The Cuba Connection
October 25, 2002
The Northarvest Bean Growers Association has made what some are calling "historic" progress on trade with Cuba.
This summer, for the first time in 40 years, the U.S. shipped dry edible beans to Cuba and the beans came from the Northarvest region.
The Northarvest Bean Growers Association made trade trips to Cuba in February and July 2002 The first tip was as part of the U.S. Agricultural Sales Conference, and the second was with North Dakota Gov. John Hoeven.
As a result of the first trade trip, Northarvest shipped 225 cwt. of pintos and 225 cwt. of black beans to Alimport, Cubas state food import company, on July 9. The deal was made through North Central Commodities, Johnstown, N.D.
The dry beans were shipped in specially designed bags depicting the Northarvest location in the United States.
"We wanted to show our Cuban customers the geographic region that can supply them with high quality beans," says Mark Streed, president of the Northarvest Bean Growers Association.
The second trip will likely lead to more sales as trade begins with Cuba.
Northarvest is going to participate in the U.S. Food and Agriculture Exposition in Havana in late September.
The trade trips served a way for buyers and sellers to meet each other and the initial sale gave traders a chance to work together.
"They are getting to know us and we are getting to know them," said Jim Karley, president of Johnstown Bean Co., in an interview with Agweek.
Cuba Trade Participants
The following people went to Cuba in July:
North Dakota Gov. John Hoeven.
Lance Gaebe, Hoevens ag policy advisor
Eric Asmundstad, North Dakota Farm Bureau president.
Brian Kramer, North Dakota Farm Bureau policy analyst.
Ward Eichorst, Colebarbor, N.D., farmer.
Jon Nelson, Wolford, N.D., farmer and state representative.
Neal Fisher, North Dakota Wheat Commission executive director.
Maynard Satrom, former North Dakota Wheat Commission chairman and Page, N.D., farmer.
Mark Streed, Northarvest Bean Grower Association president and Milan, Minn., farmer.
Gary Paur, Northarvest Bean Grower Association director and Gilby, N.D., farmer.
Tim Courneya, Northarvest Bean Grower Association executive vice-president.
Gary Paur, a Gilby, N.D., bean grower and Northarvest director, calls the Northarvest shipment "historic," not only because it is the first in 40 years, but because it was entirely managed locally.
"In fact, the local nature of the shipment helped assure that Cuba received high quality, 100% Northarvest-grown beans." Paur says.
Mark Streed, a Milan, Minn., bean grower and Northarvest Bean Grower Association president, says the trade trips and first shipment helped introduce Cuban importers with the Northarvest region and positioned the region as an important potential trading partner.
Cuban importers had no idea what Northarvest was, where the region is located or that it has such a high quality product, Streed says.
"Since we are in close proximity to the market, we should be able to do so at a competitive price. All these efforts are designed to position us for a more open trading environment with Cuba in the future," he says.
Cuba could import 80,000 to 100,000 MT of dry beans each year, the equivalent of one-fourth to one-third of the beans produced in North Dakota and Minnesota annually.
"Cuba is a promising market for North Dakotas agricultural commodities," says Sen. Byron Dorgan (D-N.D.) "I believe the high quality of the farm goods produced in North Dakota will lead to many more sales to Cuba in the future."
Northarvest sale "probably just
the beginning of significant" ag trade
By John Parker, Market Analyst
Cuba is the leading Caribbean importer of dry beans. The recent sale of 20 tons of dry beans to Cuba by North Dakota traders is probably just the beginning of significant U.S. sales to this new market.
Sales so far in 2002 of other U.S. agricultural commodities have already climbed to about $250 million.
Further gains for U.S. exports of corn, rice, wheat, and other commodities are in the planning stage. The upcoming trade show managed by Peter Nathan will have exhibits from many U.S. export firms and ganizations.
A shortage of meat and dairy products has exacerbated Cubas demand for imported pulses. Total imports of pulses into Cuba may rise to a range of 300,000 tons in 2002. This may include about 125,000 tons of dry beans.
During 2002, Cuba imported about 108,000 tons of dry beans. China was the dominant supplier of Cubas dry bean imports in 2001, providing 79,398 tons.
The spike in world prices for dry beans in late 2001 and early 2002 may have caused China to have more eager customers for its dry beans from other countries than it could satisfy.
The special trade arrangement between Cuba and China contributed to relatively large Chinese deliveries of beans to Cuba during most of the recent decade, except for 1998 and 1999.
As world sugar prices declined, China was able to find less costly suppliers than Cuba. China resumed large shipments of beans to Cuba in 2000 when officials in Havana arranged payments which were acceptable to Chinas exporters.
Even if China is again a significant supplier of dry beans for Cuba in 2002, much larger imports are needed. Dry bean and peas at reasonable prices have been welcomed by Cuban consumers, who rely on this inexpensive source of food high in protein.
Cubas importing history
Canadas exports of pulses to Cuba reached a peak in 1999, when deliveries of dry peas accounted for most of the value.
Canadas pulse exports to Cuba declined in 2000 and remained at a low level in 2001. It is apparent that Canadas large pulse shipments to Cuba in 1999 helped to offset the lack of Chinese deliveries of dry beans. China exported only 970 tons of dry beans to Cuba in 1999, compared with an average of over 80,000 tons annually during 1995-97.
Canadas exports of pulses to Cuba from $7.3 million in 1995 to $55.3 million during calendar 1999. In 1999, Canada exported 182,975 tons of dry peas to Cuba, valued at $38.2 million, compared with 106,320 tons for $24.7 million in 1998. Canadas dry bean exports to Cuba doubled in 1999, reaching 27,709 tons, compared with 12,389 tons in 1998, and a token 298 tons in 1997. The average export price for Canadas dry bean shipments to Cuba rose from $480 per metric ton in 1998 to $500 per ton in 1999.
Chinas dry bean exports to Cuba increased to 79,398 metric tons in 2001. The rise helped Cuba to cope with strong demand for dry beans, despite inadequate domestic production of about 27,000 tons and problems in obtaining beans from other suppliers.
Chinas exports of dry beans to Cuba peaked at 99,031 tons in 1997, and then temporarily stopped in 1998, Shipments resumed with the delivery of only 987 tons in 1999.
As Cuba found if difficult to obtain dry beans from other sources, a return to China for kidney beans occurred in 2000, and was maintained in 2001. Shipments of kidney beans by China to Cuba during 2000 had rebounded to 68,483 tons. China was an important customer for Cuban sugar and nickel during 1990-97.
Recently, Chinas expanding merchant marine fleet has been able to make use of Cuban ports. Managers of Chinese merchant ships are able to obtain a wide range of fresh fruits and some specialty items when stopping in Cuba.
Chinas shift to more cash transactions in foreign trade and less involvement in barter through trade agreements had earlier upset the deliveries of dry beans to Cuba in 1997 and 1998. The resumption of bean substantial bean shipments to Cuba in 2000 may have been assisted by innovative banking in China and Hong Kong to show some flexibility in financing exports of dry beans to Cuba. Also, Cuba has been able to provide services to pay for some of the bill for imported beans.
Barriers Fading for U.S. Beans
Now that most U.S. restrictions on exports of food to Cuba have been lifted, financing remains the major factor.
While Cuba has large cash inflows from remittances sent back home by Cubans living in the United States, a shortage of foreign exchange hampers expected commercial sales of U.S. beans. However, as income from tourism advances, more cash will be coming in for purchases of essential items like beans.
Total U.S. agricultural exports to Cuba in January-May 2002 had already reached $50 million, compared with less than $1 million in calendar 2001. Teams from various states and wrought associations have been busy in Cuba in the recent year.
A team lead by North Carolinas Farm Bureau President visited Cuba in 2001, and had interviews with a number of important Cuban officials. Through September 2001, the hurdles for a reported sale of $30 million worth of U.S. farm products to Cuba had not been overcome. The sales reportedly were mostly for wheat, rice, and corn.
Cuba Uses Other Pulses
Cuban consumers would apparently like to have about 200,000 metric tons of imported beans, including a considerable volume of Great Northern and pinto beans. Since prices of U.S. beans increased in late 2001 and remained high in early 2002, Cuban planners may be thinking that they will encourage greater imports of other pulses until plans to import more U.S. beans can be arranged.
When the much larger U.S. harvest in 2002 causes prices to decline, Cuba may be one of the fastest growing export markets in the 2002/03 season. The rise in Cubas imports of dry beans from China in 2001 indicates that there is considerable unmet demand for imported beans. The decline for imported dry beans was partly offset by rising imports of less costly peas in 1998 and 1999.
Hurdles To New Sources
Total Cuban imports of dry beans were down in 1998 because of problems in obtaining the traditional types of kidney beans from China. Apparently, there were few potential dry bean suppliers seeking to replace China in 1998, or 1999. Argentina was the only country to emerge as a partial replacement for Chinas lacking deliveries in 1999. Because of the hurdles in getting appropriate bank payments, exporters tend to arrange sales of relatively high quality beans to Cuba.
Chile exported 147 tons of beans to Cuba for $98,000 in 1997, but the price for 20 tons shipped in 1998 was $1,000 per ton.
Brazil exported 296 tons to Cuba in 1997 for $124,000, but the price for 66 tons provided in 1998 was up to $510 per ton.
Mexicos exports of dry beans to Cuba declined from 758 tons in 1996 to 109 tons in 1997. Mexico sold out its old stocks of beans mostly to Brazil which was able to pay cash. In 1998, Cuba lost out in chances to buy beans at low prices in various places because of banking and foreign exchange complications. This means that Cuba has been a customer of secondary importance for exporters of dry beans in Argentina, Chile, and Central America.
Hurricane Mitch left countries in Central America with a need for greater dry bean imports. This meant that their small exports to Cuba during 1996-98, temporarily ended in 1999. Honduras exported a token 21 tons of beans to Cuba in 1998. Costa Rica had exported 80 tons of beans to Cuba in 1996, but none in other years of the late 1990s. Nicaragua exported 1,013 tons of beans to Cuba in 1995, but made no significant deliveries during 1996-99.
Argentinas shipments of dry beans to Cuba soared from 191 tons in 1998 to 27,688 tons in 1999. Spains exports of dry beans to Cuba dropped from 611 tons in 1998 to 301 tons in 1998. Dutch transit traders shipped 611,000 tons of dry beans to Cuba in 1998, but only half that quantity in 1999.
Kidneys Part of Cuban Diet
For about a decade through 1997, kidney beans from China became an important part of the Cuban diet. The lack of deliveries from China was not filled by other suppliers in 1998 and 1999. This appears to explain the strong rebound for Chinas deliveries in 2000.
Cuba was a leading customer for Chinas exports of kidney beans during 1991-97. Chinas exports of kidney beans to Cuba rose from 41,984 tons in 1992 to a peak of 77,878 tons in 1993, and were steady at 72,558 tons in 1996, before climbing to the 1997 peak.
The value for Chinas exports of kidney beans to Cuba increased to about $28 million in 1996, or double the 1992-94 average. The peak value for Chinas dry bean deliveries was in 1997 at $40.4 million. This was when the average export price for deliveries to Cuba reached $405 per ton.
Major kidney buyer
China eliminated the 13% export bonus for dry beans and some other commodities on July 1, 1995. This caused the export price for kidney beans to rise. Cuba did not have much success in finding suppliers of beans in 1998 and 1999 for less than $400 per ton to take the place of China.
Recently, China tended to seek foreign customers who pay cash as a first priority. This meant that high prices paid by Japan and other countries in 1998, limited supplies of dry beans available for export to Cuba
Chinas total exports of kidney beans plummeted from 491,398 tons in 1994 to 269,683 tons in 1996.
The share of Chinas kidney bean exports going to Cuba rose from 14 percent in 1994 to 27 percent in 1996.
Cuba produces only about 28,000 to 30,000 tons of dry beans annually. Many foods in Cuba include dry beans, ranging from chili to bean soup. A shift to more pea soup and stews apparently occurred in 1998 and 1999.
Cuba may import about 350,000 tons of pulses by 2003. Dry beans may account for a third to a half of total pulse imports in the coming year. The lower price for imported dry peas may be an attractive, but many Cuban consumers prefer beans.