Cargill’s Vorwerk makes case for ending Cuba embargo

Photo: Mary F. Calvert • Associated Press

A trade mission with 95 agriculture leaders from 12 states visited Cuba earlier this month. Many were members of the U.S. Agriculture Coalition for Cuba, formed early this year and chaired by Devry Boughner Vorwerk, vice president of corporate affairs for Minnetonka-based Cargill Inc. The group spent a full day with Cuban import, trade and investment officials in Havana, Vorwerk said. Another day the delegation broke into groups to visit Cuban farms growing and processing sugar, rice, cattle, fruits and vegetables, fish, tobacco and other products. Vorwerk’s comments have been edited for space and clarity.

Q: What experiences did you have on the trip?

A: One of the groups went out to the Bay of Pigs to see the aquaculture production taking place out there, with the support of the Norwegian government. That team was surprised by the sophistication and the absolute modern aquaculture infrastructure. My group visited a farm, and we were able to see tobacco, sorghum, rice and dry beans. I was impressed by the way they set up their management team. We also learned a lot about differences in co-ops, and how they voluntarily organize themselves and provide services to different farmers.

Q: Was there an overall impression that you had?

A: I would use one word, and that is potential. Potential on both sides. Certainly the Cuban farmers need access to technology, inputs, capital and services. They pretty much need access to what any modern agricultural industry could provide. People on the sugar tour saw brand-new International Harvester equipment being used that was supplied by Brazilians. I saw farmers still using oxen and having wooden plows to draw the rows for tobacco planting. So there’s inconsistency in terms of access to technology.

Another finding is that there’s a real market. A market could potentially exist in greater form for U.S. agricultural products. The Cuban citizens need these products. They’re in a net food deficit right now, so they are importing products. If they are intended to grow and leverage one of their main industries, which would be tourism, they’re especially going to need additional support. That may come from increased yields, but certainly that’s also going to come from outside sources.

Q: What could we offer Cuba and what could Cuba sell to us in terms of commodities?

A: There’s clearly potential for U.S. exports across the value chain. Soybeans, wheat, corn, rice, dried beans, and we also had individuals from the U.S. meat industry. I think it’s limitless in terms of our ability as the U.S. food and ag sector to supply products whether it’s at the commodity level or higher value food products.

On the Cuban side, we just got a taste of their export potential. Certainly one of their mainstay products is tobacco: cigars. Cuba is also incredibly well-positioned to grow an outdoor aquaculture industry because their water is pristine and they’ve got a lot of it. There could be a play for high-value organic products like fruits and vegetables. This would all require investment in their ag infrastructure. It’s going to be a journey for the Cuban farmers to figure out what their comparative advantage is, and what they can export.

Q: How’s the competition?

A: There are investors flocking in and dipping their toe in [the] water to figure out whether they have a play there. But the most compelling that we saw is the Brazilians in the agro sector. They’re eating our lunch in terms of market share for commodities. On top of that they have competitive financing. The U.S. farmers’ hands are tied behind their backs because of the complex financing requirements that are set up at the moment. But in addition what we saw was some actual investment, which means competitors are seeing something. It’s only a matter of time until the U.S. ends the embargo, but other countries have first mover advantage right now, and we’re sitting on the sidelines.

Q: What are the chances of ending the embargo, especially since many members of Congress and most of the Republican presidential hopefuls are opposed to doing that?

A: One of the trip’s main goals was to raise the level of consciousness of the current U.S.-Cuba policy situation and help make the case to end the embargo. We know that not everyone agrees with us. But the more we can share the importance of Cuba as a natural market for U.S. agriculture, hopefully we will be able to change minds. We and others need to make the case to Congress, which has a lot on its plate. Ultimately, it’s in the hands of Congress to decide whether we get the chance to trade and invest, or whether we sit on the sidelines while our competitors engage more strategically than we’re able to. We left Cuba inspired to make 2015 our year. Maybe we’re optimists, but unless you’re an optimist, you can’t stay in this game. What we’re talking about is unraveling 54 years of a policy.

Article by Tom Meersman , Star Tribune

March 21, 2015

Tom Meersman • 612-673-7388

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