Texas farmers see deals worth millions as embargo crumbles

By BRENDAN M. CASE / The Dallas Morning News

CANCÚN, Mexico – For the first time in decades, ships bound for Cuba are steaming out of the Port of Galveston.

Texas farmers recently formed the Texas-Cuba Trade Alliance to seek nearly $60 million in potential business on the communist-controlled Caribbean island.

And everyone from U.S. cheese-makers to goatherds to Hollywood star Danny Glover will convene here Monday to continue restoring U.S.-Cuba trade links. They
will visit Havana and Varadero, a Cuban beach resort, Wednesday.

"Cuba is a tremendous market," said Bob Reed, a rice farmer in Bay City, Texas, who will attend the conference. "And I'm just very confident they would purchase
a lot of rice from Texas, Louisiana, the gulf states."

The 40-year-old U.S. trade embargo on Cuba is slowly crumbling. And scores of U.S. farmers and business executives are rushing to cash in.

New U.S. laws began allowing food shipments in late 2001. American companies responded by selling nearly $250 million in food products to Cuba last year.

"The embargo as we've known it for 40 years is essentially over," said Kirby Jones, the president of Alamar Associates, a consulting firm in Washington, D.C., that
is sponsoring the Cancún conference. "It used to be a question of if it would end. Now it's a question of when."

Critics dismiss the conference as a political stunt designed to make the Cuban government look good at a time of falling foreign investment from Europe, Canada and elsewhere.

And skeptics warn that if it's challenging to do business in most emerging markets, it's even harder in Cuba. The island is home to a communist dictatorship under Fidel Castro. Critics say he has a history of not paying his bills.

"Cuba is an untapped market, yes," said Dennis Hays, the executive vice president of the Cuban American National Foundation, which staunchly opposes Mr. Castro. "But remember, Cuba is a bankrupt dictatorship with no rule of law, no sanctity of contracts. They have a Marxist-Leninist economy that's falling down all around them."

'A natural market'

With fewer than 12 million people, Cuba hardly offers the huge potential markets of China, India, Brazil or Mexico. But for 40 years, the U.S. embargo ceded a market 90 miles from the United States to companies from Europe, Asia, Canada and Latin America.

Now U.S. multinationals are making up for lost time.

"Cuba is an interesting market for us because it's 90 miles off the coast of the United States," said Van Yeutter, the director of international business development at
Cargill Inc., the Minneapolis-based food giant. "It's a natural market for U.S. agricultural products."

Last year, Cargill sent 200,000 tons of corn, wheat, soy meal, vegetable oil, turkey and other products to Cuba. Archer Daniels Midland Co., the food
conglomerate based in Decatur, Ill., shipped rice, wheat, corn, soybeans, navy beans and other goods worth more than $75 million.

All told, Cuba manages to import about $1 billion in food products, experts say. Cuban officials say U.S. producers might be able to gain up to three quarters of that
market thanks to their efficiency and proximity.

Mr. Reed, the Bay City rice farmer, notes that Cuba currently imports large quantities of rice from Asia. Texas and other U.S. states could deliver rice more quickly
and economically.

"We could load it here one day, and they could unload it just a few days later," said Mr. Reed, who is also a board member of the Texas Farm Bureau. "That's a lot
better than what they have now, buying rice from Thailand and Vietnam and places like that, where it could be on a transport vehicle for a month or more."

The Texas Farm Bureau and several other groups recently formed the Texas Cuba Trade Alliance to offer farmers information on opportunities in Cuba.

Parr Rosson, an agricultural economics professor at Texas A&M University, reckons that food and agricultural exports from Texas to Cuba could reach $57 million
and generate 1,500 new jobs. Shipments could include rice, wheat, beef, chicken, fertilizers and softwood logs and lumber.

The Texas Cuba Trade Alliance will hold a conference call on doing business in Cuba with John Kavulich, the president of the U.S.-Cuba Trade and Economic
Council Inc., on Feb. 27. It will also hold a one-day workshop on Cuba in Houston on April 3.

"The Cuban market represents a very important market for Texas," said Cynthia Thomas, president of Dallas-based TriDimension Strategies LLC, which helped
form the trade alliance. "We have a history and geography that we can capitalize on."

Bitter policy dispute

The move by Texas farmers is one more step in the long, bitter struggle over American policy toward Cuba.

The White House appears to frown on a greater opening, despite the farming industry's ties to the Republican Party. President Bush warned Congress that he would
veto an upcoming spending bill if it includes language that would ease the embargo further.

But the embargo is being challenged by a growing number of U.S. lawmakers. Two senators – Max Baucus, D-Mont., and Chuck Hagel, R-Neb. – recently
proposed lifting it entirely.

In the House of Representatives, leading anti-embargo proponent Rep. Jeff Flake, R-Ariz., is preparing legislation for this summer that would allow the unfettered
flow of goods and tourists to the island.

Mr. Flake also points out that two die-hard Castro opponents – Republican Jesse Helms and Democrat Robert Torricelli – have just retired from the Senate.

Mr. Flake added that he expects "some real movement on Cuba this year. It's a different dynamic. Some of the more conservative senators on Cuba, including Jesse
Helms and Robert Torricelli, have retired. Some of the new ones are Republicans who differ openly with the White House on this issue."

But U.S. authorities have recently been making it harder for Americans to get visas to travel to Cuba. Mr. Hays, the Cuban American National Foundation official,
said he did not expect Congress to loosen the travel restrictions any time soon.

Mr. Hays said the United States should still focus on removing Mr. Castro, who has held power since 1959.

"Wouldn't it be better for Cuba to be a proper democracy?" he said.

Execs losing patience

Still, many business executives have lost their patience with the embargo, which has shut them out of Cuba while failing to dislodge Mr. Castro.

"We've got 40 years of isolationism toward Cuba that really hasn't achieved the political objectives," said Tony DeLio, the vice president of marketing at Archer
Daniels Midland.

Mr. DeLio dreams of the day when he can wrap Cuba into the Caribbean markets he already serves. And Cuba would get more food for its money.

"We have a boat that goes by Cuba every single day," he said. "I hope the day comes when this boat can go freely to Cuba, drop off what it needs to drop off,
maybe pick something up and be on its way. Cuba would be integrated into this incredibly efficient food production system that is emanating out of North America."

Scores of other U.S. companies are also positioning themselves to profit when the embargo ends.

Over the last year, the Port of Galveston has handled several ships carrying U.S. wheat to Cuba. Port director Steven Cernak says he hopes for more traffic in
coming years. "We see our job as facilitating trade," he said.

Staff writer Alfredo Corchado contributed to this report from Mexico City, and staff writer Tracey Eaton contributed from Havana.