Ending the Trade Embargo Will Spur Demand for U.S. Dairy Products
Jay Waldvogel, Senior Vice President, Strategy and Global Development for Dairy Farmers of America, recently testified before the International Trade Commission regarding the investigation into Cuban imports of goods and services and the effects of U.S. restrictions.
"Our cooperative has a strong interest in expanding our opportunities in Cuba, a market of 11 million people," Waldvogel said. "Given Cuba's import needs and U.S. competitiveness and proximity, the United States could be a more significant supplier were Cuba not operated under the constraints of the embargo. However, as the situation currently stands, the Cuban dairy market has been ceded to the European Union, New Zealand and Argentina, which are not hindered by the financing and travel restrictions facing U.S. exporters."
The United States as a whole is a significant dairy exporter, with global sales of nearly $7 billion in 2014. U.S. dairy products are sold throughout the world, and last year U.S. dairy exports to Cuba's neighbors in the Caribbean region were valued at nearly $100 million.
"Unfortunately, current U.S. policies have greatly limited our ability to service Cuba as well as Cuba's ability to develop its economy in a way that could stimulate demand for a wider range of dairy products," Waldvogel noted.
With legislation that normalizes the United States and Cuba's economic relationships and newly devoted marketing efforts by the U.S. dairy industry, the National Milk Producers Federation (NMPF) estimates the U.S. share of overall Cuban dairy trade to increase as much as 18 percent or $40 million in the near term and 30 percent or $65 million approximately 10 years after the end of the embargo.
Waldvogel acknowledged that new policy measures announced in early 2015 will help to ease the restrictions on trade with and travel to Cuba, but said there are still key obstacles for U.S. dairy exports to Cuba.
One of the biggest impediments to trade is lack of financing to allow for payment in a manner that is commercially viable. Currently, payments must be routed through banks in other countries, thus raising the cost of doing business in Cuba and putting U.S. products at a competitive disadvantage. Additionally, U.S. suppliers are barred from extending credit to Cuban buyers.
"We believe that normalizing trade relations between the United States and Cuba will not only benefit the United States, but also give Cuban citizens access to more affordable food," Waldvogel noted. "For too long, they have dealt with the repercussions of government action and policies that have limited their access to safe, affordable and wholesome milk and other dairy products."
6.24.2015