Bloomberg: Food fight with Castro spells trouble for biggest Florida crops

Bloomberg: Food fight with Castro spells trouble for biggest Florida crops

Agriculture groups have been big supporters of increasing trade with Cuba, but what does that mean for sugar, fruit, vegetable and organic producers?

by Alan Bjerga and Marvin G. Perez

Florida citrus farmer Dan Richey is worried about a Cuban fruit invasion.

“They have a better climate than us and the same growing season,” said Richey, who farms 4,000 acres of mostly grapefruit near Vero Beach. “They could become the low-cost competitor, right at our doorstep.”

While a diplomatic thaw is just beginning, President Barack Obama is seeking closer U.S. trade ties with Cuba, signaling an end to five decades of sanctions that left the country starved of cash and little changed since Fidel Castro’s revolution in 1959. That’s clearing a path for more agricultural investment on a Caribbean island just 90 miles south of Florida.

U.S. citrus growers are concerned about citrus imports from Cuba. (Photo: wirepac/Thinkstock)

Cubans have been more buyers than competitors because they eat mostly imported food and already get grain from the Midwest. But expanded farming in the country poses a new threat for Florida, the top U.S. grower of sugar cane, oranges and fresh tomatoes. Cuba was once a major supplier of sugar, fruits and vegetables, and with land untouched by modern chemicals or genetically modified seed, it is drawing the attention of organic food producers.

“The opening of full trade and commercial relations with Cuba will have a more significant impact on Florida agriculture than anything else in the history of our state,” said William Messina, an agricultural economist with the University of Florida in Gainesville.

Trade Dilemma

Trade agreements have been a lightning rod in this year’s presidential campaign. Candidates from both parties have decried the impact on jobs when domestic industries are forced to compete with cheaper imports, especially those subsidized by foreign governments or produced with fewer workplace or environmental rules than in the U.S.

U.S. farmers were early and enthusiastic advocates for closer ties with Cuba. Congress in 2000 authorized humanitarian exports, including agricultural products valued at $685 million in 2008.

Since 2014, when Obama moved to re-establish normal diplomatic ties -- an effort that included a trip to Havana to meet Raul Castro, who replaced his brother Fidel as Cuba’s leader -- agriculture groups have streamed south. Cuban purchases could mean $1.1 billion in annual sales for American farmers, the U.S. Department of Agriculture estimates. But the prospect of more grain sales has overshadowed concerns from growers who may eventually compete with the island once crop output is expanded.

“Exports to Cuba are always a huge economic opportunity,” said Janell Hendren, national affairs coordinator with the Florida Farm Bureau Federation in Gainesville. “Imports from Cuba we are not really keen on.”

The state is the biggest U.S. producer of oranges and sugar cane, and ranks second to California in vegetables and third in fruit. Florida sold $4.2 billion of crops in 2014, exporting $3.6 billion of them, according to USDA data.

Cuban agricultural production struggled as its economy sputtered. In 1989, the island was the largest sugar producer behind Brazil and India, growing 8.12 million metric tons, USDA data show. With the collapse of the Soviet Union, its biggest buyer, production plunged. By 2011, it was 1.1 million tons, the lowest since before the revolution.

“They don’t have much money, but they have land they could give away to farmers,” said Messina, the University of Florida professor. “That makes production much less expensive.”

It’s also a lure for U.S. investors. Agricultural equipment maker Deere & Co., soybean processor Bunge Ltd., and several state farm bureaus are all in favor of opening Cuba trade, according to lobbying records. Cargill Inc., the world’s largest agribusiness, is bankrolling the U.S. Agriculture Coalition for Cuba, a consortium of commodity growers, farm lenders and exporters.

Organic Investment

Members of an organics-focused group that includes food companies like Stonyfield Farm Inc. plan to visit Cuba for several days starting May 3. They see the island’s land and farming practices as a potential fit, especially with expanding demand for food that isn’t produced with pesticides or genetically modified seeds.

“We as an industry need to start to developing new supply chains,” said Dave Alexander, president of Global Organics, the biggest seller of organic sugar in the U.S. and Europe. “We’re rapidly approaching the time when demand is far outstripping supply.”

Any competition with Cuba is still years away, and its agricultural exports to the U.S. probably will never evolve beyond niche-market status, said John Kavulich, president of the New York-based U.S.-Cuba Trade and Economic Council.

Bigger Problem?

Crop diseases may be a bigger immediate concern, especially if the U.S. moves too quickly ease limits on food imports. Citrus greening, which is destroying fruit trees, has cut Florida’s  production of oranges, its biggest crop, by 46 percent since 2013, according to a USDA forecast in April. Meanwhile, fruit flies have damaged crops in Dade County.

“Some of the insects and disease that we got in citrus came from abroad,” including South America, said Dean Mixon, 64, who grows citrus on 50 acres in Bradenton, Florida, that his grandfather started in 1930. “There are large plantations with citrus in Cuba, and they don’t have all the rules and regulations we do, that’s when it becomes unfair.”

The White House is sensitive to grower concerns but sees plenty of room for more supply, according to Agriculture Secretary Tom Vilsack.

“Cuba is in a position to be a supplier, especially in organic,” Vilsack said by telephone on April 20. “But that doesn’t necessarily mean they’re competing against us when there’s so much demand.”

--With assistance from Lydia Mulvany.

To contact the reporters on this story:

Alan Bjerga in Washington at [email protected]

Marvin G. Perez in New York at [email protected]

To contact the editors responsible for this story:

Simon Casey at [email protected]

 Steve Stroth

© 2016 Bloomberg L.P

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