U.S. Agricultural sales to Cuba nosediving
– Sales of U.S. agricultural products to Cuba continue to nosedive for the third consecutive year and hopes the trending decline will turn around do not appear realistic due to the economic situation of the island.
According to statistics released this Thursday by the U.S.-Cuba Economic and Commercial Council (USTEC), purchases by the State-run Alimport from American companies barely reached $240.3 million between January and August, an 11% decline compared to $268.1 million in transactions realized during the same period in 2010.
The decline in commercial transactions remains unstoppable since 2007 when Cuban purchases reached a record $710 million. Since sales to Cuba were authorized by Congress, the total dollar amount of transactions add up to $3.766 billion.
The principle reason for the decline: the Cuban regime’s lack of hard currency, which substantially diminishes its ability to pay in cash without any credit options.
“There is no indication that sales of food and agricultural products from the U.S. will increase in what is left of 2011, and once again we will see a decline in exports in comparison to 2010,” said John Kavulich, principle adviser to USTEC to Café Fuerte.
Kavulich said that Cuba will continue importing less and is looking for contracts with government entities of countries who provide them with political support and commercial credit, in particular Venezuela and China.
Ineffective efforts and less dollars
“The Cuban government intends to minimize the possibility that both the payment terms of the transactions and their expected inability to meet those obligations will become public,” said the executive.
In their report, USTEC cites among the causes for the chilling of commercial relations the fact that “once successful efforts by Cuba to increase the motivation of companies, organizations, and local and state governments, as well as members of Congress, to obtain changes in U.S. commercial regulations and laws have been increasingly less effective.”
The information from USTEC, which is based in New York, is supported by official data from the Agricultural and Commerce departments, and in the reports from export firms, but it does not take into account the added costs of transportation, bank fees, and other costs connected with the shipping of goods to the island. Alimport does not provide verifiable documents regarding its statistics dealing with the transportation of merchandise.
The spectacular decline in sales also coincided with the removal of the Alimport head, Pedro Alvarez, who presumably escaped to the U.S. late last year.
Alimport replaced Alvarez and he was named the president of the Chamber of Commerce at the beginning of 2009, but later he was stripped of his responsibilities during an investigation by State Security for acts of corruption. His whereabouts in the U.S. are unknown, although reports indicate he is in the area of Tampa.
The departure of Alvarez has provoked an evident decline in business relationships between American companies and government representatives that before was seen frequently on the island.
A midsummer’s night dream
“The reality is that the visas for business related travel that Cuba provides are getting more difficult to obtain, and business trips are practically cut off,” said Pedro Gonzalez-Munne, a publicist, businessman, and president of the company CubaPromotions in Miami. “Business delegations from the U.S. are now a midsummer’s night dream.”
At the beginning of September, some thirty Illinois State legislators visited Cuba with the intention of rekindling commerce between the two countries. It is the largest U.S. delegation to visit the island with business purposes all year.
Democrat Dan Burke, who led the delegation, was confident that business opportunities would improve for a state that beginning in 2001, at one point was selling $650 million in agricultural products a year to Cuba. Sales to Alimport by the state of Illinois have declined by 90% in the last five years.
Gonzalez-Munne says that his firm is facing difficulties establishing contacts and organizing business delegations, which years before was a common and fast process, and he considers that this panorama also reflects foreign participation in the Havana International Fair (FIHAV).
The 29th edition of FIHAV is scheduled to begin on October 31st and run through November 5th, and Cuba is hoping to find new markets and clients for the development of the national economy. Last year, representatives from 55 countries attended, including governmental delegations.
During the fair’s golden era, representatives from more than 400 U.S. companies attended.
The USTEC report on sales to Cuba is available HERE