmers and ranchers are uniquely positioned to lead 

the way, and I agree with Senator Roberts that agriculture is in 

a very key position. Consider this: In 2014, the U.S. exported just over $290 million 

in agricultural goods to Cuba. Good start, but this is a country only 

90 miles off our shore. We can do a lot better than that. Cuba’s 

own import agency, estimates it will receive approximately $2.2 billion in U.S. dollars’ worth of food and agriculture this year, and we 

can do even better than that. That type of economic potential deserves a chance to succeed and is one reason why many of the largest producer groups, trade associations, and companies from within 

agriculture have come together to increase engagement. 

Many on the Committee, as Senator Roberts indicated, have 

taken the opportunity to go to Cuba in addition to Senator Leahy, 

again, who he and his staff have been real leaders in this effort in 

developing our relationship with Cuba, but Senator Klobuchar, 

Senator Boozman, and Senator Heitkamp I know are working in a 

bipartisan way as well, and we appreciate your leadership and your 

efforts. 

The commitment to democratic ideas and human rights we share 

as Americans are best realized through engagement, and I believe 

our bedrock principles accompany every single product that our 

farmers and ranchers send to Cuba. 

Last week’s actions by the President are a step forward in normalizing a relationship and will test the commitment of the Cubans to this process. But even while we are making significant 

progress in rebuilding our relationship, the policies governing trade 

between our countries are not yet designed to allow a steady flow 

of goods and services. 

So, Mr. Chairman, I look forward to working with you and others 

on the Committee to find a path for U.S. financial institutions to 

be able to safely and securely work with Cuban purchasers, including extending the lines of credit, to look for a broader range of 

goods and services and supplies that we can export to Cuba. These 

measures are not only good for business, but they will help Cuba’s 

agricultural capacity and make the island a better trading partner 

in the long run. I know that, working together, we can write the 

next chapter in the U.S.-Cuban relationship. 

Thank you. 

Chairman ROBERTS. Thank you, Madam Chairwoman. 

I now have the pleasure of introducing a friend and colleague of 

mine, Senator Leahy, the undeclared but yet accurate king of the 

dairy policy, and the dairy policy posse, who comes in at the 11th 

hour and 59th minute to help us write a farm bill from time to 

4 

time, for brief remarks, sir, so you may go manage a bill on the 

floor in your very snappy attire. 

STATEMENT OF HON. PATRICK J. LEAHY, U.S. SENATOR FROM 

THE STATE OF VERMONT 

Senator LEAHY. Thank you, Mr. Chairman. I like being with a 

Chairman who knows how to comb his hair. 

[Laughter.] 

Chairman ROBERTS. I appreciate so much that you said that. 

Just let it go, okay? 

Senator LEAHY. I cannot do as well as you do with the tones on 

your phone, but I commend you for holding this hearing in all seriousness. This is an important hearing. Here is Cuba 90 miles from 

our shores. We have the ability to help them gain control of their 

own lives, but we can also expand markets for American farmers 

selling their product. There will be some winners as part of the 

normalizing of trade with Cuba. I think we have to temper our 

hopes and remember that Cuba’s economy is in shambles. Its people are suffering. But I would note what Senator Stabenow said, 

and she went and spent time with the agricultural community 

there on our last trip. 

I have been going to Cuba numerous times in the last 20-someodd years. This last trip you saw a huge difference. I started seeing 

American flags in the stores, American flags on the taxis. You 

know, a lot of these taxis are mid-1950s automobiles, and they 

have flags of different countries. I had never seen American flags 

on them before. Now we saw them. 

Now, we are not going to have an immediate commercial windfall 

for American agriculture, but Cuba has used our embargo as a 

phony excuse for its own failed policies. Now we have a chance to 

create a more efficient and less burdensome opportunity for Cubans 

to buy U.S. products. Canada and the European Union are there 

already. The last time we were there, they were talking about 

things that we produce, that the Cubans were bringing in from 

New Zealand, and we are 90 miles away. 

So I think that American agriculture has often been the bridge 

in normalizing with countries. This will allow us to do that, but 

also let the Cuban people see that it is their own government, not 

the United States, that is to blame for the poverty and dysfunction 

and repression in their country. Mr. Chairman, I say all that really 

to applaud you for doing this. I think we can all learn by this, and 

I look forward to my next trip down there. 

Chairman ROBERTS. Well, thank you, sir. I thank you for your 

comments, and I know you have to manage a bill on the floor. That 

is something that we are doing differently this year. We are actually managing bills. Good luck in that respect. 

Senator LEAHY. Having been here for 40 years, it is kind of nice 

to go back to the old way. Thank you. 

Chairman ROBERTS. Welcome to our first panel of witnesses before the Committee this morning. 

The Honorable Michael Scuse serves as Under Secretary for 

Farm and Foreign Agricultural Services. Under Secretary Scuse 

has previously served as the Deputy Under Secretary for Farm and 

Foreign Agricultural Services as well as Secretary of Agriculture 

5 

for the State of Delaware. Welcome, Mr. Under Secretary. I look 

forward to your testimony. 

STATEMENT OF THE HONORABLE MICHAEL SCUSE, UNDER 

SECRETARY, FARM AND FOREIGN AGRICULTURAL SERVICES, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, 

DC 

Mr. SCUSE. Chairman Roberts, Ranking Member Stabenow, and 

members of the Committee, I am pleased to come before you today 

to discuss agricultural trade with Cuba. 

As you know, in December, President Obama announced policy 

and regulatory changes to chart a new course in U.S. relations with 

Cuba. The measures also seek to expand opportunities for America’s farmers and ranchers to sell goods in Cuba. 

In January, the Treasury Department published regulatory 

changes including a revise interpretation of the term ‘‘cash in advance’’ and authorization for U.S. banks to establish correspondent 

accounts at Cuban banks. These changes had been sought by members of the U.S. agricultural community. 

Fifteen years ago, Congress lifted the decades-old ban on the export of agricultural products to Cuba. But despite this opening, 

U.S. Government agencies, including USDA, remain prohibited 

from providing export assistance and credit guarantees for exports 

to Cuba. As Secretary Vilsack has said, he cannot use a single dollar of trade promotion funding for trade with Cuba. These restrictions apply to USDA’s very successful market development programs like the Market Access Program and the Foreign Market Development Program. 

The policy changes announced by the President are significant, 

but legislative hurdles remain. Bills have been introduced to further open trade with Cuba, including legislation sponsored and cosponsored by members of this very Committee. USDA stands ready 

to provide technical assistance to Congress as it considers further 

openings with Cuba. 

If the embargo is removed, we could be poised to become a major 

agricultural trading partner with Cuba. Cuba depends on imports 

to feed its 11 million citizens. According to the World Food Program, Cuba imports about 80 percent of its food, which means the 

potential for our producers here is significant. The United States 

has potentially huge advantages in exporting to Cuba. Chief among 

them is location. We are less than 100 miles away, as has been 

pointed out, meaning lower shipping costs and transit times, especially compared to our current top competitors—Brazil and the 

members of the EU. 

In fiscal year 2008, U.S. agricultural exports to Cuba reached 

$658 million. However, by the end of last fiscal year, they had fallen to $300 million. At the same time, global agricultural exports 

to Cuba have doubled over the past decade to approximately $2 billion. 

Right now, the largest U.S. agricultural export to Cuba is poultry, followed by soybean meal, soybeans, and corn. I am confident 

that U.S. agricultural exporters can capture the market in Cuba, 

but I do not want to minimize the obstacles. Cuba is a country with 

6 

limited foreign exchange. We are also behind our foreign competitors in market development. 

Another impediment is Cuba’s import policy requiring all U.S. 

imports to be channeled through one state corporation—Alimport. 

The policy changes towards Cuba are just one example of opportunities to help our farmers and ranchers build on their record agricultural exports. In fiscal year 2014, agricultural exports reached 

a record $152.5 billion and supported nearly 1 million American 

jobs. The potential for U.S. agricultural exports around the globe 

is, in fact, considerable. It is critically important that Congress 

quickly consider and pass bipartisan Trade Promotion Authority 

legislation introduced last week. TPA will help ensure that America’s farmers, ranchers, and food processors receive the greatest 

benefit from trade agreements currently being negotiated. 

In conclusion, there is potential for expanding agricultural exports to Cuba over time. Agriculture has served as a bridge to foster cooperation, understanding, and the exchange of ideas among 

people. I have no doubt that agriculture will play an important role 

as we expand our relationship with the Cuban people. 

Thank you, Mr. Chairman and members of the Committee. 

[The prepared statement of Mr. Scuse can be found on page 74 

in the appendix.] 

Chairman ROBERTS. We thank you, sir. 

Mr. Matthew Borman currently serves as the Deputy Assistant 

Secretary of Commerce for Export Administration. In this position, 

Mr. Borman is responsible for implementing the Bureau of Industry and Security controls on the export of dual-use items for national security, foreign policy, non-proliferation, and short-supply 

reasons. 

Welcome, Mr. Borman. I look forward to your testimony. I thank 

Under Secretary Scuse for being on time. Just to remind the witnesses that most Senators can read, all of their staff can read. Feel 

free to summarize your statement, sir. 

STATEMENT OF MATTHEW S. BORMAN, DEPUTY ASSISTANT 

SECRETARY FOR EXPORT ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE, WASHINGTON, DC 

Mr. BORMAN. Thank you, Mr. Chairman, and thank you, Ranking Member Stabenow and the members of the Committee. It is a 

pleasure to be here. 

Of course, I will address the role of the Department of Commerce 

with regard to agricultural trade with Cuba. As you know, in terms 

of the Cuba embargo, the Commerce Department is responsible for 

regulating the export of items to Cuba. The Treasury Department, 

of course, is responsible for financial transactions, including travel. 

As you know, on December 17, 2014, the President announced 

the most significant changes in Cuba policy in more than 50 years. 

As the President noted, these changes are intended to create more 

opportunities for the American and Cuban people by increasing 

commerce, travel, and the free flow of information. To implement 

these changes, we at the Department of Commerce’s Bureau of Industry and Security amended our Export Administration Regulations on January 16, 2015, to expand the authorization for exports 

and re-exports of certain categories of items to Cuba. 

7 

Principally, we expanded the License Exceptions available for 

consumer communication devices to facilitate the flow of information among Cubans and between Cubans and the outside world. We 

also expanded the ability for U.S. exporters to send gift parcels and 

consolidated packages to Cuba without a license. Then we created 

a new License Exception Support for Cuban People. So in our system, a License Exception means as long as the exporter complies 

with the conditions of the License Exception set out in the regulations, they do not have to come into Commerce, submit a license 

application, and wait for the Government to say yes or no and give 

them a license. So exporters always feel that License Exceptions facilitate trade in whatever transaction they cover. 

The principal focus of the License Exception Support for Cuban 

People is getting items into the hands of the private sector in Cuba. 

So under that License Exception, U.S. persons are now able to export building materials for private sector building activity in Cuba. 

They are able to export items going to the private agricultural sector in Cuba, the agricultural co-ops, again without a license; and 

generally items that go to private sector entrepreneurs. So the 

focus of that License Exemption is to make it much easier for the 

export of items from the United States to the private sector in 

Cuba, including the private agricultural sector in Cuba. 

The License Exception also authorizes the export of items to the 

Internet infrastructure in Cuba to, again, facilitate communication 

among the Cuban people and between the Cubans and the outside 

world. 

You will notice in all that I have mentioned, there is just a small 

focus on agriculture. We did not change our primary regulatory 

process for agricultural exports to Cuba, and the reason we did not 

is that it is pretty well governed by the Trade Sanctions Reform 

Act. So under that Trade Sanctions Reform Act, we have an expedited process in place where a U.S. company that wants to make 

an agricultural export to Cuba comes into Commerce, we refer it 

to the State Department, we get a position from the State Department, and we give them an answer typically in 12 days. So it is 

an expedited process, but it still is a licensing process. Again, that 

is largely governed by the requirements of the Trade Sanctions Reform Act. 

Under that process, exporters can get an online application. As 

I mentioned, we consult with the State Department. We also screen 

the end users of the agricultural exports to make sure that they 

are not involved in terrorist or proliferation activities. 

Then the last requirement is that those exports that are licensed 

must be made within the year of the license. 

Last year, we processed 56 notifications under this expedited 

process, valued at about $2.4 billion. That is what we authorized. 

As you heard, the actual dollar value of exports is far less than 

that, roughly $290 million. So you can see U.S. exporters see a tremendous market in Cuba by the authorizations they seek from us 

even though currently they only export a small fraction of that. 

As you also heard, all of those exports go through Alimport, 

which is the Cuban agricultural import agency. So there are really 

no changes in our regulations specifically on agricultural exports to 

8 

Cuba because, again, that is limited by the Trade Sanctions Reform 

Act. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Borman can be found on page 49 

in the appendix.] 

Chairman ROBERTS. Thank you for your statement. 

Our next witness is John E. Smith, Acting Director, Office of Foreign Assets Control, the Department of Treasury. Mr. Smith serves 

as the Acting Director of the Department of Treasury’s Office of 

Foreign Assets Control, or OFAC—that is Mr. Smith’s acronym for 

which he works—which is tasked with administering economic 

trade sanctions to advance U.S. national security and foreign policy 

goals. Prior to joining OFAC, Mr. Smith served as an expert to the 

United Nations’ Al Qaeda and Taliban Sanctions Committee and as 

a trial attorney at the U.S. Department of Justice. Welcome to your 

new job. 

Thank you for joining us, Mr. Smith. I look forward to hearing 

from you, sir. Please proceed. 

STATEMENT OF JOHN E. SMITH, ACTING DIRECTOR, OFFICE 

OF FOREIGN ASSETS CONTROL, U.S. DEPARTMENT OF THE 

TREASURY, WASHINGTON, DC 

Mr. SMITH. Good morning, Chairman Roberts, Ranking Member 

Stabenow, and distinguished members of the Committee. Thank 

you for the opportunity to appear before you today to discuss our 

recent amendments to the Cuban Assets Control Regulations and 

the implications for agricultural trade with Cuba. 

On December 17, the President announced a number of significant policy changes regarding our relationship with Cuba. To implement the sanctions policy changes, Treasury’s Office of Foreign 

Assets Control, or OFAC, amended the Cuban Assets Control Regulations, and our colleagues at the Department of Commerce amended the Export Administration Regulations on January 16. These 

amendments ease sanctions related to Cuba in a number of key 

areas, including trade, financial services, travel, and remittances. 

These changes are intended to enhance commerce and communications between the United States and Cuba and to help the Cuban 

people to freely determine their own future. 

OFAC expects its recent rule changes will benefit American exporters in at least four key respects: 

First, OFAC expanded the financing provisions of the regulations 

to allow America’s agricultural exporters to be more competitive in 

selling their wares to Cuba. 

Second, OFAC broadened the ability of U.S. financial institutions 

to provide services and effectuate payments for exporters and others authorized to engage in trade with Cuba. 

Third, OFAC authorized trade delegations and exporters satisfying the conditions of its regulations to travel to Cuba—without 

needing to come into OFAC first to apply for and receive a license—and expanded the ability of airlines and other U.S. travel 

service companies to offer more reliable and potentially cheaper 

travel with far less paperwork to Cuba. 

9 

Finally, OFAC permitted certain humanitarian projects in Cuba, 

including those related to agricultural and rural development that 

promote independent activity. 

With respect to the first change, OFAC modified the regulatory 

interpretation of the term ‘‘cash in advance,’’ which describes a financing requirement for agricultural trade between the United 

States and Cuba that is imposed by statute. Previously, OFAC had 

determined the statutory term to mean that the U.S. exporter had 

to receive payment from the Cuban importer prior to the goods 

leaving American shores—an interpretation that U.S. exporters 

said made their products less competitive than those from other 

countries. OFAC has now revised its interpretation of the term to 

mean that payment from the Cuban purchaser is required now 

prior to transfer of title to and control of the goods. This change 

should provide for a more efficient, less expensive means for Cuban 

importers to purchase American-produced agricultural, medical, 

and other authorized products. 

U.S. exporters, however, continue to face barriers, including that 

all U.S. agricultural goods are imported via Alimport, a Cuban 

state-run monopoly. Also, U.S. exporters continue to be prevented 

by statute from offering financing inducements, such as loans, for 

authorized agricultural exports, a limitation that may prevent 

them from being as attractive to Cuban importers as third-country 

competitors. 

With respect to the second key regulatory change, to improve the 

speed, efficiency, and oversight of authorized payments between 

the United States and Cuba, OFAC has authorized U.S. banks to 

establish correspondent accounts at financial institutions in Cuba. 

This change is intended to ease the flow of authorized payments 

and eliminate the need for third-country payment structures, which 

should benefit U.S. exporters to Cuba. 

With respect to the third key regulatory change, it is important 

to note that OFAC’s Cuba sanctions program is the only such program that restricts travel to a country. The recent regulatory 

amendments eased travel restrictions by generally licensing certain 

additional travel within the 12 existing categories of travel in 

OFAC’s regulations, without the need for a specific license from 

OFAC. This means that exporters and other travelers who satisfy 

the criteria in our regulations may travel to Cuba and conduct 

travel-related transactions there without requesting or receiving individual authorization from OFAC. 

With respect to the fourth key regulatory change, and to help 

strengthen Cuban civil society, OFAC eased certain restrictions on 

remittances to Cuba and authorized remittances to certain individuals and independent nongovernmental organizations in Cuba for 

humanitarian projects, including those related to agricultural and 

rural development. Increased remittances will afford individual Cubans with increased financial resources to purchase American-produced agricultural goods. 

Thank you, and I look forward to answering any questions. 

[The prepared statement of Mr. Smith can be found on page 78 

in the appendix.] 

Chairman ROBERTS. To the entire panel, thank you again for taking the time to share your professional experiences and perspecVerDate Nov 24 2008 15:27 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96175.TXT MICAH
10 

tives about the opportunities and the challenges we face in opening 

up trade with Cuba. 

For the entire panel, what was the administration’s process in 

preparing for this major policy shift in the United States’ relationship with Cuba? What was the involvement of the stakeholders in 

determining what changes could be made? How have you worked 

with industry during the regulatory amendment process? A big 

question, hopefully a short answer. I apologize for that. Under Secretary Scuse? 

Mr. SCUSE. Mr. Chairman, we have been working with the cooperators now for quite some time, not just at the national level 

but also at the State level. It has been evident now for a number 

of years that our stakeholders have wanted Cuba opened up for the 

markets that—for the products that our farmers and ranchers 

produce in this country, which are the best to be found anywhere 

in the world. We have been at a very big disadvantage because of 

the restrictions that have been in place. 

But our stakeholders have made it known very clearly that this 

is a country that they want to do business in. When you look at— 

I will give an example, not because Betsy Ward is sitting behind 

me, but rice, half the rice consumed in that country is imported, 

and it is coming from Vietnam. It is not coming from the United 

States, and it should be. 

So our stakeholders, again, this has been something they have 

been wanting for a great deal of time, and we look forward to the 

opportunity to eventually get products in there on a level playing 

field. 

Chairman ROBERTS. Mr. Borman. 

Mr. BORMAN. Thank you, Mr. Chairman. As far as the process 

goes, we work very closely with our colleagues in the executive 

branch to identify ways that we could facilitate trade to the private 

sector in Cuba within the bounds of the existing embargo, and that 

is how we can go from individual license requirements to license 

exceptions. Since the announcement of our regulations, we have 

probably done several dozen outreach events, both from Washington and across the country, where we explain the changes and 

answer questions. We estimate we have probably individually 

talked to, as part of these events, well over 3,000 people. So we 

continue to solicit feedback from those who want to understand 

what the regulations are. 

Chairman ROBERTS. I appreciate that. Mr. Smith. 

Mr. SMITH. I would echo the comments from my colleagues here. 

We work very closely within the executive branch to utilize some 

of the comments that we have received from industry and Members 

of Congress over the years about how we could better change our 

regulations, and we have worked with Commerce and other agencies since that time to actively promote our regulatory changes so 

people know what the new rules are. 

Chairman ROBERTS. This is for Under Secretary Scuse. I have 

traveled to Cuba, as many others have done. Sometime back, Senator Max Baucus, now the Ambassador to China, and I went 

down—we did not tell anybody; we just went down—and for 18 

hours discovered the world according to Fidel Castro, and then also 

11 

with an ag group trying to establish trade. I want to make sure 

that we go about this change in the right way. 

After a very long history of little or no meaningful engagement 

with Cuba, many of these folks have come down, met with people, 

and then been informed, yes, you can trade, only to find out you 

could trade with hospitals, schools—and what was the other one? 

I will think of it in a minute. Three very limited situations. Then 

all of a sudden, you come up against the state-owned enterprise, 

and that is where it ended. So all of the talk and everything happened, and nothing really happened. 

So do you envision the reestablishment of diplomatic relations to 

be helpful to agricultural trade? Are there any concerns you have 

regarding this renewed relationship, the process to establish these 

ties, and its interaction with exports to and agricultural development within Cuba, sir? 

Mr. SCUSE. I think normalizing relations and opening up trade, 

Mr. Chairman, will have a tremendous impact on agriculture. The 

United States is the only country, to my knowledge, that has to go 

through the state-owned corporation of Alimport to gets its products in there. So hopefully with the normalization of relations and 

opening of trade, that restriction would, in fact, be lifted. 

Number two, there has been a study done by Texas A&M as well 

as the American Farm Bureau that said once relations are normalized and trade is opened up, there will be a significant increase in 

the purchase of products by Cuba. What the study showed was that 

U.S. sales of agricultural supplies to Cuba could exceed $1 billion. 

So I think that is a tremendous increase over the $300 million that 

we are selling today. 

Chairman ROBERTS. This is for all of the panel, and I apologize 

to my colleagues for going just a tad over time. All of you made reference to Alimport, the state-run monopoly through which all U.S. 

agricultural imports are channeled. 

By the way, it was churches, schools, and hospitals we were able 

to export product to, and then we hit a brick wall. 

As the U.S. begins to implement changes removing restrictions 

on our side of the transaction, what commitments, if any, have 

been made by the Cuban Government to provide the same ability 

that our competitors receive to trade with other Cuban organizations? Any one on the panel. Mr. Smith, we will try you first. 

Mr. SMITH. I would have to say that is a question I would largely 

defer to the State Department. I think that is something that we 

would expect as part of a normalization of relations, that would be 

discussed as part of the talks, and that would be something that 

we would expect to open up as part of that process. I do not know 

of any commitments that have been made, but, again, I would have 

to refer that to the State Department. 

Chairman ROBERTS. Mr. Borman. 

Mr. BORMAN. I agree with Mr. Smith and also note that we have 

an ongoing series of discussions with Cuban Government officials, 

and I expect that this certainly would be one of those topics that 

will come up in those sector-specific discussions. 

Chairman ROBERTS. Under Secretary Scuse. 

Mr. SCUSE. No, I would defer to the answer of my colleagues. 

Chairman ROBERTS. Senator Stabenow. 

12 

Senator STABENOW. Well, thank you very much, Mr. Chairman. 

When I was last in Cuba, I had the same conversations with the 

Secretary of Agriculture about Alimport and the process for them. 

They were indicating about 80 percent of the farmland is still 

owned by the government, about 20 percent by the private sector. 

I said, ‘‘Well, can we sell to the 20 percent? Can we sell farm equipment to the 20 percent?’’ No. It has got to all at this point go 

through the same process. So there is a lot of change that needs 

to occur. 

I do want to stress that—and I know we will hear from the second panel, but we have tremendous opportunities. When Senator 

Leahy was talking about products from New Zealand, they are getting milk from New Zealand in powdered milk form, and so I 

talked to our Michigan milk producers who would be happy to 

oblige, as I know others would as well. We are a whole lot closer. 

There are potatoes and beans and a whole range of things that are 

available, and apples seems to be a delicacy at Christmastime. I 

said, ‘‘We can give you Christmas every day.’’ So we have a lot of 

opportunities. 

Let me ask, Under Secretary Scuse, there is an expression that 

says the first step to achieving success is showing up, and I think 

that is really true on trade, showing up and also our ability to market. So you mentioned the Market Access Program and the other 

tools at the Department of Agriculture, and I wonder if you might 

speak more to what—while they are not currently authorized in 

Cuba, how would you envision the USDA’s MAP programs going 

forward and creating opportunities and tools for American agriculture? 

Mr. SCUSE. Well, again, if we were allowed to use our marketing 

programs such as our Market Access Program, it is an area where 

we work with our cooperators to go in, to do the trade missions, 

to look at ways to develop markets and what the actual needs are 

through the Market Assistance Program, help our producers, help 

the different commodity groups make inroads into establishing 

markets in that country. The Foreign Market Development Program was where we actually worked with the cooperators to do 

studies on what the demands are for different products. 

So if we were allowed to use these products, as well as do a trade 

mission to Cuba, I think it would go a long way in getting back 

much of the market that we have lost in the past. But the lack of 

the ability to use these programs as well as our inability to extend 

credit is the main issue why we have lost our market share since 

2008. The economists at the University of Florida did a study, and 

what their study showed was that the biggest loss or the reason 

for the most loss in our market share there was our inability to extend credit as our competitors, the EU and Brazil and others, are 

doing. 

So the playing field right now is not level, Senator. A level playing field, they are going to buy the best products from the United 

States. 

Senator STABENOW. Well, we heard that over and over again as 

well when I spoke to the minister of agriculture in Cuba. We heard 

over and over again the same thing with the foreign minister, foreign relations, talking about the lack of credit. 

13 

When we look at how we get through that—and you have all spoken to it, but I wonder if anyone wants to comment further on the 

specifics of what we need to do to make sure that process is open. 

The President has taken the first step, taking out the intermediary, being able to allow payment not before the shipment 

leaves but at a later point when it is in process and arrives. But 

we all know that the issue of credit, whether it is using USDA 

credit opportunities, other credit opportunities, is a serious issue 

for us. 

What do we need to do to be able to make that happen? Is this 

all about lifting the embargo completely? Or are there other things 

that we should be doing? 

Mr. SMITH. I could start out and answer. At least one provision 

that is at issue is the provision in the TSRA statute that prohibits 

any financing of goods, agricultural goods and others, to go to Cuba 

other than third-country financing or payment by cash in advance. 

So we are not allowed to offer any kind of payment deals, payment 

terms other than going through a third country to receive that financing or to pay the Cuba importer in advance of the goods being 

turned over. I think that is what my colleague has indicated is necessary to be able to extend credit. We would need to remove that 

statutory prohibition. 

Mr. BORMAN. I would also add clarity on the provision of TSRA 

that appears to require an individual license for any ag export to 

Cuba, to change that, or make it clear that we could allow it by 

license exception would also really facilitate ag exports to Cuba. 

That is what we have heard from U.S. agricultural exporters. 

Senator STABENOW. Right. Under Secretary Scuse, is it those two 

things specifically, or is there anything else from the USDA’s 

standpoint that we need to be changing to create opportunities for 

you to fully provide assistance? 

Mr. SCUSE. Well, again, I think those are the biggest changes 

that we need to have made so that we could use, again, our marketing money, as well as the commodity groups with their checkoff funds, because they are not allowed to use their check-off funds 

for promotion in Cuba either. So those changes would allow us to 

do marketing in Cuba as well as give us the ability to extend credit, again, to put us on a level playing field with our competitors. 

Senator STABENOW. Thank you. 

Mr. Chairman, as you know, there is a hearing going on in Finance. I am going to step over there for a moment and then come 

back. So be on your best behavior while I am gone. 

[Laughter.] 

Chairman ROBERTS. I will try to do that and would urge you to 

do the same on behalf of a good trade bill. Thank you. 

[Laughter.] 

Senator STABENOW. Yes, that is right. 

Chairman ROBERTS. Senator Boozman. 

Senator BOOZMAN. Thank you, Mr. Chairman, and thank you all 

for holding this very, very important hearing. I believe that the 

way that you change the world is through personal relationships. 

If we are serious about really bringing real change to Cuba, we 

need to expose the Cuban people to America. We are not only trading our products, but we are trading our democratic ideals. Cuba 

14 

represents a remarkable opportunity for American farmers, but it 

is also an opportunity for Cubans to gain access to safe, affordable, 

and high-quality agricultural products from the United States. 

I am encouraged by recent steps to reform the U.S.-Cuba relationship. Boosting our commercial ties would have significant benefits for both of our economies. In my State, it is estimated that easing finance and travel restrictions with Cuba will result in an increase of over $35 million in agricultural exports from Arkansas 

annually. 

Mr. Scuse, let us talk again a little bit about what percentage of 

the food that Cuba consumes is actually grown in Cuba. 

Mr. SCUSE. According to the World Food Program, 80 percent of 

their food is imported. 

Senator BOOZMAN. What countries—you mentioned Vietnam, I 

believe, as—— 

Mr. SCUSE. Vietnam is supplying half the rice. If you look at 

corn, corn is coming from Brazil and Argentina. if you look at 

wheat, wheat is coming from the European Union and Canada. 

Our sales from the United States to Cuba currently, 50 percent 

of our sales are poultry products; 25 percent of our sales are made 

up of soybean meal and soybeans. So that makes up three-quarters 

of the sales from the United States. 

Senator BOOZMAN. What about the quality of Vietnam rice compared to American rice? 

Mr. SCUSE. Well, Senator, I am real partial to U.S. products. 

[Laughter.] 

Mr. SCUSE. I said earlier, I think our farmers and ranchers 

produce the very best products to be found anywhere in the world, 

and I am going to stick to that. 

Chairman ROBERTS. Said very well. 

Senator BOOZMAN. Exactly. I do think that is important in the 

sense that it is not only an opportunity, but it is an opportunity 

for the Cuban people. 

Mr. Smith, you have talked a lot about easing financing and 

things like that. Out of the things that we are doing, what is the 

most important thing that we need to be doing? 

Mr. SMITH. Well, I think when you started out, you talked about 

travel between the American people and Cubans. I think that is 

right that, as the President said, and I think you have said, the 

best ambassadors for America can be ordinary Americans going to 

travel and embodying our ideals. We generally licensed or authorized travel within the 12 categories that we have. Congress has 

prohibited any further opening for tourist travel under the TSRA 

statute, so that is a statutory prohibition. We also have a statutory 

prohibition with respect to not only private assistance to Cuba for 

exports, for agricultural exports, but also for U.S. Government exports. 

Senator BOOZMAN. Very good. 

Do you agree with that, Mr. Borman? Or have you got any 

other—— 

Mr. BORMAN. No; I certainly do. One other thing that I would 

point out, in TSRA there is also a prohibition on U.S. Government 

export promotion for trade with Cuba. So that really limits the 

Commerce Department’s ability to carry out the kind of trade proVerDate Nov 24 2008 15:27 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96175.TXT MICAH
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motion and market analysis work that it does in virtually every 

other country of the world. 

Senator BOOZMAN. Again, you guys can jump in, but even with 

the changes that we have made, is it fair to say that the majority 

of the restrictions regarding trade are still in place? 

Mr. SMITH. It is correct that most trade, most imports, most exports, most other transactions remain prohibited. 

Senator BOOZMAN. So we have got a good step in the right direction, but we have got a long way to go. 

You know, we have talked about financing. Are you aware of any 

other countries that go through the financing scheme that Americans have to go through? 

Mr. SCUSE. You mean to get products—— 

Senator BOOZMAN. The financing restrictions. 

Mr. SCUSE. No, I am not aware of any other country that has 

those type of restrictions. Senator, we do trade in approximately 

200 countries around the world. 

Senator BOOZMAN. So America is unique in that regard. Very 

good. 

In dealing with the Cubans, how does Cuba differ from other 

major export markets in terms of how normal commercial operations work? 

Mr. SCUSE. Well, again, as I pointed out earlier, we are restricted 

to dealing with one state-owned corporation, Alimport, for access 

for our U.S. products. So that is unique, and it does present its own 

problems. 

Senator BOOZMAN. Mr. Borman. 

Mr. BORMAN. My understanding is that for virtually all imports 

into Cuba, regardless of the product category, they have to go 

through some Cuban Government import agency. 

Senator BOOZMAN. Mr. Smith. 

Mr. SMITH. The other differences, the financing terms, as we 

have talked about, in most other contexts the exporter could get financing of some kind, either from the U.S. or from the importer. 

That cannot occur here. 

Senator BOOZMAN. Thank you, Mr. Chairman, and thank you all 

very much for being here. 

Chairman ROBERTS. Senator Donnelly. 

Senator DONNELLY. Thank you, Mr. Chairman, and I would like 

to thank all the witnesses. 

I am a big supporter of increasing American exports to world 

markets, and I am intrigued by the possibility of opening the 

Cuban market, not only for Hoosiers but for all of our country to 

export the things we build and produce. 

But the concern is I want to make sure that the Cuban people 

actually benefit from it. You know, what can we do from a policy 

perspective to better ensure that the benefits of trade reach the 

Cuban people as opposed to all the products going into one agency 

and then being divvied out? What do you see as the keys to making 

sure that the Cuban people actually benefit from this? 

Mr. SCUSE. Senator, I think that by normalizing relations, by 

breaking down the restrictions that we currently have for trade, 

the Cuban people are going to benefit from that right away. If you 

look at just the cost in transportation, again, rice coming from VietVerDate Nov 24 2008 15:27 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96175.TXT MICAH
16 

nam and you look at the cost of that, corn coming from Argentina, 

wheat coming from the European Union, we have a tremendous advantage in logistics and being able to supply them top-quality products at what I would believe would be a more reasonable price than 

what they are currently paying for products shipping from those 

countries all over the world. So I think that there would be an immediate benefit. 

Could there be additional benefits? If, in fact, we are treated like 

other countries and do not have to go through one state-owned corporation for our products, which I believe and hope would happen, 

then I think there would be additional benefits. 

Senator DONNELLY. One of my concerns is just what you referred 

to, which is having to go through Alimport, the state agency there. 

We talk about the higher quality. I have been to my friend Senator 

Boozman’s home State, the extraordinary rice they produce there, 

the pork products produced in my home State, and all of us. We 

talk about the benefits of lower price, easier transportation, and all 

of those things. The question is: How do we make sure that lower 

price actually gets passed on so they are not paying—the Cuban 

people are not paying the same and that this group who will set 

it, in effect, if you know what I mean? 

Mr. SCUSE. Yeah, I understand the concerns, but, again, hopefully once relations are normalized and trade is liberalized, again, 

I would hope that we would be treated like the other countries that 

are currently trading with Cuba so they do not have to go through 

one state-owned corporation for those products. 

Senator DONNELLY. This would be for any of you. When Canadian products are sent to Cuba, how are they entered into the 

country? Who are they distributed through, do you know? 

Mr. BORMAN. I do not know. 

Senator DONNELLY. Do they have to go through Alimport? 

Mr. SCUSE. To the best of my knowledge, no. The United States 

has to go through Alimport. 

Senator DONNELLY. So that is one of the points I would like to 

make as you talk to State, as you move forward with this. One of 

my concerns and I know a lot of my colleagues’ concerns is that we 

be treated the same as everybody else. That is the way the Cuban 

people benefit, that our products are able to go directly to the 

Cuban people, that we are treated the same, and I think that much 

of what we look at as we move forward will be dependent on that 

being incorporated into any agreement that comes through. 

Thank you, Mr. Chairman. 

Chairman ROBERTS. We thank you, Senator. 

Senator Hoeven. 

Senator HOEVEN. Thank you, Mr. Chairman. I actually want to 

pick up on a point that Senator Donnelly is making, and that is, 

I think there has to be a carrot and a stick to what we are doing 

here. We want to expand ag trade. That is good for our farmers. 

Hopefully that is good for the Cuban people. But at the same time, 

we want to put more pressure on the Cuban Government to change 

its policies on human rights. 

So what can we do, as we work here on ag trade, to make sure 

that we are doing that? How do we get these products down to the 

small businesses and the entrepreneurs that are actually trying to 

17 

make something happen in terms of free enterprise in Cuba? How 

do we at the same time create some pressure on the Cuban Government, on the Castro regime, to change and to particularly 

change in regard to human rights? I would like to hear from each 

one of you on that. 

Mr. SCUSE. Senator, as you well know, coming from the big ag 

State that you are from, agriculture throughout history has been 

a way to break down some of the barriers that we have faced. If 

we can open up trade with Cuba and—because they are only supplying 20 percent of what they currently consumer, but the demand 

is certainly there. There is a way to help build the agricultural sector in that country, which would create jobs, which would create income, which would create more demand. As that happens, I think 

you are going to see an awareness. Just opening up the country 

and normalizing relations, there will be an awareness of the people 

that I do not believe currently exists. So I think this is a really 

good first step to helping the Cuban people. 

You know, our policies over the last 50 years have not been one 

that has provided that openness, that transparency, and the education about the United States that I think normalizing relations 

and opening up trade will. 

Senator HOEVEN. Mr. Borman, you and I talked specifically before the meeting about how do we make sure that these restaurants and other small businesses that people in Cuba are trying 

to get going—I mean, how do we support that effort as we do this? 

Mr. BORMAN. Several ways. One is, of course, the folks who make 

the exports from the United States know who they are intended for 

and they typically know those individuals, because they are often 

relatives who are running the bed and breakfast, the auto repair 

shop; and if the items do not get to them, they will hear about that. 

We have a very good working relationship with a lot of the exporters from our enforcement side to make sure that the items go to 

where they are supposed to go. 

Senator HOEVEN. See, that is right on the mark. Now you are 

starting to talk about actually helping people, entrepreneurship, 

business enterprise, the kind of things that hopefully will create 

some pressure for change over there. So do you have a way to enforce that if we are going to have food products or other products 

going in there to make sure that they are actually getting to these 

small businesses that are trying to get going? 

The other thing is payment. How are you going to make sure 

that people get paid for products that they ship into that market? 

Mr. BORMAN. Right. Well, so far we have not heard any complaints of U.S. exporters not getting paid, and I am sure we would, 

and I think—— 

Senator HOEVEN. Well, that is because the old policy was cash 

in advance. You are changing that, aren’t you? 

Mr. BORMAN. Well, but remember, it is still cash on delivery, 

so—— 

Senator HOEVEN. Cash when you change title. 

Mr. BORMAN. Right. But that is still—and, again—— 

Senator HOEVEN. Delivery, the product is delivered. It is there. 

Mr. BORMAN. Right. 

18 

Senator HOEVEN. Which limits your ability to go get it, doesn’t 

it? 

Mr. BORMAN. Well, but, again, if that, in fact, happens, we will 

find out about that quickly, and then we will have to decide—— 

Senator HOEVEN. Again, go back to getting it to those small businesses, how you enforce that. 

Mr. BORMAN. Well, again, the first part is we make sure that the 

folks who want to make the exports understand who the small 

businesses are and what the limits are. Two, remember, the Cuban 

people are very aware of these changes, and if over time they do 

not see any significant changes, that is going to create more pressure on the government internally. We have already seen exports 

made to the private sector agricultural co-ops in Cuba. We have 

seen that in the trade data. 

Mr. SMITH. I think we can continue to focus on the Cuban people 

as we make our changes. I think the recent round of changes that 

we made were very much focused on the ability of the Cuban people, and to strengthen the Cuban people. We increased their ability 

for communications, for Internet, for other things so that they 

could better understand the changes that were being made. We 

also increased the limits that can be given on remittances, the financial amounts that U.S. citizens can give to Cubans, and we increased those amounts for support for the Cuban people, humanitarian projects, and other things that would help agricultural development as well, including microfinancing activities. So those are 

very much focused on the individual Cubans, the small Cuban development businesses that might want to grow, and it was the 

focus of our change. 

Senator HOEVEN. I think it is very important that you are focused on that area, including putting information into that market 

every way you can, because as we provide people with more information, I think that also helps with their efforts to try to force 

change from the inside as we try to force change from the outside. 

A final question for Mr. Scuse. What food products, farm products do you particularly see as opportunity areas? You said threefourths of our exports now are poultry and soybeans. What else do 

you see as good opportunities? 

Mr. SCUSE. Well, I think we have a great opportunity to increase 

our exports of corn. There is no reason why the European Union 

and Canada have the wheat market. That market should also be 

ours. I think there is a great opportunity for us to have the rice 

business in Cuba. I think it was pointed out earlier in this meeting, 

there is a great opportunity for dairy and dairy products. 

Senator HOEVEN. Thank you. 

Chairman ROBERTS. I thank the Senator for his most pertinent 

comments and thank the panel for responding. 

Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman, and thank you for 

holding this meeting. 

We have asked the witnesses probably three or four times now 

about Alimport, and you all said you hope that we will see this restriction lifted. I think I can remind you hope is not a strategy, and 

we are hopeful that you all—hopeful—will take the concern that is 

19 

being expressed today about Alimport back to your smaller groups 

as you discuss opportunities going forward. 

We have long been concerned about the extension of credit for ag 

transactions and trade. Hopefully, I think tomorrow, we are going 

to try to take a move in the right direction. I think you guys have 

highlighted the number one thing that we think we can deal with, 

which is Section 908. I personally support lifting the embargo entirely. However, that may be a bridge too far for this Congress. So 

we have to take these baby steps. 

With that, I have a couple specific questions for you, Under Secretary. To date, the Federal check-off dollars have not been used 

for promotion of trade for Cuba. The loose reasoning, I think almost an assumption, is that this is due to the language of TSRA, 

which precludes the use of any United States assistance, including 

United States export assistance. Of course, the check-off dollars are 

not taxpayer dollars. They are producer dollars. The Federal checkoff program is set so that farmers elect a board of peers who decide 

how those check-off dollars are used. 

It is not tax money, and as a result, does USDA recognize the 

difference between your Government assistance programs like MAP 

and FMD and producer-raised and controlled check-off funds? Can 

producers utilize their own check-off dollars for promotion for activities in Cuba? If not, why not? 

Mr. SCUSE. My understanding, Senator, is that the Federal 

check-off funds cannot be used for trade promotion in Cuba. Now, 

if it is—— 

Senator HEITKAMP. I am asking you why. 

Mr. SCUSE. My understanding is it is because of the current law 

that is in place. 

Senator HEITKAMP. I am suggesting that maybe the current law 

is being broadly interpreted, and you might want to go back and 

take a look to see if we can make that change without legislative 

changes. 

Mr. SCUSE. Okay. We will do that, but I also understand—it is 

my understanding that if there is State check-off money, that can 

be treated differently. But the Federal dollars, the Federal checkoff money cannot be used. But, again, we will go back and take a 

look at just what the law says and if it can be used. 

Senator HEITKAMP. Yes, I think just to reexamine that policy. 

Mr. Smith, I am running out of time, but I want to go back to 

the cash in advance original definition and the other changes you 

are making to facilitate more efficient and affordable exports to 

Cuba. At this time, do you feel like the administration has gone as 

far as legally possible, in terms of the definition, to open up opportunities? Were there other things on the table as you discussed the 

changes that you did make, that maybe you said, well, maybe we 

should not do that? Are there other kinds of policy things that were 

abandoned that maybe we should reexamine? 

Mr. SMITH. In terms of the restrictions on financing, I think the 

definition that we use is the definition that had been in appropriations bills from the Congress. That had been as far-reaching as I 

had heard in terms of transfer of title and control. So it is hard to 

imagine that you could interpret cash in advance far beyond transVerDate Nov 24 2008 15:27 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96175.TXT MICAH
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fer of title, because it is largely the last step before you actually 

turn over the goods. 

So there has been no other definition that I have heard that 

could meaningfully interpret that statutory term. 

Senator HEITKAMP. So you mean cash in advance means cash in 

advance? 

Mr. SMITH. That is what I mean. 

Senator HEITKAMP. Okay. Finally, Mr. Scuse, I know that you do 

not have any boots on the ground in Cuba, but you do have folks 

in DC who follow exports and our competitors closely. We believe 

we grow the highest-quality products with the nearest market. 

Cuba obviously is a huge opportunity for my State and the States 

that are represented in the Ag Committee. 

Given that export assistance funding is prohibited by TSRA, are 

you still allowed to place someone within the Havana embassy that 

could make those contacts and begin to do that groundwork without crossing the boundary? Are you intending to do that at USDA? 

Mr. SCUSE. Well, correct me if I am wrong. I do not believe we 

have an embassy just yet. 

Senator HEITKAMP. Well, we are hopeful. 

Mr. SCUSE. Okay. So am I. We can put individuals in there on 

a short-time basis for whatever assistance may need to be needed 

to look at different projects or to help them with different regulations that we may need. But that is only short term. 

Long term, I would hope that when the day comes that we have 

an embassy there, we would work with the State Department, and 

we would be able to put staff in that embassy to help us facilitate 

trade and to move American products into Cuba. 

Senator HEITKAMP. How many staff do you have currently in 

Cuba? 

Mr. SCUSE. To the best of my knowledge, we do not have any at 

USDA. 

Senator HEITKAMP. Do you believe that you are prohibited from 

having staff in Cuba right now? 

Mr. SCUSE. You know, I do not know, to be quite honest with 

you. Again, to have full-time staff in Cuba, I do not believe that 

we would have the need right now to have any full-time staff until 

trade is actually opened. 

Senator HEITKAMP. I think you get my intention, which is we 

think that this is going to happen probably sooner rather than 

later. So we want to hit the ground running, and we would appreciate it if you guys would take a look at what kind of opportunities 

you could avail yourself of today that could, in fact—once we get 

things lined up—facilitate further trade. 

Mr. SCUSE. Senator, I believe that when that day comes, we will 

be able to act very quickly. 

Chairman ROBERTS. Senator Klobuchar. 

Senator KLOBUCHAR. Well, thank you very much, Mr. Chairman. 

Thank you for holding this hearing. It is good to see you, Under 

Secretary Scuse. We love you in Minnesota because you were willing to come out to a forum I held on Cuba in February, and that 

means a lot to us in Minnesota. 

Senator HEITKAMP. Everybody in North Dakota agrees. We claim 

you as our own. 

21 

Senator KLOBUCHAR. Exactly. As you know, we discussed at that 

forum—you did a great job, by the way—the potential for the U.S. 

to export products to a country that is just 90 miles off our shores, 

11 million people. When I went there a few months ago with Senator Warner and Senator McCaskill, I was able to see the new port 

that is being built, which is a very big port, and it is going to replace the Port of Havana, which will be used for tourism. But when 

I saw that port, I thought, ‘‘If they are going to bring in goods here 

and sell things in Cuba, we want them to be American goods.’’ As 

you know, I am carrying the bill to lift the embargo, and I appreciate the support of Senators Enzi, Flake, Stabenow, Leahy, Durbin, and Paul. There are other Senators that are interested. We are 

adding to our numbers. 

We know it is going to take a while to get it done, but that is 

truly the way, I think you would agree, Under Secretary Scuse, to 

have some trade with Cuba and actually sell our goods. Now they 

are being done on a humanitarian basis, but could you talk about 

the effect it could have if we were to actually lift the embargo? 

Mr. SCUSE. It will have, I believe, a tremendous impact on our 

ability to sell products and greatly increase the amount of products 

that we are currently selling to Cuba. Again, right now you are 

looking at about $300 million worth. Again, the study by Texas 

A&M and the American Farm Bureau believes that, with normalized relations and lifting of the trade restrictions, that number 

could be in excess of $1 billion. 

What this also, I believe, would mean to the Cuban people, with 

the ability to purchase agricultural inputs—fertilizer, seed, chemicals, and equipment—I think it would give them also the ability to 

have agricultural businesses, produce more of what their actual demands are in the country, and create revenue throughout the countryside, and, again, help the Cuban people, especially that live in 

the rural areas. So I think it is a win for both of us, in my opinion. 

Senator KLOBUCHAR. Yes. Now, Mr. Under Secretary, some have 

argued that while Cuba is a small market and also clearly has a 

lot of poverty, why would this still be such a benefit? Are there 

other reasons outside of just selling to Cuba that this could be a 

benefit to American agriculture? 

Mr. SCUSE. Again, I think it is not just selling commodities, but 

I think it is selling agricultural equipment. I think it is not just 

about the sales. It is about the jobs that will also be created here 

in the United States. You know, when you look at our exports currently at $152.5 billion supporting almost 1 million American jobs, 

any increase that we are going to be having in sales, that is an increase in American jobs. 

But, again, I think it is also a win for the Cuban people, supplying them with the very best products to be found anywhere that 

can be purchased, and an opportunity to also create jobs there as 

well. 

Senator KLOBUCHAR. Well, and another argument, which you do 

not need to get into but that I have heard raised, is that it is often 

thrown in our country’s face in other countries in Latin America, 

our situation with Cuba, and there is some belief it could help us 

to open up some markets for our agriculture and other products as 

well. 

22 

I want to ask about foreign competition. When I was there, we 

met with a number of the ambassadors from places like Brazil and 

Spain and other places. As you know, their investment—they do 

not have embargoes, but their investment has been slow. However, 

I detected that they might start picking up as they see the potential for the U.S. coming in. Do you think other countries are going 

to continue to expand their market share? I will never forget being 

at the port and saying, well, they said they got their computers 

from China because they were not able to use U.S. computer companies like most ports do across the world. But do you want to discuss that briefly? 

Mr. SCUSE. Well again, there are opportunities there. But, yes, 

we are going to face competition from those countries that are currently doing business there. If you go back again and look at the 

business that we—the trade that we had in 2008, $658 million 

down to $300 million last year, look at the reason why. Other countries were able to extend credit, and we were not. So the main result of that was a substantial loss in the Cuban market for U.S. 

products. 

Senator KLOBUCHAR. Right. 

Mr. SCUSE. So I think we are going to face competition from— 

continued competition from countries like Brazil, Argentina, Canada, and the EU. 

Senator KLOBUCHAR. Okay. Just one last question of you, Mr. 

Borman or Mr. Smith. What do you see as the biggest obstacles on 

the Cuban side to increasing American agricultural exports? We 

clearly have issues there with human rights, and it is our hope as 

the negotiations go forward, this will clearly be part of the negotiations. But when I was there, I saw the double currency issue and 

some of the other things. What do you see as some of the obstacles 

to trade? 

Mr. BORMAN. Well, I think in addition to the Alimport issue, just 

more generally the Cuban bureaucracy’s ability to freely let goods 

into the country, because I think that is historically not the way 

they have done things. 

Senator KLOBUCHAR. That is putting it mildly, yes. All right. Mr. 

Smith. 

Mr. SMITH. I would add to what Mr. Borman said that also the 

development of private business, and that is something that we are 

trying to encourage here, so to encourage that, there is more money 

for individuals and more money for private businesses to be able 

to import. 

Senator KLOBUCHAR. Exactly. I think there is something like 

600,000 entrepreneurs now. This has loosened up recently. They 

have their own currency. But there is still a long way to go. I will 

say, in ending, that I just saw such a spirit of entrepreneurship 

there with the people and that the people are a bit ahead of the 

government—again, putting it mildly. 

So I want to thank the Chairman for holding this hearing and 

really being willing to hold such a hearing. As we know, this can 

be a controversial issue on both sides of the aisle, and I really appreciate you doing it. Thank you. 

Chairman ROBERTS. Thank you, Senator. 

Senator Brown. 

23 

Senator BROWN. Mr. Chairman, I echo the—— 

Chairman ROBERTS. Senator Brown, you might want to put your 

sign up. Everybody knows you, but that is Mr. Leahy’s. 

Senator BROWN. I did not know I was removed from the Committee. 

Chairman ROBERTS. What on Earth happened to Mr. Brown? 

Senator KLOBUCHAR. The Senator Brown sign is missing. 

Senator BROWN. It is missing. 

Chairman ROBERTS. Did you lose your—— 

Senator BROWN. I do not know, Mr. Chairman. It is okay. 

Chairman ROBERTS. Senator Brown, we will pick—— 

Senator BROWN. I lost my train of thought, Mr. Chairman, but 

thank you, as Senator Klobuchar said, for holding this hearing. I 

have two questions. 

One, Mr. Secretary, talk to me about what this means, as trade 

restrictions are eased, what it means to a State like Ohio in terms 

of agricultural exports. 

Mr. SCUSE. For a State like Ohio, what our current restrictions 

mean, it means that it is difficult to get agricultural products from 

a State into Cuba. We are at a tremendous disadvantage—the playing field is not level—because we are not allowed to do marketing 

programs like other countries do. We are not allowed to extend 

credit like other countries do. So the playing field is not level, and 

it creates a great deal of difficulty for us to compete against those 

country. 

Senator BROWN. So tell me what it will mean as we ease them. 

Mr. SCUSE. Well, again, I think that as we ease the restrictions, 

it is going to be easier for us to get products in there. Again, I went 

through the list. Right now the corn is coming from Brazil and Argentina. I think that we should be the number one supplier for 

corn. If you look at wheat, wheat is coming from the European 

Union and Canada. Again, there is no reason why that should not 

come from the United States. Fifty percent of the rice is coming 

from Vietnam. We should be the one supplying the rice to Cuba. 

Again, I think there are opportunities for us to ship dairy and 

dairy products to Cuba. 

So when these current restrictions are gone, I think there are a 

lot of opportunities for those products as well as a lot of others. Our 

fruits—apples would be another good example of a product that 

there is a demand for that we could ship down there. 

So I think there is a lot of opportunity, but we need to get the 

current restrictions lifted. We need to be able to use our marketing 

programs, and we need to be able to extend credit. 

Senator BROWN. Thank you, Mr. Secretary. 

Mr. Smith, in light of Treasury’s policy changes under TSRA, has 

there been much interest shown by U.S. banks willing to do this 

type of trade? Have there been issues or problems with establishing 

correspondent accounts with Cuban banks? If you could kind of 

give me your assessment about what is happening and what you 

think will happen. 

Mr. SMITH. Sure. There has been tremendous interest from U.S. 

financial institutions in terms of the engagement that may be allowed in Cuba. As far as I am aware, no U.S. financial institutions 

have yet opened correspondent accounts there. A number of U.S. fiVerDate Nov 24 2008 15:27 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96175.TXT MICAH
24 

nancial institutions have decided to begin engagement on the credit 

card and debit card front that we have allowed. Many of the financial institutions have talked about concerns over the state sponsor 

of terrorism designation that still exists with respect to Cuba, 

which may be changed. 

Senator BROWN. Would that be sort of the on switch for correspondent accounts, once that is lifted or once that is changed? 

Mr. SMITH. It could be. We have authorized it, but it is up to an 

individual financial institution’s risk appetite and whether they are 

concerned—whether their concerns will be ameliorated by the removal of the state sponsor of terrorism designation remains to be 

seen. 

Senator BROWN. One of the things that has changed in today’s 

banking system from particularly 10 years ago but that began to 

change 5 years ago with the financial crisis is banks increasingly, 

even smaller banks of $20 and $30 and $40 billion, even some 

smaller than that, have sort of elevated in stature their risk officer 

to look at—to make sure that they sit at the table to be part of decisionmaking on is this too risky for our bank to engage in. In the 

past, that question was not asked often enough, and look what happened. 

Is Treasury talking to risk officers about this issue of risk, sort 

of injecting that in the conversation in board rooms, at least in the 

largest banks in the country, to help them think through the issues 

of risk? 

Mr. SMITH. Yes. Almost daily, we are talking to the financial institutions and particularly the risk officers, the compliance officers, 

to make sure that they understand the changes that we are making, what our policies are and what our requirements are, so that 

they have a chance to dialogue with us. We have had a number of 

open outreach events where we have had financial institutions 

present, but we have also had one-on-one conversations with many 

financial institutions. 

Senator BROWN. Thank you. 

Thanks, Mr. Chairman. 

Chairman ROBERTS. I am going to ask one quick question before 

we ask the second panel to come up, with all due respect to my colleagues. 

Director Smith, in view of the questions asked by Senator 

Brown—and I like that term ‘‘risk appetite.’’ Where did you come 

up with that? That is probably the first question. But, to date, have 

many U.S. financial institutions set up correspondent accounts 

with the financial institutions in Cuba? How many businesses do 

you expect utilize this type of account through their bank? 

Mr. SMITH. So I am not sure where I came up with ‘‘risk appetite.’’ I am sure I heard it somewhere, and—— 

Chairman ROBERTS. Well, chew on that awhile. 

[Laughter.] 

Mr. SMITH. I will, indeed. As far as I am aware, no U.S. financial 

institutions yet have opened correspondent accounts. I think what 

we do is we authorize certain activities, but we do not require financial institutions to engage in any certain activities. 

25 

Chairman ROBERTS. Obviously. Well, if that were the case, how 

many U.S. businesses would you expect to utilize this type account 

through their bank? Do they have the risk appetite to do that? 

Mr. SMITH. I think the more financial institutions—or the more 

U.S. industry wants to trade with Cuba, the higher the trade goes 

with Cuba, the more demand there will be on the banks from their 

clients to say, ‘‘We need you to be in there servicing us.’’ So I think 

the more the trade increases, the more we would expect the pressure on the banks to go in. 

Chairman ROBERTS. I appreciate your answer. This will conclude 

the first portion of our hearing this morning. Thanks to each of our 

witnesses, especially for taking time out of your very busy schedule 

to share your perspectives and your insights about the opportunities and challenges we face in expanding agricultural trade with 

Cuba. 

To my fellow members, I would ask that any additional questions 

you may have for the record be submitted to the Committee clerk 

5 business days from today, or by 5:00 p.m. next Tuesday, April 28. 

We now invite the second panel of witnesses to come to the table. 

Thank you very much, gentlemen. 

Mr. SCUSE. Thank you, Mr. Chairman. 

Mr. SMITH. Thank you. 

[Pause.] 

Chairman ROBERTS. I would like to welcome our second panel of 

witnesses before the Committee. First, Mr. Michael Beall, president 

and CEO of National Cooperative Business Association. Mr. Beall 

joins us today on behalf of the National Cooperative Business Association where he serves as the president and CEO. Before joining 

NCBA, he served as president and CEO of the Missouri Credit 

Union Association and president and CEO of the Maryland-District 

of Columbia Credit Union Association. He additionally held positions at the World Council of Credit Unions and the North Carolina 

Credit Union League. Anybody need any credit in the audience, you 

ought to see Mr. Beall. 

[Laughter.] 

Chairman ROBERTS. Welcome, Mr. Beall. I look forward to hearing from you. We will wait to introduce the second panelists after 

you conclude, sir. Please feel free to summarize your comments. 

STATEMENT OF MICHAEL V. BEALL, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, NATIONAL COOPERATIVE BUSINESS 

ASSOCIATION, WASHINGTON, DC 

Mr. BEALL. Good morning, Chairman Roberts. You have introduced me. 

NCBA works to provide educational, technical expertise, and advocacy that helps cooperatives thrive and survive in today’s economy. My remarks today will focus on the new day in U.S.-Cuba relations and some ways forward to foster better, more productive, 

and positive relationships between the two countries, notably 

through agricultural trade. 

As a preface, I want to convey two thoughts regarding U.S.- 

Cuban cooperative development. 

First, the U.S. should view Cuban cooperatives as a fundamental 

to building a market-based economy in Cuba, one that incorporates 

26 

a proven business model in economic empowerment for member 

owners, for consumers. Cooperatives are functioning, successful 

businesses that provide tangible economic ownership and benefit 

consumers wherever they are found, and NCBA is optimistic that 

Cuban cooperatives will be no exception to this rule. 

Second, U.S. cooperatives here are ready to assist right now. We 

have already begun to build ties with Cuban cooperatives, and we 

can hit the ground running whenever the laws discussed in the 

first panel permit. The message here is simple: Put U.S. cooperatives to work with Cuban cooperatives. 

By way of background, there are 29,000 member-owned co-ops in 

the U.S., employing about 2 million folks. One in three American 

consumers does business with a cooperative. Consumers and producers benefit greatly from cooperatives in areas like agriculture in 

particular, but also in housing, rural electric and telecommunications, and credit unions. Co-ops work for consumers. 

The cooperative form of business where the members own the enterprise is particularly well suited for the Cuban people and especially in this period of transition. Cooperative ownership combined 

with cooperative business practices that use the profits for the benefit of the members and the form of governance where each member gets one vote are all features that are going to have special appeal as they grow in Cuba. 

Our understanding is that Cuba has begun to change its cooperative law, starting in 2011, making lots of businesses become cooperatives and changing the ownership structure. This is a welcome departure from the other types of government or state-owned 

enterprises. NCBA in our work, we have been told by Cuban cooperative officials there are about 5,200 agricultural cooperatives currently operating in Cuba that contribute 80 percent of all the fruits 

and vegetables consumed by consumers, and by all appearances 

this Cuban ag sector is the foundation for their economic stability 

and growth. 

NCBA has taken preliminary steps to initiate stronger ties with 

Cuban co-ops. Last year, we established the U.S.-Cuba Cooperative 

Working Group to explore opportunities to engage with Cuba on cooperative development. We sponsored a trip last year of co-op leaders, establishing connections, and actually we are hosting a group 

of co-op ag leaders the first week of May. 

In terms of some of what I have seen in travel to co-ops, there 

are challenges. There is lots of focus on the 1950s era cars, but on 

the co-op farms we visited, the ag equipment is from that era as 

well, and it would be considered vintage. 

One of the other main concerns that I would say that I saw is 

that none of the cooperatives for us produced financial statements, 

and so we are not able to verify how profitable are these cooperatives. What are the expenses that they are taking on? More importantly, perhaps most importantly, what is the treatment of the 

state-owned equipment that is being delivered over to co-ops? What 

is the treatment on the balance sheet of the land that cooperatives 

are operating on? 

So as NCBA, as cooperatives build relationship with Cuban cooperatives, this is really where we want to see progress. This is 

where we want to see proof, if you will, that the cooperatives are 

27 

independent and able to manage these assets and not with interference from the Cuban Government. 

I did return very optimistic about the future of U.S., Cuban, and 

cooperative endeavors. Furthermore, the challenges facing the cooperatives there are technical, they are accounting, educational obstacles are the exact kinds of issues that can be addressed and addressed well by Americans and American co-ops. We stand with 

U.S. co-ops ready to provide this as soon as the legal and governmental issues between the two countries are resolved. U.S. co-ops 

are a compatible development tool that can make a difference in 

developing healthy and vibrant cooperatives in Cuba, and cooperatives that can over time become valuable to both the American and 

the Cuban consumer. 

The legal and governmental issues we have talked about this 

morning are real and are something for us to look to policymakers 

like you to resolve. NCBA is a business group focused on consumer 

empowerment and economic results. We are leaving diplomacy to 

the diplomats. 

As the new U.S.-Cuban relationship takes place, NCBA respectfully but forcefully wants to remind Congress that we are here, 

that cooperatives are ready to roll up their sleeves and get to work, 

and cooperatives are an ideal democratic structure and form of operation that can produce results on the ground. 

Cooperatives are going to help the Cuban people develop financially viable, member-owned businesses that assist in the economic 

empowerment of Cuban entrepreneurs, and in doing so we provide 

Cuban consumers with marketplace choices and, perhaps most importantly, further U.S. interest by demonstrating the benefit of democracy and financial independence that ownership confers. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Beall can be found on page 44 

in the appendix.] 

Chairman ROBERTS. We thank you, Mr. Beall. 

Senator Boozman wanted to introduce Mr. Harris. 

Senator BOOZMAN. Thank you, Chairman Roberts, Ranking Member Stabenow. I am very pleased to welcome Terry Harris to testify 

before our Committee. Thank you for extending the invitation to 

this distinguished witness. 

Mr. Harris has worked for Riceland Foods since 1975, and currently he is the senior vice president for marketing and risk management. Mr. Harris has traveled to Cuba more than 20 times, and 

he has a wealth of knowledge on the practical challenges that 

America’s farmers and ranchers face with trading with Cuba. Mr. 

Harris lives and works in Stuttgart, Arkansas, which is the rice 

and duck capital of the world. I look forward to hearing Mr. Harris’ 

testimony. Thank you for being here. 

STATEMENT OF TERRY L. HARRIS, SENIOR VICE PRESIDENT, 

MARKETING AND RISK MANAGEMENT, RICELAND FOODS, 

STUTTGART, ARKANSAS 

Mr. HARRIS. Thank you, Senator Boozman. Mr. Chairman, thank 

you for the opportunity to appear before this Committee today. 

Riceland is a family farmer-owned cooperative that was formed 

in 1921 to market rice. Today Riceland serves approximately 6,000 

28 

farmer members in Arkansas and Missouri who grow rice, soybeans, and wheat. The cooperative markets about a third of the 

rice grown in the southern United States and about 25 percent of 

the national production. 

Riceland is primarily a direct exporter, selling directly to buyers 

in importing countries. As a result of this direct approach, our staff 

is very well schooled in the details of everyday management of logistics and finance related to the export business. 

Riceland Foods is also proud to be a member of the USA Rice 

Federation. USA Rice represents all segments of the U.S. rice industry. Rice is grown in seven States, including Arkansas, California, Louisiana, Texas, Mississippi, Missouri, and Florida. Nearly 

half of the U.S. crop is grown in eastern Arkansas. The industry 

markets rice in all 50 States and to 125 countries worldwide. USA 

Rice is a founding member of the U.S. Agricultural Coalition for 

Cuba, a broad-based group of U.S. ag and food organizations seeking to reestablish Cuba as a market for U.S. food and ag exports. 

My objective today is to discuss the past and potential trade relationship between the U.S. and Cuba, a future that I believe holds 

great promise for U.S. rice farmers and U.S. agriculture. 

The United States exports about half of the rice produced annually, so maintaining existing markets, as well as developing new 

markets, are key components to the industry’s success. Therefore, 

the U.S. rice industry wholeheartedly supports the opportunity to 

move to normal commercial relations with Cuba. 

Prior to the U.S. embargo on Cuba more than 50 years ago, the 

island was the number one export destination for U.S. rice. Annual 

rice shipments reached as much as a quarter of a million metric 

tons in the 1950s, and the U.S. accounted for more than half of 

Cuba’s rice imports. 

Prospects brightened with passage of the Trade Sanctions Reform and Enhancement Act of 2000, when U.S. agriculture and 

food exports to Cuba were granted, or what many of us believed at 

the time to be, a broad exemption from the embargo. 

In November 2001, I had the opportunity to make the first sale 

of U.S. rice to Cuba since the embargo was imposed. It was an incredibly intense and interesting negotiation as we developed contract terms and quality specifications for a country which, at that 

time, had not purchased goods from the U.S. in more than 40 

years. 

I found the leadership of the Cuban buying organization informed, shrewd, and very professional. I was also in Cuba to witness the first shipment of U.S. rice when it arrived in the Port of 

Havana. It was an unforgettable experience for me to see how excited they were with the quality of rice they had been able to purchase for the people of Cuba. I saw what can happen when barriers 

are removed and people are allowed to meet and find common 

ground for cooperation and trade. 

The success of rice and other U.S. agriculture products in Cuba 

was seriously curtailed in large part following a change by the Office of Foreign Assets Control in the definition of ‘‘cash in advance’’ 

in 2005. U.S. rice exports to Cuba dropped to zero following this 

regulatory change. 

29 

Currently, most of Cuba’s rice imports come from Vietnam. With 

the port of New Orleans located less than 700 miles from Havana, 

the U.S. is in a better position to serve the rice needs of the Cuban 

people in terms of transit time and cost of freight. 

With the lifting of the embargo and the restoration of trade and 

travel with Cuba, we estimate that the U.S. could regain 20 to 30 

percent of the Cuban rice business within 2 years, or an estimated 

90,000 to 135,000 metric tons of new demand for U.S. rice farmers 

based on USDA’s estimate of Cuba’s annual import needs. We 

would anticipate the U.S. share of this market would exceed 50 

percent within 5 years and could reach as high as 75 percent or 

more within 10 years. 

On January 15, 2015, OFAC made changes to the regulations on 

trade with Cuba that allowed for the definition of ‘‘cash in advance’’ 

to revert to the pre-2005 wording. We applaud this measure, as 

well as other actions by the Obama administration to facilitate 

trade. However, there are still obstacles to conducting normal trade 

with Cuba. 

I stated earlier that we are seeking normal commercial relations 

with Cuba. This means allowing U.S. citizens to travel and spend 

money in Cuba without restrictions as well as allowing Cuba to export their goods to the U.S. as they do to most countries around 

the world so they can gain the resources and increased demand to 

import U.S. food and ag products. It also means permitting the full 

range of commercial banking and financial relationships to facilitate trade based on individual exporter assessments of the risk of 

doing business. 

The U.S. rice industry and Riceland Foods is committed to building the Cuba market for our product. Our company has made numerous trips to Cuba to meet with Cuba’s national importer of rice 

and food. USA Rice has spent just under $900,000 in rice industry 

promotion funds since 2003 to promote the high quality and efficiency of U.S. rice in the Cuba market. We intend to continue those 

activities. 

To give U.S. rice the chance to compete in Cuba, the rice industry seeks the ultimate lifting of the embargo and the elimination 

of all restrictions on tourism and trade with Cuba. This, of course, 

requires congressional action. 

Thank you. 

[The prepared statement of Mr. Harris can be found on page 52 

in the appendix.] 

Chairman ROBERTS. Thank you, sir. 

Senator Klobuchar. 

Senator KLOBUCHAR. Well, very good. Thank you, Mr. Chairman. 

I am very pleased today to introduce Mr. Ralph Kaehler. Ralph is 

a Minnesota native whose family has been farming in St. Charles 

for nearly 130 years. He has been on a number of different trade 

missions to Cuba, and he has a unique perspective of someone who 

both understands how modernizing our country’s relationship with 

Cuba impacts farmers here at home, and also understands how it 

could impact Cuba’s culture and people. 

In February, he was one of the panelists at the Cuba forum I referred to that Under Secretary Scuse came out for, and it is good 

to see him here today. I look forward to hearing his testimony. We 

30 

are really excited to have a Minnesotan on the panel. Thank you, 

Mr. Kaehler. 

STATEMENT OF RALPH KAEHLER, FARMER AND OWNER, 

KAEHLER CATTLE COMPANY, ST. CHARLES, MINNESOTA 

Mr. KAEHLER. Thank you. Chairman Roberts, Ranking Member 

Stabenow, Senator Klobuchar, and all members of the Committee, 

thank you for holding this panel on ag trade with Cuba. 

Chairman ROBERTS. Mr. Kaehler, would you just take a moment 

here? I understand you have two boys, Chase and Colby; two girls, 

Opal Jo and Elsie. It is also my understanding—I would like to 

take a moment—no, this is not correct? Wrong witness. Sorry. 

[Laughter.] 

Mr. KAEHLER. I have got two boys and one daughter-in-law-tobe, so we started out right. 

Chairman ROBERTS. I have two daughters and one—— 

Senator KLOBUCHAR. These were the trick questions we were 

telling you about, Mr. Kaehler, that we prepared for. Okay, good. 

You did well. You did well. You did not agree. 

[Laughter.] 

Chairman ROBERTS. I think the whole world knows I have grandchildren, and I want to ‘‘Let It Go.’’ 

[Laughter.] 

Chairman ROBERTS. All right. Please proceed, sir. 

Mr. KAEHLER. Well, we are both fifth generation. You just got 

the two mixed up. 

Chairman ROBERTS. Feel free to summarize your comments after 

my intemperate remarks. 

Mr. KAEHLER. No problem. I guess we are on. Well, my two sons 

are the fifth generation to be operating our family farm in St. 

Charles, which sits in the southeastern part of the State. Our farm 

produces traditional crops, canning crops, and livestock. We are nationally recognized beef breeding livestock producers whose claims 

to fame include exporting the first livestock to Cuba in 2002 since 

the enactment of the trade embargo. Our youngest son, Seth, is 

going to be married in November. He is actively involved in the 

cattle operation and will be taking over the export activities. My 

oldest son, Cliff, recently returned home from Wall Street to start 

a solar energy company, and we are pretty excited to bring a kid 

back from Wall Street into rural Minnesota. 

Our initial exposure to Cuba was as an exhibitor in the First 

U.S./Cuba Food and Agriculture Exposition in 2002 through an invitation from Governor Ventura. Of the over 180 exhibitors from 30 

States, the Kaehler Farm display was the only one with live animals—affectionately known as the ‘‘Cuban Ark.’’ It consisted of two 

beef cow, two dairy cows, two pigs, two sheep, and two bison bottle 

calves that we took on behalf of the North Dakota Farmers Union. 

The display was intended to exhibit the diversity of U.S. livestock 

producers and introduce Cuba to what we considered was a typical 

farm family. 

We returned home from that exposition motivated to do more. 

Since then, we have led over 10 trade delegations to Cuba. These 

missions have included producers from over seven States and a bipartisan mix of State lawmakers and officials. To date, some of the 

31 

most successful exports to Cuba that we have initiated include the 

shipments of the first livestock, the first dried distillers grains, a 

letter of intent for powdered milk, the first animal milk replacer, 

and the first texturized calf feed, which was made by a local farmer-owned co-op. 

Given the opportunity, U.S. farmers do well in Cuba. We have 

a significant advantage of shorter shipping over Europe, South 

America, Asia, and other major exporters. In addition, Cuba can 

take advantage of our U.S. rail container service and sizing options, which brings significant benefits to smaller privately owned 

businesses like ours or the edible bean producers in the Midwest. 

On top of this, U.S. producers offer a wide variety of affordable and 

safe food products for the Cubans. 

Unfortunately, some of the policies currently in place diminish 

the natural advantages American agriculture enjoys over its competitors. For instance, requirements for using third-country banks 

for financing adds a lot of paperwork, time, and personalities to 

every transaction. Coupled with a restrictive cash-in-advance policy—which I know the President helped to improve in recent 

months—there is a very small margin of error before a shipper 

faces demurrage fees. As a family operation trying to build our 

business through exports, this self-inflicted inefficiency can be really difficult to manage. 

What do I hope to see for farmers in the national Cuba debate? 

First, I hope farmers can work with Congress to improve the trade 

financing rules for Cuba. The efficiencies gained by doing this 

would be immediately beneficial. It would make shipping cheaper 

for producers and food less expensive for Cubans, both of which can 

only be a good thing for our trade relationship. 

Second, I have to mention the importance of the USDA to ag exporters. Large companies have plenty of resources without this promotion and technical assistance, but small firms like ours do not 

have the luxury of extra available cash or shareholder offsets. We 

need marketing support and assistance to help support our companies and figure out exactly what is going on in the markets abroad. 

I hope to see these resources available someday soon for our small 

and medium-sized producers to help us work on selling our products to Cuba. 

Finally, I hope that Congress will expand the universe of people 

involved in U.S.-Cuba trade by allowing a greater variety of goods 

and services to be traded. I do not know much about politics, but 

I have spent a lot of time in Cuba and have built strong relationships with the farmers and their families. Our farm has weathered 

many ups and downs in doing business with Cuba, including a recession, high commodity prices, and difficult financing rules. But 

we have made progress over time and have never been shortchanged by our customers. I can only imagine that having more 

interactions like these—farmer to farmer—will help build a better 

understanding between our two countries and build a better quality of life on both sides. 

I look forward to answering any questions. Thank you for this 

opportunity. 

[The prepared statement of Mr. Kaehler can be found on page 59 

in the appendix.] 

32 

Chairman ROBERTS. Thank you, Mr. Kaehler. I apologize for the 

congressional oversight in regards to you adopting Mr. Keesling’s 

family. 

[Laughter.] 

Mr. KAEHLER. Well, my folks could not get our name right half 

of the time neither. No problem. 

Chairman ROBERTS. Doug Keesling has traveled from Chase, 

Kansas, America, to join us today. Mr. Keesling is representing the 

Kansas Wheat Commission, where he has served since 2005. Doug 

and his wife, TJ, grow wheat, corn, soybeans, milo, and alfalfa on 

their fifth-generation farm. Now, Doug and TJ do have two boys, 

Chase and Colby; two girls, Opal Jo and Elsie. The whole point is 

I would like to take a moment here to wish Elsie a very happy 1- 

week birthday. You better get back home as soon as you can. 

[Laughter.] 

Chairman ROBERTS. Mr. Keesling. 

STATEMENT OF DOUG KEESLING, FIFTH GENERATION 

OWNER, KEESLING FARMS, KANSAS WHEAT, CHASE, KANSAS 

Mr. KEESLING. Good morning, Chairman Roberts, Ranking Member Stabenow, and members of the Committee. Thanks for the opportunity to testify today about the opportunities for agricultural 

trade with Cuba. In particular, I would like to thank Chairman 

Roberts for his kind invitation and his decades of service to Kansas 

and her farmers. 

My name, again, is Doug Keesling. I am a fifth-generation farmer from Chase, Kansas, and I have been on the Wheat Commission 

for the last 10 years and have been able to travel several places 

because of that. 

I recently returned from Cuba, where I was part of a delegation 

organized by the U.S. Agriculture Coalition for Cuba. The primary 

purpose of USACC is to reestablish Cuba as a market for U.S. food 

and agriculture exports, and the wheat industry fully endorses that 

goal. 

There were nearly 100 participants on the trip representing a 

wide range of agricultural organizations and companies. From 

what I could see, there was a lot of potential in Cuba—potential 

in its own ag sector and potential as a market for U.S. ag exports. 

As a Kansas wheat farmer, that potential was obvious every time 

a meal included bread. Cubans eat a lot of it, and they are the largest wheat importer in the Caribbean, to the tune of nearly 30 million bushels per year. That would be over 10 percent of all the 

wheat grown in Kansas, going to this one island just a couple days’ 

sail from the U.S. ports. 

Cuba is the largest country in the Caribbean and the largest 

wheat importer. That is because Cubans are not only buying-sorry. 

Today the wheat imports from the United States have an upward 

potential of the whole 30 million bushels. That is because Cubans 

are not buying any wheat from the United States. They buy almost 

all their wheat from Canada and Europe, as has been discussed before, even though Cuban ports are much closer to U.S. ports. That 

is a $200 million opportunity that passes us by every year. 

When Congress lifted some of the restrictions on U.S. ag exports 

early in the last decade, we were excited that there would be an 

33 

opportunity to reestablish Cuba as a consistent wheat market for 

American farmers. For a while, it looked like that might happen, 

as wheat exports slowly grew through the decade until they peaked 

at 18 million bushels in 2008. 

But exports tanked over the next couple of years, eventually 

dropping to zero. But it has nothing to do with economics. It is particularly very difficult for Cubans to import wheat grown in Kansas 

and apparently much easier for wheat grown in Canada or France. 

I can put my wheat in an elevator in Kansas, send it by rail down 

to the gulf, put it on a ship that is a couple days away from the 

Havana harbor, but my wheat is still going to lose out to wheat 

that has to be on a boat for a week from Canada or even 2 weeks 

from France. 

The problem is rules and laws that make it too expensive to compete in that market. The law requires that exporters receive cash 

before they are allowed to unload in a Cuban port. If a company 

wants to take the risk of providing a loan to a Cuban buyer, they 

are out of luck because selling on credit is not even an option for 

them. There are also shipping restrictions that generally prohibit 

docking in the United States if a ship has been in a Cuban port 

within the last 6 months. 

As a farmer, I have to evaluate all the costs that go into planting 

wheat, including seed, fertilizer, fuel, maintenance, compliance, 

and financing. If it is too expensive, I will just have to give up on 

wheat and plant a competing crop. Well, that is what the Cubans 

face when they are trying to purchase my wheat. It is just too expensive. But they are not going hungry. They are just buying 

wheat from other countries that may be more expensive than mine 

in a free market, but is now a much better value because there are 

not massive compliance costs accompanying every purchase. 

It does not make any sense to me that if someone wants to buy 

the wheat that I grow, they have to jump through the sorts of regulatory hoops that they do. If Cuba is to become a successful export 

market for U.S. farmers, these regulatory obstacles need to be repealed. But more than that, we need to see the trade sanctions in 

their entirety lifted. Cuba has enormous economic potential, and 

while it certainly remains a communist country, that hardly justifies the scale of the sanctions, especially when trade relations with 

other communist countries are growing deeper all the time. 

U.S. agriculture is never going to realize its full potential in 

Cuba as long as the trade sanctions are in place. If they cannot sell 

us their tourism services, like cigars, rum, fruit, and other products 

where they have an advantage, we will always face an uphill battle 

in selling the products of American soil. It is time for us to eliminate these barriers and see how far this free trade relationship can 

go. 

I would suggest that Congress carefully consider why there is a 

compelling reason to restrict the freedom of Americans to engage 

in commerce, especially for those who are just trying to sell wholesome, American-grown food. I sure do not see one. 

In conclusion, I would like to reiterate the support of Kansas 

Wheat and a broader Kansas ag community for normalizing trade 

relations with Cuba. Agriculture and the subsidiary industries that 

34 

support it will stand to benefit if we can open unfettered trade with 

Cuba. 

Thank you again for the invitation to testify this morning and for 

your attention. 

[The prepared statement of Mr. Keesling can be found on page 

61 in the appendix.] 

Chairman ROBERTS. Thank you, Doug. Say hello to Elsie for me. 

Mr. KEESLING. Thank you. 

Chairman ROBERTS. We have now a welcome to Dr. C. Parr 

Rosson, who is joining us today from Texas A&M University. Dr. 

Rosson is professor and department head of the Agricultural Economics Department where his extension and research interests 

focus on international trade and international marketing. He, however, is not responsible for Texas A&M leaving the Big 12 and 

going to that other football conference. 

[Laughter.] 

Chairman ROBERTS. Dr. Rosson received his Ph.D. and Master’s 

and Bachelor’s all from Texas A&M, served as an officer in the 

United States Army, and was a captain in the U.S. Army Reserve. 

We thank you for your service, sir. 

Dr. Rosson, I believe you are joined today by your wife, Helen. 

Is that correct? 

Mr. ROSSON. No, sir. She is not here. 

Chairman ROBERTS. I see. All right. We obviously will not have 

her stand. 

Let me just get right to some questions real quick—oh, yes, you 

have your testimony. Pardon me. 

STATEMENT OF C. PARR ROSSON, III, PH.D., PROFESSOR AND 

DEPARTMENT HEAD, DEPARTMENT OF AGRICULTURE ECONOMICS, TEXAS A&M UNIVERSITY, COLLEGE STATION, 

TEXAS 

Mr. ROSSON. Thank you. Good afternoon, Mr. Chairman, Ranking Member Stabenow, and esteemed members of the Committee. 

It is my pleasure to be here today, and I want to thank you inviting me to testify on the challenges and opportunities associated 

with trade with Cuba. I have been studying the Cuban market for 

about 15 years. I have been there a number of times. We continue 

to monitor what happens in Cuba and how that impacts U.S. agricultural exporters. 

In fact, our work at Texas A&M indicates that one U.S. job is 

created for about every $76,000 in U.S. exports to Cuba, and we 

think that makes it worthwhile for us to continue to stay engaged 

on this important issue. 

Just a little bit about background. Our exports have averaged 

about $300 million annually since 2002, but they have fluctuated 

widely, from about $140 million in 2002, up to $709 million in 

2008, and that uncertainty has been a problem for our businesses. 

The product mix has also changed. During the first decade of our 

export experiences with Cuba, we exported a wide variety of products, such as corn, soybeans, rice, wheat, animal feeds, cotton, 

along with processed foods, such as frozen leg quarters, pork, beef, 

dairy products, dry beans, snack foods, canned fruit, vegetables, 

bottled water, and also grapes, pears, and treated telephone 

35 

poles—so a fairly broad array of products up until 2012, when 

things began to deteriorate. 

The more recent export categories over the last couple of years 

have really been concentrated in three areas, and that is, frozen leg 

quarters, the soy complex, and corn. In fact, last year, those three 

accounted for 96 percent of our exports. In my mind, that is precariously risky. We just do not have the diversity of our marketing 

base to withstand the kind of declines we have seen over the last 

few years. 

There are a number of things that have happened that have contributed to these declines, and I would like to briefly go over those. 

One is that Cuba has moved away from U.S. exporters of products such as rice, wheat, and higher-value foods to more price-competitive competition. We have talked about Brazil, Canada, Argentina, Mexico, Spain, and Vietnam, and I have seen some of those 

products in the market—rice, for example, 25 percent cracked and 

broken. It has got to be sifted before it can be served in restaurants 

or hotels. So it may be cheap when it gets there, but by the time 

they get through handling it, the quality deteriorates further and 

it becomes a much lower-quality product when it is cooked and 

served. 

No doubt the strong dollar over the last several years has put 

some downward pressure on our exports. It has made our products 

higher-priced. The Cubans also have diversified away from us to 

lower-priced competition. During the global recession, Cuba’s earnings from tourism declined along with declines in the value and the 

volume of their all-important nickel and cobalt exports. Remittances from Cuban Americans also declined during that time and 

put a lot of pressure on the Government of Cuba and limited their 

ability to purchase products from the U.S. 

Of course, the key thing to note about the Cuban market is that 

the term ‘‘market’’ today is a misnomer. As we have talked, 

Alimport controls all aspects of importing food products from the 

United States, and I am also of the opinion that from time to time 

the Cuban Government itself gets directly involved in some of these 

decisions. They influence what is purchased, how much, and from 

whom. 

Despite these constraints, Cuba has some potential. We have 

been looking at this for a long time. It has become a much larger 

market for U.S. exports. We estimate about a $1 billion market 

over the next 5 years. What is important is Cuba’s demographics 

are favorable for growth. With a population of 11 million people, 

99.8 percent of whom are literate, Cuba has a highly trainable 

workforce of more than 5 million people. 

In addition, those aged 25 to 54 represent 47 percent of the population and are in their peak consumption years, and these characteristics are very similar to the Dominican Republic, to which we 

exported $1.4 billion in food products last year. 

For this potential to be realized, we must see gains in consumer 

incomes in Cuba. We need to see improvements in infrastructure 

and logistics, some of which have been discussed here today. We 

also need to see more stable policy regimes and policy environment 

that would stimulate interest on the part of U.S. businesses. 

36 

Concluding, the Cuban market for U.S. food and agriculture-re- lated products has the potential to exceed $1 billion annually, and 

this would create 6,000 new jobs in this country. To be realized, 

however, we need to see positive changes in income, infrastructure, 

and regulation. 

Thank you very much. 

[The prepared statement of Mr. Rosson can be found on page 65 

in the appendix.] 

Chairman ROBERTS. Well, Doctor, thank you very much for that 

most informative testimony. 

Doug, you mentioned that the rest of the Caribbean region, the 

market share for United States wheat is over 80 percent. If Cuba 

resumes the purchases of U.S. wheat, what is your estimation of 

the market share of U.S. wheat in Cuba? Do you see this level of 

market share staying relatively stable given the economic volatility 

in Cuba? 

Mr. KEESLING. Well, first of all, I see no reason for it not to go 

up from zero. Second of all, I see no reason that it should not be 

somewhere in that range of that 80 to 90 percent, likewise in the 

rest of the Caribbean. 

Chairman ROBERTS. Dr. Rosson, you have worked on projects in 

Mexico, Canada, Brazil, Cuba, Guatemala, Nicaragua, Costa Rica, 

Argentina, Ecuador, Australia, Japan, Iraq, Indonesia, Singapore, 

Philippines, Malaysia, and Thailand. Did you sing that country 

western song, ‘‘I’ve Been Everywhere, Man’’? 

[Laughter.] 

Chairman ROBERTS. You taught at Clemson University. You are 

a Tiger as well as an Aggie. Thank you for your testimony. You certainly have an impressive background. 

We have got an opportunity to expand our competitive position 

of U.S. agriculture in the Cuban market. The distinguished Chairwoman Emeritus agrees with me, and I know that the Senator 

from Arkansas does as well. But when farmers and ranchers explore an expansion of their business opportunities, they not only 

explore the benefits but also the potential costs. What are some factors that could weaken our competitive position of the agricultural 

products in the Cuban market? 

Mr. ROSSON. Well, from our standpoint in Texas, one of the 

things right now is a limiting factor in the movement of container 

cargo, which would apply to a lot of the higher-value food products. 

We do not really have service right now out of our local ports to 

move directly. We have to go to Florida, transload, then move into 

the Cuban market, usually by barge, and it takes several days to 

move that cargo. It raises the cost, and it endangers those products 

in terms of the quality, the reliability when they get there, and the 

condition in which they arrive. So I think improving our own 

logistical system is one thing that needs to happen. 

A second thing is within the Cuban market itself, the times I 

have been there and been with companies that have exported products, particularly perishable products to be used in food shows, for 

example, we have had trouble with reliable electrical power both at 

customs as well as in hotels and restaurants, where we might go 

periods of several hours without electricity. If you have a frozen 

dessert that goes that long without power, when you get done, it 

37 

is not exactly what you had come in with. So those kind of 

logistical requirements are an issue. 

The other thing is simply that the capacity of refrigerated warehouse space I think needs to be enhanced, which would allow us 

to move more products into the market on a more reliable basis 

and more steadily over time. 

Chairman ROBERTS. I appreciate that very much. All of you have 

traveled to Cuba over the years. What are some of the supply chain 

challenges? I think, Dr. Rosson, you have already testified on some 

of that. Would any of you like to pitch in? Mr. Beall, do you have 

any commentary? 

Mr. BEALL. Well, I think that in terms of some of the issues, I 

think you are going to see that cooperatives are going to have to 

figure out ways to create some of the relationships that we are 

talking about. Those relationships we think are the piece that is 

going to bridge some of these problems and gaps, and, frankly, I 

think we need the Government to be able to get out of that so that 

these sorts of solutions the cooperative cooperatives create can step 

in and fill those gaps. 

Chairman ROBERTS. Mr. Harris. 

Mr. HARRIS. Again, we made the first sale of rice to Cuba in 

2001, and it was pretty seamless, quite frankly. We shipped bulk 

rice there, and taking advantage of their lower-cost labor, we actually had the rice bagged on the docks within Cuba for distribution 

from there. One of the benefits that we see, Mr. Chairman, is that 

when Cuba buys rice from Vietnam, they have to buy in extremely 

large vessels, 25,000-, 30,000-, 40,000-ton vessels. Because of the 

proximity to the U.S., we can actually load small vessels, go not 

only to the Port of Havana but go to other ports like Santiago de 

Cuba and other ports within Cuba. That really helps them on their 

storage, their warehousing, and their distribution within country. 

Chairman ROBERTS. Mr. Kaehler. 

Mr. KAEHLER. We have had a lot of interaction with the Cuban 

people. One thing they need is our technology. They have fallen behind us. They need access to more of our products, such as farm 

equipment. We have some limitations as to what we can ship to 

Cuba. 

One thing we found, for example, we took gifts of fencing tools 

and a set of wrenches down to them. Now, some of the professionals that were in our trade delegation were not sure if that was 

a very good gift to take. When we took it to the farmers, they had 

tears in their eyes. They went in the subsequent trade mission. 

They showed us all the fences that were built with our tools that 

we took down because we understood what their needs are. 

So as we get some efficiencies in our shipping and bring our 

farmer-to-farmer interaction, we will improve their productivity, 

which will increase the demand for our U.S. goods. 

Chairman ROBERTS. Doug, do you have anything to add? 

Mr. KEESLING. I will echo onto that. I think sometimes our biggest restriction to trade with Cuba may be us, not them. Of course, 

you guys have the power to work on that, and you are, and that 

is very good. 

I think as far as what I saw in Cuba, their entrepreneurship, 

which several of you guys have touched upon, was outstanding. As 

38 

a business owner myself that was something that really stood out 

to me, and I think they are going to try to make anything we can 

do work. 

Chairman ROBERTS. Senator Stabenow. 

Senator STABENOW. Thank you very much, Mr. Chairman. I 

think this has been a really important discussion. 

First, Mr. Beall, I just want to underscore, when you were talking about cooperatives, in the conversations that I have had with 

Cuban officials, first, they are very positive they have created cooperatives and the ability for more decisions to get made by farmers, although there is more to do, as you say, to get the Government out of that position so that the farmers are the ones really 

driving the train here. 

It was interesting to me, as we were talking, Mr. Kaehler, you 

were talking about what they are interested in terms of equipment 

and tools and so on. We talked a lot about farm equipment and 

tractors and the fact that the new decision that the President made 

was to allow farm equipment, and the fact that they had cooperatives, most of them did not have one tractor, and they were making 

decisions as to who got a tractor and how many tractors. So there 

are a lot of opportunities for us to be able to expand, but I think 

cooperatives are very much a part of this structure going forward. 

So I am glad to hear your testimony. 

I am wondering, Mr. Kaehler, because you have been to Cuba so 

many times and have had the opportunity to really navigate both 

from agriculture but looking also at Cuba’s economy from a broader 

trading relationship, beyond exports, in terms of commodities, 

when you think about how to more fully develop the farm economy 

in Cuba and what we can do, what would you suggest? I am wondering what products or services or assistance we are leaving out 

of the conversation so far. What should we be focused on that we 

have not been talking about? 

Mr. KAEHLER. Well, when we went down, for example, the first 

trip, when we were there in 2002, the nutrient compendium that 

the gentleman had was from 1989. So working with some of the 

magazines and universities, taking updated technical information 

to help with the livestock we exported and feeding them was our 

first step. Things had changed from their time of closeness with the 

Soviet Union. Their professionals are all willing to get U.S. technology and get access through the Internet. 

We took in—when we took distillers grains down and showing 

them how to feed it—they are a grass-based economy. But when 

they went through the drought, we got reports from a Cuban paper 

of one farmer had a report he had lost two-thirds of his livestock, 

and the quote in the paper was he went to the bag and reached 

in and got a scoop of what we trademark Norgold in Minnesota as 

distillers grain, he said, ‘‘Without this product from the U.S., I 

would have lost all my cattle.’’ 

So we were providing technology that way, getting farm equipment, as you mentioned, the access to modern mixing equipment, 

modern milking equipment. It was only going to help our U.S. 

products as we improve production and improve efficiency for their 

farmers, and it will feed their people. There is a lot of poverty in 

39 

Cuba. We did not see a lot of hunger. But they are all looking to 

increase their supply of food for their families. 

Senator STABENOW. Absolutely. I am wondering, Mr. Rosson, 

again, we have talked about the fact of a small group of products 

that we are exporting now, we want to do more. We want to do 

more rice; we want to do more of everything, and that we need 

more diversity in terms of our goods that we are exporting to Cuba. 

How do you see the President’s new rules governing trade financing between the U.S. and Cuba as creating more opportunities for 

the underrepresented Cuban market? What more could we be 

doing? I know ultimately it is lifting the embargo, and we hope we 

are going to be able to get that done. But what more can we be 

doing right now? 

Mr. ROSSON. Well, I think the encouraging thing in the new regulations is the allowance for remittances to quadruple, and if they 

could go further, that would be even better because the remittances 

end up, 80 percent of it, in the hands of the Cubans—either consumers or small businesses. Those remittances represent about— 

they go into about 60 percent of the households in Cuba. So they 

can be quite important in terms of stimulating consumption, and 

part of that consumption would, of course, be food products, and we 

would hope from this country. They can also be used for business 

development, for example, in cooperatives or private business ventures. The Cuban people are very entrepreneurial. You have been 

there; you have seen the entrepreneurial spirit and the capacity 

that exists, but it has been harnessed. 

So I think remittances play a critically important role, and if 

those could be expanded, I think it would be a very positive impact 

on the people there. 

Senator STABENOW. Thank you. 

Thank you, Mr. Chairman. I appreciate your holding the hearing. 

Chairman ROBERTS. Thank you. 

Senator Boozman. 

Senator BOOZMAN. Thank you, Mr. Chairman. 

Mr. Harris, there has been some concern expressed by some 

Members of Congress in the sense as to what would happen, who 

would be obligated if a Cuban buying organization failed to pay or 

whatever. Some have concerns that perhaps the United States Government would be on the hook. I guess the question for you is, and 

the others can chime in also: If a Cuban buying organization fails 

to pay for a shipment of rice or whatever, would you expect the 

U.S. Government to compensate, in your case, Riceland or whoever 

else for the shipment? 

Mr. HARRIS. Senator, in my opinion, no. I mean, certainly we 

would welcome GSM financing. That would be a wonderful opportunity for the ag industry. But that is my job with the company, 

risk management, and we assess that every day. So we assume as 

we take that risk that risk is for Riceland Foods. 

Senator BOOZMAN. Anybody else? 

Mr. KAEHLER. I would expect that the rules change, it would be 

the same requirements as it is for any other company—any other 

country and any other business transaction. As a business owner 

it is a transaction between buyer and seller, and as we mentioned, 

that is risk we take, and we have to analyze our business as we 

40 

do it. As producers, we are asking for less Government interaction, 

not more. 

Senator BOOZMAN. No, no, and I agree totally. Again, I think 

there has been a misconception, and I really wanted to clarify that. 

You know, we have talked a lot about today—your testimony was 

excellent and very helpful, as was the other panel. I guess the bottom line is: Have the recent administrative changes regarding 

trade—are they going to help your business with what is going on 

right now? Mr. Harris. 

Mr. HARRIS. I can respond on behalf of Riceland Foods. No. It is 

a very small step. I can tell you that the day after the President’s 

announcement I contacted Alimport and told them certainly we had 

an interest in doing business there, and they thanked me very 

much for the call but had no interest in purchasing U.S. rice. So, 

Senator, I really think that they are looking for an eliminate of the 

embargo so that they can have the ability to create foreign exchange by selling their rum and their cigars and their citrus to the 

U.S. and the tourism that they need so badly. I really think that 

the small incremental moves that we are making are not swaying 

them to try to work closer with us. 

Senator BOOZMAN. Would you all agree that is the major barrier? 

Or what is the major barrier? 

Mr. KEESLING. I agree that I think the answer would be the repeal of the embargo. As a wheat farmer from Kansas I am looking 

at June to be harvesting my wheat crop. So I would be looking— 

it would be at the port in July. So if the embargo is lifted, we could 

be selling wheat to Cuba in July or sooner, and this is what is 

holding it up. 

Senator BOOZMAN. Dr. Rosson. 

Mr. ROSSON. My perception is—and I have visited with the people here at the Cuban Interest Section, both this group as well as 

the previous group, and there was a lot of optimism early on that 

we were going to change the rules, possibly lift the embargo. Of 

course, that has not happened. I think in about 2011, 2012, they 

came to the realization that the carrots they had been offering in 

terms of purchasing products from 38 different U.S. States had not 

worked, and that is when they began to diversify away from the 

United States to other countries. 

I think they are waiting for—well, in our perception, this is a 

very strong signal. In their minds it may not be strong enough, and 

I believe they are still waiting to see what we are going to do. 

Senator BOOZMAN. Very good. Mr. Kaehler? Okay. Very good. 

Well, thank you all again for being here. I do appreciate your testimony, and it really is very, very helpful. You all are on the ground 

floor of this, and nobody understands it better than you all. So 

thank you very much. 

Chairman ROBERTS. I share the comments by the distinguished 

Senator from Arkansas. In my view, it is access to credit. In my 

view, it is whether or not the banks in question and obviously the 

customers of those banks have an appetite for risk, if we can use 

that term again. That is to be seen, and I just want to assure you 

all that this Committee stands firmly behind our efforts to see if 

we cannot clear up some of those obstacles that you have talked 

about. 

41 

Thank you so much for coming. This will conclude the second 

panel of our hearing. Thanks to each of our witnesses for being 

part of Government in action—that is two words. 

[Laughter.] 

Chairman ROBERTS. The testimony provided today is valuable for 

lawmakers to hear firsthand. To my fellow members who were not 

present earlier, we would ask that any additional questions you 

have for the record be submitted to the Committee clerk 5 business 

days from today, or by 5:00 p.m. next Tuesday, April 28th. 

Thank you so much. The Committee is adjourned. 

[Whereupon, at 12:35 p.m., the Committee was adjourned.] 

(43) 

A P P E N D I X 

APRIL 21, 2015 

44 


96175.001
45 


96175.002
46 


96175.003
47 


96175.004
48 


96175.005
49 


96175.006
50 


96175.007
51 


96175.008
52 


96175.102
53 


96175.103
54 


96175.104
55 


96175.105
56 


96175.106
57 


96175.107
58 


96175.010
59 


96175.011
60 


96175.012
61 


96175.013
62 


96175.014
63 


96175.015
64 


96175.016
65 


96175.017
66 


96175.018
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96175.019
68 


96175.020
69 


96175.021
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96175.022
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96175.023
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96175.024
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96175.025
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96175.026
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96175.027
76 


96175.028
77 


96175.029
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96175.030
79 


96175.031
80 


96175.032
81 


96175.033
82 


96175.034
83 


96175.035
(85) 

DOCUMENTS SUBMITTED FOR THE RECORD 

APRIL 21, 2015 

86 


96175.036
87 


96175.037
88 


96175.038
89 


96175.039
90 


96175.040
91 


96175.041
92 


96175.042
93 


96175.043
94 


96175.044
95 


96175.045
96 


96175.046
97 


96175.047
98 


96175.048
99 


96175.049
100 


96175.050
101 


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102 


96175.052
103 


96175.053
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96175.054
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96175.055
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96175.056
107 


96175.057
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96175.058
109 


96175.059
110 


96175.060
111 


96175.061
112 


96175.062
113 


96175.063
114 


96175.064
115 


96175.065
116 


96175.066
117 


96175.067
118 


96175.068
119 


96175.069
120 


96175.070
121 


96175.071
(123) 

QUESTIONS AND ANSWERS 

APRIL 21, 2015 

124 


96175.072
125 


96175.073
126 


96175.074
127 


96175.075
128 


96175.076
129 


96175.077
130 


96175.078
131 


96175.079
132 


96175.080
133 


96175.081
134 


96175.082
135 


96175.083
136 


96175.084
137 


96175.085
138 


96175.086
139 


96175.087
140 


96175.088
141 


96175.089
142 


96175.090
143 


96175.091
144 


96175.092
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96175.093
146 


96175.094
147 


96175.095
148 


96175.096
149 


96175.097
150 


96175.098
151 


96175.099
152 


96175.100
153 


96175.101