• Submitted by: manso
• Business and Economy
• 08 / 17 / 2010

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HAVANA - Cuba has continued to slash agricultural purchases from the U.S. even as a key bill that would ease Washington's Cuban travel ban and make it easier to sell more food to the island works its way through Congress, according to a report released today.

Imports fell 28 percent through the first six months of the year to about $220 million. That follows a 26 percent slippage to $528 million in 2009, down from a peak of $710 million the year before, according to the New York-based U.S.-Cuba Economic Trade Council.

"There are no indications that the Cuban economy is going to rebound to the extent that the Cuban government will be able to substantially increase its level of purchasing of food and agricultural products to those it reached in years past," John Kavulich, senior policy adviser for the council, said by telephone.

The island has been weakened by the global economic crisis and a drop in revenues from tourism and the natural resources it exports. It is also struggling to recover from three hurricanes two summers ago.

The council does not include shipping and transaction costs when calculating Cuban funds spent on U.S. imports, meaning its figures are lower than those Havana releases.

Still, all sides agree the Cuban government has reduced imports from all its major trading partners. It has made a special effort to stop buying foreign food, however, while launching campaigns to increase domestic farm production.

But so far, food output across Cuba has remained mostly stagnant, and the cuts in imports have sparked periodic shortages of such staples as rice.

U.S. farm exporters have been hit especially hard by Cuba's belt-tightening because — despite the 48-year-old trade embargo against the island — America is the largest seller of food to Cuba. Food and agriculture products have been exempted from the embargo since 2000, though Cuba must pay cash up front.

The island originally balked at the law, but a 2001 hurricane hurt food production and gave it little choice. Today, Cubans getting food from monthly ration books eat chicken from Arkansas. Upscale island markets stock everything from Kellogg's cereal to Heinz ketchup.

Kavulich said Cuba has made up for some of its recent cutbacks on U.S. imports by buying food from Vietnam and other countries that offer it more time to pay.

The 2008 record figure for imports may also have been inflated by hoarding, as the island tried to stockpile food, believing hat commodities prices that were then on the rise would continue to spike. Instead, they fell and having extra stocks was no longer so important.

The U.S. House Agriculture Committee voted June 30 to lift the ban on American travel to Cuba and make it easier to sell agricultural exports to the island.

While the bill has made headlines because of the travel component, it is backed by farm-state members of Congress hungry for a larger slice of the Cuban market. Unclear is when it will be considered by the full House.

Kavulich said supporters of the measure will use the drop in Cuban imports as evidence U.S. policy needs to be changed to keep from losing Cuban business to foreign competitors offering food exports. Opponents, meanwhile, will say American food sales to Cuba are no longer so potentially profitable.

But, for him, the issue is simply that Cuba is short on funds.

"Why are they buying less? I haven't read one Cuban official saying it's because of U.S. law and policy," Kavulich said.

"They say they don't have the money."

By The Associated Press

Source: http://www2.tbo.com/content/2010/aug/12/cuba-cut-us-food-imports-28-year/