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USACC Chair Talks Agricultural Trade with Cuba

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USACC Chair Paul Johnson on agriculture, US-Cuba trade relations and the upcoming Bill to Congress.

Paul Johnson is the Chair of the United States Agriculture Coalition for Cuba (USACC). Over 100 agricultural organizations and corporations belong to the USACC, focused on improving two-way trade with Cuba.

Our editor spoke with Mr. Johnson on agricultural trade between the U.S. and Cuba, the recent success of the Potato USA seed project, and the upcoming “Agricultural Export Expansion Act of 2021” bill to Congress.

Since 2014, he is also a Partner at Focus Cuba Consulting. He has led several business and political missions to the Island to improve trade and investment between the U.S. and Cuba.

In 2008, Mr. Johnson founded Chicago Foods International to export food products to the Cuban and tourism markets.

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For the last 25 years, he has lived in and traveled frequently to the Island.

Mr. Johnson has a degree in international relations from the University of Wisconsin and a Master’s from the University of Illinois in Chicago.

He lives in Chicago and, like many Americans, is longing for flights to open up again to Cuba.

Cuba Business Report: First, let me thank you for agreeing to an interview with us. Tell me, is it back to normal in the US? Can you get to Cuba again?

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Paul Johnson:

We’re still stuck with the charter flights, once a week, so it’s not good.

Is the bill co-sponsored by a group of people?

Mr. Johnson:

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It hasn’t been introduced yet. This week.

In preparing for this interview, I found the names of Senators associated with the Bill. There was John Boozman, Michael Bennett, John Hoeven, Tom Udall, Kevin Cramer, Angus King, Mark Warner, Susan Collins, Debbie Stabenow, Amy Klobuchar, Mike Enzi, and Patrick Leahy.

Mr. Johnson:

Yes, that was from the last time it was introduced.

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Are the same people going to co-sponsor it this time?

Mr. Johnson:

I imagine. They’re working on getting as many co-sponsors as possible. We’ll see.

The original bill died in the previous Congress. Do you have hopes that the outcome will be different this time? And what are the efforts behind the bill to ensure its success this time around?

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Mr. Johnson:

The last time they introduced it, President Trump was tightening the embargo and the rhetoric around Cuba made it difficult for Congress to maneuver. And there were no champions in Congress to support a Cuba bill that would go against the will of the president. Now that Biden is in office, we still don’t have a true champion on the Hill and we don’t have a president who has publicly stated his position on Cuba. So in some respects, we face similar challenges today as we did two years ago. That being said, while we don’t have a policy direction from the White House there isn’t the same pushback either. Frankly, the real goal has always been to get Congress to act. We’ve seen executive regulations signed and unsigned over the past decades. What we need is a law that can’t be overturned in the next election cycle.

Yes, exactly. Because business can’t function with that on-again, off-again thing.

Mr. Johnson:

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Yes, exactly right. Business wants certainty and we don’t have that. I think it’s important to note that this is not the only bill that’s circulating in Congress that would support or change our relations with Cuba. There are other bills. What separates this bill is that it takes a very narrow approach. It only addresses trade finance of agricultural commodities to Cuba, so the narrowness of the bill works in its favor because it may draw less opposition. However, there are other groups and even congressmen who would support a broader bill rather than having to alter the embargo piece by piece. But the real strength of this bill is in its bipartisan support. Senator Boozman is a Republican senator from Arkansas and the ranking chair of the Senate Agriculture Committee, and that carries a lot of weight. Senator Bennett is a Democrat out of Colorado. He has a great track record of working on both sides of the aisle. And, you know, let’s face it, Congress needs to show us that they can find some common ground. And I think this bill fits that category.

And it’s to the benefit of American farmers, of course. What do you think the efforts will be to ensure its success this time?

Mr. Johnson:

We circulated a letter of support within our coalition and we have great support on the national level. We had groups like the American Farm Bureau, Corn, Soy, Wheat, National Association of State Departments of Agriculture, National farm cooperatives, dry beans, Potatoes, Dairy, Cattle, you name it. There’s a lot of support at the national level and the state level. Cuba is an issue that has always had strong support across America, both in rural America and urban America. So that’s what we’re building from.

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You sort of answered the next question I had. What kind of support have you received from the groups within the coalition? It looks like you’ve had a lot, you’ve got over 100 hundred members, correct?

Mr. Johnson:

Yes, it’s good. I mean, we’ve circulated letters of support in the past, but not all of them always sign onto every effort that we do. What was different about this letter of support is that we had some groups that I hadn’t heard from in about four years. That was encouraging. That’s positive.

If this bill is successful, what do you see foresee for the future of US-Cuba agriculture?

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Mr. Johnson:

We would like to talk more about the future of US and Cuba agricultural relations, but it’s hard to talk about building a relationship from the ground up and learning from past years to build trust and confidence. This future conversation of the agriculture relationship doesn’t fit well in political circles where the focus, understandably so, is simply on how to get a bill through Congress or have the president sign an executive order. But it doesn’t leave much room to talk about what we want or where we are going. But what we need to talk about is comprehensive agricultural reform. That entails a slew of things. I’ll name some of them: balanced trade, support for agro-ecology and conventional farming where it works, supporting local Cuban agricultural production and allowing the United States to fill in the gaps where needed, the improvement of Cuba’s economy to aid trade. We’re not just talking about exports, but imports from Cuba and investment in Cuban agriculture to meet the recent changes within Cuba’s policy to allow foreign direct investment in Cuban agriculture. We need to end travel restrictions. We need to suspend Title III. And we need a continued dialog between the USDA and the Ministry of Agriculture, particularly around the MOU they signed back in 2016. We need more agricultural trade promotion programs to allow the US agricultural community to be more competitive. And of course, we need to open our embassy and ideally have USDA staff at the embassy.

Agreed. Biden––who knows when he’s going to make an announcement. He made promises in his campaign and everybody is waiting to hear from him.

Mr. Johnson:

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They are currently reaching out to stakeholders in all sectors to gather notes and opinions and comments. And I suspect they will have an announcement when they feel the time is right. Obviously, Biden is more focused on domestic policy right now.

Our concern is that we’re still living under the Bolton policy towards Cuba, and it’s terrible. To travel to Cuba right now is incredibly difficult. There’s only one flight a week for a country of 11 million. You have lots of Cuban-Americans and others who want to see their family and friends in Cuba and they can’t go back. That is related to Covid, but also the regulations in place, so we hope that Biden makes a move sooner rather than later. We’d hate to think that this would drag on until after the midterm elections. There are no commercial flights, it’s just charter flights. I think there are about six charter companies that fly to Cuba now and they’re on a rotating basis. Every charter company gets to fly once a week. You can imagine the demand to get to Cuba. Of course, in Cuba, the current situation is bleak. But there is light at the end of the tunnel as all of Havana will be vaccinated by around the end of this month. 70 percent of the country should be vaccinated by August. And 100 percent of the island will be vaccinated by September. That will help a great deal.

You heard the news of June 21, Cuba’s Abdala vaccine is 93.28 percent effective at preventing Covid. Cuba is achieving great success with their vaccines.

Mr. Johnson:

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Yes, and it’s incredible to think of a country of 11 million people still living with the embargo and yet were able to create a vaccine. I heard a lot of machinery they need for the production of vaccines and other critical equipment is old and they have to band-aid it together to make it work. Yet, they’ve created a successful vaccine to pull them out of this mess. That’s commendable. I hope that the United States rewards Cuba for its efforts and sees it for what it is. It’s a health issue, and it’s saving lives. I have family in Cuba and it’s a relief knowing that the in-laws have all been vaccinated.

Agreed. And they have five vaccines. One is a nasal application, and they also released the phase III test results of the Soberana, which is 63 percent efficient after two of a three-dose protocol. Cuba is suffering because of the US embargo and has sent many teams of medical staff overseas. They’ve created five vaccines. It’s incredible what they’ve achieved in this awful situation. Should the outcome of this bill be successful in a two-way trade situation, what do you predict Americans would import from Cuba?

Mr. Johnson:

Besides the obvious, rum and tobacco and maybe some sugar down the line, there could be tropical fruit such as Mangoes, Guayaba, pineapple. Also aquaculture, I think, is certainly a sector to keep our eyes on. Coffee one day, winter vegetables, and organic products. Obviously, there’s a market for that here in the United States. If Cuba can get their products certified and get production up, that could be a great export for them.

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Can you share with us the present state of US agricultural export to Cuba numbers and is it still a one-way trade?

Mr. Johnson:

Basically, two items are permitted to be imported into the United States, one is artisanal charcoal. The other is not a direct import into the U.S., but Nespresso is shipping coffee to Europe, packaging it into those little capsules, and then selling it for their Nespresso machines.

Since 2000, when we passed the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), the U.S. has been allowed to export food products to Cuba. We’ve exported about $8 billion in food over those 20 years. Last year, we only exported $160 million of food, which represents about 10 percent of what Cuba purchases from global suppliers around the world. In the first quarter of this year, we are at a $100 million, which is up 85 percent from the same period last year. Almost all of it is poultry meat. Cuba depends on poultry meat for about 40 percent of their protein needs so they can get it relatively inexpensively from the United States. They’ve increased their orders. How long that lasts, given their cash situation, I don’t know. But chicken is cheaper to produce than pork or beef. So it’s an inexpensive way to supply their protein needs and I hope that continues.

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Do the Cubans need cash upfront now?

Mr. Johnson:

TSRA stipulates we can only export food products on a cash basis and that is what the Bennet/Boozman bill would change. That would allow us the opportunity to offer trade financing terms. But it obviously goes hand in hand with Cuba’s economy and if they have money to pay for our goods. And that’s why we’re always keen on talking about comprehensive agricultural reform. We estimate that under normal trade relations, we would capture about 60 percent of the Cuban market or roughly $1.2 billion annually. And that figure would grow over time as Cuba’s economy and tourism increase.

Can you tell us about the recent success of Potatoes USA’s project that shipped 16 tons of seed potatoes to Cuba? How did it come about?

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Mr. Johnson:

Yes, it’s a great project! I worked on that as a consultant and we were supportive as a coalition. Importantly, that project continued the discussion between the USDA and the Ministry of Agriculture (Cuba) around the MOU both groups signed back in 2016. We were able to continue that effort under the Trump administration. It’s incredibly important to have APHIS, which is USDA’s animal and plant health inspection services, working with their scientist counterparts in Cuba. Pests and diseases don’t know political boundaries. It’s vital to protect agriculture both in Cuba and the United States. Part of the process of getting the seed potato down to Cuba was finalizing the import permit. This included inviting Cuban scientists here to visit Colorado, California, Minnesota, and North Dakota to show them how we operate, to get them comfortable with our standards. And then once those protocols were established, they become like the railroad tracks for future trade. Those discussions were really nitty gritty and don’t get a lot of attention. But it all starts there. It starts with negotiating the import permit. Why we had success was because it was a collaborative effort between USDA, industry, Potatoes USA, farmers, and their counterparts in Cuba. Once the protocol was signed, it built trust and confidence. It also encourages more dialogue. Once we had this permit in place, we shipped around 16 tons of seed. The trial itself was definitely successful. Some varieties performed better than others and we learned from that. We are going to build on the information from the year one trial and ship another container for a year two trial sometime this fall.

We’re going to have to get a few trials to find out what varieties work best in the Cuban environment and soils. Transporting and handling seed in particular, how to store them, plant and harvest them are all part of the learning process that always needs to be improved.

Do you have any more projects like that with Cuba in the future?

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Mr. Johnson:

Yes, we’re always looking to increase trade, help Cuba improve local production, and find ways to strengthen our agriculture relations. We’re also looking for opportunities to invest in Cuban agriculture. So, yes, there are a number of projects that we continue to work on.

There are foreign investors there, and I believe the Cubans are opening up investment to Cuban-Americans.

Mr. Johnson:

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Well, you know, the law that just recently came out doesn’t single out Cuban-Americans. It allows for foreign direct investment in Cuban agriculture, which is something that we’ve been waiting for a long time. As their law changes to allow the private sector to grow, they are also allowing foreigners to invest directly with them.

I suppose they’ll be set for when Biden makes his announcement.

Mr. Johnson:

I’m just hoping for the best and we’re doing all we can. He made a promise on the campaign trail. If you’re looking for a bipartisan bill that’s going to get a lot of support across America, then a broad Cuba policy needs to be considered. Our coalition represents a lot of groups and individuals from across America, both urban and rural, Republicans and Democrats. There’s a tremendous amount of support to change the present policy in Cuba.

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That’s positive. I wish the best for US-Cuba agriculture trade. Thank you for your time, Paul. Very nice to meet you and discuss US-Cuba agriculture relations, the upcoming Bill in Congress, and the success of the potato seed project.

Mr. Johnson: Thank you very much.

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