[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
           HEARING TO REVIEW U.S. AGRICULTURAL SALES TO CUBA

=======================================================================



                                HEARING

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 11, 2010

                               __________

                           Serial No. 111-44


          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov




                  U.S. GOVERNMENT PRINTING OFFICE
55-518                    WASHINGTON : 2009
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001


                        COMMITTEE ON AGRICULTURE

                COLLIN C. PETERSON, Minnesota, Chairman

TIM HOLDEN, Pennsylvania,            FRANK D. LUCAS, Oklahoma, Ranking 
    Vice Chairman                    Minority Member
MIKE McINTYRE, North Carolina        BOB GOODLATTE, Virginia
LEONARD L. BOSWELL, Iowa             JERRY MORAN, Kansas
JOE BACA, California                 TIMOTHY V. JOHNSON, Illinois
DENNIS A. CARDOZA, California        SAM GRAVES, Missouri
DAVID SCOTT, Georgia                 MIKE ROGERS, Alabama
JIM MARSHALL, Georgia                STEVE KING, Iowa
STEPHANIE HERSETH SANDLIN, South     RANDY NEUGEBAUER, Texas
Dakota                               K. MICHAEL CONAWAY, Texas
HENRY CUELLAR, Texas                 JEFF FORTENBERRY, Nebraska
JIM COSTA, California                JEAN SCHMIDT, Ohio
BRAD ELLSWORTH, Indiana              ADRIAN SMITH, Nebraska
TIMOTHY J. WALZ, Minnesota           ROBERT E. LATTA, Ohio
STEVE KAGEN, Wisconsin               DAVID P. ROE, Tennessee
KURT SCHRADER, Oregon                BLAINE LUETKEMEYER, Missouri
DEBORAH L. HALVORSON, Illinois       GLENN THOMPSON, Pennsylvania
KATHLEEN A. DAHLKEMPER,              BILL CASSIDY, Louisiana
Pennsylvania                         CYNTHIA M. LUMMIS, Wyoming
BOBBY BRIGHT, Alabama
BETSY MARKEY, Colorado
FRANK KRATOVIL, Jr., Maryland
MARK H. SCHAUER, Michigan
LARRY KISSELL, North Carolina
JOHN A. BOCCIERI, Ohio
SCOTT MURPHY, New York
EARL POMEROY, North Dakota
TRAVIS W. CHILDERS, Mississippi
WALT MINNICK, Idaho

                                 ______

                           Professional Staff

                    Robert L. Larew, Chief of Staff

                     Andrew W. Baker, Chief Counsel

                 April Slayton, Communications Director

                 Nicole Scott, Minority Staff Director

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Cuellar, Hon. Henry, a Representative in Congress from Texas, 
  prepared statement.............................................     5
Lucas, Hon. Frank D., a Representative in Congress from Oklahoma, 
  opening statement..............................................     3
    Prepared statement...........................................     4
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................     1
    Prepared statement...........................................     2
    Submitted letters on behalf of:
        Hubbard, Rev. Howard J, Bishop of Albany; Chairman, 
          Committee on International Justice and Peace, United 
          States Conference of Catholic Bishops..................    71
        Vivanco, Jose Miguel, Executive Director, Americas 
          Division, Human Rights Watch...........................    71

                               Witnesses

Stallman, Bob, President, American Farm Bureau Federation; Rice 
  and Cattle Producer, Columbus, TX..............................     5
    Prepared statement...........................................     7
Johnson, Roger, President, National Farmers Union, Washington, 
  D.C............................................................    10
    Prepared statement...........................................    11
Wagner, Mike, Owner/Operator, Two Brooks Farm; Member, Board of 
  Directors, U.S. Rice Producers Association, Sumner, MS; on 
  behalf of USA Rice Federation..................................    33
    Prepared statement...........................................    34
    Supplementary material.......................................    79
McReynolds, Jerry, President, National Association of Wheat 
  Growers; Wheat Producer, Woodston, KS..........................    44
    Prepared statement...........................................    45
    Supplementary material.......................................    81
Wilson, John J., Senior Vice President, Marketing and Industry 
  Affairs, Dairy Farmers of America; Member, Board of Directors, 
  National Milk Producers Federation, Kansas City, MO............    49
    Prepared statement...........................................    51
Schott, Barton, First Vice President, National Corn Growers 
  Association; Corn, Soybean, and Wheat Producer, Kulm, ND.......    54
    Prepared statement...........................................    55
Fritz, Scott E., Owner/Operator (President/Treasurer), Fritz 
  Black Sand Farm, Inc.; Member, Board of Directors, American 
  Soybean Association, Winamac, IN...............................    58
    Prepared statement...........................................    59

                           Submitted Material

AgriLIFE Research, Texas A&M University, submitted reports.......    72


           HEARING TO REVIEW U.S. AGRICULTURAL SALES TO CUBA

                              ----------                              


                        THURSDAY, MARCH 11, 2010

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 1:45 p.m., in Room 
1300, Longworth House Office Building, Hon. Collin C. Peterson 
[Chairman of the Committee] presiding.
    Members present: Representatives Peterson, Holden, Boswell, 
Baca, Costa, Halvorson, Dahlkemper, Bright, Schauer, Boccieri, 
Murphy, Pomeroy, Minnick, Lucas, Goodlatte, Moran, Johnson, 
King, Neugebauer, Conaway, Smith, Roe, Luetkemeyer, Thompson, 
and Cassidy.
    Staff present: Aleta Botts, Tyler Jameson, John Konya, 
Clark Ogilvie, April Slayton, Debbie Smith, James Ryder, Mike 
Dunlap, Tamara Hinton, Kevin Kramp, Josh Mathis, Nicole Scott, 
and Sangina Wright.

OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE 
                   IN CONGRESS FROM MINNESOTA

    The Chairman. Good afternoon and welcome to today's 
hearing.
    Right now, Cuba relies heavily on imported food to feed its 
people; and the United States provides about 30 percent of the 
food Cuba imports. Given our geographic location close to Cuba 
and high-quality, well-priced commodities, the U.S. 
International Trade Commission estimates that the United States 
could provide as much as \1/2\ to \2/3\ of the food and 
agricultural imports if current trade restrictions were lifted. 
These restrictions are limiting a very promising market for 
U.S. agriculture producers. To that end, I have introduced 
legislation H.R. 4645, along with Congressman Moran and other 
Republicans and Democratics, including Members of this 
Committee, to expand U.S. agriculture exports to Cuba.
    The bill we have introduced would eliminate the requirement 
that our farmers have to go through a third country bank to do 
business in Cuba, and would place agriculture exports to Cuba 
on the same terms for cash payment as other countries, 
requiring payment when the shipment changes hands, as opposed 
to what it is now.
    It will also make it easier for U.S. citizens to travel to 
Cuba, allowing American agriculture producers to more easily 
conduct business with Cuba and boosting demand for U.S. 
products in Cuba at the same time.
    However, it should be very clear that this bill will not 
end the U.S. embargo on Cuba, and will not allow U.S. banks to 
extend credit to Cuba. It will simply allow U.S. agriculture 
exporters to offer their products for sale in Cuba in the same 
way that they do for business with all of our other trading 
partners.
    American agriculture is eager to increase exports and grow 
this important sector of the U.S. economy. That is why many 
diverse agriculture groups have already voiced support for this 
bill, including the American Farm Bureau, The National Farmers 
Union, the National Milk Producers, the National Chicken 
Council, the National Corn Growers, the National Wheat Growers, 
USA Rice Federation, U.S. Rice Producers, American Soybean 
Association, American Cotton Shippers, National Council of 
Farmer Cooperatives, and U.S. Apple Association, and others.
    Before we begin, I think it is important to clarify one 
other thing right now. I do not think any of the Members here, 
or any of the witnesses at this table today, are supporters of 
the Castro regime. None of us support the Cuban Government's 
detainment of political prisoners. However, these policies we 
have in place today have done nothing to remove the regime or 
to improve the situation for political prisoners.
    I have here and am entering into the record without 
objection letters from the Human Rights Watch and Conference of 
Catholic Bishops that support this legislation that I have 
introduced because they recognize the restrictions in place are 
failing the Cuban people.
    [The documents referred to are located on p. 71.]
    The Chairman. America's current policies have failed to 
achieve their stated goal; and, instead, they have hand-
delivered an export market in our own backyard to the 
Brazilians, the Europeans, and other competitors around the 
world. It is time we ask ourselves why we have in place 
policies that simply do not work and only harm U.S. interests.
    So, again, I want to thank all the witnesses for joining us 
today, and thank the Members for their interest in this 
important issue. I look forward to the witnesses' testimony
    [The prepared statement of Mr. Peterson follows:]

  Prepared Statement of Hon. Collin C. Peterson, a Representative in 
                        Congress from Minnesota
    Good morning and welcome to today's hearing of the House 
Agriculture Committee. Right now, Cuba relies heavily on imported food 
to feed its people, and the United States provides about 30 percent of 
the food Cuba imports. However, given our geographic location close to 
Cuba and high quality, well-priced commodities, the U.S. International 
Trade Commission estimates that the United States could provide as much 
as \1/2\ to \2/3\ of Cuba's food and agriculture imports if current 
trade restrictions were lifted. These restrictions are limiting a very 
promising market for U.S. agriculture producers.
    To that end, I have introduced legislation, H.R. 4645, along with 
Congressman Moran and other Republicans and Democratics, including many 
Members of this Committee, to expand U.S. agricultural exports to Cuba.
    The bill we have introduced would eliminate the requirement that 
our farmers have to go through a third country bank to do business in 
Cuba, and would place agricultural exports to Cuba on the same terms 
for cash payment as other countries, requiring payment when the 
shipment changes hands. It would also make it easier for U.S. citizens 
to travel to Cuba, allowing American agricultural producers to more 
easily conduct business with Cuba and boosting demand for U.S. products 
in Cuba. However, it should be very clear that this bill will NOT end 
the U.S. embargo on Cuba and will not allow U.S. banks to extend credit 
to Cuba. It will simply allow U.S. agriculture exporters to offer their 
products for sale to Cuba in the same way they do business with all of 
our other trading partners.
    American agriculture is eager to increase exports and grow this 
important sector of the U.S. economy. That is why many diverse 
agriculture groups have already voiced support for H.R. 4645, including 
the American Farm Bureau Federation, National Farmers Union, National 
Milk Producers Federation, National Chicken Council, National Corn 
Growers Association, National Association of Wheat Growers, USA Rice 
Federation, U.S. Rice Producers Association, American Soybean 
Association, American Cotton Shippers Association, National Council of 
Farmer Cooperatives, and U.S. Apple Association, among others.
    Before we begin, I think it's important to clarify one other thing 
right now. I do not think any of the Members here or any of the 
witnesses at that table today are supporters of the Castro regime. None 
of us support the Cuban Government's detainment of political prisoners. 
However, the policies we have in place today have done nothing to 
remove the regime or improve the situation for political prisoners. I 
have here, and am entering into the record, letters from Human Rights 
Watch and the Conference of Catholic Bishops that support the 
legislation I have introduced, because they recognize that the 
restrictions currently in place are failing the Cuban people. America's 
current policies have failed to achieve their stated goal and instead 
they have hand-delivered an export market in our own backyard to the 
Brazilians, the Europeans, and our other competitors around the world. 
It's time we ask ourselves why we have in place policies that simply do 
not work and that only harm U.S. interests.
    I thank our witnesses for joining us today to talk about this 
important issue, and I look forward to their testimony.

    The Chairman. I will now recognize the gentleman from 
Oklahoma, the Ranking Member, for a statement.

 OPENING STATEMENT OF HON. FRANK D. LUCAS, A REPRESENTATIVE IN 
                     CONGRESS FROM OKLAHOMA

    Mr. Lucas. Thank you, Mr. Chairman.
    I am glad we had an opportunity today to discuss the 
important role that exports play in the success of our farmers 
and ranchers. I look forward to hearing from a full set of 
witnesses who represent producers with agricultural export 
interests, several of whom are producers themselves.
    Exports are essential to the prosperity of American 
farmers, and we should consistently seek greater opportunities 
for exports. We have several such opportunities ready and 
waiting. The three pending free trade agreements the U.S. 
signed with Panama, Colombia, and Korea are worth more than 
$2.6 billion in new market access for American agricultural 
exports. The Korean agreement alone is the most economically 
significant agreement negotiated in 16 years.
    Unfortunately, these agreements are being delayed 
unnecessarily.
    The Obama Administration has in recent weeks passed up 
three key opportunities to lay out a clear path for expanding 
U.S. agricultural exports. Neither the President's budget 
proposal, his export initiative, nor this year's trade policy 
agenda places an emphasis on finally implementing our pending 
trade agreements. Instead, the Administration seems narrowly 
focused on trade enforcement and technical assistance to expand 
trade. These are important activities, but they are inadequate 
when it comes to opening new markets.
    Today, we are here to talk about trade with Cuba. U.S. 
farmers are well positioned to supply food and agricultural 
products, which are exempt from the embargo on humanitarian 
grounds. Since 2001, U.S. agricultural exporters have used 
licenses to send products to Cuba. Over the past decade, the 
U.S. share of the Cuban food market has risen dramatically.
    In 2005, some additional changes were made to regulations 
governing exports to Cuba; and this Committee is interested in 
hearing how those changes have been implemented. Of particular 
concern is the issue of specific and general licenses for 
exports and travel, and how these licenses have been 
administered.
    I hope that our witnesses can help us understand how these 
issues fit into our overall picture of expanding U.S. exports. 
I hope we can shed light on some of a few questions, such as 
regulations administered in an equitable and timely manner, are 
they? What changes can the Administration make to respond to 
your concerns? And what other avenues of exports do you see are 
a necessary component to our U.S. trade policy?
    As we discuss these topics today, it is important to 
understand that our priorities should be finding a way to 
increase agricultural exports to help meet the food needs of 
the Cuban people without supporting Cuba's current oppressive 
government.
    I thank the Chairman for this hearing, and I yield back.
    [The prepared statement of Mr. Lucas follows:]

Prepared Statement of Hon. Frank D. Lucas, a Representative in Congress 
                             from Oklahoma
    Thank you, Mr. Chairman.
    I am glad we have an opportunity today to discuss the important 
role that exports play in the success of our farmers and ranchers. I 
look forward to hearing from a full set of witnesses who represent 
producers with agricultural export interests, several of whom are 
producers themselves.
    Exports are essential to the prosperity of American farmers, and we 
should consistently seek greater opportunities for exports. We have 
several such opportunities ready and waiting. The three pending free 
trade agreements the U.S. signed with Panama, Colombia, and Korea are 
worth more than $2.6 billion in new market access for American 
agricultural exports. The Korean agreement alone is the most 
economically significant agreement negotiated in 16 years. 
Unfortunately these agreements are being delayed unnecessarily.
    The Obama Administration has in recent weeks passed up three key 
opportunities to lay out a clear path for expanding U.S. agricultural 
exports. Neither the President's budget proposal, his export 
initiative, nor this year's trade policy agenda places an emphasis on 
finally implementing our pending trade agreements. Instead, the 
Administration seems narrowly focused on trade enforcement and 
technical assistance to expand trade. These are important activities, 
but they're inadequate when it comes to opening new markets.
    Today, we are here to talk about trade with Cuba. U.S. farmers are 
well positioned to supply food and agricultural products, which are 
exempt from the embargo on humanitarian grounds. Since 2001, U.S. 
agricultural exporters have used licenses to send products to Cuba. 
Over the past decade, the U.S. share of the Cuban food market has risen 
dramatically.
    In 2005, some additional changes were made to regulations governing 
exports to Cuba, and this Committee is interested in hearing how those 
changes have been implemented. Of particular concern is the issue of 
specific or general licenses for exports and travel, and how those 
licenses have been administered.
    I hope that our witnesses can help us understand how these issues 
fit into their overall picture of expanding U.S. exports. I hope they 
can shed some light on a few questions, such as are regulations 
administered in an equitable and timely manner? What changes can the 
Administration make to respond to your concerns? What other avenues for 
exports do you see are a necessary component to our trade policy?
    As we discuss these topics today, it's important to understand that 
our priority should be finding a way to increase agriculture exports to 
help meet the food needs of the Cuban people without supporting Cuba's 
oppressive government.

    The Chairman. I thank the gentleman.
    All the Members will be able to put a statement into the 
record if they so wish.
    [The prepared statement of Mr. Cuellar follows:]

Prepared Statement of Hon. Henry Cuellar, a Representative in Congress 
                               from Texas
    Thank you Chairman Peterson and Ranking Member Lucas for holding 
today's hearing of the House Committee on Agriculture to review United 
States agricultural sales to Cuba. I look forward to our hearings on 
this issue, as I believe there are both strong positives and negatives 
to changes to our current policy.
    When reviewing changes to our current relationship with Cuba, I 
must first and foremost represent my Congressional District and 
constituents. I understand the strong views that Cuba policy elicits, 
and I hope our hearings will serve to answer many questions about the 
short and long term implications this may lead to.
    American agricultural producers are the best in the world. They 
have every ability to compete and succeed in any marketplace, and I do 
believe that expanding markets for them during some of the toughest 
economic times in our lifetimes will help lessen the impact of our 
current recession. That is why I have supported in the past increased 
access and trade globally. In fact, this Congress I created the Pro-
Trade caucus. Let there be no doubt--trade creates jobs for American 
workers.
    However, let us not be blind to the negatives of this legislation. 
Cuba is a communist country with a Dictator. There is no debating that. 
The United States has made a near 50 year commitment to ending the 
communist rule that lives only 90 miles off our border. We must 
carefully consider if now is the time--or if changing the policy now 
puts our last 50 years to waste.
    Finally, we must try to ensure that by expanding trade into Cuba, 
we don't only generate revenue for the Cuban Government, but also 
improve the quality of life for 11 million Cuban citizens.
    I have approached this issue with an open mind, and I will continue 
to learn of the impact this legislation will have in its current form. 
I look forward to a substantive and productive debate with my 
colleagues on the Committee on Agriculture, as I know many of them 
share my concerns.
    Again, I thank the Chairman and the Ranking Member for holding 
these hearings. I understand the emotions that any discussion of Cuba 
can bring out. I look forward to the testimony today, and our continued 
work on this Committee.

    The Chairman. We welcome our first panel, the Presidents of 
our two major general farm organizations, Mr. Bob Stallman, the 
President of the American Farm Bureau, and Mr. Robert Johnson, 
the President of the National Farmers Union.
    So, gentlemen, we appreciate you being here with us today; 
and I guess, Mr. Stallman, you are up first. Welcome to the 
Committee.

  STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN FARM BUREAU 
       FEDERATION; RICE AND CATTLE PRODUCER, COLUMBUS, TX

    Mr. Stallman. Thank you, Mr. Chairman and Ranking Member 
Lucas, Members of the Committee.
    I am Bob Stallman, President of the American Farm Bureau 
Federation and a rice and cattle producer from Columbus, Texas; 
and I certainly appreciate this invitation to share our views 
on U.S. agricultural exports to Cuba.
    The American Farm Bureau Federation supports H.R. 4645. We 
appreciate the leadership of the Chairman and Representative 
Moran for sponsoring this legislation, and the efforts of other 
House Members who worked together to develop this bill.
    H.R. 4645 will increase agricultural exports and supply 
food to the Cuban people. U.S. agricultural exports to Cuba do 
reach the Cuban people and are not solely placed in hard 
currency supermarkets. Cuba's agricultural production is not 
able to meet the food demands of the nation, so they must 
import agricultural goods. If not, many Cuban citizens would go 
hungry.
    On the average, the United States has exported $320 million 
in U.S. product per year since 2000. We have exported a variety 
of products, including corn, wheat, soybeans, rice, poultry, 
dairy products, pork, live cattle, dried beans and peas, and 
fresh and dried fruits, including apples, grapes, and pears.
    The International Trade Commission has reported that the 
value of agricultural imports by Cuba has more than tripled 
since 2000, but those sales values have fluctuated. Our 
submitted statement includes U.S. commodity export numbers. 
Given that my colleagues representing those commodity groups 
will be testifying, I will focus my comments on the legislation 
and its importance.
    The major factor contributing to sales fluctuations is that 
the U.S. is not viewed by Cuba as a reliable supplier due to 
our sales restrictions, and the ability of the U.S. Government 
to alter those restrictions on a whim. The United States should 
be the preferred supplier in Cuba, given our competitive 
prices, high-quality products and lower delivery costs due to 
the proximity of our countries. Instead, we have opened the 
door to countries like the European Union, Brazil, Canada, 
Vietnam, while hindering ourselves. Our competitive 
disadvantage in the market is not a result of partner-imposed 
trade reasons, but, rather, our own government-imposed 
restrictions.
    What we are asking for from Congress is to give U.S. 
farmers the competitive advantage in Cuba that they should 
rightly have, and the opportunity to increase U.S. agricultural 
exports. The provisions of H.R. 4645 include returning the so-
called payment of cash in advance rule to normal commercial 
terms, as intended by Congress. The Office of Foreign Assets 
Control rule change in 2005 negated the original intent of 
Congress, created a special case that only applies to Cuba, 
thus increasing the cost of purchasing our products and 
negatively impacting our sales. The current definition does 
nothing to protect U.S. exporters, but was put in place to 
attempt to hinder U.S. exports.
    The additional dollars that Cuba now has to spend to 
purchase U.S. product does not go to the U.S. farmer, but, 
rather, the foreign bank carrying out the transaction. Payment 
of cash in advance was the method of doing business with Cuba 
prior to the change, and those who used this method previously 
are supportive of returning to what Congress originally 
intended.
    The legislation would also eliminate the requirement that 
Cuba wire any payment for U.S. goods through a third country 
bank. This process comes with a high fee, again increasing the 
cost of purchasing agricultural goods from the United States. 
While U.S. telecommunications companies are authorized to 
receive payments directly from their Cuban counterparts, U.S. 
agriculture is singled out for this expensive, unnecessary, and 
discriminatory requirement.
    The opposition has tried to argue against this bill based 
on Cuba's creditworthiness and the risk to U.S. suppliers. This 
bill does not allow credit or are we asking for credit. This 
bill would still require Cuba to pay for U.S. purchases in 
cash. The issue of credit and Cuba's ability to pay does not 
apply to what is being proposed.
    Finally, H.R. 4645 would lift the U.S. travel ban. Lifting 
the travel restrictions on U.S. citizens will have a direct 
impact on U.S. agricultural sales. Increased travel to Cuba by 
U.S. citizens will boost food demand in the country, and 
coupled with these other reforms U.S. industry would expect to 
meet the increased food needs. Remember, Cuba does not have the 
capacity to fully meet its own food needs.
    This need also brings with it the opportunity to sell Cuba 
higher valued products, increasing the overall value of our 
exports to the country. Given that Cuba would still be required 
to purchase product from the U.S. with cash, those dollars 
received from U.S. visitors would be spent to meet those 
additional food needs.
    Travel will also have a positive impact on the Cuban people 
and their food consumption. U.S. citizens traveling to Cuba 
will use dollars, and some of those dollars will flow back to 
the Cuban people. This will increase the income of the Cuban 
people, allowing them to purchase products they previously 
could not.
    U.S. agriculture's goal is to make the United States the 
number one supplier in agricultural products to Cuba. In order 
to achieve this goal, Cuba must view the United States as its 
preferred supplier. Eliminating these restrictions will 
decrease the advantage the United States has given our 
competitors and restore the advantage to U.S. farmers.
    U.S. agriculture is not requesting the embargo be lifted, 
but rather for Congress to take the small step of lifting key 
restrictions that will increase U.S. agriculture's 
competitiveness in the market. We urge Members of this 
Committee and this House to cosponsor and support H.R. 4645.
    Thank you, and I look forward to the opportunity to answer 
questions.
    [The prepared statement of Mr. Stallman follows:]

  Prepared Statement of Bob Stallman, President, American Farm Bureau 
           Federation; Rice and Cattle Producer, Columbus, TX
    My name is Bob Stallman. I am President of the American Farm Bureau 
Federation and a rice and cattle producer from Columbus, Texas. I 
appreciate the invitation to share Farm Bureau's views on U.S. 
agricultural exports to Cuba. Farm Bureau is the nation's largest 
general farm organization, with more than six million member families, 
representing producers of every commodity from every state as well as 
Puerto Rico.
    While the United States has only been exporting U.S. agricultural 
products to Cuba for just over 10 years, we have seen the promise the 
market holds. Unfortunately, because of restrictions on U.S. exports to 
Cuba, U.S. farmers have not been able to benefit from the full 
potential of the market.
    Because of the market potential, the American Farm Bureau 
Federation has been an advocate for easing restrictions on exports to 
Cuba and is a supporter of H.R. 4645, The Travel Reform and Export 
Enhancement Act. We appreciate the leadership of Chairman Collin 
Peterson and Rep. Jerry Moran for drafting this legislation, and the 
efforts of other House Members who worked together to develop this 
bill. This legislation will eliminate costly obstacles for American 
farmers interested in exporting to Cuba and will expand the potential 
for increase food consumption providing an even greater opportunity to 
export U.S. products to the market.
    H.R. 4645 will increase agricultural exports and supply food to the 
Cuban people. U.S. agricultural exports to Cuba do reach the Cuban 
people and are not solely placed in hard-currency supermarkets. Cuba's 
agricultural production does not meet the food demands of the nation so 
they must import agricultural goods, if not many Cuban citizens would 
go hungry.
The Cuban Market
    U.S. agriculture has seen significant growth and experienced 
significant setbacks since being allowed to trade with Cuba in 2000. We 
have seen our sales increase and decline over the years, but on average 
the United States has exported roughly $320 million in U.S. product per 
year since 2000. The factors that have contributed to these 
fluctuations can be attributed to U.S. regulation changes, cost of 
doing business with the United States, commodity prices, transportation 
cost, etc., but the major factor is that the United States is not 
viewed by Cuba as a reliable supplier due to our sales restrictions and 
the ability of the U.S. Government to alter those restrictions at a 
whim.
    The United States has exported a variety of commodities to Cuba. Of 
those commodities grain and feed has consistently been the top export 
group with sales of $369 million making up more than half of our total 
exports in 2008. With an 81 percent increase from 2007 to 2008, corn 
and wheat have been the largest beneficiaries of these sales. Rice on 
the other hand had seen major growth until 2006 when exports reached a 
high of $39 million; since then rice sales have been on a sharp decline 
resulting in no rice sales in 2009.
    Oilseeds are the second largest group of exports to Cuba. The 
majority of what Cuba is importing from the United States in this group 
consists mainly of soybeans and soybean products. Of these products the 
United States exported $135 million in 2008 and has seen a growth of 
119 percent since Cuba began purchasing these products in 2002.
    Since 2001 Cuba has been an importer of U.S. meats and dairy 
products. A majority of these sales have come from poultry purchases by 
Cuba. U.S. poultry sales showed nearly 80 percent growth in 2008 from 
2007, with sales reaching a high of $139 million. U.S. dairy sales have 
been less regular with dramatic sales increases and decreases. In 2008, 
the United States exported more than $15 million in dairy products but 
those sales were a little more than half of what we exported during our 
top year, 2005 ($30 million).
    While the above mentioned products represent our largest exports, 
the United States also exports products like pork, live cattle, dried 
beans and peas, fresh and dry fruits including apples, grapes and 
pears. U.S. agriculture sales to Cuba exponentially increased until 
around 2005; however, after 2005 sales dropped as Cuba increasingly 
turned to our competitors to fill its needs. This shift in purchases 
was a result of the increasingly complex sale requirements, which 
caused Cuba to view the United States as an unreliable supplier. The 
Foreign Agriculture Service, United States Department of Agriculture, 
trade data comparing the export information for 2009 compared to the 
same period in 2008 shows our exports dropped by 23 percent.
    According to the U.S. International Trade Commission (ITC) report, 
``U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. 
Restrictions,'' Cuba's value of agricultural imports more than tripled 
from approximately $500 million in 2000 to more than $1.8 billion in 
2008. There is much more opportunity to expand the U.S. market share. 
The United States should be the preferred supplier in Cuba given our 
competitive prices, high-quality products and lower delivery cost due 
to proximity of our countries. Instead, we have opened the door to 
countries like the European Union, Brazil, Canada and Vietnam while 
hindering ourselves. At this point our competitive disadvantage in the 
market is not a result of the usual trade reasons, tariffs, partner-
imposed sanitary and phytosanitary measures or other non-tariff 
barriers, but rather our own government-imposed restrictions.
Making U.S. Agriculture Competitive in the Cuban Market
    The American Farm Bureau is not currently advocating fully lifting 
the embargo, but we believe now is the time for Congress to take action 
to ease some of the current restrictions. President Obama early last 
year took action to eliminate the restrictions placed on Cuban American 
travel and remittances, as well as restrictions allowing U.S. 
telecommunication companies to do business in Cuba. Steps have also 
been taken by the Administration and some within Congress to engage 
with Cuba. This Congress passed a 1 year measure to ease restrictions 
on ``cash payment in advance,'' and a measure to allow travel to Cuba 
for agricultural sales to be done on a general license, which is 
currently being implemented.
    What we are asking for from Congress and the Administration is to 
give U.S. farmers the competitive advantage in Cuba that they should 
rightly have and the opportunity to increase U.S. agricultural exports. 
We believe the way to make that happen is to return ``payment of cash 
in advance'' to the commercial terms as intended by Congress, eliminate 
the need to go through third country banks, issue visas for Cuban 
agriculture inspectors and eliminating all travel restrictions on U.S. 
citizen travel to Cuba.
    The Office of Foreign Assets Control (OFAC) re-defining ``payment 
of cash in advance'' negated what was the original intent of Congress, 
ignored the commercial definition to create a special definition that 
only applies to Cuba, increased the cost of purchasing our products and 
negatively impact our sales. The current definition does nothing to 
protect U.S. exporters but was put in place in an attempt to hinder 
U.S. exports. ``Payment of cash in advance'' was the method of doing 
business with Cuba prior to the change, and those who used this method 
previously are supportive of returning to what Congress had intended.
    The opposition has tried to argue against this bill based on Cuba's 
credit worthiness and the risk to U.S. suppliers. This bill does not 
allow credit nor are we asking for credit. This bill would still 
require Cuba to pay for U.S. purchases in cash. The issue of credit and 
Cuba's ability to pay does not apply to what is proposed.
    U.S. citizen travel to Cuba will create a new demand for food in 
the market, increasing the opportunity to sell U.S. agricultural 
product. To meet the demand Cuba will have to import more food. Cuba 
does not have sufficient agricultural production to meet its own 
consumption. Travel will also have a positive impact on the Cuban 
people and their food consumption habits. U.S. citizens traveling to 
Cuba will use dollars and many of those dollars will flow back to the 
Cuban people. This will increase the income of the Cuban people 
allowing them to purchase higher valued food products they previously 
could not afford.
Payment of Cash in Advance
    On Feb. 22, 2005, the OFAC issued a regulation narrowing the 
application of the term ``payment of cash in advance'' for sales to 
Cuba. Under the new OFAC definition, cash payments for U.S. 
agricultural goods sold to Cuba are restricted to payments received 
prior to shipment of the goods from U.S. ports. This restriction is 
contrary to the Trade Sanctions Reform and Export Enhancement Act of 
2000 (Export Enhancement Act), which allows for the shipment of 
agricultural goods under a broader interpretation of ``payment of cash 
in advance'' terms, consistent with practices successfully used by U.S. 
exporters.
    Most contracts made with the Cuban Government for the purchase of 
U.S. agricultural products have used ``payment of cash in advance'' as 
the method of payment. Under its original interpretation, U.S. 
agricultural products could be shipped to Cuba but all certificates, 
title and ownership of the goods would only be transferred once payment 
was received from Cuba. Contracts now being made with Cuba are done 
under letters of credit from third party banks. These letters of credit 
have increased the cost of doing business with the United States which 
translates into a higher price for our commodities. The additional 
dollars Cuba spends for these transactions do not go to the U.S. farmer 
but rather the foreign bank carrying out the transaction.
Third Country Banks
    Currently, Cuba must wire payments for U.S. goods through a third 
country bank in order for U.S. banks to receive the cash for the U.S. 
product to be delivered. This process comes with a high fee for 
handling the transaction, increasing the cost of purchasing 
agricultural goods from the United States. Having to go through a third 
country bank puts U.S. products at a disadvantage to those of our 
competitors. While U.S. telecommunications companies are authorized to 
receive payments directly from their Cuban counterparts, U.S. 
agriculture is singled out by law for the expensive, unnecessary and 
discriminatory requirement that payments must flow through foreign 
banks.
Removal of the Travel Ban
    Lifting the travel restrictions on U.S. citizens will have a direct 
impact on U.S. agricultural sales. Increased travel to Cuba by U.S. 
citizens will boost food demand in the country and, coupled with other 
reforms, U.S. industry would expect to meet the increased food needs. 
The ITC study mentioned previously in this statement concurs that 
visitors would boost the demand for imported agricultural products. 
U.S. farmers have the capability to fulfill the demands of the Cuban 
citizen and the added demand of the country's visitors. This new demand 
also brings with it the opportunity to sell Cuba higher-valued 
products, increasing the overall value of our exports to the country.
    Increased travel will also bring much needed funds to purchase U.S. 
commodities. Given that the United States would not extend credit to 
Cuba, Cuba would still be required to purchase product from the U.S. 
with cash. Those dollars received from U.S. visitors would be spent to 
meet those food needs.
Denial of U.S. Visas
    Cuban travel has been denied by the United States for important 
meetings for Cuban officials, like veterinary officials, to confer with 
U.S. suppliers, inspect facilities, discuss sanitary and phytosanitary 
issues and verify U.S. procedures and standards associated with the 
sale of U.S. food and agricultural exports to Cuba. Visits of this type 
are routinely conducted by U.S. officials and U.S. importers in markets 
that sell to the United States. It is also customary practice for 
foreign purchasing agents and government technical teams to travel to 
the U.S. to meet with U.S. suppliers and tour facilities. The denial of 
the visas associated with these commercial visits from Cuban officials 
has drastically limited the export of some U.S. products, hindering our 
trade growth and is contrary to the spirit of the Export Enhancement 
Act. 
Conclusion
    U.S. agriculture's goal is to make the United States the number one 
supplier of food and agricultural product to Cuba. In order to achieve 
this goal, Cuba must also view the United States as its preferred 
supplier. Our competitors do not have the same obstacles in trading 
with Cuba we face. Eliminating these restrictions will decrease the 
advantages the United States has given our competitors and restore the 
advantage to U.S. farmers. These actions will make it easier for Cuba 
to purchase U.S. commodities and most importantly will reduce the cost 
of purchasing our commodities. U.S. agriculture is not requesting the 
embargo be lifted but rather for Congress to take the small step of 
lifting key restrictions that will increase U.S. agriculture's 
competitiveness in the market.
    We hope that Members of this Committee, and the House, will support 
Chairman Peterson's and Rep. Moran's Travel Reform and Export 
Enhancement Act, H.R. 4645. The bill will reverse the restrictions on 
``payment of cash in advance,'' eliminate the third country bank 
requirement and lift the ban on travel. Passage of this bill will make 
agriculture a strong player in the Cuban market and will increase U.S. 
agricultural exports.

    The Chairman. Thank you, Mr. Stallman, I appreciate that.
    Mr. Johnson, welcome to the Committee.

STATEMENT OF ROGER JOHNSON, PRESIDENT, NATIONAL FARMERS UNION, 
                        WASHINGTON, D.C.

    Mr. Johnson. Thank you, Mr. Chairman and Members of the 
Committee.
    For the record, my name is Roger Johnson. I am President of 
National Farmers Union, and a farmer from North Dakota. I am 
formerly the North Dakota Agriculture Commissioner and in that 
capacity I have personally lead eight trade-related missions to 
Cuba. So I speak with some firsthand experience.
    The National Farmers Union has long supported ending the 
Cuban embargo. We think it is simply not achieving the goal 
that it was intended to achieve. And so, consequently, we 
clearly are in support of the Travel Restriction Reform and 
Export Enhancement Act that is before us today. It at least 
goes in the right direction by doing the right things. Allowing 
for direct financial transactions will allow for significant 
efficiencies in the marketplace to be realized, allowing for 
the same sorts of payment requirements that are afforded to 
other countries for our exporters, and, of course, allowing 
U.S. citizens to travel to Cuba.
    Since the passage of the 2000 TSRA, U.S. farmers have 
earned about $4 billion from sales to the Cubans. They have had 
an excellent repayment record. I know of no one who has not 
been paid in the extensive trips that I have had there and the 
contacts that I have made with U.S. suppliers.
    Between 2000 and 2006, Cuba's food and export and ag 
imports nearly doubled. We have picked up a significant share 
of that, as has already been pointed out. We are very well 
positioned to supply this market. One might argue that we are 
the best positioned of any country in the world to supply the 
Cuban market.
    U.S. ag producers have already experienced positive impacts 
since the passage of TSRA. Nonetheless, the current policy is 
tepid and inconsistent with the policy that this country has 
towards a number of other countries in the world; and, frankly, 
the current policy which allows for the cash sale of food and 
medicine to Cuba is getting a little old.
    We need to continue to advance in this current policy. 
Trade is based on relationships, and our word means something 
and relationships mean something between trading partners. We 
need to get beyond where we are at and get beyond the 
diplomatic slaps in the face that the 2005 change in policy, 
already referenced, that was intended to provide.
    The current cash-only sales policy may seem to be in our 
best interest. However, it is an inefficient system 
characterized by small sales, the absence of long-term 
contracts, unnecessarily high transaction costs, and exchange 
rate losses, all of which hurt our competitiveness. Direct 
banking transfers, if they were permitted between the U.S. and 
Cuba for these products, would also add additional 
efficiencies.
    Our policy currently is designed to use food as a weapon, 
and we would argue that that policy has failed. Just under 50 
years ago, 60 percent of Cuba's food imports came from the U.S. 
We ought to get back to that goal.
    The International Trade Commission predicts that lifting 
the ban on ag products would increase U.S. exports to Cuba to 
between $900 million and about $1.2 billion, leading to an 
increase of somewhere between $\1/4\-$\1/2\ billion annually. 
We ought to do this. This bill would get us a long ways down 
the road towards making that accomplishment.
    That report also pointed out a number of factors that are 
both positive and negative with respect to our relationship. 
They are detailed on page four of my testimony. You can see the 
three positive factors that we have deal with our competitive 
prices and high quality of products, our lower cost of 
delivery, and the smaller volumes that, because of our 
proximity, we are able to move into that market on a just-in-
time basis.
    But that report also details eight factors that hinder our 
ability to access that market. This bill would go a long ways 
towards eliminating a majority of those eight factors.
    I realize that there are political factors to consider as 
well when lifting the ban on travel to Cuba. As the Chairman 
stated at the opening of this hearing, we have never been 
supportive of military dictatorships. We do, however, feel this 
embargo has failed. It is time to move on, and passing this 
bill would at least be a significant step in the right 
direction. Thank you.
    [The prepared statement of Mr. Johnson follows:]

Prepared Statement of Roger Johnson, President, National Farmers Union, 
                            Washington, D.C.
    Chairman Peterson, Ranking Member Lucas and Members of the 
Committee, thank you for the opportunity to testify about the 
importance of agricultural trade with Cuba. My name is Roger Johnson 
and I am President of the National Farmers Union (NFU). NFU is a 
national organization that has represented family farmers and ranchers 
and rural residents for more than 100 years. As a point of reference, 
during my career I have personally led eight trade-related missions to 
Cuba, so I speak from firsthand experience.
    NFU has long supported ending the Cuban embargo and establishing 
trade relations with Cuba. For this reason, NFU supports the Travel 
Restriction Reform and Export Enhancement Act sponsored by House 
Agriculture Committee Chairman Collin C. Peterson, Agriculture 
Appropriations Chair Rosa L. DeLauro, Representative Jerry Moran and 
Representative Jo Ann Emerson.
    This bill would allow direct financial transactions for 
agricultural sales to Cuba; require agricultural exports to Cuba to 
meet the same payment requirements as exports to other countries; and 
would allow U.S. citizens to travel to Cuba.
    Since January 2009, 13 bills have been introduced in Congress to 
ease restrictions on travel, financial transactions or agricultural 
trade with Cuba. Clearly, in this case, politics is blocking good 
policy decisions.
Trade with Cuba
    Since passage of the 2000 Trade Sanctions and Reform Act (TSRA), 
U.S. farmers have earned $4 billion from sales to the Cuban market and 
Cubans have had an excellent payment record. However, due to continued 
arbitrary restrictions on U.S. agricultural sales driven by Executive 
Orders rather than Acts of Congress, U.S. producers have failed to 
unlock the full market potential in Cuba. Cubans have begun to shift 
their purchases of several commodities to other suppliers, such as 
Vietnam, Canada, Brazil and the European Union (EU).
    Expanding exports and trade are critical to expanding opportunities 
for U.S. agricultural producers and will allow producers to provide the 
highest quality food products to people around the world. Cuba relies 
on imports for most of its food needs. Between 2000 and 2006, Cuba's 
food and agricultural imports nearly doubled. Passage of such 
legislation will increase exports, meaning millions of dollars for U.S. 
agriculture.
    U.S. producers are well-positioned to supply Cuba with additional 
commodities, with the ability to reach three major Cuban ports in 1 day 
or less, compared to 25 days from Brazil. Current U.S. policy hampers 
our ability to supply the Cuban market, a market we once dominated.
Effects of U.S. Trade Restrictions with Cuba
    U.S. agricultural producers have already experienced positive 
impacts from the sale of agricultural products into the Cuban market 
since the passage of TSRA. Nonetheless, our current policy is tepid and 
inconsistent with policy the United States has with other countries. 
Current policy allows for cash sale of food and medicine to Cuba, yet 
direct banking exchanges are not allowed.
    The current ``cash only'' sales policy may seem to be in the best 
interest of the U.S.; however, it is an inefficient system, 
characterized by small sales, the absence of long-term contracts, 
unnecessarily high transaction costs, and exchange rate losses. This 
policy needs to be changed so U.S. producers can benefit from full and 
normalized trade relations with Cuba. If direct banking transfers were 
permitted between the U.S. and Cuba for the purchase of American-made 
products by Cuba, notable positive impacts on both countries' economies 
would be possible, creating a win-win situation. Current U.S. policy is 
designed to use food as a weapon, and it has failed.
    Just under 50 years ago 60 percent of Cuba's food imports came from 
the U.S. Our policy should allow domestic producers to reach that level 
once again. More recently, agricultural trade with Cuba reached a value 
of approximately $750 million before additional regulations, which were 
designed as a diplomatic slap in the face, were put in place during the 
Bush Administration. Following the additional restrictions, 
agricultural sales have steadily declined with a recent report by the 
International Trade Commission (ITC) showing approximately $290 million 
in agricultural cash sales to Cuba.
    Parties in both Cuba and the U.S. have increasingly cited how 
cumbersome agricultural trade has become. Some are considering 
abandoning trade altogether, with Cubans left to source their 
commodities from other origins. The current embargo is not working.
    Last year the U.S. Government purchased more than $300 million in 
surplus U.S. agricultural goods in an attempt to support the market; 
while opening the Cuban market would not fully offset these purchases, 
it would certainly help. Ending the Cuban embargo would both save 
taxpayer dollars and assure Cuba a consistent source of reasonably 
priced, high-quality food.
    As this cumbersome trade process continues, we have seen a ten 
percent decrease in imports from the U.S. to Cuba in 2005 and an 
additional decrease of four percent in 2006. Looking at the percentage 
of market access the U.S. has in Cuba, clearly grains are the easiest 
commodity to move because of the uncertain timeframe it will take to 
get all of the necessary paperwork in line. Shipping is clearly not the 
problem. The U.S. has almost no market share of value-added or 
processed foods, which are usually more perishable and more costly to 
ship, allowing Brazil and the EU to fill this demand. Value-added goods 
also tend to yield higher returns for U.S. exporters and create more 
jobs and economic activity than commodity sales. The very type of food 
exports we most want are the ones our current restrictive policy 
preclude.
    The ITC predicts lifting the ban on agricultural goods would 
increase U.S. exports to Cuba by between $924 million and $1.2 billion. 
This would also increase the U.S. market share in Cuba compared to 
other competing countries from the current 38 percent to between 49 
percent and 64 percent.
U.S.--Cuba Trade Policy Recommendations
    Lifting the current restriction on tourism would provide Cuba with 
more U.S. dollars, which could then be used to purchase more U.S. 
products, particularly more value-added agricultural products for the 
food service and hotel trades. Many of these products could have a 
significant impact on economic growth and support for rural farm and 
ranch families.
    Passage of this legislation would mean millions of dollars in 
agricultural exports for U.S. producers and the economy. According to 
the ITC report released in June 2009, there are only three major 
factors that enhance the competitiveness of U.S. agricultural exports 
to Cuba:

    1. U.S. exporters offer competitive prices and high-quality 
        products.

    2. U.S. exporters benefit from lower cost of delivery than 
        competing suppliers.

    3. U.S. exporters can provide smaller volumes of individual 
        shipments on a just-in-time basis to smaller Cuban ports.

    However, according to the same report, U.S. exporters are hampered 
by eight major factors making the U.S. a less desirable trading partner 
and decreasing market access:

    1. U.S. exports cannot offer credit to Cuba for the purchases while 
        other trading partners to Cuba make concessions for trade with 
        Cuba.

    2. The U.S. Government requires payment from Cuba in cash in 
        advance channeled through third-country banks, driving up 
        transaction fees.

    3. When purchasing U.S. products, ALIMPORT may incur additional 
        storage and demurrage costs if the transactions paperwork is 
        not completed on schedule.

    4. U.S. exporters wishing to travel to Cuba in order to complete 
        sales contracts find the travel licensing process to be 
        cumbersome, nontransparent and time consuming.

    5. The U.S. restricts visits by Cubans for sales negotiations and 
        for sanitary and phytosanitary inspections of U.S. products and 
        processing facilities.

    6. U.S. agriculture trade associations cannot use industry-
        generated funds or U.S. Department of Agriculture Market Access 
        Program money for market research and promotion activities in 
        Cuba.

    7. U.S. regulations penalize foreign vessels that dock in Cuban 
        ports, resulting in less competition among carriers and higher 
        maritime transportation costs.

    8. The Cuban Government makes purchases from certain countries 
        based on geopolitical motivations.
Travel to Cuba
    The Obama Administration has, by Executive Order, lifted part of 
the travel ban for Cuban Americans to travel to Cuba to visit family. 
Every American should be free to travel to and from Cuba.
    The aforementioned ITC report clearly indicates that lifting the 
travel ban will result in an influx of U.S. tourism. An enhanced 
tourism industry would boost the demand for imported agricultural 
products, particularly high-valued products from the U.S., and bring 
more hard currency into the country, allowing ALIMPORT to buy more U.S. 
agricultural products for the domestic Cuban population.
    I realize there are political factors to consider when lifting the 
ban on travel to Cuba. This is a sensitive topic, and as an 
organization NFU may be criticized for supporting lifting this ban, but 
I want to clearly state NFU has never been supportive of a military 
dictatorship. However, this 50 year embargo has not worked for our 
nation's farmers and ranchers and has only caused the Cuban people, not 
the Cuban Government, to suffer.
Conclusion
    NFU has clear, common-sense policy on Cuba. It is our 
recommendation that the Cuban embargo be lifted. If that is not 
possible, at minimum the eight impeding roadblocks outlined by the ITC 
must be dissolved in order to increase U.S. exports to Cuba. Passage of 
the Travel Restriction Reform and Export Enhancement Act would be a 
significant step toward tearing down artificial walls put in place by 
past Administrations and Congressional actions. I appreciate the 
opportunity to testify today and look forward to responding to any 
questions Committee Members may have.

    The Chairman. Thank you, Roger--Mr. Johnson, Mr. President.
    Mr. Johnson. You are welcome.
    The Chairman. He is my neighbor. I can call him Roger.
    Mr. Stallman, you mentioned that we are not viewed as a 
stable supplier, and we have this 1 year fix that was put in 
and it is apparently being implemented on part of this. Do you 
think that is going to be enough to make any difference? Or do 
we need a more permanent fix to make this work?
    Mr. Stallman. No. I mean, obviously, as much as it is--it 
is good, but it is not enough. You need more long-term 
certainty when you are dealing with trade.
    That is what I meant by not being viewed as a reliable 
supplier. We made the change back in 2005, on a short-term 
basis. And for longer term trade you need to have certainty 
about what policy will be in terms of transactions. Having the 
short-term implementation is good, but it is not enough.
    The Chairman. Thank you.
    Mr. Johnson, you have been to Cuba a bunch of times, as you 
mentioned. Could you just tell us what the effects of that 
travel were both in the United States and Cuba? And why did you 
travel to Cuba? And how did that travel relate to U.S. 
agriculture? Can you just elaborate a little bit more on that, 
and on how the current policy is negatively affecting the 
smaller sales?
    Mr. Johnson. Sure, I would be pleased to, Mr. Chairman.
    All of my trips to Cuba were in the order of trying to 
advance trade. We led trade delegations, usually of North 
Dakota companies, but often for our neighboring Minnesota 
companies, as well, that went down with agricultural products. 
We had to get specific licenses. That has been changed now, so 
a general license will get folks down there. We are still 
finding out how that will play out. It was a fairly cumbersome 
process. To get the licenses, you had to license each 
individual participant, and you had to demonstrate that their 
reason for traveling exclusively related to selling food or ag 
products.
    I can tell you that the way the financial transactions have 
to be handled is extraordinarily cumbersome. The way it used to 
be is the goods would dock at the port, usually in Havana; and 
before they could be off-loaded, the money had to be received. 
But that is just a little piece of it. The money would normally 
get wired across the ocean, converted into a foreign currency, 
and then converted into the U.S. dollar. So you would have two 
conversions, both of which would lose you some money in 
transaction costs.
    And then, because of time changes, a day later they would 
get transferred back to the U.S. bank. It would get in the bank 
in which--that would be paying the seller. In that case, the 
North Dakota company or Minnesota company that would be selling 
the products, or their broker.
    And then that would have to be confirmed by the Federal 
Government before word could be send back to Cuba, ``Yep, we 
have the money. It is in the bank. Now you can offload the 
ship.''
    This is very inefficient. The Cubans told us repeatedly 
five to 15 percent right off the top they accounted for just 
because of that process.
    Now, in 2005, when the Administration made that change--and 
essentially same process, except that all this now had to 
happen at the port in the U.S., instead of the port in Cuba--
there was a long period of time, 6 to 9 months, where the 
policy had changed, but there was no official recognition of 
the change. You saw enormous uncertainty in the market.
    I think it was intended as a diplomatic slap in the face. 
Clearly, that is what it was received as by the Cubans. There 
were lots of concerns about that. We can go into that if you 
want to pursue it more. But the system is extraordinarily 
inefficient.
    The last point I would like to make about this, we have--on 
three of the trips, specifically the Cubans were interested in 
potatoes coming out of the Red River Valley, both table stock 
and seed potatoes. On two of those trips, we specifically 
negotiated deals to sell table stock and seed potatoes to Cuba. 
None of those sales have yet occurred, because of the 
complexities of getting all these travel arrangements to allow 
the Cuban inspectors to come up and to get our sanitary and 
phytosanitary standards reconciled between the two countries, 
since USDA can't talk to Cuba, only the State Department can.
    We were left in our Department and the Minnesota Department 
of Agriculture and the Department of Agriculture in the State 
of Maine trying to negotiate those requirements with the Cubans 
and then coming back to the State Department and to USDA. We 
never got it all done. It just never happened, and the sales 
have never happened as a result of it.
    The Chairman. Thank you.
    The gentleman from Oklahoma.
    Mr. Lucas. Thank you, Mr. Chairman.
    I do appreciate this hearing today, and I am very pleased 
to have knowledgeable witnesses. Part of these hearings, of 
course, is the exchange of information to better enlighten the 
Committee to understand what is really going on.
    First, before we move directly into the Cuba issue, on the 
free trade agreements, can you reiterate, gentlemen, your 
organizations' position, if you have a position, on the timely 
efforts to move the free trade agreements with Panama, 
Colombia, and Korea?
    Mr. Stallman. Our Bureau has been supportive of passing 
those agreements. We supported negotiating them, and we 
supported passing them once they were negotiated. That applies 
to Colombia, Panama, and South Korea. They are absolutely good 
for American agriculture. We need to pass those agreements, and 
obviously there are issues holding those up. We have 
communicated that to the Administration and also to this 
Congress.
    Mr. Lucas. Thank you, Mr. Stallman.
    Mr. Johnson.
    Mr. Johnson. I don't believe that the Farmers Union has 
taken a specific position on those three agreements.
    I will say as a general matter our policy argues that trade 
needs to be much more fair and that, in particular, we want 
labor requirements to be part of trade agreements and 
environmental requirements, currency rates, those sorts of 
things. I will say that our annual convention begins in 2 days, 
and I expect we may very well end up debating this issue there. 
But, right, now I don't think we have a policy on those three 
particular agreements.
    Mr. Lucas. After the convention, if you decide to be 
consistent, I would be most appreciative to know that and if 
you would forward it to me.
    Gentlemen, you are both obviously very good farmers or you 
would not have been elected by your farm organization, so you 
understand production agriculture hands on. Mr. Johnson, you 
alluded to several trips to Cuba. Mr. Stallman, have you been 
to Cuba?
    Mr. Stallman. Yes, I have, not as many times as Mr. 
Johnson, but I have been there.
    Mr. Lucas. Absolutely. My question for both of you is, when 
you have been in that country, have you spent any time out in 
the countryside in addition to the being in the urban areas 
working on the trade issues?
    Mr. Stallman. We absolutely did. We went down with multiple 
goals, one, obviously, to talk to all important government 
officials, also to look at their port facilities and determine 
what the transportation infrastructure was. But we also went 
out into the countryside to try to get what was, frankly, a 
superficial assessment of what their ability was to produce 
food and what the opportunities were for imports. So we did 
travel some in the country.
    Mr. Lucas. I will admit I have not been there. So I ask you 
this question, what were your observations about the quality of 
the soil. Most assuredly good people, well-educated people, 
would you say that if their system would permit it that they 
have the potential to greatly increase their own agricultural 
production?
    Mr. Stallman. They definitely have potential. They have, 
obviously, a tropical climate and soils decent enough to grow a 
lot of crops suitable for that climate. They lack capital. The 
people are willing to work. When I was there they were just 
beginning to open up, I guess you would say, farmers markets 
that would allow producers to come in and actually sell their 
products, as opposed to having it sold to the government. So 
that was a small step. The potential is there, but the 
restriction on their system and lack of infrastructure 
investment and capital is hindering their ability.
    Mr. Lucas. The reason I bring that question up, when we do 
business with the Cuban Government, we facilitate their ability 
to not only meet the needs of their constituencies down there, 
but to also continue to exist. It is one of the few examples of 
Soviet-style communism that still exists in the world, which 
means not a market-driven economy but a government-dominated 
economy. Even in places like mainland China, where the 
Communist party still attempts to maintain absolute political 
control, they have adopted a more market-oriented process and, 
consequently, have seen dramatic economic growth in the last 10 
to 20 years.
    I guess what I am getting at is, in your observations the 
soil is good, the potential is there, good people clearly, but 
don't you think that the system that they have that controls 
the resources, isn't that impeding their ability? And would we 
therefore--second question--would we therefore be continuing 
the problems they have by directly or indirectly helping the 
system survive?
    That is a good question for you, Bob. I look forward to the 
answer.
    Mr. Stallman. The first part of that answer is that, yes, 
there is no question their form of government and the type of 
control that comes from the top from the Castro family, and the 
military, inhibits their ability to do this.
    In terms of what would happen based on our engagement and 
opening up the travel ban, I think the more opportunity that we 
have to interact with Cubans at all levels and the greater 
opportunity there is for them to see the truth about America 
versus the web of propaganda and lies that they are given by 
the government. It enhances the opportunity to, ultimately, 
move more towards democratic reforms. I think it is that 
interaction and exchange that we want.
    The government has maintained themselves in power over the 
years by putting all of their problems on the backs of the 
United States, or trying to, because of our policies. That is 
what the government has done. But if the truth is known by the 
Cuban people about Americans and about our form of government 
and our capitalistic system, I think that will provide a great 
opportunity for that exchange of information and ideas to 
occur.
    Mr. Lucas. Mr. Johnson?
    Mr. Johnson. There were a whole bunch of questions, Ranking 
Member. Let me see if I can kind of remember them in order.
    First of all----
    Mr. Lucas. The basic question is, do we--by making it 
easier for the Cuban Government to buy things here, do we 
facilitate their ability to hold on and keep the Cuban people 
in this place they are trapped in now?
    Mr. Johnson. I understand that question, and I agree fully 
with what Mr. Stallman said. I firmly believe that the best way 
to bring light, if you will, to the people down there is to 
open up travel. I think the influx of American tourists that 
would come into that country, and the exchange of views that 
would occur between our citizens and their citizens, would be 
healthy for both of our people.
    And if you look at what has happened, the policy we put in 
place some 50 years ago was designed to get rid of a system of 
government. Ten U.S. Presidents have come and gone, and all we 
have done is move from one Castro to a younger brother who is 
not very young. We would argue that the policies we have used 
to try and make the changes that I think you and I agree ought 
to be made have simply not worked.
    Mr. Lucas. And the contagion has spread to other countries 
in Central and South America.
    Tolerate me one more moment, Mr. Chairman. I can see where 
the need to meet the basic food needs of the Cuban people 
should be met. That is a humanitarian issue, meeting things 
that are on those ration cards. And I understand they have an 
amazing system for allocating out the calories that people get. 
Meeting those needs, I can't argue with that for a moment.
    I just don't want to facilitate things that wind up 
enabling the regime to hold on and to spread its style of 
governance around by using access to things that the average 
Cuban citizen never sees. They probably don't drink much 
bourbon, and they don't see any lobster tails, but those kind 
of things help facilitate a tourism industry that brings real, 
hard cash into the country. Those are the kind of things we 
need to look at.
    I realize that is more than the scope of this bill and, 
perhaps, more than the scope of this hearing, but it is the 
kind of thing we need to think about in our overall policies.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman.
    The gentleman from Pennsylvania, Mr. Holden.
    Mr. Holden. Mr. Johnson, I am having a rough time grasping 
how this cash-in-advance provision works. I know you have 
elaborated on it in some detail. Can you maybe elaborate a 
little more and how the provisions in the Chairman and Mr. 
Moran's bill would change that?
    Mr. Johnson. Yes, I would be pleased to.
    The basic provision of this bill relative to cash in 
advance is simply to put in law what you already did with the 
last appropriation bill, I think it was, that put it in place 
for this year but that expires at the end of this fiscal year. 
So this would simply extend that provision, going forward.
    It would essentially return us to the policy that was in 
place from the beginning in 2000 when we first had some opening 
under the TSRA Act to the point in 2005 when the Administration 
put a different definition on the term cash in advance than 
what is used anywhere else in the world. So it would put us 
back to the normal definition, if you will.
    Now, related to that is the ability to do direct financial 
transactions, which is also in this bill. It is essential to 
get rid of 90 percent of that garbage that I talked about in 
that very convoluted system. If you did that, instead of 
sending the Cubans' money over to Europe, converting that into 
a Euro or some other currency and then reconverting to a dollar 
and then sending it back, you would just directly send the 
dollars to the U.S. bank. That would take probably 2 or 3 or 4 
days of delay out of the system, and it would take the 
inefficiencies of currency conversions out of the system, which 
can be very substantial if they need to happen in a very rapid 
basis, as they always do in these kinds of transactions.
    Mr. Holden. Mr. Stallman, I believe you said that EU and 
Brazil and Canada are the three biggest--where Cuba imports 
most of the agriculture products from; is that correct?
    Mr. Stallman. Yes.
    Mr. Holden. And I also believe you said that all sectors of 
the U.S. agriculture economy would benefit from this 
legislation. What sector do you think would benefit the most?
    Mr. Stallman. Oh, gosh, that would be difficult. It would 
probably vary over the years. I mean, rice was a huge export to 
Cuba in the past. You know, they obviously eat a lot of pork. 
Their market for dried beans--the whole list that I read are 
potentials, and I don't know, ultimately, which one would 
benefit.
    The point is, in the aggregate, if we can remove some of 
these restrictions that we have been talking about, you will 
enhance the opportunity, basically, for all commodities that 
would be desired by the Cubans to purchase.
    Mr. Holden. Thank you. Thank you, Mr. Chairman.
    The Chairman. I recognize the gentleman from Kansas, the 
cosponsor, and thank him for his leadership. Mr. Moran.
    Mr. Moran. Mr. Chairman, I thank you for holding this 
hearing; and I am pleased to be your ally in regard to this 
legislation.
    I appreciate the testimony of the two Presidents of our 
farm organizations. I don't have any questions. I just want to 
kind of outline the history and my understanding of what we are 
about here.
    In July of 2000, I offered an amendment on the House floor, 
as a relatively new Member of the House of Representatives, 
that would prohibit the use of any money in an appropriation 
bill from being used to enforce sanctions for food, medicine, 
and agriculture products in a sale to Cuba.
    The end result of that amendment--and it was a 
controversial day. I remember it as part of my time in 
Congress. It will stand out to me. But, ultimately, despite 
being suggested that this bill or this amendment would be 
overwhelmingly defeated, it passed by 301 to 116. A majority of 
Republicans, a majority of Democratics said it is time to 
change the policy.
    It changed the history of our relationship between the 
United States and Cuba, a history that had been in existence 
for 40 years, of which there were no sales of any of those 
products to Cuba. Again, we are not talking about trade. We are 
talking about sales.
    So the end result of that amendment and the broad support 
here in that Congress, July of 2000--and, in fact, all the 
Members to my right voted for that amendment. It is so long ago 
that there is no one here that voted against that amendment. 
They just weren't here at the time. So broad support among the 
Agriculture Committee and a broad set of supporters among all 
Members of the House; 301 to 116 said let's do something 
different.
    I remember my conversation on the House floor that said, 
``In Kansas, we will try something once. If it doesn't work, we 
probably will try it again. We might even try it a third time. 
But after about 40 years, Kansans would decide let's try 
something different. If our goal is to change the leadership of 
Cuba, let's do something different than what we are doing, 
because it is not working.''
    And I will admit that my interest in this was very 
provincial. It was about Kansas farmers. It was how do we get 
another market in a very difficult economy in which we can sell 
our products to. And, as a result, the Trade Sanctions and 
Reform Export Enhancement Act of 2000 became law.
    We were doing just fine until 2005 when the Treasury 
Department decided to change the regulations and say that cash 
in advance no longer meant, as it does every other place in our 
relationship, it no longer means when the ship arrives in 
Havana. It means when the ship leaves the United States. So we 
added another set of 4, 5, 6, days, 2 weeks in which the Cubans 
had to pay that much earlier.
    We also said from the very beginning you have never been 
able to finance this. There are no government subsidies in 
these sales. We restricted the ability to use a U.S. bank in 
those regulations. And so they then had to go to a third party 
bank in a foreign country, get a letter of credit, and we 
increased the cost of doing business with the United States.
    As a result, after the 2005 change in regulations, we lost 
20 to 30 percent of our exports. And so year after year I have 
offered the amendment again to an appropriation bill that says, 
no money can be spent in this appropriation bill to enforce 
those new regulations which make no sense. And that amendment 
has passed the house time and time again. That is what is in 
this bill. It has been approved as most recently as last year 
in an appropriation bill. We have said it is okay, and 
sometimes when I have offered my amendment it has been adopted 
by voice vote. And so the controversy that sometimes surrounds 
this issue is pretty limited when it comes to the agricultural 
side of what we are doing here.
    As a result of the change in our laws, and despite the fact 
that these restrictions made it more difficult and we were 
losing market share, we are seen by the Cubans as an unreliable 
selling partner, again not a trading partner, a selling 
partner. We sold $708 million worth of agriculture commodities 
to Cuba in 2008, and it is rice. They import rice from Vietnam 
and China if they are not buying it from us.
    This idea of whether or not the food actually gets to the 
Cuban people, I don't understand that issue. Because when we 
don't sell, all we are doing--this is a unilateral sanction. 
All we are doing is restricting our ability for our farmers and 
our agribusinesses to conduct business in Cuba.
    And yet France, Argentina, Canada, they love our embargo. 
They love the fact that we made this market more restrictive 
because they fill it.
    And so if you are interested in whether or not the Cuban 
people are getting the food, that is not this bill. We can't 
necessarily affect that. Because when we don't sell, somebody 
else does. Those decisions are already made by someplace down 
the road, not whether or not we agree to take cash.
    All the agricultural side of this legislation does is 
return us to the common days, the days before 2005, in which we 
operated normally. And it is normal compared to around the 
world.
    And we deal with Communist countries on an ongoing basis in 
a trading relationship in which we offer them credit. Who is 
the United States biggest creditor? China. And yet we are 
nervous about selling for cash up front agriculture 
commodities, food, and medicine to a country 90 miles off our 
shore. What a double standard we have created in this country.
    In Kansas--and I hope to ask my Kansas witness today--we 
would not object to selling Boeing aircraft to China, and yet 
we worry whether or not we are going to sell wheat to Cuba. I 
don't understand how we got ourselves in this position in which 
we worry about this issue, cash up front, no government 
subsidy. We are taking money out of the Cuban Government and 
putting it into the pockets of farmers and American business, 
agribusiness.
    Finally--my time has expired a minute and 18 seconds ago--I 
would just add my provincial interest started with Kansas 
farmers and a desire to see that we have one more market. You 
may recall the year 2000 was not a perfect year on farms across 
this country, and every market mattered to us for our success.
    And, again, Cuba is not the end all. It doesn't solve all 
of our problems or doesn't make us all wealthy. But having 
spent some time on this issue I am convinced, as has been 
indicated today, that this is not just about the United States. 
This is about how we change the Cuban people's opportunities.
    Because economic freedom, the market system that we all say 
we believe in, the free market system causes the Cuban people, 
when they have the ability to buy consumer goods--in this case, 
I am just talking about food, fill their diet. The more contact 
we have with them economically, the more demands they will make 
upon the Cuban Government to change for the opportunity for 
liberty and freedom. That ultimately is what this is about.
    Again, as I started out as just a provincial Kansas 
Congressman wanting to take care of Kansas wheat farmers, I 
think there is a much more noble cause to this than just that, 
which is we can make a greater difference in the lives of 
Cubans by dealing with them than by ignoring them.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman for his passion and 
eloquent statement and for his persistence on the issue. I 
recognize the gentleman for Iowa, Mr. Boswell.
    Mr. Boswell. Thank you, Mr. Chairman. Thanks for having 
this hearing.
    And, Mr. Moran, I firmly confirm what you have said. If I 
had 7 minutes, I would give it back to you and let you say it 
again. Because you have said everything, and I totally agree 
with you.
    I, too, have been down there, Mr. Presidents, both of you. 
I appreciate that but assume that you know who Mr. Alvarez is. 
I spent a lot of time with him. I spent quite a bit of time 
with Mr. Castro. Sometimes we would be entertained. I can tell 
you about that a little bit.
    But we went out in the country, and I think that Mr. Moran 
is exactly right. I think you all have it right. We are just 
denying ourselves markets. Because they can go elsewhere, and 
they are, and learn about the process of getting the money to 
pay for it and what they had--it cost them more, but they still 
did it. And there we sat not being able to send a product that 
we could have on the way down there so quick. And they want it, 
and they can use it.
    And as far as the other parts of the political side of it, 
how many years do we have to wait to figure out that this is 
not working? And it is not working. It is silliness to keep 
this up.
    So I am very supportive of the bill, in fact, if left up to 
me, Mr. Chairman, I would probably expand it. We really are 
just spiting ourselves by not taking advantage of this market; 
and we are denying our producers, the farmers of Kansas, Iowa, 
Minnesota, Texas, Oklahoma, and everywhere, the opportunity to 
have a place to sell--not even trade, just to sell. I think 
this ought to be done.
    So I yield back the balance of my time. Or I could give it 
to Mr. Moran, I suppose.
    The Chairman. I think we heard enough out of him.
    Mr. Boswell. We agree. It is time to do something.
    The Chairman. All right. I thank the gentleman.
    The gentleman from Texas, Mr. Neugebauer.
    Mr. Neugebauer. Thank you.
    I want to echo a lot of things that my good friend from 
Kansas, Mr. Moran, said. I opposed the Administration's plan 
when they went to cash before you ship it, cash in advance. I 
think it is a little ridiculous that we have to pretend like we 
are not having relations with Cuba and we have to trade through 
a third country bank. I think that doesn't make sense as well.
    I, too, have been to Cuba; and I know that that is a 
wonderful country. It is unfortunate that such wonderful people 
are having to live under this dictatorship, one that has truly 
kept that country in the dark ages for a number of years.
    I think when I look at this bill--H.R. 4645 I believe is 
the number on it--is that I agree with most of the things that 
the two witnesses said. I think that one of the things that I 
am a little concerned about is that we can enhance business 
travel. Where we are focusing on these trades, we are 
facilitating people being able to put those deals together so 
we can increase and expand the market for American agriculture.
    I am not to the point, personally today, that I am ready to 
open up the tourist trade, although for family members or 
people who have family in Cuba, we should continue that 
process. But when I was down there, it was represented to me by 
the Cuban people that live in that country--there were some 
wonderful hotels along the beach. The Cuban people are not 
allowed to go into the lobbies of those hotels. I think it 
would be an affront to the Cuban people for us to embrace the 
support of those hotels when the Cuban people themselves cannot 
go in there.
    So, Mr. Chairman and Mr. Moran, I have a great deal of 
respect for both of you; and I support a lot of the concepts of 
your bill and would look forward to seeing that we could limit 
some of the travel pieces of that where we could facilitate 
being able to expand American agricultural markets, but at the 
same time respecting and not causing a great injustice for us 
to open up an opportunity that the Cuban people themselves do 
not have.
    I don't really have any questions for the panel, but I 
would give them an opportunity to respond to the two or three 
statements that have been made here. So, Mr. Stallman.
    Mr. Stallman. Just a response from my visit out there, 
being out in the streets and moving around the country. There 
were tourists from a multitude of other countries from around 
the world. They were moving around pretty freely and had 
interactions with the Cuba people. And while you are absolutely 
correct in your description of their resort hotel system that 
they have there, having that opportunity for, once again, the 
Cuban people to interact with American tourists, to be able to 
hear about America, to me that undermines the messages they 
receive from their government. And, once again, I think that 
would be the quickest way to actually make progress on this 
country's goal of figuring out how to change regimes and the 
form of government there.
    Mr. Neugebauer. Thank you.
    Mr. Johnson.
    Mr. Johnson. Yes, I certainly agree with what was just 
said.
    On the issue of the Cubans not being allowed into hotels, I 
think that was the case, but it is my understanding that in the 
transition between Fidel Castro to Raul that that was one of 
the changes that has been made under the new government there, 
that there is no longer a prohibition against the Cubans using 
the hotels.
    The fact of the matter is that their income levels are so 
low that most of them couldn't afford to pay the room rates 
that you and I pay when we go down there. I don't think it is a 
prohibition. I think it is just a matter of the income level to 
support it.
    And, frankly, in some small part, this bill is about 
helping to boost their income just a little bit, too. By 
getting the food to them in a more efficient fashion at a lower 
cost, getting it spread out a little further, maybe that helps 
boost that income so a few of them can use those hotels and 
resorts.
    Mr. Neugebauer. I hear what you are saying, but my 
observation is that none of that money really funnels to the 
Cuban people. You can increase the GDP in that country 
substantially, but, unfortunately, it stays in a very small 
number of hands. And that really the overall quality of life--
and I am sure both of you know what the allocation of food is, 
and it is a pretty nominal amount of sustenance that the people 
themselves receive. So while it may increase the GDP of the 
country, I don't think it increases the income of the Cuban 
people.
    With that being said, I am supportive of the trade pieces 
of that and have been--do feel like--I don't understand the 
logic behind the changes made in 2005, it wasn't the right 
thing to do. I am supportive of returning to the way we were 
doing it before, because that, as you both testified, that was 
working.
    Thank you, Mr. Chairman.
    The Chairman. The gentlelady from Illinois, Mrs. Halvorson.
    Mrs. Halvorson. I have had a lot of people tell me of their 
concern about the travel portion of the bill versus the ag 
portion. I know I have heard all of the reasons that you 
believe it would help if we had travel, but this question will 
be two-fold, I suppose. How you feel it would affect your 
bottom line in agriculture? But, also, could you still support 
the bill if the two were separated, if it did not have the 
travel? If the travel wasn't expanded but we still fully 
supported or expanded the ag portion?
    So if the two of you could answer that, how you felt about 
if the two were separated, or if they need to be together, or 
what the bottom line on agriculture is.
    Mr. Johnson. Well, I think I made it clear in my testimony 
that we would go much further than the bill. And so, obviously, 
anything that moves in the right direction is something that we 
would be supportive of.
    I would argue that in some small part, besides allowing the 
tourists to come in and begin to change the system, which has 
been adequately explained here and I fully concur with, another 
part of that is the tourists will bring some dollars.
    And so while this bill is not about trade, as Congressman 
Moran so eloquently stated, it is about sales. There is a 
little bit of the other part of the trade that happens with the 
tourism, because it will bring some dollars into the Cuban 
economy. Now, that does a couple of things, but, for 
agriculture, one of the big things it does is it allows more 
income into the system so that they can purchase more 
agricultural products.
    Number two, in my written testimony I didn't talk about 
this because of time. I talked about the value-added in 
agriculture that many of us, many of you have spent a lot of 
time and effort working on to try and expand value-added in 
agriculture so that we can export higher-value products instead 
of just raw commodities.
    The tourism industry--bringing U.S. tourism helps that part 
of our export market a whole lot more than just doing the ag 
piece that is in the bill. It will--number one, there will be a 
demand for more of these value-added products from the tourists 
who have higher expectations, if you will.
    And, number two, that provides an opportunity--one of the 
things that I discovered early on with the trade missions that 
I led from North Dakota was that the Cubans are very astute 
business people. They are not going to spend any more than they 
have to. They were very tough negotiators, as they ought to be, 
as we all are. Very capitalistic, frankly, in that regard. They 
saw no need to spend any more than what they absolutely had to.
    We tried to sell value-added products. In fact, our 
Lieutenant Governor was the chair of the board of a pasta 
company, number three in North America in terms of size, and 
went down with me and on his own a couple of times trying to 
sell pasta. I think we might have sold a little tiny piece of 
one container.
    Frankly, there just isn't the ability to pay for those 
value-added products. We mostly sold--I would say 99 percent of 
the products sold out of North Dakota--probably the same is 
true across the board in the U.S. We mostly sold raw 
commodities that ended up going into that ration distribution 
system that has been talked about. It was to meet the 
fundamental humanitarian needs of the Cuban people. And if they 
had more income they would put more of that food into that 
system.
    Mrs. Halvorson. Mr. Stallman.
    Mr. Stallman. We certainly support the travel provisions 
that are in this bill. We have always, as my colleague has 
said, supported any measures that move the ball forward with 
respect to our trading relationships with Cuba.
    Opening up the travel and the tourism, while all of that 
GDP growth obviously does not go to the Cuban people, there 
will be a lot of casual exchange of dollars. We did that when 
we were down there, so some of those dollars will find their 
way into Cuban's hands, and it will increase some Cuban's 
purchasing power. That is in addition to what we have already 
talked about, the interaction and exchange of ideas.
    We would still support the bill even if it went back to 
purpose specific travel, because it does move the ball forward, 
but we would prefer to see all the provisions that are in the 
bill remain.
    Mrs. Halvorson. Thank you. I yield back.
    The Chairman. I thank the gentlelady. The gentleman from 
Texas, Mr. Conaway.
    Mr. Conaway. Thank you, Mr. Chairman. I am supportive of 
the ag issues in terms of being able to sell more U.S. 
products, whether value-added or not, to Cuba. I have been 
there. Mr. Moran and I went, he and I were there; there were 
ten of us on the trip, nine of whom supported unlimited lifting 
of the embargo with Cuba and one guy who didn't. He got thrown 
under the bus at every single meeting that we had with the head 
of the communist party and all those folks, and that guy was 
me. But it was a great trip, very eye-opening.
    I am not convinced that the lifting of the tourist travel 
will have any impact that would help us further our goal of 
freeing up the Cuban people. The Cuban people right now, in my 
view, are muddling along reasonably okay. There is not enough 
misery in the system for them to rear up against the 
totalitarian government that they live under. There, they 
control everything down to the point that they won't allow the 
Cuban people to know the box scores on baseball games. I guess 
they are afraid that the few Cuban players who have defected, 
fled that regime, are doing really well, and they don't want 
their folks at home to know that there is a life on the other 
side of the deal.
    I also hope, Mr. Stallman, Mr. Johnson, that the same 
passion you bring to defending this, trying to do something 
against this communist country, that you would bring to the 
table when we talk about our one free, democratic friend in 
South America, and that is Colombia.
    Mr. Johnson, I hope next month at your meeting you will be 
just as passionate for doing a free trade agreement. The labor 
issues aside, that is false. We all know that. That is a stigma 
and may have been true 20 years ago, but it is not the case 
today. And so we have a great friend there that we poke a stick 
in his eye every day that allows Hugo Chavez to do that.
    So I am not convinced that U.S. travel--there is 
unrestricted travel from around the world--Canadians and 
anybody else can go in there--and it has not had any kind of 
impact on the deal. So I support the Chairman and Mr. Moran's 
bill with respect to all things agricultural-wise. I can't 
support, at this stage, the lifting of the travel ban or 
tourist travel ban that would be a part of it. So I hope that 
we can count on your support for Colombia, Panama, and South 
Korea's free trade agreements, because those are our friends 
and we ought to treat our friends almost as good as we treat 
someone that is not our friend. If we did this, in order for 
that totalitarian government to remain in control, they have to 
have a bogeyman, and that bogeyman will be the United States--
is the United States. If we had lifted all this and tried to 
argue that the United States was not the bogeyman, then the 
Cuban community in Miami would be. Somebody is going to be the 
bogeyman for this totalitarian government to maintain their 
strict controls over everything that has been going on down 
there.
    So I appreciate your comments, and look forward to your 
help on the Colombia Free Trade Agreement, and Panama and South 
Korea.
    With that, Mr. Chairman, I yield back, short of the 7 or 8 
minutes.
    The Chairman. I thank the gentleman for his brevity. The 
gentleman from California, Mr. Costa.
    Mr. Costa. Thank you very much, Mr. Chairman. I do support 
your efforts on this legislation, and I think that, frankly, we 
have tried numerous efforts to deal with the oppressive regime 
in Cuba, from the Kennedy Administration to the present-day 
Administration. And all of those efforts have been 
unsuccessful, if the ultimate judgment for success was removing 
Castro from power and creating a more democratic regime.
    By all standards, all of the efforts with both Democratic 
and Republican Administrations have been unsuccessful, and 
Castro, much to everybody's surprise, has outlived many 
Presidents since that time, since that policy has been in 
place.
    My view is that, I mean, we have dealt with a lot of 
repressive regimes, regimes that don't respect human rights as 
we understand them today, whether it be in China or whether it 
be in other parts of the world, and yet we do trade with them. 
For the life of me, I can't understand why that same sort of 
even-handedness should not be applied to Cuba.
    As a matter of fact, frankly, we have seen changes in 
places like China and others when we have engaged with them, 
and we have seen greater freedoms become available to the 
populations. So it seems to me that we ought to just create the 
good old Yankee know-how and allow American farmers and 
ranchers, dairymen, and others to engage in active trade.
    I went to Cuba in 2002. I have viewed their efforts on 
agriculture production both as it relates to fruits and 
vegetables, and as it relates to dairy and livestock. And from 
my own firsthand observations, having been a dairy farmer for 
three generations, I think I know something about that 
business, they have a long ways to go. What they do well is 
sugar, and we don't need that. So the fact of the matter is 
this legislation is good.
    I want to get to a few questions. Mr. Johnson, you talked 
about current policy that restricts producers to making smaller 
sales and reduced long-term contracts. Can you elaborate on 
that and how we can change them?
    Mr. Johnson. Sure. Just the fact that you can't do direct 
transactions makes it really impossible.
    Mr. Costa. So that has to change?
    Mr. Johnson. Yes. That has to change, the uncertainty that 
swirls around what our policy is going to be.
    Mr. Costa. Mr. Stallman made that point in his opening 
comments. How much do third country banks charge on sales on 
the average, and how should we change that in financing, when 
we hopefully will change the policy whether through this 
legislation or other activities?
    But the financing, when I was there in 2002, was also an 
issue because, obviously, the limit--everything they were doing 
was in dollars at that time.
    Mr. Johnson. Yes. What the Cubans have told me repeatedly 
is that it is from five to 15 percent. Perhaps in a couple of 
cases as much as 20 percent of the total value of what they 
bought was eroded because of that convoluted transaction 
arrangement I described. How much of that is from----
    Mr. Costa. There has got to be a better way to do that.
    Mr. Johnson. Of course. And this bill would in fact solve 
the biggest part of that problem.
    The ITC report, if I remember, concluded--I believe they 
said from 2\1/2\ to ten percent of the value of the sales was 
being chewed up in that exchange process.
    Mr. Costa. Okay.
    Mr. Stallman, you talked about, in your testimony, the need 
for visas to be issued for Cubans to visit the U.S. for trade-
related purposes. Is this not included under the Travel 
Restriction Reform and Export Enhancement Act? And if not, 
should we include it in this legislation?
    Mr. Stallman. We need to have that ability to have those 
government officials from Cuba to come over. And it is the same 
type of visa and courtesy that we actually provide every other 
country in the world with respect to trade. They come over to 
inspect facilities, look at phytosanitary issues, and we are 
restricting government officials from coming to do that.
    Now, frankly, that hasn't impacted that many sales yet 
because of the other restrictions.
    Mr. Costa. Quickly, before my time is up, you talked about 
60 percent--before the Castro regime--of food was exported from 
this country to Cuba. Obviously, we couldn't get back to that 
overnight. But what market share at this point do the Europeans 
and the South Americans have?
    Mr. Stallman. Well, the Cubans increased their agricultural 
imports, and I am probably thinking about 2008 figures, to $1.8 
billion. We think we could have up to \2/3\ of that. So if we 
had what we should have and got about $1.2 billion, then that 
would leave about $600 million for the rest of the world, and 
we would be more than happy with that because we would have the 
advantage.
    Mr. Costa. Thank you. My time has expired.
    The Chairman. The chair thanks the gentleman. The gentleman 
from Missouri.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    This is an interesting bill from the standpoint that we 
have agriculture and then we have tourism mixed in the same 
bill, which is kind of a head-scratcher to me. In one situation 
we are putting money in our pockets by trading with these 
folks, and the other, by the tourism part of it, we are putting 
money in their pockets, which is kind of--why would we want to 
do that?
    Question number one: What is the potential for Cuban trade 
on the agricultural portion of this? Do you gentlemen have a 
figure on that by any chance?
    Mr. Stallman. Well, as I said, their total ag imports are 
about $1.8 billion. So that would be the top of the line. We 
obviously wouldn't get all of that. We think we could get \2/3\ 
of it.
    Mr. Luetkemeyer. You think you could get \2/3\?
    Mr. Stallman. Yes. If we did not have the restrictions that 
exist.
    Mr. Luetkemeyer. If I remember your calculations, we get 
about \1/3\ of it right now.
    Mr. Stallman. Roughly.
    Mr. Luetkemeyer. So we would be able to double our exports 
to them. Is that roughly what you both agree on?
    Mr. Stallman. Approximately.
    Mr. Luetkemeyer. Okay. I am just kind of curious. I have 
had many jobs over my lifetime before I got here, and one of 
them happened to be the Director of Tourism for the State of 
Missouri. I can't go along with any of the analogies of what 
you just told about what is going to happen with the tourism 
aspect of this bill. It doesn't work that way.
    The people in Cuba right now, Mr. Stallman, you made the 
comment that we need to interact with them. I think Mr. Johnson 
also made the same comment, that we need to interact with them 
so they can understand how good a country we are, and that way 
they will overthrow their government and be willing to look at 
other issues.
    I think they already know that. I think by the number of 
people that try to escape from that country every chance they 
get, I think they already know that. They are being oppressed 
because they don't want anybody to have enough freedom to even 
think about getting out. The longer we keep them depressed--our 
government keeps them depressed, I think that they are headed 
there.
    So I am very curious about this, because I have grave 
concerns about the travel portions of the bill. I think the ag 
portion is good. But whenever we are setting there, Mr. 
Stallman, you made the comment that purpose-specific travel, I 
think that is where we need to head with this bill. I think if 
we had purpose-specific travel restrictions or enhancements in 
this bill, that would be what we need to do. But I don't think 
we need to get into an area that is not agricultural. To say 
that we are going to improve the wherewithal of the people of 
Cuba by tourism, so they can buy our agricultural products, is 
a stretch beyond which I can't go, because I can tell you that 
is not the way it works.
    So I kind of take exception to some of your testimony from 
my own past, but I agree with what you--I appreciate your 
position on the agricultural portion, because it is going to be 
imperative that as we look for new areas for our own economy, 
with our ag economy to expand, this is one of those places 
where we can actually go.
    I will yield back the balance of my time, Mr. Chairman. But 
I do want to reiterate that I think that you and Mr. Moran, as 
sponsors of the bill, I would hope and urge you to somehow 
redefine this tourism portion of this, get a little more 
travel-specific, purpose-specific in their travel there, 
because we have gone well beyond what is in the best interest 
of ourselves as trading partners.
    Mr. Lucas. Would the gentleman yield before he yields back?
    Mr. Luetkemeyer. Yes, I would.
    Mr. Lucas. Just an observation on the tourism issue. You 
have to bear in mind, of course, that in an economic system 
that is so dysfunctional as they have down there, their version 
of Communism, they have to have a way to generate the capital 
to buy the agricultural goods.
    Mr. Luetkemeyer. But you also have a country dominated by 
the government which generates those things. It controls all 
that.
    Mr. Lucas. That is exactly right.
    Mr. Luetkemeyer. Whenever you dump the money in there as a 
tourist, that money does not go to the individuals. That money 
goes back to the government. The government controls 
everything.
    Mr. Lucas. You are exactly right.
    Mr. Luetkemeyer. The few pennies that fall through the 
cracks that the people get will only barely feed their 
families, whatever they have to. That is not going to come back 
to us as a trading partner.
    The tourism aspect of this bill is, quite frankly, it just 
doesn't wash. I can tell you from being in the business, it 
does not wash. But, again, I thank the sponsors of the bill, 
certainly urge them to continue on with this. I think it is 
imperative we do this for our agricultural community. But I 
would ask them to pare down this travel portion of this.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. The gentleman from 
Nebraska, Mr. Smith.
    Mr. Smith. Thank you, Mr. Chairman, and thank you to the 
witnesses. This is interesting. I will say that I appreciate 
the enthusiasm for increased velocity of trade. I have been 
amazed at the heavy lifting, as Mr. Conaway pointed out, the 
heavy lifting that these trade agreements, aside from the Cuban 
issue, have been.
    Now, to confirm. You suggested that our exports to Cuba 
would double if the travel restriction is lifted.
    Mr. Stallman. If the transactional restrictions and travel 
restrictions are lifted, the potential is there for that to 
happen. Yes, sir.
    Mr. Smith. And that would be done with about how many 
dollars' worth of travel and tourism generated? If we are going 
to double the exports, that would be done with how many dollars 
of tourism existing in Cuba? From either one of you.
    Mr. Johnson. I think we are both going to guess.
    Mr. Smith. Okay, That is fair.
    Mr. Stallman. I am not even going to guess.
    Mr. Johnson. Let me not guess then. Let me suggest that 
probably the best answer to that is from the ITC report that 
actually came to the same conclusion that we both have said a 
number of times. The $1.8 billion is recorded in that report to 
be roughly 60 to 65 percent ability to recapture ag markets. 
And I believe if you read the report, it will give you the 
assumptions. Perhaps it will give you the level of tourism 
expected.
    My memory tells me that a couple of years ago there was an 
expectation that it might be as much as $1 billion worth of 
tourism revenues that would accrue if it were opened up wide 
from the U.S. to Cuba. And I will try to reconfirm that. And if 
that is wrong, I will try to get back for the record, Mr. 
Chairman.
    Mr. Smith. One concern that I have is that there is a lot 
more competition amidst the world of travel and tourism than 
there would be with--of course, I am a bit biased, too--with an 
exporting district in terms of agriculture. With high-quality 
products that are available and accessible on demand and 
otherwise, that there is just--it would be a lot harder for 
Cuba to get tourism dollars than it would be for us to market 
the agricultural products. Would you share that concern?
    Mr. Johnson. Frankly, I would disagree. I think if Cuba was 
open to U.S. tourism, you would see an awful lot of interest 
from Americans to travel to Cuba. It has been the place you 
can't travel to. For those who have been traveling, it is the 
place you can't go.
    One of the interesting things that I observed of all the 
times I have been to Cuba, when there were more than one state 
delegation there for different trade fairs, et cetera, the 
largest state delegation every single time was from Florida. 
And I thought, well, isn't that interesting? I mean, why are 
the Floridians so interested in opening up trade with Cuba.
    You know, you think about sugar, you think about citrus, 
you think about what is their angle. It is their tourism 
industry overwhelmingly. Why? Because a lot of their tourism 
has to do with these cruise ships that travel around. And the 
one place that is forbidden is Cuba. So they can sail 
everyplace, and they have a lot of repeat customers. Apparently 
people that go on cruise ships like to go. I wouldn't know 
firsthand. But the one place that they want to go next is, they 
want to stop in Cuba.
    Mr. Smith. That is very interesting. And, Mr. Stallman, 
would you wish to comment as well?
    Mr. Stallman. I was just going to add on, and I don't think 
it has been brought up, U.S. citizens can travel to Sudan, can 
travel to Iran, but we are not allowed to travel to Cuba. You 
know, philosophically, that makes no sense whatsoever.
    Mr. Smith. I hear you. And I hope that we can arrive at 
something. Clearly, our strategy to date hasn't gotten us a lot 
of reforms. And so I hope that we can arrive at something where 
we can move forward, promote democracy and freedom, and at the 
same time opportunity here at home.
    So with that I yield back. Thank you.
    The Chairman. I thank the gentleman. The gentleman from 
Iowa, Mr. King.
    Mr. King. Thank you, Mr. Chairman. I appreciate being 
recognized, and I appreciate the testimony of the witnesses.
    I will say that I was of your opinion back in the 1990s, 
and I took the initiative to go on a trip down to Cuba. I was 
with the People to People mission, entirely legal and 
supported, of course. And I went down there because I intended 
to, with personal experience, ratify my opinion that we should 
open up trade with Cuba.
    There is nothing like going somewhere to learn the things 
that support your position, that gives a person the authority 
and the credibility to then come back and advocate for such a 
position. And I can't think of another time in my life that I 
went somewhere actually for that reason, or certainly had not 
had an experience that turned me 180 degrees, like the time I 
spent in Cuba.
    If I had stayed with the People to People mission, we spent 
our days being handled by Castro's minders, going from place to 
place, listening to people in gray smocks answer questions that 
were translated from English into Spanish, that were not the 
questions that we were asking, and the answers that they were 
giving were not the answers to the questions that were being 
asked. It took me a little while to figure that out.
    And myself and then state Senator David Miller went off on 
our own, and we ended up picking up an individual; he actually 
approached us down along Havana Harbor, and he became our guide 
for 3 days. And we went all over that island in 3 days. And he 
was a communist, a Marxist, and he was proud of Cuba and he was 
a Cuban historian.
    But throughout those long days I learned some things, in 
spite of his intent to give us a 3 day commercial, and two of 
those things stood out for me that I can't get past. One of 
them is that when Castro nationalized the real property in 
Cuba, which I think was 1963, 25 percent of that real property, 
the deeds to that property, were in the hands of Americans. The 
Americans are the only ones that have not been compensated for 
that real estate. They hold their deeds today. And if there 
were to be investments from Americans into Cuba, having 
witnessed the Mariel boatlift, I can't imagine Castro doing 
anything except selling that real property that belongs to 
Americans back to other Americans to pit them against each 
other. That would be one point.
    Another point that was a surprise to me was to learn at 
that time the exchange rate of the peso to the dollar was 21:1. 
And one would think that Americans trading in Cuba, tourists 
going to Cuba, would give the Cubans an opportunity to make 
some money off of that endeavor, so maybe it lifts them up 
economically and exchanges a little spirit of free enterprise.
    But what really happens is--it has changed a little bit now 
but the effect is the same--is that Cubans could at that time 
earn American dollars, and they can hold them but they couldn't 
spend them, unless they went to a dollar store where an 
American dollar was worth 1 Peso, not 21 Pesos. Castro was 
picking up the 20 peso villancicos out of the 21 Pesos to the 
dollar. And that was going, and still goes, into his treasury 
and into his coffers to fund the Administration, to fund his 
brutal communist dictatorship.
    Those are just two points that I couldn't get past. I 
couldn't find a way to rationalize that, even though I went 
down there to be able to ratify an opinion to opening up trade 
to Cuba.
    So where I sit today is that we have invested nearly a half 
a--well, we have--a full half a century into waiting out the 
ideological solution in Cuba. And I can't imagine we can wait 
very much longer. But I am more patient than the witnesses 
before us here. I am willing to wait out this ideological 
solution because we have invested so much in it. And I would 
say that Castro has been an exporter of his Marxist ideology in 
the Western Hemisphere, and that changes the argument on 
whether we allow trade into China or into Iran.
    I understand the philosophy that has been voiced here, and 
I would only draw that distinction. It is our back door. He has 
exported his brand of Marxism. He has been influential not just 
in the Western Hemisphere, but in places like Angola as well.
    I am not opposed to getting food to Cubans. And I would 
hope that if we do something here, we can limit our endeavor to 
getting food to Cubans, rather than inadvertently propping up a 
communist regime. When that day comes of the ideological 
solution, if we don't have a plan in place, if we don't have a 
way to encourage the Cubans anymore than we have encouraged the 
Iranians when they took to the streets, then those 11 million 
Cubans down there that have been now cursed with a half a 
century of living under the slavery of the communist dictator 
Castro may well see another half of a century.
    So that is how I look at this. And I hope we can find a 
solution that doesn't play into the hands of Castro. And I am 
going to just pass up my chance to ask a question, Mr. 
Chairman. I appreciate being recognized, and I appreciate the 
witnesses.
    The Chairman. I thank the gentleman. Would the gentleman 
answer a question? Are you in favor of selling Boeing Aircraft 
to China and other things that we are doing which are propping 
up that communist regime?
    Mr. King. Let's figure out how to work on that endeavor as 
well, Mr. Chairman, because it does light up my attention.
    The Chairman. I thank the gentleman.
    I want to thank the witnesses for being with us. You guys 
did a great job, as usual, and we appreciate your taking the 
time and being patient.
    I will call the next panel. We have Mr. Mike Wagner with 
the U.S. Rice Producers Association and Owner/Operator of the 
Two Brooks Farm on behalf the USA Rice Federation from Sumner, 
Mississippi; Mr. Jerry McReynolds, wheat producer and President 
of the National Association of Wheat Growers from Woodston, 
Kansas.
    Mr. Moran, do you want to say something?
    Mr. Moran. I am happy to say something about Mr. 
McReynolds. I am delighted that he is here as a witness. Mr. 
McReynolds is a farmer in my home county of Rooks County, 
Kansas. He and his family are highly respected and highly 
regarded, and anything that happens good in our home county 
usually involves somebody with the last name of McReynolds. And 
Jerry has continued that commitment, especially in agriculture.
    He is now the President of the National Association of 
Wheat Growers, was a previous President of the Kansas 
Association of Wheat Growers, and serves on our Kansas Farm 
Bureau Board of Directors since 1998. Just an all around good 
guy and somebody who has a lot of credibility with lots of 
Kansans.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. And welcome, Mr. 
McReynolds.
    Mr. John Wilson, Senior Vice President of Marketing and 
Industry Affairs for DFA, on behalf of the National Milk 
Producers Federation of Kansas.
    Mr. Barton Schott, corn producer and First Vice President 
of National Corn Growers, from Kulm, North Dakota. Home of 
Angie Dickinson, right? She is a little bit better looking than 
you, but not much.
    And, Mr. Scott Fritz, soybean producer and Board Member of 
the American Soybean Association from Winamac, Indiana.
    Gentlemen, welcome to the Committee. We look forward to 
your testimony.
    And we will start with Mr. Wagner. You are recognized for 5 
minutes. Your statements will be made part of the record. And 
welcome to the Committee.

  STATEMENT OF MIKE WAGNER, OWNER/OPERATOR, TWO BROOKS FARM; 
 MEMBER, BOARD OF DIRECTORS, U.S. RICE PRODUCERS ASSOCIATION, 
          SUMNER, MS; ON BEHALF OF USA RICE FEDERATION

    Mr. Wagner. Thank you, Mr. Chairman. Mr. Chairman and 
Members of the Committee, I am Mike Wagner, a rice farmer from 
Sumner, Mississippi. I appear today on behalf of the U.S. Rice 
Producers Association and the USA Rice Federation. I would like 
to acknowledge Mr. Jackie Loewer, a fellow farmer from Branch, 
Louisiana, who is here today. Our organizations represent rice 
producers in all rice producing states, as well as rice 
millers, merchants, and exporters.
    I would like to preface my statements by stating we do not 
support Castro's regime.
    As a first-time witness before Congress, I am especially 
honored and humbled to appear before you today. After almost 50 
years, one thing is clear: Our Cuban policy is ineffective. It 
punishes U.S. farmers and costs U.S. jobs.
    In the 1950s, Cuba was the largest export market for U.S. 
rice. In 1959, Cuba accounted for 51 percent of all U.S. rice 
exports. After Congress provided for agricultural trade with 
Cuba in 2000, Cuba rapidly became our fastest growing market 
for U.S. rice. In 2004, the Cubans bought $64 million worth of 
U.S. rice, providing 1,400 U.S. jobs. As the chart from page 
five of my prepared statement reflects, it established Cuba as 
our fourth largest milled rice customer.
    In 2005, OFAC issued a rule revising the rules governing 
the payment terms for these sales to Cuba. As this chart from 
page seven of my prepared statement indicates, U.S. rice sales 
to Cuba plummeted from $64 million in 2004 to zero in 2009 and 
2010.
    At the same time of the rule's imposition, the Cubans had 
purchased more than $1 billion in U.S. food and farm goods. 
Cuban buyers generally paid by cash and paid promptly. There 
was no extension of credit to Cuba.
    Cuba has the potential to once again become a top export 
market for U.S. rice. But no reasonable buyer can rely on an 
export seller for food supplies, knowing that the exporting 
country's government can and will change export policies at a 
whim. As a result, U.S. agriculture has been relegated to a 
residual supplier of rice and other farm goods to Cuba.
    Current policy drives most payments for sales to Cuba to be 
made by a letter of credit issued by a third country bank. This 
increases transaction costs, enriches foreign banks at the 
expense of U.S. farmers, and drives U.S. jobs overseas.
    We appreciate that this week OFAC redefined temporarily the 
term cash in advance for purposes of agriculture sales to Cuba. 
This needs to be made permanent, and payments should be 
authorized to be made directly to U.S. banks.
    By contrast, U.S. law authorizes telecommunications 
companies to make payments directly to Cuba. Eight U.S. 
companies did make payments totaling hundreds of millions of 
dollars directly to Cuba. As illustrated by the comparative 
charts from page ten of my statement, this discriminates 
against U.S. agriculture. If U.S. multinationals can make 
payments directly to Cuba, then why should U.S. farmers be 
forced to use foreign banks? Congress should change the law to 
allow payments for U.S. agriculture products to be made 
directly to U.S. banks.
    The U.S. International Trade Commission concluded that 
removing these restrictions would increase U.S. rice exports to 
the island by $43 million per year, to more than $80 million. 
Instead, U.S. policies have driven rice exports to zero.
    Our travel restrictions impose ever-changing bureaucratic 
red tape on travel to Cuba to seek new agriculture sales. We 
are disappointed that our government continues to restrict the 
freedom of Americans to engage with the people of only one 
country on Earth, Cuba.
    The ITC concluded that if restrictions on travel of U.S. 
citizens to Cuba were lifted, gains valued in millions of 
dollars per year would be made in exports of U.S. processed 
foods, poultry, beef, pork, and fish.
    The damage done since 2005 to our reputation as a reliable 
supplier can be repaired, but not until the Cubans are 
convinced that our government will not unilaterally void 
contracts or otherwise restrict trade.
    We agree with much of what President Obama said in his 
State of the Union address about the need to increase our 
exports and support U.S. jobs. Unfortunately, our Cuba policy 
ignores the President's wise advice. It reduces U.S. employment 
by choking off trade with Cuba; it decreases U.S. exports, and 
cedes this important market to our competitors.
    To begin to address this, the President should state 
publicly that the United States Government will not impose any 
new restrictions on sales of food and agriculture products to 
Cuba. This would reassure producers, exporters, and Cuba that 
our government will not prevent us from reliably supplying the 
Cuban market.
    To better address all of these issues, we strongly support 
the enactment of H.R. 4645. I look forward to addressing any 
questions you might have.
    [The prepared statement of Mr. Wagner follows:]

  Prepared Statement of Mike Wagner, Owner/Operator, Two Brooks Farm; 
 Member, Board of Directors, U.S. Rice Producers Association, Sumner, 
                  MS; on Behalf of USA Rice Federation
Introduction
    Good morning Mr. Chairman and Members of the Committee. I am Mike 
Wagner, a rice farmer from Sumner, Mississippi. I am the current 
President of the Mississippi Rice Council, and serve on the Board of 
Directors of the U.S. Rice Producers Association. My testimony today is 
on behalf of both the U.S. Rice Producers Association and the USA Rice 
Federation. Together our organizations represent rice producers in all 
of the major rice producing states of Arkansas, California, Louisiana, 
Missouri, Mississippi, and Texas--as well as rice millers, merchants, 
exporters and related industries. As a first time witness before the 
Congress, I am especially honored and humbled to appear before you 
today.
    Thank you for holding this timely hearing to review the state of 
U.S. agricultural sales to Cuba. It is unfortunate that this once-
vibrant market for U.S. agricultural goods is being thwarted by U.S. 
policies. It is especially frustrating to rice producers and the rice 
industry that successive Administrations continue to implement policies 
contrary to Congressional intent to the detriment of rice producers, 
the U.S. rice industry, and indeed all of U.S. agriculture.
    Similarly, it is sad that our antiquated, ineffective policy 
restricts the rights of American citizens to travel to Cuba. It is the 
ONLY country in the world that our government prohibits American 
citizens to visit. After almost 50 years of the United States 
unilaterally choking off exports and travel to Cuba, one thing is 
clear: it is a policy that is not only ineffective, but one that also 
punishes U.S. farmers, and costs U.S. jobs in related businesses.
    We applaud the efforts of Chairman Peterson and Congressman Moran 
to enact legislation to begin to create jobs in the United States by 
rationalizing agricultural sales to Cuba and to open travel there for 
all U.S. citizens.
Cuba: America's Largest Natural Rice Market
    In 1951, Cuba was the destination for 252,878 metric tons of U.S. 
rice, approximately $52 million in sales that represented 51% of U.S. 
rice exports at that time. Rice exports to Cuba during the period 
between 1951 and 1960 averaged approximately 169,000 metric tons, 
valued at $37 million annually and accounted for 25% of all rice 
exports for the decade.\1\ Following the overthrow of the Batista 
Government in 1959, the unilateral U.S. embargo closed the Cuban market 
in 1960.
---------------------------------------------------------------------------
    \1\ A total of 1.7 MMT, based on U.S. Department of Commerce 
estimates (See Attachment A).
---------------------------------------------------------------------------
    The U.S. rice industry has grown tremendously in the past 40 years. 
U.S. rice production is projected to increase from last year to 
approximately 237 million hundredweights (cwts) in 2010, up 17 million 
cwts from 2009 production. On average, approximately 50% of the U.S. 
crop moves into export channels. For the 2009 marketing year, USDA 
projects 99 million cwts in rice exports.
    In addition to shutting off exports to Cuba, export embargoes 
imposed unilaterally by our government represent one of the greatest 
impediments to the enhanced exports of U.S. rice. For example, the 
largest market for U.S. rice in the 1950s was Cuba, in the 1970s it was 
Iran, and in the 1980s it was Iraq. Unfortunately for rice producers 
and the rice industry, unilateral embargoes imposed by our own 
government later negatively affected each of these important markets.
    Rice farmers have known for decades what the U.S. Department of 
Agriculture concluded in 1997, that ``Of all grains exported by the 
United States, rice has been particularly hard-hit by trade 
restrictions.'' \2\ The Department went on to note that such unilateral 
trade restrictions had put more than 13 percent of projected global 
rice import demand off-limits to U.S. farmers and exporters.
---------------------------------------------------------------------------
    \2\ A Review of U.S. Trade Restrictions and Grain Exports, Foreign 
Agriculture Service, U.S. Department of Agriculture, http://
www.fas.usda.gov/grain/circular/1997/97-09/feature/trd_rstr.htm.
---------------------------------------------------------------------------
    Fortunately, as policymakers have recognized the ineffectiveness of 
trade embargoes, each of these embargoes has been lifted. Only the 
embargo against trade with and travel to Cuba remains. It is widely 
recognized as having been a failure, and it should be ended.
The 2000 Export Enhancement Act Reopens Rice Trade With Cuba
    Thanks to the leadership of Senators Byron Dorgan, Richard Lugar, 
Representative Jo Ann Emerson and many others, Congress provided for 
the resumption of trade with Cuba when it passed the Trade Sanctions 
Reform and Export Enhancement Act of 2000. The Act sought to achieve 
its goal of enhancing U.S. agricultural export opportunities by 
explicitly exempting sales of food and medicine from the exercise of 
any economic embargo. In order to prevent the extension of credit to 
Cuba by any U.S. entity, the Act limited the financing terms of sales 
to Cuba to either--

      (A) Payment of cash in advance; or
      (B) Financing by third country financial institutions (excluding 
        United States persons or Government of Cuba entities), except 
        that such financing may be confirmed or advised by a United 
        States financial institution.

    Cuba first made purchases of U.S. agricultural products under the 
new Export Enhancement Act authorities in December 2001. Between 2001 
and early 2005, Cuba contracted to purchase approximately $1.25 billion 
worth of U.S. agricultural goods. These purchases included shipments of 
nearly 320,000 tons of U.S. rice, worth a reported $81 million. In 2004 
the Cubans bought $64 million worth of U.S. rice--more than their 
purchases of any other commodity. This established Cuba as our fastest 
growing market overall, and one of the top five customers for long 
grain rice.
Annual Growth Rate of Rice Exports 2000-2004 Tonnage Basis


    In 2004 alone, the U.S. exported 177,000 tons of rice to Cuba worth 
an estimated $64 million with a total economic impact on local U.S. 
economies of $220 million and provided for up to 1,400 jobs.
    Cuba has the potential to once again become a top export market for 
U.S. rice, representing a 400,000 to 600,000 MT export market under 
normal commercial trade and travel relations.
Largest U.S. Milled Rice Export Markets, 2004


OFAC's Cash in Advance ``Reinterpretation'' Imposed Unwarranted Trade 
        Restrictions and Crippled U.S. Exports
    Beginning in November of 2004 the Treasury Department's Office of 
Foreign Assets Control (OFAC) began holding up payments to U.S. sellers 
doing business with Cuba, and began imposing new regulatory reviews 
and/or licensing requirements on U.S. sellers and their banks. On 
February 22, 2005, OFAC issued a Final Rule revising the regulations 
governing the payment terms permitted for the sale of licensed 
agricultural products to Cuba (70 Fed. Reg. 9225; the ``Final Rule''). 
The Final Rule was published without any prior notice to Congress or to 
the exporting community, nor was any opportunity afforded for comment 
on the Final Rule by the agricultural or exporting communities.
    Rice producers and the rice industry were particularly disappointed 
that in imposing this new restriction on exports to Cuba, OFAC ignored 
the requirement in section 903 of the 2000 Export Enhancement Act that 
prohibits the President from imposing any new restriction or condition 
on commercial export sales of agricultural commodities unless the 
President submits a report to Congress regarding the restriction 60 
days before its imposition, AND the Congress enacts a joint resolution 
approving the report.\3\ It is difficult for rice farmers to agree with 
OFAC that the new ``interpretation'' was not a restriction or condition 
on trade when the interpretation rendered invalid $250 million worth of 
open agricultural export contracts, and imposed expensive new 
requirements to finance trades through banks in foreign countries.
---------------------------------------------------------------------------
    \3\ Section 903(a) of the Export Enhancement Act (22 U.S.C. 
2207(a)) reads as follows:

    ``Sec. 903. Restriction.

      ``(a) New Sanctions. Except as provided in sections 7203 and 7204 
of this title and notwith-
    standing any other provision of law, the President may not impose a 
unilateral agricultural
    sanction or unilateral medical sanction against a foreign country 
or foreign entity, unless--

        ``(1) not later than 60 days before the sanction is proposed to 
be imposed, the President
      submits a report to Congress that--

          ``(A) describes the activity proposed to be prohibited, 
restricted, or conditioned; and
          ``(B) describes the actions by the foreign country or foreign 
entity that justify the sanc-
        tion; and

        ``(2) there is enacted into law a joint resolution stating the 
approval of Congress for the
      report submitted under paragraph (1).''

    Section 902(6) and 902(2)(E) of the Act make clear that the 
prohibited unilateral agricultural sanctions under section 903(a) 
include ``any prohibition, restriction, or condition on carrying out'' 
``any commercial export sale of agricultural commodities''.
---------------------------------------------------------------------------
    As we predicted at the time of the imposition of the Final Rule, it 
devastated the market for sales of U.S. rice to Cuba. As the following 
chart indicates, U.S. rice sales to Cuba plummeted from $64 million in 
2004 to ZERO in 2009. 


    No reasonable buyer can rely on an export seller for critical food 
supplies knowing that the exporting country's government can (and will) 
change export policies at a whim. As a result, U.S. agriculture has 
been relegated to a position as a secondary, residual supplier for rice 
and many other agricultural goods to Cuba.
    Another result of the Rule has been to drive most if not all 
payments for remaining U.S. agricultural sales to Cuba to be conducted 
via a letter of credit issued by a third country (non-Cuban) bank. As 
illustrated in the chart below, this requirement drives up the 
transaction costs to U.S. sellers and Cuba alike, and reduces the 
competitiveness of U.S. agricultural products to Cuba. These costs will 
fall disproportionately on small exporters, many of whom will be run 
out of the market by the increased costs and complexities of the trade. 
The costs of these reduced sales will ultimately be borne by U.S. 
farmers. Effectively the Rule enriches foreign banks at the expense of 
U.S. farmers, processors, and exporters; and drives the jobs associated 
with these activities to overseas competitors. 


Congress Should Clarify and Reiterate the Operation of Cash Sales Under 
        the Enhancement Act
    We strongly urge Congress to enact legislation reiterating the 
intent of Congress that the payment of cash in advance under the 2000 
Export Enhancement Act was indeed intended to enhance trade, not to 
restrict it. This issue is addressed in H.R. 4645, the Travel 
Restriction Reform and Export Enhancement Act, which was introduced on 
February 23, 2010 by Chairman Peterson and cosponsored by 
Representatives Jerry Moran, Jo Ann Emerson, Rosa DeLauro, and 36 other 
Members of the House of Representatives. We urge the swift enactment of 
this legislation to reiterate the intent of Congress that exports 
financed by the payment of cash in advance be allowed to continue on 
the same basis that had been successfully used for $1 billion in 
exports during 2001 through 2004, before the U.S. rice sales to Cuba 
were killed off by the OFAC 2005 Final Rule.
Congress Should Begin To Correct the Discriminatory Treatment Of U.S. 
        Farmers By Authorizing Direct Transfers From Cuba to U.S. 
        Financial Institutions
    As described above, current U.S. law discriminates against American 
farmers and agricultural exporters. It prohibits Cuba from directly 
paying U.S. sellers for their purchases. Even safe and secure payments 
by bank letters of credit are required to be routed through third 
country banks. This requirement unnecessarily drives up the cost of 
U.S. exports, discourages U.S. sales, and costs U.S. jobs. There is no 
offsetting benefit to this policy except to enhance the profits of 
foreign banks.
    By contrast, U.S. law authorizes telecommunications service 
providers to make service related payments directly to Cuba. In fact, 
eight U.S. companies make payments totaling hundreds of millions of 
dollars directly to Cuba. According to published reports, these 
payments totaled $150 million in 2007 and $120 million in 2008, and 
will likely increase since the Obama Administration has broadened the 
services that U.S. telecom firms may provide to Cuba. The obvious 
discriminatory disparity between the treatment afforded U.S. farmers 
and exporters, and multinational telecommunications companies is 
illustrated by the following comparative flow charts.


    Opponents of agricultural sales to Cuba argue that allowing direct 
payments by Cuba to U.S. sellers will somehow benefit the Cuban 
Government. But at the same time, some of these opponents SUPPORTED 
legislation providing for the direct payment of HUNDREDS OF MILLIONS OF 
DOLLARS TO THE CUBAN GOVERNMENT EACH YEAR as compensation for services 
provided by U.S. telecommunications companies.
    If U.S. multinationals can make payments directly TO Cuba, then why 
should U.S. farmers be disadvantaged? Congress should change the law to 
allow U.S. farmers and their exporters to be paid directly by Cuba.
    Legislation to begin to correct this discrimination is included in 
the Travel Restriction Reform and Export Enhancement Act (H.R. 4645). 
Rice producers and the rice industry strongly support the enactment of 
this provision to stop the discrimination against U.S. agriculture and 
to support U.S. employment.
    Together, these modest rationalizations of agricultural export 
terms would significantly enhance U.S. exports. A comprehensive study 
by the U.S. International Trade Commission (ITC) during the Bush 
Administration concluded that the Treasury Department's restrictions on 
agricultural payment terms had a ``substantial negative effect on the 
sales of agricultural products to Cuba.'' The ITC also found that 
removing these restrictions would increase annual U.S. agricultural 
sales to Cuba by more than $300 million.\4\
---------------------------------------------------------------------------
    \4\ ``U.S. Agricultural Sales to Cuba; Certain Economic Effects of 
U.S. Restrictions''; Investigation No. 332-489; USITC Publication 3932; 
July 2007.
---------------------------------------------------------------------------
    In the case of rice, the ITC concluded that the lifting of these 
unnecessary restrictions could increase U.S. rice exports to the island 
by $43 million per year. As of 2006, U.S. rice enjoyed a 77 percent 
share of Cuban imports, for sales valued at $40 million. The 
restrictive policies of the United States have driven those exports to 
zero. The enactment of H.R. 4645 could reverse this trend and give U.S. 
rice producers, processors, exporters and those whom they employ a 
fighting chance to regain this key market.
Congress Should Open Travel for All U.S. Citizens to Cuba: A Mutual 
        Benefit for Both U.S. and Cuban Citizens
    The rice industry also strongly supports the freedom of U.S. 
citizens to travel to and from Cuba. We continue to be disappointed 
that our government continues to restrict the freedom of Americans to 
travel to and engage with the people of only one country on Earth: 
Cuba. These restrictions also frustrate the intent of the Export 
Enhancement Act of 2000 by imposing ever-changing bureaucratic red tape 
requirements for travel to Cuba to facilitate new agriculture sales. 
This policy is widely acknowledged to be a failure, and should be 
relaxed to allow U.S. citizens to travel to Cuba.
    Specifically, we support the reform of these burdensome and costly 
travel restrictions as provided for in H.R. 4645. We also support H.R. 
874, the ``Freedom to Travel to Cuba Act,'' introduced by Congressman 
William Delahunt, and currently cosponsored by 178 other Members of the 
House.
    The legislation would lift all restrictions on U.S. citizens 
traveling to Cuba, and will have a direct impact on U.S. agricultural 
sales. Increased travel to Cuba will boost food demand in the country 
and provide the funds to purchase U.S. commodities. U.S. producers and 
the agriculture industry would expect to meet the increased food needs.
    The U.S. International Trade Commission concluded that if 
restrictions on travel of U.S. citizens to Cuba were lifted, gains in 
exports valued in the millions of dollars per year would be made in 
exports of U.S. processed foods, poultry, beef and pork, and fish.
    In addition, lifting the travel ban will reflect the desires of the 
American people. Public opinion polls show that about 64 percent of 
Americans \5\ and \2/3\ of Cuban-Americans \6\ support the freedom of 
U.S. citizens to travel to Cuba.
---------------------------------------------------------------------------
    \5\ According to the CNN/Opinion Research Corp. poll conducted 
April 3-5, 2009, 64 percent of the 1,023 Americans surveyed by 
telephone thought the U.S. Government should allow citizens to travel 
to Cuba. And 71 percent of those polled said that the U.S. should 
reestablish diplomatic relations with Cuba.
    \6\ According to the 2009 Bendixen & Associates poll, \2/3\ of 
Cuban and Cuban American adults--67 percent--support the lifting of 
travel restrictions for all Americans so that they can also travel to 
Cuba freely.
---------------------------------------------------------------------------
    We strongly support the enactment of this provision and H.R. 4645 
in its entirety, and urge each of the Committee's Members to cosponsor 
and support the enactment of this important legislation.
Congress Should Insist on Strict Compliance With Section 903 of the 
        2000 Export Enhancement Act
    Congress should insist that OFAC, and Administrations both now and 
in the future respect the requirement in section 903 of the 2000 Export 
Enhancement Act that prohibits the imposition of new trade restrictions 
or conditions absent the prior notice to, and approval by, Congress. 
Rice producers are very concerned that absent this vigilant protection 
of Congress' rights, there will be nothing to stop the total shut down 
of exports to Cuba by future unwarranted ``interpretations'' of the Act 
by overzealous or politically driven Administrations.
The President Should Reassure U.S. Agriculture and Our Cuban Customers 
        That the Administration Will Not ``Go Backwards'' on 
        Agricultural Sales to Cuba
    The damage done since 2005 to our reputation as a reliable supplier 
of agriculture and food products to Cuba can be repaired over time. But 
until the Cubans are convinced that our government will not 
unilaterally void contracts or otherwise restrict trade, we will 
continue to be relegated to a residual supplier to the Cuban market.
    There is one thing that the Administration could do immediately to 
repair U.S. agriculture's reputation as a reliable supplier and to 
reassure Cuban and other buyers. This would not cost any money, nor 
does it involve changing the embargo in any way.
    To accomplish this, the President should simply state publicly that 
the United States Government will not impose new restrictions on sales 
of food and agriculture products to Cuba. That progress made in opening 
and servicing these markets will not be opposed or destroyed by 
government intervention. Such a statement, and its faithful 
implementation by the Administration, could go a long way to reassuring 
U.S. producers and exporters, and Cuba, that the United States 
Government will not prevent U.S. agriculture from reliably supplying 
the Cuban market.
Conclusion: A No-Cost, One-Way Trade Opportunity That Benefits U.S. 
        Farmers, Workers, and the Public
    Rice producers and the rice industry have paid a high price for our 
government's failed policy toward Cuba. First in 1960, and again in 
2005, Democratic and Republican Administration's alike have driven 
exports to one of our largest rice markets from robust levels to 
literally nothing.
    The U.S. rice industry in the Mississippi Delta and along the Gulf 
Coast has a tremendous transportation advantage over their Asian 
competitors in reaching the Cuban rice market. In the 1950's and again 
between 2001 and 2005, U.S. rice farmers and millers had built sales to 
the Cuban rice market with high-quality rice that Cuban consumers 
prefer over Asian rice. Unfortunately, actions by our own government 
effectively killed that market. The Cuban demand for food imports is 
largely being met by a number of U.S. agriculture's key competitors in 
the global market such as Canada, Brazil, and Vietnam. And this is the 
result almost entirely of actions by our own government.
    U.S. rice farmers have been told that export markets are our 
markets of the future. We agree with much of what President Obama said 
in his State of the Union speech last month about the need to increase 
our exports:

        ``We need to export more of our goods. Because the more 
        products we make and sell to other countries, the more jobs we 
        support right here in America. So tonight, we set a new goal: 
        We will double our exports over the next 5 years, an increase 
        that will support two million jobs in America. To help meet 
        this goal, we're launching a National Export Initiative that 
        will help farmers and small businesses increase their exports, 
        and reform export controls consistent with national security.

        We have to seek new markets aggressively, just as our 
        competitors are. If America sits on the sidelines while other 
        nations sign trade deals, we will lose the chance to create 
        jobs on our shores. But realizing those benefits also means 
        enforcing those agreements so our trading partners play by the 
        rules. And that's why we'll continue to shape a Doha trade 
        agreement that opens global markets, and why we will strengthen 
        our trade relations in Asia and with key partners like South 
        Korea and Panama and Colombia.''

    Rice farmers and the entire rice industry support these goals to 
increase exports and support U.S. jobs. Unfortunately, with respect to 
Cuba, our government's policy ignores all of the President's wise 
advice. U.S. Government policy reduces U.S. employment by choking off 
trade with Cuba. That policy continues to decrease U.S. exports, and 
cedes this important market to our global competitors. Rather than 
aggressively contending for the Cuban market, our government does 
indeed sit on the sidelines, while blocking our own team from taking 
the field.
    When these markets are closed off, everyone in the industry is 
hurt, and farmers predictably pay the ultimate costs of lost markets 
from their own pockets. These are unnecessary costs that rice farmers 
should not be asked to pay, especially when pending budget proposals 
would reduce the farm safety net on which farmers depend here at home.
    All we are asking is that the law governing food sales to Cuba be 
allowed to operate as Congress intended; that the discriminatory 
treatment of U.S. farmers in regard to these sales be corrected; and 
that American citizens be allowed to travel to Cuba and take the 
engagement of our values and economic activity with them--as they can 
often do in every other country on Earth.
    We strongly support the enactment of the H.R. 4645 Travel 
Restriction Reform and Export Enhancement Act. This legislation 
represents a modest, sensible first step to fulfilling the intent of 
the Export Enhancement Act of 2000 and the promise brought by the 
engagement of the U.S. people with those we seek to feed in Cuba.
    I look forward to addressing any questions that you may have.
    Thank you.
                              Attachment A
---------------------------------------------------------------------------
    * Alvarez, J. and W.A. Messina, Jr., Cuba's Rice Industry: 
Potential Imports From Florida, International Working Paper 92-27, Food 
and Resource Economics Department, Institute of Food and Agricultural 
Sciences, University of Florida, Gainesville, Florida, September 1992.


                    Cuba's Share of Total U.S. Rice Exports, by volume and value, 1951-1961 *
                Table 9. Cuba's share of total U.S. rice exports, by volume and value, 1951-1961
----------------------------------------------------------------------------------------------------------------
     Year                 U.S. exports               Cuban imports from U.S.              Cuba's share a

----------------------------------------------------------------------------------------------------------------




----------------------------------------------------------------------------------------------------------------
                      Quant.           Value          Quant.           Value           Quant.         Value
                    Metric tn       million $'s      metric tn      million $'s                --%--
----------------------------------------------------------------------------------------------------------------
      1951           493,498              94         252,878              52            51.2            55.3
      1952           800,402             157         219,282              50            27.4            31.8
      1953           707,332             154         253,786              50            35.9            32.5
      1954           568,862             107         162,532              38            28.6            35.5
      1955           454,454              81          96,702              21            21.3            25.9
      1956           824,010             132         144,826              27            17.6            20.4
      1957           740,928             124         187,048              40            25.2            32.3
      1958           573,856              97         187,048              40            32.6            41.2
      1959           690,080             105         171,612              36            24.9            34.2
      1960           893,472             130          15,890              17             1.8            13.1
      1961           806,758             106             (b)             (b)             (b)             (b)
----------------------------------------------------------------------------------------------------------------
a Calculated by the authors.
b Minimal amounts before the economic embargo was totally enforced.
Source: U.S. Department of Commerce (various issues).

    The Chairman. Thank you very much, Mr. Wagner. I appreciate 
it.
    Mr. McReynolds, welcome to the Committee.

STATEMENT OF JERRY McREYNOLDS, PRESIDENT, NATIONAL ASSOCIATION 
         OF WHEAT GROWERS; WHEAT PRODUCER, WOODSTON, KS

    Mr. McReynolds. Thank you, Chairman Peterson, Ranking 
Member Lucas, Congressman Moran, and Members of the Committee.
    My name is Jerry McReynolds. I am a wheat and sorghum 
farmer from Woodston, Kansas, and currently serve as President 
of the National Association of Wheat Growers. Thank you for 
holding this hearing and allowing me to share some of my 
experiences regarding our efforts to sell wheat to Cuba.
    I visited Cuba; had the opportunity in 2003 with my 
daughter as part of a small group of Kansas wheat producers on 
an educational mission. Seeing the situation firsthand was a 
unique experience for me, and we found that the Cuban people 
were very warm, very open, and enjoyed discussing American 
life.
    As a part of this mission, our group had the opportunity to 
meet with Pedro Alvarez, who is the head of ALIMPORT, Cuba's 
food import company. Mr. Alvarez expressed to us his sincere 
desire and eagerness to purchase Kansas wheat, both for quality 
and for the country's needs. In fact, he held pen in hand and 
was ready to sign an agreement, which we did not have and could 
not have because of the restrictive policies.
    My take-home message from this trip was simply that the 
Cubans want and need our wheat. However, current policy with 
respect to agricultural trade and travel with Cuba is 
unnecessarily impeding U.S. sales of wheat to the island.
    With no domestic production of wheat, Cuba is the largest 
importer of wheat and wheat products in the Caribbean. Over the 
past 3 years, Cuba's population of 11.4 million consumed, on 
average, 800,000 metric tons of wheat per year, and the 
nation's grain consumption is increasing, driven by both 
population and income growth.
    The bottom line is this: The Cubans need the wheat, and 
will continue to source it wherever it is most competitive.
    The U.S. should be able to boast about maintaining a lion's 
share of that growing Cuban market just as we do elsewhere in 
the Caribbean. Instead, we have maintained roughly 38 percent 
of the market compared to an 85 percent share in other 
Caribbean nations.
    A 2007 report by the U.S. International Trade Commission 
said we could hold 65 percent of the Cuban market if the 
financial and travel restrictions were removed, constituting an 
additional $34 million of export. We would argue our market 
share could and should be actually closer to the 85 percent 
level, contributing closer to $100 million in market gains.
    Despite our clear competitive advantage on transportation 
and logistics and, arguably, the superior quality of wheat, our 
European Union, Canadian, and Argentine competitors continue to 
hold a significant portion of that market. This is attributable 
to their more favorable trade terms; specifically, the fact 
that these countries are not subject to the financing and 
travel restrictions that we face.
    This year's situation is a perfect example. Sales to the 
Cuban market are down 65 percent from last year. The entire 
113,000+ metric tons sold have already been shipped, and there 
are no outstanding sales on the books to load out. Moreover, 
the Cubans do not have the budgetary resources to make any more 
purchases from the U.S. this year, virtually handing that 
market to our Canadian and European Union competitors.
    The current year's dire sales situation highlights an often 
overlooked reason for our declining sales: Cuba lacks cash, 
which U.S. law requires in advance for purchases of food and 
medicine. This only encourages Cubans to go to our competitors, 
such as Canada, as they can access lines of credit to purchase 
their wheat.
    We encourage and recognize the challenges associated with 
offering lines of credit to Cuba, and are not advocating any 
movement in that direction presently. But we recognize what can 
be done to infuse cash into the country to enable them to 
purchase our agricultural products: Lift the ban on travel. 
Coupled with eased trade restrictions on agricultural exports, 
increased travel to Cuba will boost food demand in the country 
which U.S. growers will be able to fulfill. And it will also 
bring needed funds to citizens of Cuba for purchases of U.S. 
commodities.
    All in all, we believe existing policies that impede travel 
and sales of our agricultural products to the nation seem to 
serve no function other than to decrease our sector's 
competitiveness. We believe the time is right for some 
meaningful act and a meaningful change.
    The Travel Restriction Reform and Export Enhancement Act, 
H.R. 4645, sponsored by Chairman Peterson and Representative 
Moran, would be a great catalyst to provide an opportunity for 
significant new sales of wheat to Cuba, boosting income in the 
United States, in the U.S. heartland, and adding critical 
resources to the U.S. economy. The legislation would make 
incremental changes that would allow the U.S. farmer the 
ability to conduct a more normal business function with a 
country that needs our agricultural goods to feed people.
    At a time when our economy needs every possible boost, and 
when President Obama has made a popular pledge to double U.S. 
exports--and it is only 90 miles off of our coast.
    I want to thank you, Chairman Peterson and Congressman 
Moran, and all of you Committee Members here today. We look 
forward to working with you and we urge you to support H.R. 
4645. Thank you for this opportunity to testify.
    [The prepared statement of Mr. McReynolds follows:]

Prepared Statement of Jerry McReynolds, President, National Association 
             of Wheat Growers; Wheat Producer, Woodston, KS
    Chairman Peterson, Ranking Member Lucas and Members of the 
Committee, my name is Jerry McReynolds. I am a wheat and sorghum farmer 
from Woodston, Kansas, and currently serve as the President of the 
National Association of Wheat Growers. Thank you for holding this 
hearing and allowing me the privilege of coming here today to share 
some of my personal experiences, and the experience of the industry in 
which I operate, with respect to our ability to sell wheat to Cuba.
    The wheat industry has long been engaged in the discussion 
surrounding U.S. trade policy toward Cuba. Though we do not profess to 
be foreign policy experts on most occasions, we do know enormous 
amounts about selling wheat around the world, and, in an average year, 
we export about half of our production.
    I visited the island nation of Cuba with my daughter as part of a 
small group of U.S. wheat producers on a 2003 educational mission. 
Seeing the situation first-hand was a unique experience, and we found 
the Cuban people warm and very open to discussing ``American life''. We 
also saw that Cuban farmers lacked the tools, equipment and supplies 
that they needed to produce their own food. Planting and harvesting 
equipment was outdated and in ill-repair, and most farmers there 
cultivated small gardens by hand, leaving the oxen for use in larger 
fields. And we learned that Cuba has to import wheat for all of its 
consumption needs.
    As a part of this mission, our group had the opportunity to meet 
with Pedro Alvarez, the head of ALIMPORT, Cuba's food import company. 
Mr. Alvarez expressed to us a sincere eagerness to purchase Kansas 
wheat, recognizing both the quality of our product and the country's 
need for it. In fact, he held a pen in hand, ready to sign an agreement 
to buy U.S. wheat, but was simply unable due to our country's 
restrictive policies.
    My take-home message from this trip was this: The Cubans want and 
need our wheat. However, current policy with respect to agricultural 
trade and travel with Cuba is unnecessarily impeding U.S. sales of 
wheat to the island nation.
Cuban Market Potential
    With no domestic production of wheat, Cuba is the largest importer 
of wheat and wheat products in the Caribbean. Over the past 3 years, 
Cuba's population of 11.4 million consumed on average 800,000 metric 
tons (MT) of wheat per year, and the nation's grain consumption is 
increasing, driven by both population and income growth. Despite three 
hurricanes and a global economic crisis, Cuba's economy grew 4.3 
percent last year. Five new pasta plants have been built, a flour mill 
doubled in capacity and a new milling facility has been built.
    Despite this news of recent economic growth, the fact hasn't 
changed that Cuba remains reliant on agricultural imports. With no 
resources available to purchase fertilizer or pesticides, it's my 
understanding that the Cuban Government is now relying on small organic 
farms for food production. While a respectable and novel approach to 
solve Cuba's food needs, these farms are simply too small and 
production techniques too limited to produce enough food on a large 
scale to sustainably feed Cuba's growing population. Bottom line: the 
Cubans need wheat and will continue to source it where it is most 
competitive.
Impact of Trade and Travel Restrictions on U.S. Wheat Sales to Cuba
    The U.S. should be able to boast maintaining a lion's share of the 
growing Cuban wheat market just as we do elsewhere in the Caribbean. 
Instead, we have maintained roughly 38 percent of the market compared 
to an 85 percent share in other Caribbean nations. A 2007 report by the 
U.S. International Trade Commission (ITC) indicates that the U.S. could 
hold 65 percent of the Cuban market if the financial and travel 
restrictions were removed, contributing an additional $34 million 
dollars of exports. We would argue our market share could, and should, 
reach closer to 85 percent, contributing closer to $100 million in new 
market gains.
    While Cuba's proximity to major U.S. export facilities gives the 
U.S. a clear competitive advantage on transportation and logistics, and 
we continue to boast a product of superior quality, our European Union, 
Canadian and Argentine competitors continue to hold a significant 
portion of the Cuban market due to their more favorable trade terms.
    Despite our clear competitive advantage in the country, our 
unrealized market share can be attributed largely to the financing and 
travel restrictions in place that are not constraining the ability of 
our competitors to sell their product to Cuba.
    As background, the wheat industry has been allowed to sell into the 
Cuban market since the Trade Sanctions Reform and Export Enhancement 
Act (TSRA) took effect in 2001. On Feb. 22, 2005, the Treasury 
Department's Office of Foreign Assets Control (OFAC) amended the 
regulations regarding payment to sellers. The change required cash 
payment in advance or letters of credit from a foreign third-party 
financial institution on all agricultural commodity sales to Cuba. This 
change meant that exporters would have to receive payment before the 
shipment even leaves port for Cuba. This put an end to the ability of 
ALIMPORT, Cuba's food import agency, to directly pay sellers upon 
arrival of the shipment, as is consistent with normal business 
practices, and quickly depressed our sales into the market.
    After payment rules were amended, wheat sales to Cuba dropped more 
than 25 percent in marketing year 2006, to only 28 percent of the Cuban 
wheat market. Sales rebounded the following 2 years, driven largely by 
global economic concerns, but have again fallen sharply this past year.
U.S. Share of Cuban Wheat Market



    The 2007 ITC report stated that the new financial regulations have 
``had a substantial negative effect on the sale of agricultural 
products to Cuba.'' Easing the payment restrictions will allow U.S. 
wheat growers to capitalize on several comparative advantages in 
regards to wheat exports. Proximity provides a logistical and price 
advantage for U.S. growers. Freight rates from U.S. ports to Cuba are 
about 33 percent less than rates from Europe and significantly less 
than from Canada. Domestic storage and internal infrastructure require 
Cuba to purchase smaller shipments that arrive exactly on schedule, so 
a limited transit time is particularly crucial in this market; a 
shipment from U.S. ports takes a matter of days as compared to 25 days 
when shipped from Brazil. Other competitive advantages that could be 
enjoyed by U.S. growers include world-class marketing capabilities and 
the handling capacity of U.S. ports.
    Despite these clear competitive advantages, Cuba will look to other 
sources for their food needs while financial and travel restrictions 
are still in place. This threat of continued diminishing market share 
has hit home this year more powerfully than ever, as current year wheat 
sales to the country are less than a third of where they should be.
    This year's sales into the Cuban market are down 65 percent, 
totaling 113,100 metric tons versus 357,700 metric tons for the same 
time period in the 2008-2009 marketing year. The entire 113,100 metric 
tons has already been shipped, and there are no outstanding sales on 
the books to load out. Moreover, the Cubans do not have the budgetary 
resources to make any more purchases from the U.S. this year, virtually 
handing the market to our Canadian and European Union competitors who 
will offer them credit.
Cuban Purchases of U.S. Wheat 



    The current year's dire sales situation highlights an often-
overlooked reason for our declining sales levels. In addition to the 
cumbersome and cost-prohibitive environment created by our restrictive 
financing terms, another significant reason cited for these declining 
sales levels is Cuba's lack of cash, which U.S. law requires in advance 
for purchases of food and medicine. This only encourages Cubans to go 
to our competitors, such as Canada, where they can access lines of 
credit to purchase their wheat.
    Though we recognize the challenges associated with offering lines 
of credit to the country and are, therefore, not advocating any 
movement in that direction, it is important to recognize that there is 
something more reasonable that can be done to infuse cash into the 
country to enable them to purchase our agricultural products--lift the 
ban on travel.
    Removing the restrictions on agricultural trade alone will not be 
enough to maintain (or restore) our ability to sell wheat into the 
Cuban market. This is why we support coupling these changes with a 
lifting of the travel ban. Coupled with eased trade restrictions on 
agricultural exports, increased travel to Cuba will boost food demand 
in the country which U.S. growers will be able to fulfill. And, as 
cited above, it will also bring much needed funds to citizens of Cuba 
for purchase of U.S. commodities.
The Time Is Right for Legislative Action
    A number of bills have been introduced to clarify the payment rules 
and ease travel restrictions hamstringing our ability to sell wheat to 
Cuba. Countless attempts have been made in annual appropriations 
processes to include language to resolve some of these longstanding 
issues. Just recently we have begun to see some positive movement, 
signaling the time is right for some real, meaningful change.
    The Omnibus Appropriations Act of 2009 amended the TSRA to permit 
travel related to commercial marketing, sales negotiation, accompanied 
delivery or servicing of agricultural commodities. The FY 2010 
Financial Services Appropriations bill clarified that ``payment of cash 
in advance'' should be interpreted to mean payment of cash when the 
buyer takes physical possession of the product rather than prior to it 
leaving U.S. ports. These both were positive steps, but we need more 
than temporary fixes; we need a permanent solution.
    The Travel Restriction Reform and Export Enhancement Act (H.R. 
4645) sponsored by House Agriculture Committee Chairman Collin Peterson 
and Rep. Jerry Moran would be a great catalyst to providing an 
opportunity for significant new sales of wheat to Cuba, boosting income 
in the U.S. heartland and adding critical resources to the U.S. 
economy.
    This legislation will eliminate the need to go through third 
country banks to conduct a normal business transaction, thereby 
eliminating the added cost of doing business that is currently 
hindering sales and decreasing the competitiveness of U.S. wheat. It 
will also permanently clarify the ``payment of cash in advance'' 
provision and bring it in line with the requirements of exports to 
other countries. Thirdly, the legislation will allow all U.S. citizens 
freedom of travel to Cuba, reducing the red tape for us as farmers and 
agricultural trade associations to make sales to the country. This will 
also allow us to conduct the technical and trade servicing activities 
that we conduct as part of our export development business around the 
world resulting in an increased demand for our exports to feed the 
growing number of visitors to Cuba.
    As important as it is to recognize what this legislation would 
accomplish, it is equally beneficial to clarify what it does NOT do. 
The legislation does not lift the embargo on the country. It does not 
allow Cuba to export their products to the U.S., nor does it change the 
travel restrictions for Cubans to visit the U.S. It does not even allow 
us to extend credit to the country.
    The legislation simply would make incremental changes that would 
allow the U.S. farmer the ability to conduct more normal business 
functions with a country that needs our agricultural goods to feed its 
people.
    Existing policies that impede travel and sales of agricultural 
products to the nation seem to serve no function other than to decrease 
our sector's competitiveness. Canada, Argentina and even the European 
Union all have access to the Cuban market and are taking market share 
that should be ours.
    At a time when our economy needs every possible boost, and when 
President Obama has made a popular pledge to double U.S. exports, I 
would contend there is no better time than to re-examine just why 
exactly we are being out-competed in a market just 90 miles off our 
shore.
    The time is right for the U.S. to consider incremental, common-
sense policy changes that would enable our industry to realize the full 
potential of the Cuban market.
Conclusion
    I, a Kansas farmer, recognize that many are tied to maintaining our 
current policy toward Cuba at all costs. My question to them is this: 
to what end? If the goal in maintaining our policy is to affect change 
in the nation, perhaps it is time to re-evaluate the means to achieving 
that end. Let's start on a small, incremental scale by re-evaluating 
the restrictions placed on agricultural trade and travel.
    I would like to thank Chairman Collin Peterson and Congressman 
Moran, as well as other Committee Members here today who have long been 
champions of making these incremental improvements and common-sense 
changes to our policy. I would respectfully urge the rest of the 
Committee and others in Congress to help us achieve this long-awaited 
change by supporting H.R. 4645, the Travel Restriction Reform and 
Export Enhancement Act.
    Thank you for the opportunity to testify today on behalf of our 
nation's wheat growers.

    The Chairman. Thank you, Mr. McReynolds. I appreciate that.
    Mr. Wilson, welcome to the Committee.

 STATEMENT OF JOHN J. WILSON, SENIOR VICE PRESIDENT, MARKETING 
 AND INDUSTRY AFFAIRS, DAIRY FARMERS OF AMERICA; MEMBER, BOARD 
OF DIRECTORS, NATIONAL MILK PRODUCERS FEDERATION, KANSAS CITY, 
                               MO

    Mr. Wilson. Thank you. Chairman Peterson, Ranking Member 
Lucas, and Members of the Agriculture Committee, thank you for 
the opportunity to testify about the importance of expanding 
U.S. agricultural trade to Cuba.
    My name is John Wilson, and I am Vice President of 
Marketing and Industry Affairs for Dairy Farmers of America. I 
also serve on the Board of Directors for National Milk 
Producers Federation and the Board of Directors for the U.S. 
Dairy Export Council. DFA, National Milk, and USDEC have worked 
in a complementary way for several years to expand the 
prospects for U.S. dairy exports, including to the Cuban 
market.
    I would like to begin by expressing our strong appreciation 
to the many Members of this Committee that worked tirelessly 
with us over the past year to address a dire price/cost squeeze 
throughout the producer community. That catastrophic situation 
was brought on in large part due to an abrupt decline in 
exports of dairy markets demand that began in 2008 and 
persisted throughout much of 2009.
    National Milk believes that efforts to help regain the 
ground that we lost last year with our exports are essential to 
helping stimulate further recovery for farmers, and in putting 
the U.S. dairy industry on a firmer footing, going forward.
    One such positive step in the right direction for the dairy 
industry is the subject of this hearing today. In National Milk 
Producers Federation's view, there are two critical sides to 
the coin in terms of stimulating greater dairy product sales to 
Cuba. The first involves unnecessary technical and regulatory 
barriers to greater sales. The second involves the greater 
demand that eliminating the restrictions on Americans' rights 
to travel to Cuba would generate.
    We are greatly pleased to see that Chairman Peterson and 
Congressman Moran have just introduced legislation that would 
tackle both these important sides of the equation. We are 
urging all Members of Congress to support the Travel 
Restriction Reform and Export Enhancement Act. In our view, it 
is a very beneficial step forward for American agriculture.
    As this Committee is aware, legislation was passed in 2000 
that allowed for the export of agricultural products to Cuba. 
This enabled us to sell dairy products to a new market. The 
peak years for our industry were in 2004 and 2005, during which 
we approximately sold $30 million worth of dairy products each 
year, before new restrictions on agricultural sales were 
introduced by the previous Administration.
    In 2005, however, the Administration redefined the meaning 
of TSREEA's cash in advance requirement in a way that 
dramatically impacted future contracted sales and violated the 
express intent of Congress to encourage noncredit agricultural 
sales to Cuba. That regulatory change dramatically impacted 
future contracts of dairy products with Cuba. This was seen by 
a drop in sales of U.S. dairy products to Cuba of more than 
half the following year.
    Compared to a strong increase in U.S. dairy exports to most 
other markets over the past 5 years, sales to Cuba since 2005 
have never again even approached their prior level.
    The Fiscal Year 2010 appropriations language on this issue 
was very helpful; but because it is not a permanent change and 
will only be in effect for this fiscal year, it does not 
provide the certainty businesses need to enter into longer-term 
contracts with Cuba.
    Besides addressing technical matters related to the ease of 
conducting agricultural sales to Cuba, we firmly believe that 
stimulating additional demand by allowing Americans to travel 
freely to Cuba would also provide a much-needed additional 
boost to U.S. sales of dairy products. Wider travel by the 
American people to Cuba would also stimulate greater sales of 
dairy products there, as the additional influx of visitors 
bring demand for more value-added products such as cheese.
    On behalf of America's dairy producers and the many dairy 
processors who are also supportive of the measures mentioned in 
my testimony, I respectfully ask Congress to pass the Travel 
Restriction Reform and Export Enhancement Act to help expand 
the export opportunities for the U.S. dairy industry.
    We look forward to enjoying the impact that this 
legislation would have on our ability to more easily provide 
the Cuban people, and those Americans wishing to travel to 
Cuba, with the nutritious and safe foods that we produce in 
such abundance here in the United States.
    Again, thank you for the opportunity to testify about this 
important matter.
    [The prepared statement of Mr. Wilson follows:]

Prepared Statement of John J. Wilson, Senior Vice President, Marketing 
    and Industry Affairs, Dairy Farmers of America; Member, Board of
     Directors, National Milk Producers Federation, Kansas City, MO
    Chairman Peterson, Ranking Member Lucas, and Members of the 
Agriculture Committee: thank you for the opportunity to testify about 
the importance of expanding U.S. agricultural trade to Cuba. My name is 
John Wilson and I am the Sr. Vice President of Marketing & Industry 
Affairs for Dairy Farmers of America (DFA) and I also serve on the 
Board of Directors for the National Milk Producers Federation (NMPF).
    Dairy Farmers of America is a dairy marketing cooperative that 
serves and is owned by dairy farmers in 48 states. DFA is one of the 
country's most diversified manufacturers of dairy products, food 
components and ingredients, and is a leader in formulating and 
packaging shelf-stable dairy products. Our cooperative's success is 
built on the success of its producer-members, who raise their dairy 
herd, and their families, on family farms across the nation.
    NMPF develops and carries out policies that advance the well being 
of dairy producers and the cooperatives they own. The members of NMPF's 
31 cooperatives produce the majority of the U.S. milk supply, making 
NMPF the voice of more than 40,000 dairy producers on Capitol Hill and 
with government agencies. I am offering this testimony on the behalf of 
NMPF's nation-wide membership. DFA is also a member of the U.S. Dairy 
Export Council, which has long worked jointly with NMPF on issues 
relating to expanding U.S. dairy exports, including to the Cuban 
market.
    I would like to begin by expressing strong appreciation to the many 
Members of this Committee that worked tirelessly with DFA and NMPF over 
the past year to address a dire price-cost squeeze throughout the 
producer community. That catastrophic situation was brought on in large 
part due to an abrupt decline in export market demand beginning in mid-
2008.
    That shortfall in export demand was brought on due to an ill-fated 
combination of cyclically high prices that began to weaken demand just 
at the onset of the global economic crisis, combined with a resurgence 
of milk supplies in Oceania as New Zealand and Australia's drought 
problems abated. This combination of events contributed to a sudden 
imbalance whereby global demand fell significantly short of available 
supplies. Because the U.S. market had gradually increased production to 
respond to the international market signals being sent in recent years 
that indicated higher demand for U.S. dairy products, U.S. producers 
found the rug pulled out from under them when such a significant 
portion of the market for U.S. milk evaporated in the latter part of 
2008.
    In addition to the strong efforts by this Committee and by the U.S. 
Department of Agriculture to help support dairy producers' economic 
recovery this past year, NMPF believes that efforts to help regain the 
ground lost in 2009 in U.S. participation in the global dairy market 
are essential to helping stimulate further recovery in the dairy sector 
and to putting the U.S. dairy industry on a firmer footing going 
forward. It is because of this that NMPF supports measures designed to 
expand U.S. dairy exports and offer positive net trading opportunities 
to America's hard-working dairy producers.
    One such item that would be a positive step in the right direction 
for the dairy industry pertains to expanding agriculture trade to Cuba. 
Cuba is a market where we should be a natural preferred seller due to 
our strong proximity advantages, but regulatory hurdles imposed by our 
own government have thwarted our ability to best supply this market. A 
June 2009 International Trade Commission Updated Study on U.S. 
Agricultural Sales to Cuba found that doing away with all of the 
financing and travel restrictions on U.S. agricultural exports to Cuba 
would have boosted 2008 dairy sales to Cuba from $13 million to between 
$39 and $87 million and increased our market share that year from a 
mere 6% to a much more respectable 18 to 42 percent. Although current 
legislation would not extend that far and NMPF is not actively seeking 
an end to the ban on extending credit to Cuba, these figures clearly 
suggest that easing the agricultural trade and the overall travel 
restrictions now in place would yield impressive gains for U.S. dairy 
exports.
    In NMPF's view there are two critical sides to the coin in terms of 
stimulating greater dairy product sales to Cuba. The first involves 
unnecessary technical and regulatory barriers to greater sales, 
introduced either by the prior Administration's interpretation of the 
2000 Trade Sanctions Reform and Export Enhancement Act (TSREEA) or by 
TSREEA itself. The second pertains to abolishing the restrictions on 
Americans' rights to travel to Cuba. The latter is relevant because 
greater travel to Cuba by American tourists would be expected to 
significantly boost sales of U.S. agricultural products to that country 
as well as to improve the ease with which our members could make the 
necessary in-person connections to better conduct business with Cuba.
    Because it addresses both these critical sides of the equation, 
NMPF and its members, as well as both dairy producers and processors in 
the U.S. Dairy Export Council, are extremely supportive of the newly 
introduced Travel Restriction Reform and Export Enhancement Act, H.R. 
4645. In our view, this bill, sponsored by Chairman Peterson and 
Representative Moran, provides the best prospect for addressing the 
most significant issues hindering greater sales of U.S. agriculture 
products to Cuba. As mentioned earlier, expanding U.S. dairy exports, 
particularly in a way that provides net benefits to American dairy 
farmers, is viewed as a key ingredient to helping restore profitability 
in our dairy industry.
Technical/Regulatory Issues of Concern:
    TSREEA allowed for the export of agricultural products, including 
dairy, to Cuba. This enabled us to sell dairy products--primarily 
nonfat dry milk but also other products--to a new market. The peak 
years for our industry were in 2004 and 2005 during which approximately 
$30M of dairy products were sold each year before further restrictions 
on agricultural sales came into effect.
    TSREEA requires payment of ``cash in advance'' in order to ensure 
that no credit is extended to the Cuban Government. NMPF agrees with 
this legislative intent and is not disputing the clear desire of 
Congress and of many throughout America to not extend credit to the 
Cuban authorities.
    Under the first several years of TSREEA, products were exported 
using procedures normally followed when selling on payment terms 
commonly known as ``cash in advance,'' as required in the original 
Office of Foreign Asset Control (OFAC) regulations. Specifically, the 
procedure entailed (1) shipping the product from a U.S. port, and (2) 
advising the Cuban buyer of its shipping status (an ``on-board'' bill 
of lading is prepared by the shipping company). At this point, the 
process began for full payment in advance of the buyer having ownership 
of the product. Once full payment is received, the ``on board'' bills 
of lading--the shipping documents that allow the buyer to gain control 
of the product--were released to the buyer. It is important to note 
that under this commonly used international trading practice, the Cuban 
buyer did not gain control and ownership of the product until payment 
was made. This practice fully complied with the spirit and the letter 
of TSREEA.
    In 2005, however, OFAC ``redefined'' the meaning of the ``cash in 
advance'' requirement in TSREEA in a way that dramatically impacted 
future contracted sales and violated the express intent of Congress to 
encourage non-credit agricultural sales to Cuba. In effect, the new 
OFAC ruling required cash payments from Cuba before the U.S. 
commodities could even leave the U.S. port. Although a letter of credit 
option was also permitted as another payment avenue, the overall impact 
was to add further complexity and cost to making the sale.
    That regulatory change dramatically impacted future contracts of 
dairy products with Cuba. This was seen by a drop in sales of U.S. 
dairy products to Cuba of more than half the following year (to $13 
million in 2006). Rather than growing as global U.S. dairy exports did 
between 2004 and 2008, sales to Cuba since then have ranged from 
minimal (e.g., approximately $1 million in 2007 and approximately $3 
million in 2009) to only half of peak sales in prior years (e.g., $16 
million in 2008 when global demand was quite tight and so Cuba was 
likely driven to seek out alternative sellers).
    NMPF urges Congress to act to clarify the intent of Congress with 
respect to the ``cash in advance'' requirement before further 
opportunities are foregone in Cuba. We greatly appreciate the clarity 
provided by Congress in the FY 2010 Omnibus Appropriations bill on this 
point and are looking forward to a rule being issued by OFAC on this 
matter. However, while very welcome, the appropriations process only 
provides resolution and clarity for the length of the fiscal year. As a 
business that frequently enters into supply contracts over long 
periods, this uncertainty is not helpful to securing business. 
Therefore, we believe strongly that a more permanent resolution in 
statute is required. That is why the inclusion of this element in the 
Travel Restriction Reform and Export Enhancement Act is so critical in 
our view.
    Along similar lines, we applaud the Travel Restriction Reform and 
Export Enhancement Act's addressing the unnecessary cost involved in 
TSREEA's ``direct banking'' provision which requires routing of payment 
through a third-country bank to conduct agricultural trade. This 
prohibition against allowing direct payments to be made to U.S. banks 
for agricultural sales serves no useful purpose in our view. It merely 
makes sales transactions more complicated and costly due to the fees 
charged for these additional transactions. We agree with Chairman 
Peterson and Mr. Moran that it is time for Congress to eliminate those 
TSREEA regulatory measures that have been found to serve no useful 
purpose, are not in keeping with the spirit of TSREEA, and have served 
only to make sales more costly without serving a logical policy goal 
(such as the direct banking provisions).
    It is clear that we are now among the least-preferred of suppliers 
given these technical and regulatory impediments to U.S. agricultural 
sales to Cuba. The U.S. should be actively working to expand 
agricultural exports--in line with the long-standing goals of many 
bipartisan Congressional leaders and with the President's recently 
stated aim to double U.S. exports over the next several years.
Americans Traveling to Cuba:
    NMPF believes that permitting all Americans to travel to Cuba 
without restriction would provide an additional boost to U.S. sales of 
dairy products to Cuba. Eliminating travel restrictions to Cuba would 
open up new opportunities for our members to more easily travel to Cuba 
to further encourage sales of U.S. dairy products there. Additionally, 
wider travel by the American people to Cuba would stimulate greater 
sales of dairy products in that dairy-importing nation. This would 
benefit America's dairy industry through greater sales opportunities 
but would also bring our policy with respect to Cuba more in line with 
how the U.S. treats other countries, including dictatorships and 
repressive regimes that surely rival the Cuban Government's 
oppressiveness and humanitarian violations.
    Rather than being a sanction on Cuba, the ban on travel by 
Americans is a restriction placed by our own government on American 
citizens. The U.S. Government does not restrict travel to any other 
country, including state sponsors of terrorism like Iran, Syria, and 
Sudan, as well as North Korea, Burma, and Uzbekistan. Additionally, 
although the travel ban is very strongly supported by an extremely 
vocal and active minority in the U.S., recent public opinion polls show 
that 64 percent of Americans \1\ and \2/3\ of Cuban-Americans \2\ 
support the freedom of U.S. citizens to travel to Cuba.
---------------------------------------------------------------------------
    \1\ According to the CNN/Opinion Research Corp. poll conducted 
April 3-5, 2009, 64 percent of the 1,023 Americans surveyed by 
telephone thought the U.S. Government should allow citizens to travel 
to Cuba. And 71 percent of those polled said that the U.S. should 
reestablish diplomatic relations with Cuba.
    \2\ According to the 2009 Bendixen & Associates poll, \2/3\ of 
Cuban and Cuban American adults--67 percent--support the lifting of 
travel restrictions for all Americans so that they can also travel to 
Cuba freely.
---------------------------------------------------------------------------
    NMPF strongly supports an end to the restrictions on Americans' 
ability to travel freely where they choose. That is why we are so 
pleased to see the Travel Restriction Reform and Export Enhancement Act 
marry action related to American travel with the technical changes 
necessary to better facilitate non-credit sales of agricultural 
products to Cuba.
Conclusion:
    We respectfully ask the Members of this Committee and others in 
Congress to support the Travel Restriction Reform and Export 
Enhancement Act which will greatly improve American agriculture's 
ability to provide the Cuban people and those Americans wishing to 
travel to Cuba with the nutritious and safe foods that we produce in 
such abundance here in the United States. The U.S. dairy industry 
firmly believes that it is critical that we work to expand 
opportunities for our dairy exports to allow our dairy producers, as 
well as their dairy manufacturing partners, to grow and prosper. 
Improving our ability to export to Cuba by doing away with many of the 
barriers the U.S. Government has erected to us in that market is a very 
important step in the right direction.

    The Chairman. Thank you, Mr. Wilson, for your testimony.
    Mr. Schott, you are recognized.

       STATEMENT OF BARTON SCHOTT, FIRST VICE PRESIDENT,
  NATIONAL CORN GROWERS ASSOCIATION; CORN, SOYBEAN, AND WHEAT 
                       PRODUCER, KULM, ND

    Mr. Schott. Chairman Peterson and Members of the 
Agriculture Committee, thank you for the opportunity to testify 
about the importance of expanding U.S. trade to Cuba.
    My name is Barton Scott. I am the First Vice President of 
National Corn Growers. I am a family farmer from Kulm, North 
Dakota. I farm with my three sons. We grow soybeans, wheat, and 
corn on our farm. And I am here today on behalf of NCGA, which 
represents 35,000 dues-paying corn growers. NCGA and its 
affiliated state associations work together to advance corn 
growers' interests.
    If I can leave you one thing to remember today, it is that 
the Cuban embargo is working. It is working against U.S. 
farmers and ranchers. Everyone at this table has felt the 
economic effect of this embargo, but I cannot believe that we 
were the group meant to be targeted.
    U.S. ranchers and farmers need the increased one-way trade 
that the newly introduced Travel Restriction Reform and Export 
Enhancement Act provides, and I thank Chairman Peterson and Mr. 
Moran for the support of this important legislation.
    This bill ends the embargo's effect on corn farmers by 
providing an opportunity, not only to protect and preserve 
current and trend-line goal of U.S. sales to Cuba, but also to 
increase the demand for DDGS and other value-added products 
such as poultry.
    Despite numerous weather issues in 2009, U.S. producers set 
all-time records in national average yields and total 
production. Our growers produced 13.1 billion bushels of corn, 
have met all market demands, and are building stocks. To 
maintain stocks in an appropriate level that does not 
negatively impact pricing, we must pursue both export markets 
for corn and U.S.-produced livestock products.
    Corn farmers are more fortunate than other U.S. 
commodities. We currently do move some bulk corn to Cuba. 
According to USDA Foreign Agricultural Service data, during the 
2008-2009 marketing year, Cuba was our tenth largest exporting 
market. Corn farmers currently have 91 percent average share of 
the Cuban corn imports. However, we make these sales under 
competitive disadvantage and in spite of the cash in advance 
and the third-party banking restrictions in place right now.
    As I mentioned earlier, we are producing a record amount of 
corn in the U.S., while at the same time our strong regional 
competitors, such as Brazil and Argentina, do not face these 
same obstacles to export with Cuba. The immediate elimination 
of both of these costs would help, certainly, maintain our 
current exports of bulk corn in light of ever-increasing 
international competition.
    This bill would also help increase sales of DDGS at a 
critical time. A past increase in Cuban imports of DDGS from 
marketing year 2007 and 2008 to marketing year 2008 and 2009 
was almost 50 percent, indicating fast-growing interest in this 
product.
    Corn markets: U.S. corn markets are also directly impacted 
by increased export sales of value-added products such as meat. 
U.S. chicken producers export relatively significant quantities 
of meat to Cuba. In 2008, poultry exports to Cuba, primarily 
chicken, reached 146,000 metric tons. During 2009, a slight 
retraction saw exports over 138,000 metric tons.
    To put this into perspective, it takes approximately 79 
bushels of corn to produce 1 metric ton of poultry under the 
2:1 conversion ratio of corn to white and/or dark meat. So to 
meet 2009 poultry exports to Cuba, the U.S. corn industry fed 
10.9 billion bushels of corn.
    This bill also lifts travel restrictions to Cuba. A portion 
of this bill is integral to actually increasing demand for 
corn. Without travel, the increased demand for value-added 
products would not be significant. U.S. tourism in Cuba will 
boost demand for American products. This increased economic 
activity will also lead to improvements to the Cuban diet. And 
as their consumers sought out more animal proteins, and over 
the past decade as Cuban chicken consumption has increased, 
Cuban chicken production declined. Export projections for these 
value-added products would certainly increase past and current 
trend lines.
    Actual increase in corn demand here in the U.S. from trade 
with Cuba is an important component to the benefits from better 
trade with Cuba, especially in light of their record corn 
production. As an example, one of the best ways to predict 
future growth is to look at consumption patterns of other 
Caribbean islands, specifically the Dominican Republic. Through 
the last decade, Dominican Republic's per-capita chicken 
consumption has been just over twice the amount of Cuba. In our 
estimation, it is reasonable to assume that Cuban chicken 
consumption would grow over time to match that of the Dominican 
Republic. If the import of domestic production ratio of chicken 
remains somewhat the same, doubling U.S. chicken exports to 
277,000 metric tons would require almost 22 million bushels of 
corn.
    In conclusion, I ask for this Committee's support to end 
the embargo's effect on farmers like myself across America. 
Sometimes there are unintended consequences from a decision, 
and here we have a perfect opportunity to fix it.
    We strongly believe that U.S. corn farmers can continue to 
be the number one reliable supplier to our customers around the 
globe, but we need the changes this legislation can do, and I 
think the time is right for those changes.
    Again, I greatly appreciate the opportunity to testify on 
this important opportunity for corn farmers. Thank you.
    [The prepared statement of Mr. Schott follows:]

  Prepared Statement of Barton Schott, First Vice President, National 
 Corn Growers Association; Corn, Soybean, and Wheat Producer, Kulm, ND
    Chairman Peterson, Ranking Member Lucas, and Members of the 
Agriculture Committee, thank you for the opportunity to testify about 
the importance of expanding U.S. agricultural trade to Cuba. My name is 
Bart Schott and I am the First Vice President of the National Corn 
Growers Association (NCGA). I am a third generation farmer from Kulm, 
North Dakota where I farm with my sons, raising corn, soybeans and 
spring wheat. I am here today on behalf of NCGA, which was founded in 
1957, and represents over 35,000 dues-paying corn growers. NCGA and its 
affiliated state associations work together to help protect and advance 
corn growers' interests.
U.S. Corn Production
    Despite numerous weather issues in 2009, U.S. corn producers set 
all time records in national average yields and total production. Our 
growers produced over 13.1 billion bushels of corn, have met all market 
demands and are building stocks. To maintain stocks at an appropriate 
level that does not negatively impact prices, we must pursue both 
export markets for corn and U.S. produced livestock products.

                       U.S Corn Supply and Demand
------------------------------------------------------------------------
   (mil bushel)         2007-08           2008-09            2009-10
------------------------------------------------------------------------
      Carry-in              1,304            1,624             1,673
 Average Yield                151              153.9             165.2
    Production             13,038           12,092            13,151
        Supply             14,362           13,729            14,834
Feed & Residual             5,913            5,246             5,550
       Ethanol              3,049            3,677             4,200
           FSI              1,338            1,276             1,270
        Export              2,437            1,858             2,050
     Carry-out              1,624            1,673             1,764
------------------------------------------------------------------------
Source: USDA, WASDE.

Corn Sales to Cuba
    Cuba is currently an important market for U.S. corn. According to 
the United States Department of Agriculture (USDA) Foreign Agricultural 
Service (FAS) data, during the 2008-2009 marketing year, Cuba was our 
tenth largest export market. U.S. corn farmers currently have a 91 
percent \1\ average share of Cuban corn imports. In calendar year 2009, 
U.S. corn exports to Cuba were down to 24 million bushel, off the then 
peak in 2008 of 30.9 million bushels. The estimated value \2\ of Cuban 
corn imports was $134.0 million during marketing year 2007-08 and 
$104.6 million in marketing year 2008-09. This is a significant change 
from when our corn producers first entered the Cuban market in 2001, 
exporting that year slightly less than 1 million bushels of corn.
---------------------------------------------------------------------------
    \1\ Average calculated based on USDA FAS data from marketing years 
2006-07, 2007-08 and 2008-09.
    \2\ Estimated value calculated based on USDA National Agricultural 
Statistics Service average U.S. corn price for that year.
---------------------------------------------------------------------------
    The growth in corn-based ethanol production has led to the 
increased production of Distillers Dried Grains (DDGS). This high 
protein feed is a direct co-product of the ethanol industry. In 
marketing year 2008-09, Cuba imported 146,500 metric tons of DDGS from 
the U.S.\3\
---------------------------------------------------------------------------
    \3\ Data source USDA FAS.
---------------------------------------------------------------------------
Value-Added Products
    U.S. corn markets are directly impacted by increased exports of 
value-added products such as meat. U.S. chicken producers export 
relatively significant quantities of meat to Cuba. In 2008, poultry 
exports to Cuba, primarily chicken, reached 146,000 metric tons.\4\  
During 2009, a slight retraction saw exports of 138,000 metric tons.
---------------------------------------------------------------------------
    \4\ Data source USDA FAS.
---------------------------------------------------------------------------
    To put this into perspective, it takes approximately 79 bushels of 
corn to produce 1 metric ton of poultry, under a 2:1 conversion ratio 
of corn to white and/or dark meat. So, to meet 2009's poultry exports 
to Cuba, the U.S. broiler industry fed 10.9 million bushels of corn.
Unnecessary Restrictions to Agricultural Trade with Cuba
    The 2000 Trade Sanctions Reform and Export Enhancement Act (TSREEA) 
created exemptions that allow for the export of U.S. medical supplies 
and food (agricultural products) to Cuba. However, in 2005, the Office 
of Foreign Asset Control (OFAC) changed the meaning of ``cash in 
advance'' under TSREEA to require cash payments from Cuba before food 
leaves a U.S. port instead of allowing for payment prior to change in 
title of goods, which generally occurs at the port of destination. 
While NCGA appreciates the clear direction to roll back this 
requirement in the FY 2010 Omnibus Appropriations bill, this law only 
provides resolution regarding this issue for the rest of the fiscal 
year. It is not a permanent fix, and American producers will eventually 
continue to function with this disadvantage which is not shared by our 
competitors in supplying the Cuban market with food. Simply put, the 
time value of money can be a significant factor in the decision of 
where and from whom to buy a commodity or any other product.
    TSREEA also involves a ``direct banking'' provision which 
necessitates payments from Cuba to U.S. suppliers through a third-
country bank. This requirement adds yet another additional cost to each 
transaction involving the sale of agricultural goods to Cuba.
    Currently, there are significant restrictions on American citizens' 
travel to Cuba. Unfortunately, this greatly limits the opportunities 
for increased agricultural trade with this country. Increased travel to 
Cuba by Americans would boost sales of U.S. agricultural products, 
especially value-added agricultural products.
The Travel Restriction Reform and Export Enhancement Act
    NCGA strongly supports the newly introduced Travel Restriction 
Reform and Export Enhancement Act regarding Cuba and thank Chairman 
Peterson and Mr. Moran for their support of this important legislation. 
This bill provides an opportunity not only to protect and preserve 
current and trendline growth of U.S. sales of corn to Cuba, but to 
increase demand for DDGS and other corn value-added products such as 
poultry.
    Corn farmers are more fortunate than other U.S. commodities, as we 
currently do move some bulk corn to Cuba. However, we do so under a 
competitive disadvantage and in spite of the two requirements mentioned 
earlier, the definition of cash in advance and the third party banking 
restriction. As mentioned, we are producing record amounts of corn in 
the U.S., while at the same time our strong regional competitors, such 
as Brazil and Argentina, do not face these same obstacles to export 
with Cuba. The immediate elimination of both these costs would 
certainly help maintain our current exports of bulk corn in light of 
ever increasing international competition.
    These changes would also help increase sales of DDGS at a critical 
time. A past increase in Cuban imports of DDGS from marketing year 
2007-08 to marketing year 2008-09 was almost 50 percent, indicating 
fast growing Cuban interest in this product. We need to capitalize now 
on this opportunity, but unfortunately, policies such as cash in 
advance and third party banking disproportionately penalize more 
expensive agricultural products, such DDGS.
    This bill would also lift travel restrictions to Cuba. This portion 
of the bill is integral to actually increasing the demand for corn. 
Without travel, the increased demand for value-added agricultural 
products will not be as significant. U.S. tourism in Cuba will boost 
demand for American products. This increased economic activity would 
also lead to improvements in the Cuban diet, as their consumers sought 
out more animal proteins. Over the past decade, as Cuban chicken 
consumption has increased, Cuban chicken production declined.\5\ As 
such, export projections for these value-added products would certainly 
increase past their current trendlines. Actual increases in corn demand 
here in the U.S. from trade with Cuba is a very important component of 
the benefits from better trade with Cuba, especially in light of recent 
record corn production.
---------------------------------------------------------------------------
    \5\ In 2009, approximately 14 percent of the chicken consumed in 
Cuba was locally produced.
---------------------------------------------------------------------------
    As an example, one of the best corollaries to examine regarding 
predictions for future growth is to look at the consumption patterns of 
other Caribbean islands, specifically the Dominican Republic, which has 
some of the same general cultural background as Cuba. Through the last 
decade, the Dominican Republic's per capita chicken consumption has 
been just over twice the amount of Cuba. In our estimation, it is 
reasonable to assume that Cuban chicken consumption could grow over 
time to match that of the Dominican Republic. If the import to domestic 
production ratio of chicken remained somewhat the same, doubling U.S. 
chicken exports to 277,000 metric tons would require almost 22 million 
bushels of corn.
Conclusion
    NCGA respectfully requests that the Members of this Committee and 
others in Congress support the Travel Restriction Reform and Export 
Enhancement Act. Our members want to preserve our current corn exports, 
increase our export of DDGS at a critical point in the Cuban market and 
importantly, significantly increase demand for corn through 
opportunities in value-added corn products through travel-related 
economic activity. We believe that U.S. corn farmers can continue to be 
the number one reliable supplier to our customers around the globe, but 
need the changes wrought in this legislation and believe the time is 
right for those changes. Again, I greatly appreciate the opportunity to 
testify on this important opportunity for corn farmers.

    The Chairman. Thank you, Mr. Schott, for your testimony.
    And, Mr. Fritz, welcome to the Committee.

          STATEMENT OF SCOTT E. FRITZ, OWNER/OPERATOR
  (PRESIDENT/TREASURER), FRITZ BLACK SAND FARM, INC.; MEMBER, 
              BOARD OF DIRECTORS, AMERICAN SOYBEAN
                    ASSOCIATION, WINAMAC, IN

    Mr. Fritz. Good afternoon, Mr. Chairman. And thank you, and 
thanks to the Members of the Committee and the fellow members 
of the panel and staff that are here in the room today.
    I am Scott Fritz, a soybean and corn farmer from Winamac, 
Indiana, and a Member of the Board of Directors of the American 
Soybean Association, or ASA. ASA is the advocate and 
representative of the U.S. soybean farmers on policy issues. We 
are pleased to have the opportunity to appear before you today 
on the important issue of agriculture trade with Cuba.
    ASA commends you, Mr. Chairman, and the Members of the 
Committee, for seeking to normalize trade and travel between 
the United States and Cuba. An initial step in this direction 
was taken with the enactment of the Trade Sanctions Reform and 
Export Enhancement Act, or TSRA, in the year 2000, which lifted 
sanctions on commercial sales of U.S. agriculture commodities 
to Cuba.
    As a result of this legislation, Cuba has become a key 
importer of U.S. soybeans, soybean meal, and soybean oil. 
According to the U.S. International Trade Commission, soybean 
and soybean product exports to Cuba more than doubled from 
$61.6 million in the year 2002 to $134.7 million in the year 
2008. Soybeans, soybean meal, and soybean oil represent 19 
percent of the value of total U.S. exports to Cuba in the year 
2008, and was 25 percent of the total value in the year 2009.
    While this performance certainly represents an improvement 
after the long-standing trade embargo, there is significant 
potential to further increase soy exports to Cuba. In 2008, 
Cuba imported a total of 496,000 metric tons of soybean, 
soybean meal, and soybean oil from all sources. Of this total, 
282,000 metric tons, or 58 percent, were purchased from the 
United States.
    However, the U.S. soybean industry is uniquely positioned 
to significantly increase its share of the Cuban market. U.S. 
ships can reach the three major Cuban ports in 1 day, compared 
to up to 25 days from Brazil or Argentina. As a result, our 
shipping costs are much lower than for our South America 
competitors, giving us a natural advantage in supplying the 
Cuban market.
    Unfortunately, TSRA imposes significant financing and 
licensing conditions on U.S. export sales to Cuba. All 
transactions must be paid in cash prior to shipment, commercial 
and government financing or credit is prohibited, export 
licenses are required, and all transactions must be handled by 
a third-party bank.
    A list of these and other factors that weaken the 
competitive position of U.S. agriculture exports to Cuba is 
attached to my statement. These restrictions nullify our 
natural competitive advantage in exporting to Cuba. Their 
elimination would enable the U.S. to further increase its 
market share of soybean and soybean products exports to that 
country.
    ASA strongly supports the Travel Restriction Reform and 
Export Enhancement Act, which would eliminate the financing and 
travel restrictions affecting trade with Cuba.
    Necessary policy changes include the following:
    Allow direct banking. At present, all financial 
transactions with Cuba must be handled by third-party banks 
outside the United States.
    The second point: The payment-in-advance rule should be 
eliminated. In fact, the U.S. does not impose this requirement 
on sales to any other country.
    The third point: Unrestricted travel to Cuba should be 
allowed. Currently, farmers and companies selling goods to Cuba 
must apply for a license before traveling there, and there is 
no guarantee the licenses will be granted in a timely manner. 
And the time and resources required to apply for license are 
burdensome, particularly to farmers and small businesses.
    U.S. economic sanctions against Cuba have cost U.S. farmers 
and businesses billions of dollars in exports to the Cuban 
market. In a time of economic downturn, we can no longer sit on 
the sidelines and watch our competitors continue to supply a 
market where we have a natural competitive advantage.
    ASA strongly supports the Travel Restriction Reform and 
Export Enhancement Act which eliminates financial and travel 
restrictions on Cuba, and which would be consistent with the 
Administration's goal to double exports in the next 5 years. 
U.S. farmers stand ready to meet Cuban demand on soybean 
products, but U.S. policy must change.
    Thank you again, Mr. Chairman, for the opportunity for the 
American Soybean Association to present its views on this 
important issue. And I would be happy to respond to any 
questions.
    [The prepared statement of Mr. Fritz follows:]

    Prepared Statement of Scott E. Fritz, Owner/Operator (President/
 Treasurer), Fritz Black Sand Farm, Inc.; Member, Board of Directors, 
               American Soybean Association, Winamac, IN
    Good morning, Mr. Chairman and Members of the Committee. I am Scott 
Fritz, a soybean and corn producer from Winamac, Indiana, and a Member 
of the Board of Directors of the American Soybean Association (ASA). 
ASA is the advocate and representative of U.S. soybean farmers on 
policy issues. We are pleased to have the opportunity to appear before 
you today on the important issue of agricultural trade with Cuba.
    ASA commends you, Mr. Chairman, and other Members of the Committee, 
for seeking to normalize trade and travel between the United States and 
Cuba. An initial step in this direction was taken with enactment of the 
Trade Sanctions Reform and Export Enhancement Act, or TSRA, in 2000, 
which lifted sanctions on commercial sales of U.S. agricultural 
commodities to Cuba. As a result of this legislation, Cuba has become a 
key importer of U.S. soybeans, soybean meal and soybean oil. According 
to the U.S. International Trade Commission, soybean and soybean product 
exports to Cuba more than doubled, from $61.6 million in 2002 to $134.7 
million in 2008. Soybeans, soybean meal and soybean oil represented 19 
% of the value of total U.S. exports to Cuba in 2008.
    While this performance certainly represents an improvement after 
the long-standing trade embargo, there is significant potential to 
further increase soy exports to Cuba. In 2008, Cuba imported a total of 
496,000 metric tons of soybean, soybean meal and soybean oil from all 
sources. Of this total, 282,000 metric tons, or 58 percent, were 
purchased from the United States. However, the U.S. soybean industry is 
uniquely positioned to significantly increase its share of the Cuban 
market. U.S. ships can reach the three major Cuban ports in 1 day, 
compared to 25 days from Brazil or Argentina. As a result, our shipping 
costs are much lower than for our South American competitors, giving us 
a natural advantage in supplying the Cuban market.
    Unfortunately, TSRA imposes significant financing and licensing 
conditions on U.S. export sales to Cuba. All transactions must be paid 
in cash prior to shipment, commercial and government financing or 
credit is prohibited, export licenses are required, and all 
transactions must be handled by a third-party bank. A list of these and 
other factors that weaken the competitive position of U.S. agricultural 
exports to Cuba is attached to my statement. These restrictions nullify 
our natural advantage in exporting to Cuba. Their elimination would 
enable the U.S. to further increase its market share for soybean and 
soybean product exports to that country.
    ASA strongly supports the Travel Restriction Reform and Export 
Enhancement Act, which would eliminate financing and travel 
restrictions affecting trade with Cuba. Necessary policy changes 
include the following:

   Direct Banking Should Be Allowed--At present, all financial 
        transactions with Cuba must be handled by third-party banks 
        outside the United States. This requirement results in 
        unnecessary costs and delays for U.S. businesses, which must 
        receive payment from Cuba through a third-country bank, rather 
        than a U.S. bank.

   The ``Payment in Advance'' Rule Should be Eliminated--Under 
        the Payment in Advance Rule, a product sold to Cuba must be 
        paid for in cash prior to shipment from U.S. ports. This 
        contrasts with the normal business practice of paying for goods 
        after arrival, when title to the goods changes hands. The U.S. 
        does not impose this requirement on sales to any other country.

   Unrestricted Travel to Cuba Should be Allowed--Currently, 
        farmers and companies selling goods to Cuba must apply for a 
        license before traveling there. There is no guarantee that 
        licenses will be granted in a timely manner, and the time and 
        resources required to apply for the license are a burden, 
        particularly to farmers and small businesses.

    Removing the financing restrictions will make U.S. agricultural 
products more competitive because it would reduce Cuba's cost of 
purchasing U.S. products. The ITC estimates that such costs would be 
lowered by from 2.5 to 10 percent of the purchase price. The Commission 
also estimates that, in the absence of financing restrictions, U.S. 
exports to Cuba would have been from 11 to 26 percent higher in 2008.
    If the travel ban is eliminated, the number of U.S. citizens 
traveling to Cuba annually would increase to between 500,000 and 1.0 
million. This growth in travel to Cuba would bring in more hard 
currency, enabling the Cuban state-trading agency, ALIMPORT, to buy 
more U.S. agricultural products. Ending the travel ban would also 
benefit the U.S. economy by creating much-needed American jobs in the 
tourism and airline industries.
    U.S. economic sanctions against Cuba have cost U.S. farmers and 
businesses billions of Dollars in exports to the Cuban market. In a 
time of economic downturn, we can no longer sit on the sidelines and 
watch our competitors continue to supply a market where we have a 
natural advantage. ASA strongly supports the Travel Restriction Reform 
and Export Enhancement Act, which eliminates financial and travel 
restrictions on Cuba, and which would be consistent with the 
Administration's goal to double exports in the next 5 years. U.S. 
farmers stand ready to meet Cuban demand for soybean products, but U.S. 
policy must change. Legislation can ``correct an economic blind spot 
that has allowed other countries to chip away at America's 
international competitiveness.''
    Thank you, again, Mr. Chairman, for the opportunity for the 
American Soybean Association to present its views on this important 
issue. I would be happy to respond to any questions.

    Source: ``U.S. Agricultural Sales to Cuba: Certain Economic Effects 
of U.S. Restrictions'' U.S. International Trade Commission, June 2009. 
http://www.usitc.gov/publications/332/working_papers/ID-22.pdf.
Factors Weakening the Competitive Position of U.S. Agricultural 
        Products in the Cuban Market
   U.S. exporters cannot offer credit to Cuba for the purchase 
        of U.S. products. Most U.S. competitors make concessions to 
        finance trade with Cuba.

   U.S. regulations require U.S. exports to Cuba to be paid 
        ``cash in advance.'' Payments are made through letters of 
        credit through third-country banks. The regulations are a 
        particular concern for small and medium-sized exporters because 
        they do not have established commercial relationships with the 
        appropriate foreign banks.

   When purchasing U.S. products, ALIMPORT may incur additional 
        storage and demurrage costs if the transactions paperwork is 
        not completed on schedule.

   U.S. exporters wishing to travel to Cuba in order to 
        complete sales contracts find the travel licensing process to 
        be cumbersome, nontransparent, and time consuming.

   The United States restricts visits by Cubans for sales 
        negotiations and for SPS inspections of U.S. products and 
        processing facilities.

   U.S. agricultural trade associations cannot use industry-
        generated national Checkoff funds, USDA Foreign Market 
        Development funds, or USDA Market Access Program allocations 
        for market research and promotion activities in Cuba.

   U.S. regulations penalize foreign vessels that dock in Cuban 
        ports prior to arrival in the U.S., resulting is less 
        competition between carriers and higher transportation costs.

    The Chairman. Thank you very much, Mr. Fritz.
    And I thank all of the panel members for their testimony.
    I was visiting with my staff about the discrepancy between 
the different commodities in terms of how it has impacted you.
    Mr. Wagner, do you know why rice has been--it seems like 
you are hit harder than the others in terms of the markets you 
have lost. Is there an easy explanation for this?
    Mr. Wagner. I think I can say that Mr. Alvarez was quite 
miffed that he had to pay cash in advance in the fashion that 
he did. And every time in the last 30 or 40 years that 
sanctions have been imposed, it has been the rice farmers that 
have really lost. We lost the Cuban market, we lost the Iranian 
market, we have lost the Iraqi market. The Vietnamese have 
captured the Cuban rice market.
    The Chairman. I think corn and soybean--corn went up, 
actually, in terms of the percentage of the market that you 
have. Am I right about that?
    Mr. Schott. Currently, we are selling them 91 percent of 
their corn needs.
    The Chairman. And you used to be, rice used to be, what, 
50, 60 percent or more?
    Mr. Wagner. Of our exports? Yes.
    The Chairman. Of the imports that Cuba was getting, you 
were a big percentage of that market at one time.
    Mr. Wagner. Fifty percent of our exports went to Cuba.
    The Chairman. And they were buying the majority of their 
rice from the U.S. at that time.
    Mr. Wagner. Correct.
    The Chairman. So I guess I was wondering, is it a 
difference of freight rates or something? Is that having an 
impact?
    Mr. Wagner. Presently?
    The Chairman. Well, corn I guess is bulkier than wheat or 
rice in terms of--is that some of the impact? I mean, how is 
Vietnam able to send it over here? Are they giving them some 
kind of better terms?
    Mr. Wagner. One, they offer credit, which we do not. Two, 
they have an inferior product which is more affordable since 
they are so cash-strapped.
    The Chairman. So that is part of the deal.
    Mr. Wagner. That is a lot of it.
    The Chairman. And the corn, I heard you say you are 
starting to sell DDGS now to Cuba. Is that correct?
    Mr. Schott. Yes, Mr. Chairman. There is a big demand for 
DDGS for their livestock and poultry industry. They want to 
grow their dairy industry down there. And because of the price 
of DDGS and the protein, they are real interested in purchasing 
more of that.
    The Chairman. And apparently, Mr. McReynolds, there has 
been an increase in where they have built some new pasta plants 
and milling capacity in Cuba. Am I correct about that?
    Mr. McReynolds. My understanding, yes.
    The Chairman. Has that increased your sales to Cuba or does 
that have any impact, or has that gone some other place?
    Mr. McReynolds. Well, of course, our sales at this point in 
time are really down, about 14 percent of--and at one time we 
were at the 48 percent level.
    The Chairman. So the Canadians have picked a lot of this 
up?
    Mr. McReynolds. Competitors have picked that up, which they 
are going to get the product somewhere.
    The Chairman. I understand. I am just trying to figure out 
where it is coming from. I guess Canada is probably our biggest 
competitor with Cuba.
    Mr. McReynolds. Generally.
    The Chairman. Probably more than Argentina. Argentina has 
got that export tax.
    Mr. McReynolds. Right.
    The Chairman. And with the corn, that basically would have 
to come from Argentina, too, because Brazil doesn't really grow 
that much corn. I mean, they have some. They grow it as a kind 
of secondary crop. But they are more a competitor in soybeans, 
I would guess, Brazil would be. Right?
    Mr. Schott. Right. But Brazil is increasing their corn 
acres pretty quick.
    The Chairman. Because they are increasing their soybean 
acres. I mean, they are using it kind of as a rotation crop or 
a second crop with soybeans, as I understand it.
    Mr. Schott. That is correct.
    The Chairman. But they are not really focused on corn. When 
I was down in Argentina the last time, there was a lot of 
transition going, in Argentina, to corn in what would be their 
equivalent of our corn belt. You know, they have plowed up a 
lot of pasture land and are planting corn. If the government 
down there doesn't kill them off before they get started, they 
might be our best allies in that regard. But I was just trying 
to get some sense of why it was different in different areas. 
But I guess Vietnam has lower quality rice, it is probably 
cheaper, and they are giving them some kind of break, financing 
and whatever.
    Mr. Wagner. Correct. It has been about a third cheaper per 
metric ton last year.
    The Chairman. But if we get back under normal situations, 
you would probably get a fair amount of that market back, I 
would guess.
    Mr. Wagner. We would, especially when you put some money 
into the Cubans' pockets.
    The Chairman. All right. Thank you very much. The gentleman 
from Oklahoma.
    Mr. Lucas. Thank you, Mr. Chairman. And just the question I 
had asked the previous panel and I ask you: On the free trade 
agreements out there that are pending--Panama, Colombia, 
Korea--I assume, gentlemen, your organizations are all 
supporters of those?
    Mr. Schott. NCGA, their policy is in support of the FTAs. 
Correct.
    Mr. Fritz. The American Soybean Association does indeed 
support the FTAs.
    Mr. Wilson. The National Milk Producers and Dairy Farmers 
of America both would say yes.
    Mr. McReynolds. National Association of Wheat Growers 
supports those.
    Mr. Lucas. Thank you very much.
    And let's focus for a moment on what the Chairman was 
looking at just a moment ago, talking about the freight rates 
and the competition and the economics of it all.
    Mr. Wagner, once again, you said the chief competitor for 
the Cuban market in rice were the Vietnamese. Do you know what 
the freight rate difference is between shipping from New 
Orleans or wherever the main port would be for that sort of 
product and, say, shipping from Vietnam?
    Mr. Wagner. Two years ago, if I remember right, it was ten 
times. It was something like, $1,000 per metric ton to ship 
from the Far East to that market. I couldn't say what it would 
have been for us because we weren't players in the market, but 
it is substantially less. Obviously, it is a 30 to 40 day trip 
from Vietnam or Thailand through the Panama Canal to Cuba. We 
can make it in 2 days. We can ship it on smaller vessels. All 
those costs are--savings in costs are passed on to the Cubans 
and they could buy more product.
    Mr. Lucas. Mr. McReynolds, I assume as was mentioned a 
moment ago, the Canadians would be the leading competitor on 
wheat. Do you have any idea what the freight difference is 
between shipping Canadian wheat to Cuba versus from New Orleans 
or Galveston, wherever, in the United States?
    Mr. McReynolds. Well, I don't have those off the top of my 
head. We can get those to you and to the Committee. But in 
days, it takes about 2 days, as was stated earlier. And from 
Canada, it takes 7 to 8 days to make that trip. So the 
transportation costs are certainly higher.
    Mr. Lucas. It was a fascinating statistic, Mr. Wilson your 
commodity group's estimate.
    Mr. Wilson. I certainly should get you a better number. If 
I can guess, if you would like for me to take a guess, probably 
something north of 10 cents a pound on whether it be nonfat dry 
milk or cheese.
    Mr. Lucas. And your leading competitor in the Cuban market 
right now would be New Zealand?
    Mr. Wilson. Probably New Zealand, Australia and Europe. We 
are not exactly sure what the combination is but they would be 
the three biggest competitors.
    Mr. Lucas. And the product that you would primarily be 
selling down there would be powder.
    Mr. Wilson. Most likely nonfat dry milk. That is what we 
were selling the most before. But certainly with the tourism 
aspect to this, we think it could be a very viable market for 
cheese and many other dairy products, for that matter, as 
Americans go down there and eat.
    Mr. Lucas. Mr. Schott, on your commodity group your leading 
competitor would be from where?
    Mr. Schott. Well, we are targeting Argentina and Brazil.
    Mr. Lucas. So how would the freight rates--would you 
estimate or can you find me information later between shipping 
from the U.S. and coming from South America?
    Mr. Schott. I am not prepared to answer that question but I 
can get you the data.
    Mr. Lucas. That is a good answer.
    Mr. Fritz. As I stated in my written statement, we think it 
is 1 day to ship from the United States to Cuba, where it could 
be up to 25 days of shipping time from South America. Now I 
realize that South America would be coming out of a 
northeastern port or it could be coming out of Argentina. I 
have heard the number, I am sorry I don't have the number, the 
cost of Panamax ships per day--the difference would be 
somewhere between 15 to 20 days, and it doesn't take long for 
that to add up quickly.
    Mr. Lucas. So a substantial trade difference given an 
equitable situation then. I think, gentlemen, you will find 
that most of us on this Committee want your producers to have 
an opportunity to do their business and to demonstrate their 
economic efficiency.
    As you have heard various comments and the various Members 
of all perspectives, there is a sensitivity about the 
government down there. I suspect my good colleagues with their 
legislation will perhaps in some modified form have more 
success than they might realize today. But, nonetheless, we do 
need to remember we are dealing with a country that, because of 
its horrible economic and political system, cannot feed itself. 
If they didn't have the political system, the economic system 
they have right now, they would be dramatically less dependent 
on you and on the farmers that I represent, that you represent 
too.
    So in the actions we take here, while we want to make sure 
our farmers have access to those opportunities, we also need to 
bear in mind the consequences to the people that we are 
affecting and to the region as a whole.
    I appreciate the Chairman tolerating my editorial comment 
at the end there, and I yield back.
    The Chairman. Thank you. The gentleman from Kansas.
    Mr. Moran. I remember hearing at least one time, Mr. 
Wagner, that Cuba imports \1/5\ of the world's rice. Is my 
recollection at all correct? And the point that was made to me 
is while they consume 20 percent of the world's rice, they are 
consuming not U.S. rice, but China, Vietnamese--you are shaking 
your head so maybe my recollection is wrong.
    Mr. Wagner. They import up to half a billion metric tons a 
year.
    Mr. Moran. And rice would be a major product in the Cuban 
diet.
    Mr. Wagner. Oh, yes. They eat up to 150 pounds a year. They 
started eating rice in 1512. It is written in history.
    Mr. Moran. And let me join in the comments about the Cuban 
Government. Nothing that anybody is doing with this legislation 
or any efforts here is to put any stamp of approval upon the 
dictatorship that has lasted so long and has created so many 
economic and freedom burdens upon the Cuban people. I just want 
to comment, and most of my focus in my time in Congress, almost 
exclusively, has been on the agricultural side. Although as I 
said earlier, I believe that the other component of this 
legislation, the ability to travel by U.S. citizens to Cuba, 
enhances the opportunity for Cuban freedom, liberty, and 
economic opportunity.
    But I do want to comment about the conversation that we 
have had on this Committee. Somehow we got on the conversation 
about tourism. This is not a bill that creates tourism. This is 
a bill that authorizes travel by United States citizens. If you 
want to talk about it from the Cuban perspective, you can, I 
suppose. But, what we are really doing here is creating freedom 
and liberty for Americans, United States citizens, about what 
country they can visit. As has been indicated, we do not place 
restrictions like we do on Cuba on any other travel by U.S. 
citizens to any other country.
    One of the leaders in this effort in regard to travel has 
been the Congressman from Arizona, Mr. Flake. And every time I 
have heard him speak about this issue, it is not about boosting 
the Cuban economy, it is about liberty for American citizens. 
And part of what I came to Congress to do is to promote freedom 
and liberty in the United States.
    I believe one of the primary responsibilities we have as 
Members of Congress is to see that another generation of 
Americans have the liberties and freedoms that we are 
authorized and guaranteed under our United States Constitution.
    I think the focus of the comments of some of my colleagues 
on the Committee, as they talk about creating a tourism 
industry in Cuba, is really misguided. What we are talking 
about here is authorizing the liberty of American people to 
travel to another country.
    I yield back and therefore give back the 2\1/2\ minutes 
that I exceeded the last time I was given the microphone.
    The Chairman. So recognized, and I thank the gentleman.
    The gentleman from Iowa, Mr. King.
    Mr. King. Thank you, Mr. Chairman. I really didn't 
anticipate to have Mr. Moran inspire me quite so much, but a 
point that I made earlier is about the liberty of the Cuban 
people. And I think that is something we should take into 
consideration. We are the vanguard of liberty for the world. 
And it is part of what remains of the Monroe Doctrine. It is 
our global position that has put our troops in harm's way on 
every continent that I can think of.
    But I take you back to these circumstances. There is a 
limit to what the Cubans can buy. In fact they are limited, 
they can't buy anything from you. All business is conducted by 
ALIMPORT, which is Castro's organization. He decides who gets 
the proceeds and who does not. He is able to distribute the 
foodstuffs to the people who support him, and he is able to 
keep it away from the people who do not support him. He does 
use it as a tool. I am just not hearing this in the dialogue on 
how Castro would be able to use some of this as a tool.
    Here are some things: I just asked them to put together for 
me some of the items that are on the ration card. And I haven't 
heard dialogue either about the rationing in Cuba, and this is 
updated exactly today. Here are the rations: If you are between 
0 and 7 years old or a pregnant woman--I don't know any other 
gender that can become pregnant--you can purchase a liter of 
milk every day and meat when available. The ration per person 
per month, 5 pounds of rice; 4 pounds of sugar; 1-2 bags of 
salt, whatever size they are; one tube of toothpaste for up to 
four persons in a household; 8 ounces of grains, other types of 
grains than rice; a quarter pound of cooking oil per person per 
month; a half a bar of soap per person per month; two bags of 
coffee per person per month; four eggs per person per month. A 
couple of omelettes a month would be the ration on the eggs.
    I think we need to think of this in the context of what it 
is like in a country that is so politically manipulated that 
people are scared to death to even get to know their neighbor, 
and having food used as a tool against them for political 
purposes.
    And so I just pose this question this way, to each of you, 
and maybe I can articulate it enough so that it can allow you 
to each provide an answer. I know that we have talked about the 
economics of this, and my life has been wrapped up in the 
economics of ag commodities and the necessity for us to have 
good markets. It is everywhere around me. I look from my house 
and I will see either corn or soybean. I love that. I love that 
in the middle of my life for all these years that I have been 
blessed with.
    But this discussion that we have had is about the economic 
impact on our ag producers, and that is the only focus that I 
have heard. And I am not charging that you have a 
responsibility beyond that, but I would just ask the question, 
starting with Mr. Wagner: Has a discussion about the promotion 
of this liberty that Mr. Moran so eloquently talks about 
promoting it to the Cuban people, has that also been a part of 
the discussion as you look at your policy. Or have these 
policies by your organization and each of you been confined to 
the economic question solely as your testimony apparently has 
been?
    Mr. Wagner. No, we have talked about the moral side of this 
as well and it--something came to mind last night. How can you 
export freedom when there is such a shortage of it in this 
country? If we don't have the freedom to travel there and carry 
on commerce there, I don't know how we are going to export and 
change those people's way of life.
    Mr. King. Mr. Wagner, though, is it then this rationale--it 
doesn't have to be the position of your organization--but is it 
the rationale that Americans traveling to and trading with 
Cubans does export freedom and liberty to them because it is 
contagious? That is what I believed when I went there, but I no 
longer believe that. But is that close to the position that is 
being discussed?
    Mr. Wagner. I think we have some evidence of that in 
history in the USSR and China to some degree, and in Vietnam. 
That we are open trading partners with Vietnam now. We just 
finished a war with them, what, 30 years ago.
    Mr. King. Thank you, Mr. Wagner. Mr. McReynolds.
    Mr. McReynolds. I just go back to my experiences there and 
realize it wasn't a long period of time. But the Cuban people 
were very eager to communicate with us and just eager to--just 
little things; know a little more about the United States, 
about America, about schools and universities. I was 
overwhelmed with their eagerness to have a better understanding 
of our life and what we did in our lifestyles and our families.
    And so, when you have that free travel opportunity, you 
open a whole new world up to people that have that opportunity. 
And to restrict U.S.--I don't see the rationale there at all. 
And we have the opportunity to go to other places in the world, 
why would we be restricted there? I think it opens up a whole 
new world to Cuban people.
    I think even our interaction with our guide and with the 
people that we associated with, which was a cross-section of 
individuals, I got the impression that they benefited from us 
being there. I guess I would like to think that. But I 
certainly did.
    Mr. King. I learned to love the people and to that 
sentiment I would agree. That result, of course we did not, but 
I would ask, Mr. Chairman, if I could allow the witnesses on 
down the line to respond to a similar question with the time we 
have.
    Mr. Wilson? Thank you, Mr. Chairman.
    Mr. Wilson. Well, I would say our initial reason is 
economic, because we do see it will benefit U.S. dairy farmers 
by being able to adequately compete with dairy farmers from 
other parts of world. However, along those lines, you can't 
avoid getting into the other aspects of this argument. I think 
in one sense you would say, okay, we have been doing this for 
my whole lifetime essentially.
    Mr. King. Castro's whole lifetime.
    Mr. Wilson. And we really haven't made any progress there. 
I guess we look back from 100,000 feet in the world and you see 
how communication, partly through the Internet, but 
communication has changed the world just in the last few years, 
really. And it has changed a lot of countries and the way they 
treat their people in the last few years.
    And so perhaps allowing U.S. citizens the freedom of going 
to Cuba, whether it be tourists or whether it be on business or 
whatever. There has to be some interaction with the common 
people in those----
    Mr. King. You recognize that enriches the regime. Every 
dollar spent down there, a large share of it goes into the 
hands of Castro.
    Mr. Wilson. We are not going to change that overnight, but 
we have to take this in steps. And we would believe that it is 
a positive step to allow people from the United States to go 
there. How are they any different from China? We have said that 
before here.
    Mr. King. Thank you. Mr. Schott.
    Mr. Schott. Yes. Our policy is economic as well, and I am 
not reinventing the wheel here; we talked with our leadership 
about these issues and we know what you are talking about. But 
we do look at China and say, we are sending food to China right 
now and that is an oppressive nation. And so that is how we 
deal with the situation on the corn board.
    Mr. King. Thank you. Mr. Fritz.
    Mr. Fritz. Thank you, Mr. King. I think this answer is 
perhaps in two parts. The American Soybean Association, of 
course, had a long history of supporting free and open trade 
and opposing restrictions. With that said, I have promoted U.S. 
export cost savings in many countries of the world, serving on 
the ASA Trade Policy and International Affairs Committee.
    What you learn when you travel is you learn the cultures of 
the country and you learn to understand the people. You learn 
to tolerate other cultures and you appreciate them for what 
they are.
    Specifically, what I see happening in Cuba is that when we 
have visitors, any visitors, American visitors or visitors from 
other parts of the world in Cuba, in effect we are holding the 
government accountable because we have eyes on the ground. We 
have people seeing what is going on. We have the ability to 
bring back those stories of discrimination and poor respect for 
human rights.
    Specifically to this bill, we exported 496,000 metric tons 
of soybean meal and soybean oil to Cuba. That is a lot of food 
and a lot of protein for a lot of people, not just members of 
the regime. So in regards to this bill, I see this bill as a 
way of doing business and doing business better than what we 
had before. But what is it all about? It is all about feeding 
hungry people.
    Mr. King. Thank you, Mr. Fritz.
    In conclusion, Mr. Chairman, I want to thank all the 
witnesses. And I want to just put this into the record: that 
one of my goals, one of my very high goals and dreams in life, 
is to swim ashore at the Bay of Pigs and walk out onto a free 
Cuba. I hope we all live to see that day.
    The Chairman. Mr. King, I think from your comments that you 
must have supported the Russian grain embargo.
    Mr. King. I think what I saw----
    The Chairman. Maybe you are not old enough to remember 
that.
    Mr. King. I am a very youthful individual, Mr. Chairman. 
What I saw happen with the Russians----
    The Chairman. The problem is the people are going to get 
this stuff someplace. Just us cutting it off, all we are doing 
is hurting ourselves. Whether they buy it from the U.S. or buy 
it from Vietnam or wherever they buy it, isn't going to do a 
thing about the problems we are talking about.
    We have groups here that I don't always agree with, the 
Human Rights Watch and so forth, that have exactly the opposite 
position that you do, that they say that this bill will help 
these human rights problems. So we are cutting off our nose to 
spite our face here. This is crazy, and we are going to 
disagree on that, but it has gone on long enough.
    Mr. King. Thank you for the endorsement of my sanity, and I 
yield back the balance of my time.
    Mr. Lucas. I think the Chairman has many words of wisdom 
there. Let's pass those three free trade agreements and get on 
with it everywhere.
    The Chairman. All right.
    So, Mr. Lucas, that is the final word?
    Mr. Lucas. Final word.
    The Chairman. All right. So under the rules of the 
Committee, a record of today's hearing will remain open for 10 
calendar days to receive additional material and supplemental 
written responses from the witnesses to any questions posed by 
a Member. And this hearing of the Committee on Agriculture is 
adjourned.
    [Whereupon, at 4:00 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
      
 Submitted Letter by Hon. Collin C. Peterson; on Behalf of Rev. Howard 
  J. Hubbard, Bishop of Albany; Chairman, Committee on International 
    Justice and Peace, United States Conference of Catholic Bishops
March 10, 2010

Hon. Collin C. Peterson,
Chairman,
Committee on Agriculture,
U.S. House of Representatives,
Washington, D.C.

    Dear Chairman Peterson:

    As Chairman of the Committee on International Justice and Peace of 
the United States Conference of Catholic Bishops (USCCB) I write to 
express support for H.R. 4645, the Travel Restriction Reform and Export 
Enhancement Act. This bipartisan bill removes obstacles to legal sales 
of United States agricultural commodities to Cuba and ends restrictions 
on all Americans traveling to Cuba. Our Conference of Bishops supports 
both objectives of this legislation as ways to advance the goal of 
increasing engagement with the people of Cuba.
    The USCCB has for many years consistently called for relaxing the 
sanctions against Cuba. These policies have largely failed to promote 
greater freedom, democracy and respect for human rights in Cuba. At the 
same time, our nation's counterproductive policies have unnecessarily 
alienated many other countries in the hemisphere. Improving the lives 
of the Cuban people and encouraging democracy and human rights in Cuba 
will best be advanced through more, rather than less, contact between 
the Cuban and American people. Removing the barriers to agricultural 
exports to Cuba, and thus deepening the trade relationship, is one step 
toward this goal.
    While our Conference welcomed the Administration's lifting of 
travel restrictions for Cuban Americans, ongoing restrictions on the 
ability of other Americans to travel to Cuba, even when accompanying 
their Cuban American relatives, remain objectionable. No one should be 
prevented from supporting a spouse in visiting a dying relative or 
attending a family funeral simply because he or she is not Cuban 
American. We welcome H.R. 4645 because it lifts all restrictions on 
travel by all U.S. citizens to Cuba and removes unnecessary obstacles 
to trade.
            Sincerely yours,
            
            
Bishop of Albany and Chairman,
Committee on International Justice and Peace.
                                 ______
                                 
 Submitted Letter by Hon. Collin C. Peterson; on Behalf of Jose Miguel 
   Vivanco, Executive Director, Americas Division, Human Rights Watch
Washington, D.C.--March 11, 2010

Hon. Collin C. Peterson,
Chairman,
Committee on Agriculture,
U.S. House of Representatives,
Washington, D.C.

    Dear Mr. Chairman,

    I would like to congratulate you on convening this timely and 
important hearing of the United States House of Representatives 
Committee on Agriculture on U.S. travel and agricultural trade with 
Cuba. Human Rights Watch fully supports the Travel Restriction Reform 
and Export Enhancement Act (H.R. 4645), which would remove obstacles to 
legal sales of U.S. agricultural commodities to Cuba and abolish 
restrictions on travel to the island. We believe the proposed 
legislation, as well as similar legislation in the United States Senate 
(S. 1089), represents a necessary step towards ending a U.S. policy 
that has failed for decades to have any impact whatsoever on improving 
human rights in Cuba.
    In November 2009, Human Rights Watch released a 123-page report 
(http://www.hrw.org/en/node/86554) on human rights in Cuba under Raul 
Castro. The report concludes that rather than dismantle Cuba's 
repressive machinery, Raul Castro has kept it firmly in place and fully 
active. Scores of political prisoners arrested under Fidel Castro 
continue to languish in Cuba's prisons, and Raul Castro's Government 
has used Draconian laws and sham trials to incarcerate scores more who 
have dared to exercise their fundamental freedoms.
    The death in custody on February 23, 2010, of political prisoner 
Orlando Zapata Tamayo after an 85 day hunger strike served as a tragic 
reminder of the abuse suffered by those who dare to criticize the 
Castro Government, and the lack of recourse for victims of repression. 
In the aftermath of Zapata's tragic death, some have argued that the 
U.S. embargo policy should not be changed, or that restrictions on 
trade and travel should be tightened further. Human Rights Watch 
disagrees.
    Efforts by the U.S. Government to press for change by imposing a 
sweeping ban on trade and travel have proven to be a costly and 
misguided failure. The embargo has done nothing to improve the 
situation of human rights in Cuba, and imposes indiscriminate hardship 
on the Cuban population as a whole. It has provided the Cuban 
Government with an excuse for its problems and pretext for its abuses. 
Rather than isolating Cuba, the policy has isolated the United States, 
enabling the Castro Government to garner sympathy abroad while 
simultaneously alienating Washington's potential allies.
    There is no question: the Cuban Government bears full and exclusive 
responsibility for the abuses it commits. However, so long as the 
embargo remains in place, the Castro Government will continue to 
manipulate U.S. policy to cast itself as a Latin American David 
standing up to a U.S. Goliath, a role it exploits skillfully. Ending 
the travel ban and removing obstacles to agricultural trade are steps 
in the right direction toward reforming this failed policy, and 
Congress should act swiftly to pass the Travel Restriction Reform and 
Export Enhancement Act.
    Eliminating barriers to agricultural trade and lifting the travel 
ban will not, by themselves, bring an end to the Raul Castro 
Government's repression. As a result, Human Rights Watch recommends 
that the U.S. Government replace its failed embargo policy with a more 
effective, multilateral approach. Our report lays out a proposal for 
the United States to work with allies in the European Union, Canada, 
and Latin America to forge a new coalition that will exert targeted 
pressure on the Raul Castro Government to end its human rights abuses.
    I would ask that you please share this statement with Members of 
your Committee, and I would be very grateful if you would include this 
letter in the record of your hearing.
            Sincerely,
            
            
                                 ______
                                 
      Submitted Report by AgriLIFE Research, Texas A&M University
Estimated Economic Impacts of the Travel Restriction Reform and Export 
        Enhancement Act of 2010
March 11, 2010
Introduction
    The following report was prepared for submission to the House 
Committee on Agriculture, United States House of Representatives, March 
11, 2010 related to the public hearing on H.R. 4645, the Travel 
Restriction Reform and Export Enhancement Act.
    The analyses and report were prepared by the Center for North 
American Studies (CNAS). Contributors were, Principal Author, C. Parr 
Rosson III, Professor and Director; Co-author, Flynn J. Adcock, 
International Program Coordinator; and Research Assistant, Eric 
Manthei. All are located in the Center for North American Studies, 
Department of Agricultural Economics, Texas AgriLife Research/AgriLife 
Extension, Texas A&M University.
Key Findings, Assumptions and Limitations of the Analysis
    In 2009, U.S. exports to Cuba were $528 million, supported $1.6 
billion in total business activity, and provided 8,600 jobs throughout 
the U.S. economy. If U.S. travel and financial restrictions are 
removed, up to $365 million/year in additional U.S. exports could 
result, requiring $1.1 billion in business activity and 6,000 new jobs. 
While U.S. agriculture is estimated to receive major economic gains 
from increased exports, non-agricultural sectors such as business and 
financial services, real estate, wholesale and retail trade, and health 
care are also important beneficiaries of increased exports to Cuba, 
receiving up to 45 percent of the gains in some cases.
    The results of this analysis assume that any increase in U.S. 
exports to Cuba is a `net' increase in the U.S. export position. 
Otherwise, the economic impacts presented here would overestimate the 
effects of U.S. exports to Cuba on the U.S. economy. A second 
assumption is that Cuba's tourist industry follows a similar 
developmental pattern to other Caribbean countries in terms of food and 
beverage consumption and imports. Third, the results of a report by the 
U.S. International Trade Commission (U.S. Agricultural Sales to Cuba: 
Certain Economic Effects of U.S. Restrictions, USITC 3932, July 2007) 
were used to estimate the value of U.S. exports to Cuba if travel and 
financial restrictions are modified. Displacement of U.S. tourism is 
assumed to be minimal. Finally, the results should not be combined, or 
added together, because they were estimated using separate economic 
impact analyses and double counting would result.
Importance of Legislation for Improving U.S. Competitive Position in 
        Cuba
    Allowing U.S. citizens/permanent residents to travel to Cuba and 
U.S. firms to utilize modified financing methods will improve the U.S. 
competitive position in the Cuban market. New financing provisions 
would allow U.S. exporters to recover lost markets for rice and forest 
products, for example, creating new jobs and economic activity.
    It is also important to maintain the U.S. competitive position for 
wheat, corn, and soybean meal. For January-February 2010, U.S. exports 
of corn to Cuba were down 47 percent compared to the same period in 
2009, while wheat exports are off 69 percent and soybean meal exports 
had fallen 55 percent. The majority of these declines in exports are 
attributed to increased costs associated with financial restrictions, 
demurrage on vessels, currency conversion costs, and higher costs 
associated with using letters of credit (ALIMPORT staff, 3/2/2010). 
Recently implemented cash in advance rules will provide a temporary 
respite, but will not alleviate the problem entirely.
    Consequently, Cuba appears to be diversifying its suppliers by 
shifting away from U.S. firms in favor of Brazil, Canada, China and 
Vietnam. Credit terms are often offered by these countries, allowing 
ALIMPORT (Importada de Alimentos--the Cuban Food Import Agency) to 
conserve its hard currency and use credit to make larger purchases over 
a longer period of time. The net result is a loss of U.S. 
competitiveness and market share, followed by declining exports. If 
conditions do not improve and if alternative markets are not developed, 
negative economic impacts will occur in terms of lost business activity 
and employment.
Background
    The Trade Sanctions Reform and Export Enhancement Act of 2000, 
allows certain exceptions for the exportation of U.S. agricultural 
products and medicines to Cuba. Since passage of the TSREEA, U.S. 
agricultural and food exports to Cuba have expanded, reaching a record 
$711 million in 2008. This was almost \2/3\ higher than 2007. Last year 
(2009) was quite different however, as U.S. exports to Cuba declined 26 
percent to $528 million. This large drop-off was attributed to a 15 
percent decline in Cuba's per capita tourist earnings, a 30 percent 
drop in Cuban export earnings from nickel sales, and weak export sales 
of sugar and tobacco. Another major set of factors was the relative 
high cost of U.S. products due to somewhat onerous U.S. financial 
requirements. Together, these factors severely limited the ability of 
ALIMPORT to purchase U.S. products on a cash basis. Despite this 
decline, Cuba remains the sixth largest U.S. agricultural market in the 
Latin American/Caribbean region.
    U.S. exports to Cuba are highly concentrated in a few key sectors. 
For 2009, the major U.S. exports to Cuba included frozen broilers/
turkeys and other poultry ($144 million), soybeans and soybean products 
($133 million) corn ($120 million), and wheat ($73 million). These four 
product categories represented 89 percent of total U.S. agricultural 
exports to Cuba. Other important U.S. exports were animal feeds ($26 
million), pork ($11 million), dry beans ($4.3 million), and processed 
foods and phosphate fertilizers ($3 million) each. Minor exports were 
apples, pears and grapes ($2.6 million), margarine ($2.2 million), and 
treated poles ($1.7 million).
    U.S. agricultural exports to Cuba of $528 million in 2009 required 
8,588 jobs and generated $1.6 billion in total economic activity. CNAS 
estimates indicate that for every $1 of U.S. agricultural exports to 
Cuba in 2009, an additional $1.96 in business activity was required to 
support those exports.
    These economic impacts of food and other agricultural exports to 
Cuba were estimated using IMPLAN, an input/output model. IMPLAN is 
maintained by Minnesota IMPLAN Group, Austin, Minnesota. Economic 
multipliers for each sector of the economy were used to estimate how a 
change in one sector affects business activity and employment in the 
other sectors of the economy.
    Business activity refers to the total output of a sector, such as 
corn, and the value of all purchased inputs used to produce corn for 
export. Business activity also includes employee compensation, 
proprietor income, rents and royalties, and payment of indirect 
business taxes. Employment is reported as total jobs, with full-time 
and part-time jobs counting the same.
Economic Impacts of Removing U.S. Travel Restrictions to Cuba
    Two scenarios were analyzed to estimate the economic impacts of 
removing U.S. travel restrictions to Cuba. Both scenarios focus only on 
the export of high value products, mainly processed foods, beverages, 
horticultural products and seafood. This analysis assumes that all 
travel restrictions are removed and that visitors remain in Cuba 
between 4.5 and 7 days.
Scenario 1: Short Run (Years 1-2)
    The short run analysis provides estimates of U.S. exports and 
economic activity before Cuba has time to adjust to the increased 
number of tourists/visitors from the United States by increasing hotel 
room capacity, and improving critical infrastructure such as power 
generation and transportation. It also assumes that visitors remain in 
Cuba for 4.5 days. Based on the USITC report, 538,000 additional 
visitors were estimated to arrive and spend $50/day for food/drink. 
CNAS estimates that the U.S. share of tourist expenditures on food/
drink would be 40 percent.
    This results in additional U.S. food/drink exports to Cuba of $48.4 
million/year (table 1). Major exports would be frozen broilers/turkeys/
eggs ($8 million), beef, pork, edible offal ($6.3 million), 
miscellaneous processed foods ($5.5 million), flour/malt ($3.3 
million), dry milk/cheese ($3 million), canned fruits/vegetables ($2.9 
million), soft drinks ($2.5 million), distilled spirits/wines/beer 
($2.4 million), fruits ($2.4 million), fats/oils ($2 million). Other 
exports include condiments, vegetables/melons, snack foods, refined 
sugar, seafood, and frozen desserts.
    The additional $48.4 million in exports would be expected to 
require $116.7 million in additional business activity, creating a 
total economic impact of $165.1 million and 786 new jobs. About 38 
percent of the economic impact would be attributable directly to new 
exports. The largest share of new economic activity (62 percent, or 
$102 million), would result from input purchases and household spending 
in sectors that support exports, but do not actually export. About $14 
million of this new total business activity is agriculturally related 
activities such as grain and oilseed production, ranching, forestry, 
fishing, and corn milling. Together, these sectors require 153 new jobs 
to support new U.S. exports to Cuba.
    Business services, such as legal, accounting and technical 
consulting require $11 million in business activity and 84 new jobs. 
Additional food processing supports $8 million in business activity, 
while real estate, wholesale trade and finance require $7.3 million, $7 
million, and $6.4 million in business activity, respectively. These 
sectors also require 89 new jobs. Other sectors required to support new 
exports include: petroleum ($8.8 million), transportation ($4.8 
million), wood processing ($3 million), and retail trade and food/drink 
establishments ($4.7 million).
Scenario 2: Long Run (Minimum of 5 Years)
    Two long run scenarios are reported. The first assumes that U.S. 
tourists to Cuba stay 4.5 days, while the second scenario assumes 
tourists stay 7.0 days and daily food expenditures rise to $60 per day. 
Over the long run, it is also assumed that Cuba's tourist industry 
adjusts to the increased demand for services by renovating existing 
hotels and facilities, building new facilities and improving critical 
infrastructure. As these improvements occur, it is estimated that 2.0 
million U.S. tourists would visit Cuba annually.
    Assuming new tourists stay 4.5 days, U.S. exports are estimated to 
increase by $180 million/year million to meet the increased demand for 
high value foods/drink products (table 1). This would lead to a total 
economic impact of $614 million in business activity and 2,923 new 
jobs. As was the case in Scenario 1, slightly more than \1/3\ of the 
economic impact would occur in sectors that are exporting products to 
Cuba. Slightly more than half ($200 million) of the non-export related 
business activity is expected to occur in other agriculture activities, 
business services, food production, real estate, wholesale trade and 
finance. About 55 percent of the new jobs associated with increased 
exports, 2,252, would occur in the previously noted non-export sectors 
of the economy. The remainder of the new jobs, 671, would be in 
petroleum, transportation, health care, food/drink establishments, 
retail trade and other sectors.

                      Table 1. Estimated Economic Impacts of Increased U.S. Tourism to Cuba
                                                (Million Dollars)
----------------------------------------------------------------------------------------------------------------
                                        Short Run 4.5 Day Stay  Long Run 4.5 Day Stay 2   Long Run 7 Day Stay 2
                                         538,000 New Tourists     Million New Tourists     Million New Tourists
                                      --------------------------------------------------------------------------
                                                       Total                    Total                    Total
                                         Exports     Business     Exports     Business     Exports     Business
                                                     Activity                 Activity                 Activity
----------------------------------------------------------------------------------------------------------------
Top Exported Products
  Poultry Meat and Eggs                      $8.1        $13.6       $30.0        $50.5       $56.0        $94.2
  Pork, Beef and Products                    $6.3         $8.8       $23.4        $31.9       $43.6        $59.6
  Miscellaneous Food Products                $5.5         $5.8       $20.9        $22.0       $39.2        $41.3
  Flour and Malts                            $3.3         $4.1       $12.4        $15.4       $23.2        $28.8
  Dry Milk and Cheese                        $3.0         $4.0       $11.3        $15.1       $21.1        $28.3
  Canned Fruits/Vegetables                   $2.9         $3.4       $10.7        $12.5       $19.9        $23.3
  Soft Drinks                                $2.5         $2.8        $9.3        $10.3       $17.4        $19.2
  Spirits/Wine/Beer                          $2.4         $2.8        $9.1        $10.6       $17.0        $19.7
  Fruits                                     $2.4         $2.9        $8.9        $10.7       $16.6        $20.1
Top Supporting Sectors
  Ag Related Activities                       N/A        $14.0         N/A        $51.9         N/A        $96.9
  Business Services                           N/A        $11.1         N/A        $41.2         N/A        $76.8
  Oil, Gas, and Petroleum Products            N/A         $8.7         N/A        $32.4         N/A        $60.4
  Other Food Production                       N/A         $8.0         N/A        $29.9         N/A        $55.8
                                      --------------------------------------------------------------------------
Total Estimated Impacts
  Business Activity                         $48.4        165.1      $180.0       $614.2      $336.0     $1,146.5
  Employment (# of Jobs)                     181          786         671        2,923       1,252        5,456
----------------------------------------------------------------------------------------------------------------
Assumptions for 4.5 day stay scenarios are that $50 per day per person spent by 538,000 visitors in the Short
  Run and 2.0 million visitors in the Long Run. These assumptions are taken from the U.S. International Trade
  Commission Report entitled U.S. Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions,
  USITC Publication 3932, July 2007. For the Long Run 7 day stay scenario, 2.0 million visitors spend $60 per
  day each. For all scenarios, it is assumed that the U.S. achieves 40 percent of the market share for these
  food expenditures and the export pattern follows the U.S. export pattern to other Caribbean nations for
  consumer-oriented food products.
Note: for supporting sectors, there are no exports resulting in N/A for those export values.

    Assuming U.S. visitors remain in Cuba for a 7.0 day stay and spend 
$60/day on food results in additional U.S. exports of $336 million/year 
(table 1). These additional exports would require $810.5 million in 
business activity, for a total economic impact of $1.15 billion, which 
would support 5,456 new jobs.
    The total business activity due solely to new exports is $433.6 
million. In terms of the impacts by sector due to increased exports, 
$94.2 million is attributed to frozen broilers/turkeys and eggs, $59.6 
million to pork, beef and edible offal, $41.3 to processed foods, $28.8 
million to flour and malt products, $28.3 dry milk and cheese, $23.3 to 
canned/preserved fruits and vegetables, $20.1 million to fruits, $19.2 
million to soft drinks, $18.7 to wine/beer/distilled sprits, $17.6 to 
fats/oils, $14 million to bakery goods, and $10.4 million to vegetables 
and melons. Other important impacts occur in snack foods, sugar, 
breakfast foods, confectionaries, seafood and frozen desserts.
    The business activity attributed to important non-export sectors 
includes: other agriculture such as grain and oilseed production, 
ranching, forestry and fishing ($96.9 million), business services 
($76.8 million), petroleum ($60.4 million), other food processing 
($55.8 million), real estate ($50.5 million), finance ($48.4 million), 
transportation ($33.5 million), food, drink and retail ($30.6 million), 
health care ($27.5 million), and forestry ($21.3 million).
    More than \3/4\ of the jobs associated with these additional 
exports, 4,202, occur in the non-export sectors. Other agriculture 
accounts for 1,062 jobs, followed by business services (582 jobs), food 
and drink retail (507), health care (303), wholesale trade (247), 
transportation (194), finance (186), and real estate (181). All of the 
other sectors account for 785 jobs.
Economic Impacts of Modifying Payment Terms and Financial Requirements
    Reducing the cost and time necessary to process payment for U.S. 
exports to Cuba would have major economic impacts in terms of increased 
exports and economic activity. U.S. exports to Cuba would be expected 
to rise by $271.2 million/year, requiring an additional $561.9 million 
in business activity for a total economic impact of $833.1 million and 
supporting 4,478 new jobs (table 2).
    Processed and other food products sectors are estimated to require 
$246.6 million in business activity and 1,228 new jobs to support 
additional exports to Cuba. Grain sectors, mainly corn, rice and wheat, 
would require $87 million in additional business activity and 767 new 
jobs. Dairy products would require $40.3 million in additional business 
activity, followed by poultry products ($30.9 million), forestry 
products ($23.2 million), beef, pork and edible offal ($20 million), 
seafood ($12.1 million), soybean meal and oil ($12.2 million), and 
animal feeds ($9.9 million). There would be 1,138 new jobs required to 
produce and market these additional exports to Cuba. Most of these jobs 
would be concentrated in the grains sector (767), poultry (141) and 
forestry (97).
    Important economic impacts would occur among the non-export sectors 
as well. In fact, about 42 percent of the business activity and 47 
percent of the jobs are associated with non-export sector production. 
Other agriculture business activity is estimated to be $72 million, 
followed by petroleum at $34.6 million, business services ($32.2 
million), real estate ($30 million), food, drink and retail ($23.8 
million), finance ($22.9 million), wholesale trade ($20.5 million), 
health care ($13.2 million), and forestry ($6.8 million).
    There are 2,112 new jobs required in the non-export sectors to 
support additional exports to Cuba. The major sectors impacted are 
other agriculture (641), business services (250), health care (145), 
food, drink and retail (133), real estate (120), wholesale trade (105), 
finance (95) and transportation (85).

Table 2. Estimated Economic Impacts of Elimination of U.S. Restrictions on Financing Exports and Restrictions on
                                                 Travel to Cuba
                                                (Million Dollars)
----------------------------------------------------------------------------------------------------------------
                                                                   Removal of Finance     Removal of Finance and
                                                                      Restrictions         Travel Restrictions
                                                               -------------------------------------------------
                                                                                Total                    Total
                                                                  Exports     Business     Exports     Business
                                                                              Activity                 Activity
----------------------------------------------------------------------------------------------------------------
Top Exported Products
  Grains (Rice, Wheat, Corn)                                         $78.7        $87.2      $122.7       $134.7
  Other Food and Ag Products                                         $49.5       $161.6       $57.5       $187.8
  Dry Milk and Other Dairy                                           $35.0        $40.4       $50.0        $57.8
  Poultry Meats                                                      $27.3        $30.9       $35.2        $40.0
  Processed Food Products                                            $26.0        $84.9       $34.5       $112.7
  Wood Products (Lumber)                                             $21.5        $23.2       $21.5        $23.3
  Pork, Beef and Products                                            $14.5        $20.0       $18.8        $25.9
  Seafood Products                                                   $11.5        $12.1       $15.0        $15.8
  Soy Complex                                                         $5.9        $12.2        $8.1        $16.7
Top Supporting Sectors
  Other Ag Related                                                     N/A        $72.0         N/A        $92.1
  Business Services                                                    N/A        $32.2         N/A        $43.6
  Real Estate                                                          N/A        $29.7         N/A        $41.6
  Financial Services                                                   N/A        $22.9         N/A        $31.6
  Wholesale Trade                                                      N/A        $20.5         N/A        $27.9
                                                               -------------------------------------------------
Total Estimated Impacts
  Business Activity                                                 $271.2       $833.1      $365.2     $1,104.1
  Employment (# of Jobs)                                            2,366        4,478       3,104        6,004
----------------------------------------------------------------------------------------------------------------
Assumptions for increased exports are based upon the U.S. International Trade Commission Report entitled U.S.
  Agricultural Sales to Cuba: Certain Economic Effects of U.S. Restrictions, USITC Publication 3932, July 2007.
  USITC estimates of the percentage changes for 2006 baseline exports were applied to 2009 exports. The actual
  USITC estimated dollar value of exports was used for rice, dairy products, beef, seafood and wood products.
  Other Food and Ag Products include fresh horticultural products, cotton, livestock, and seeds for planting.
Note: for supporting sectors, there are no exports resulting in N/A for those export values.

Economic Impacts of Removing Financial Constraints and Allowing Travel 
        to Cuba
    There are some additional economic benefits of allowing increased 
travel, while simultaneously removing financial constraints on U.S. 
exports to Cuba. U.S. exports are estimated to rise by $365.2 million/
year, while the total economic impact would be $1.1 billion, requiring 
6,004 new jobs (table 2).
    As in the previous analyses, most of the major gains in business 
activity would occur for food products and processed foods ($300.5 
million), grains ($134.7 million), dairy ($57.8 million), poultry ($40 
million), beef/pork ($25.9 million), forestry ($23.3 million), seafood 
($15.8 million), the soy complex ($16.9 million), and animal feeds 
($13.3 million).
    Major gains in business activity would also occur for non-export 
sectors as well. Other agriculture would require $92 million, followed 
by petroleum ($48.3 million), business services ($43.6 million), real 
estate ($41.6 million), finance ($31.6 million), wholesale trade ($27.9 
million), food, drink and retail ($32.4 million), transportation ($18.4 
million), health care ($17.8 million), food processing ($11.3 million) 
and forestry ($9.2 million).
    Employment occurring in non-export sectors would be expected to 
increase by 2,864 jobs. Major gains in employment would occur for other 
agriculture (857), business services (339), food, drink and retail 
(326), health care (196), real estate (172), finance (131), wholesale 
trade (143), and transportation (114). All other sectors would require 
536 jobs to support additional exports to Cuba.
Summary and Conclusions
    If H.R. 4645, the Travel Restriction Reform and Export Enhancement 
Act, is implemented as proposed, it is estimated that it would have 
substantial positive economic impacts on the U.S. economy. Exports to 
Cuba would increase by $365 million/year and would support $739 million 
in additional business activity for a total economic impact of $1.1 
billion, requiring 6,000 new jobs. While there are major economic gains 
for U.S. agriculture, there are also important economic gains for non-
agricultural sectors such as business services, financial institutions, 
real estate, wholesale and retail trade, petroleum and health care 
services.
    If only the travel restrictions are removed, it is estimated that 
U.S. exports would increase by $48.4 million/year in the short run and 
by $336 million/year over the long run, requiring 5,456 new jobs. 
Alternatively, if only the payment and financial restrictions are 
modified, U.S. exports are estimated to increase by $271.2 million/
year, requiring an additional $561.9 million in business activity for a 
total economic impact of $833.1 million and supporting 4,478 new jobs.
    The results of these analyses indicate that U.S. agricultural 
producers, input suppliers, agribusiness firms, food processors, 
business services suppliers, the financial sector, real estate, health 
care, oil, gas and petroleum suppliers, transportation companies, trade 
facilitators, and port authorities in many parts of the United States 
can expect additional economic gains if H.R. 4645 is implemented and 
U.S. exports to Cuba expand. Improved access to the Cuban market is 
more important now that new competition has emerged and the U.S. market 
share is threatened, especially for dominant U.S. products such as 
soybean meal, corn, wheat, rice, poultry and dry milk. Increased access 
for U.S. travelers is also important for stimulating demand for U.S. 
foods in Cuba over the next few years as economic recovery occurs and 
U.S. firms become better positioned to respond to global market 
opportunities.
    For further information, please contact Parr Rosson, Extension 
Economist and Director, Center for North American Studies, Department 
of Agricultural Economics, Texas A&M University, College Station, 
Texas. Tel: [Redacted] or E-mail: [Redacted]. http://cnas.tamu.edu.
                                 ______
                                 
      Submitted Report by AgriLIFE Research, Texas A&M University
Tourism and Agriculture in Cuba
March 22, 2010
Introduction
    The economic impacts of increased travel and spending by U.S. 
visitors to Cuba are documented in Estimated Economic Impacts of the 
Travel Restriction Reform and Export Enhancement Act of 2010 by the 
Center for North American Studies, Texas AgriLife Research, Texas A&M 
University, which was submitted for the record to the House Committee 
on Agriculture, United States House of Representatives, March 11, 2010 
on H.R. 4645, the Travel Restriction Reform and Export Enhancement Act. 
The following comments are submitted as a supplement to that report.
Travel and Tourism in Cuba
    A record 2.4 million tourists visited Cuba in 2009, spending about 
$2.1 billion (ONE). While the potential increases in U.S. food and 
agricultural exports to Cuba attributed to open travel were estimated 
to range from $48 million (short run) to $336 million/year (long run), 
requiring $1.1 billion in total business activity and creating up to 
5,500 new jobs, these estimates included only the additional spending 
incident to travel by new U.S. visitors to Cuba. What is not included, 
and what is more difficult to quantify and estimate, is how much of 
these new tourism earnings may be spent by the Cuban Government to 
purchase additional U.S. bulk commodities and intermediate agricultural 
products intended for local consumption. Such an increase in additional 
spending on bulk products would be anticipated not only because Cubans 
would increase consumption with additional resources, but because U.S. 
suppliers could regain market share lost in 2009-2010 to competitors 
who offer credit and extended payment terms to Cuba.
    Cuban revenue from tourism was reported to be $2.1 billion in 2009 
and was a major source of foreign exchange. It was equivalent to 57 
percent of all Cuban merchandise exports in 2009 and 28 percent of the 
balance of all services trade for 2007. Further, as Cuban tourism 
earnings increased by twenty-eight percent from 2003 to 2008, U.S. 
exports grew by 181 percent. As Cuba's earnings from tourism declined 
11 percent in 2009, U.S. exports fell by 25 percent. While numerous 
other factors also influenced U.S. exports, tourism in Cuba appears to 
be one important factor in maintaining a viable export market for U.S. 
products.
    The following is submitted in response to comments by Members 
regarding Cuba's policy allowing Cuban citizens to utilize local 
hotels, resorts and other tourist facilities.
    Changes implemented by Raul Castro in April 2008 allow Cubans to 
stay at local tourist hotels and resorts for the first time since the 
early 1990s (Dominican Today and The Washington Post). Most of the four 
and five star facilities are out of the price range of many locals who 
earn the equivalent of about $20/month. During the low season of 2009 
(August), however, many of the two and three star hotels in Varadero, 
Cuba's major tourist beach resort area, booked 1 week stays for locals 
for a fixed, all inclusive price of $200/week (Global Post).
    With about 60 percent of Cubans having access to hard currency, 
either from remittances, factory and farm bonuses, or tips, these `new' 
tourists are creating additional demand for U.S. food products (Calgary 
Herald). Remittances are likely to increase in 2010 as more Cuban-
Americans are allowed to make an unlimited number to visits to 
relatives in Cuba, thereby increasing funds available to locals. As 
Cubans obtain more hard currency, it is highly likely that the 
Government of Cuba will purchase additional high value products from 
U.S. exporters to supply the state operated stores that serve the needs 
of Cuban consumers. This would assist U.S. exporters to regain market 
share lost in 2009-2010.
    While many other forces also influence U.S. exports, and cause-
effect may be debatable, there does appear to be an established linkage 
between the amount of money Cuba earns from tourists who visit the 
island and the amount of food it can afford to import from the United 
States and other potential suppliers.
    Other economic and non-economic factors influence Cuban food import 
purchasing decisions as well. One is foreign exchange earnings from 
nickel exports, which declined 58 percent from 2007 to 2010. Nickel 
represented about 40 percent of total Cuban merchandise exports in 
2008, down from 57 percent in 2007. A second factor is the price 
competitiveness of U.S. products, which is affected by the exchange 
rate of the U.S. dollar, commodity/supply demand balance and payment/
financing regulations imposed by U.S. law (see above referenced 
report). Finally, Cuba may decide that despite the availability of 
competitively priced U.S. products, it may be in their best long term 
interests to diversify sources of supply.
Agriculture in Cuba
    The following is in response to Member questions about soil quality 
and the productive capacity of Cuban agriculture.
    Cuba has a tropical climate characterized by a dry season 
(November-April) and a rainy season (May-October). The annual average 
temperature ranges from 75 degrees in the West to 80 degrees in the 
East. Humidity averages about 80 percent and average annual rainfall is 
52 inches, with about 39 inches falling during the rainy season (Cuba 
Weather).
    About 50 percent of Cuba's land is classified as agricultural, with 
75 percent of that land area in relatively flat to gently rolling 
terrain and suitable for tropical and subtropical agricultural 
production (USDA). About 76 percent of Cuba's population lives in urban 
areas (CIA). According to the Food and Agriculture Organization, about 
70 percent of Cuba's arable land has low organic matter content, while 
45 percent is characterized by low fertility, 42 percent is eroded and 
40 is poorly drained. These soil conditions are attributed to poor land 
management, including continuous tillage, overgrazing, lack of 
fertilization, and inadequate or improper use of irrigation and 
drainage systems.
    Cuba's agricultural land is about evenly split between cropland (46 
percent) and pasture (54 percent) (USDA). Recently, a large, but so far 
undocumented, amount of Cuba's cropland was taken out of permanent crop 
production and placed in native, unimproved pasture (USDA). It is 
suspected that this was done in an attempt to increase milk production, 
which has declined about ten percent since 2003. This occurred as milk 
output per cow actually increased 25 percent over the same period 
(ONE).
    Sugarcane, coffee, tropical fruits (plantains, bananas and 
mangoes), roots/tubers, and vegetables/melons accounted for 80 percent 
of harvested area in 2008 (ONE). Cereals, primarily rice and corn, 
accounted for most of the balance of harvested area. Production of 
these cereal crops has declined from about 1.1 million metric tons (mt) 
in 2003 to 762,000 mt in 2008 (ONE). Cuba's corn yields averaged about 
41 bushels/acre from 2003-2008, about \1/4\ of those obtained by U.S. 
corn producers. Cuban rice yields have averaged 2,750 pounds/acre since 
2003, less than half the yields obtained in the United States. Soybean 
and other oilseeds production are very limited.
    Because of poor soil conditions, high humidity, timing and amounts 
of rainfall, high insect infestation and lack of pesticide or 
biological controls, Cuba's ability to produce grain and oilseed crops 
is limited and likely to remain so over the long term. As a result, 
Cuba will remain one of the top grain and oilseed product markets in 
the Caribbean region provided the economic conditions there are 
conducive to market growth and the utilization of imported products.
References
    Food and Agriculture Organization of the United Nations. Land 
Resources Information Systems in the Caribbean. 2000.
    Office of Global Analysis, Foreign Agricultural Service, USDA. 
Cuba's Food and Agriculture Situation Report, March 2008.
    Oficina Nacional de Estadisticas (ONE). Republic of Cuba, 2008 
Series. Located at www.one.cu.
    Cuba Weather.org--Weather in Cuba. www.cubaweather.org.
    Calgary Herald. Cubans Allowed to Stay at Tourist Hotels. March 31, 
2008. www.canada.com/calgaryherald.
    Central Intelligence Agency. World Factbook, Cuba. www.cia.gov.
    Dominican Today. Cubans Can Stay in Hotels. April 1, 2008. 
www.dominicantoday.com.
    Global Post. At Cuban Resorts, the End of Tourism Apartheid. August 
10, 2009. www.globalpost.com.
    The Washington Post. Cuba Repeals Ban on Its Citizens Staying in 
Hotels on Island. April 1, 2008.
    For further information, please contact Parr Rosson, Extension 
Economist and Director, Center for North American Studies, Department 
of Agricultural Economics, Texas A&M University, College Station, 
Texas. Tel: [Redacted] or E-mail: [Redacted] http://cnas.tamu.edu. 
                                 ______
                                 
 Supplementary Material Submitted by Mike Wagner, Owner/Operator, Two 
      Brooks Farm; Member, Board of Directors, U.S. Rice Producers
             Association; on Behalf of USA Rice Federation
March 22, 2010

 
 
 
Hon. Collin C. Peterson,             Hon. Frank D. Lucas,
Chairman,                            Ranking Minority Member,
Committee on Agriculture,            Committee on Agriculture,
House of Representatives,            House of Representatives,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Peterson and Ranking Member Lucas,

    On behalf of the U.S. Rice Producers Association and USA Rice 
Federation, I would like to take this opportunity to clarify and 
supplement our responses to a few of the matters discussed at the 
hearing to review U.S. agricultural sales to Cuba held on March 11, 
2010. The hearing once again reaffirmed the irrationality of our 
foreign policy with regard to Cuba.
    It was certainly interesting to respond to questions about pending 
Free Trade Agreements. One of the major purposes of these agreements is 
to eliminate any non-tariff trade barriers enacted by other countries.
    Yet the U.S.'s misguided Cuba policy does exactly that against our 
own producers. Through the implementation of onerous bureaucratic 
requirements we have essentially unilaterally eliminated all U.S. rice 
sales to Cuba. We heartily agree with Congressman Moran's point that 
this is not an issue regarding trade. Trade is bilateral. This is an 
issue about SALES, and our inability to make them because of U.S. 
policies.
    We disagree with the argument that the several pending Free Trade 
Agreements should somehow ``go first'' before rationalizing U.S. 
agriculture sales and travel to Cuba. This suggests a false choice 
between two desirable policy changes. If anything, changing our trade 
and travel policies toward Cuba is EASIER than negotiating and enacting 
Free Trade Agreements, since changing our policy toward Cuba requires 
only unilateral changes in U.S. policy.
    There are a few pertinent points that we would like to further 
elucidate. Cuba is a major player in our hemispheric rice trade. In 
2004, when Cubans were able to pay for agricultural goods before the 
change of title at the Cuban port, the U.S. exported 176,631 metric 
tons of rice to Cuba, valued at over $64 million. This amounted to 
almost 10% of the total U.S. rice exports in the Western Hemisphere for 
that year. Since 2004, U.S. rice sales to Cuba have diminished with the 
addition of onerous restrictions on payment. In 2007 and 2008, Cuba 
bought more than 650,000 tons of rice annually, less than 2% of which 
came from the United States. Cuba is buying an increasing volume of 
farm goods from Canada and other U.S. competitors, who offer a high 
quality product free of bureaucratic red tape. The U.S. used to be the 
principal supplier of rice to Cuba, and our sales have now plummeted to 
zero because of self-inflicted wounds to our export sales.
    Cuba spent more than $2.5 billion on purchases of agricultural 
products in 2008, which represents an increase of more than 50% with 
respect to the $1.6 billion of agricultural imports from 2007. Only 16% 
of Cuba's imports in 2007 and 2008 were U.S. bulk commodities. Our 
inability to provide credit or be a reliable supplier has 
disproportionally affected rice as seen in our current non-existent 
exports. As rice is a key staple in the Cuban diet, Vietnam has stepped 
in and provided credit and reliable rice supplies to the Cuban people, 
who number over 11.2 million. As in the earlier grain embargoes, our 
competitors benefit most from our unilateral sanctions. The cost of 
these sanctions is borne by U.S. farmers and the Cuban people.
    Not only does this hurt us economically, but in today's current 
worry of climate change many have adapted the mantra of eating locally 
produced food. In rice trade with Cuba, we are the locals. Gulf Coast 
ports can have rice shipped to Cuba in 3 days, while our competitor 
Vietnam takes several weeks. The magnitude of difference in the carbon 
footprint of these transactions is vastly different.
    I would also note that the 500,000 tons of rice required by Cuba 
(or more), represents all of Mississippi's annual rice production-
supporting thousands of Mississippi farm and related jobs.
    We would also note the Administration's recently announced trade 
strategy to increase exports. Rice could substantially contribute to 
this effort, at no cost to the government. A simple change in our 
bureaucratic processes could immediately result in millions of dollars 
in increased rice and other agricultural sales to Cuba.
    ALIMPORT, Cuba's leading food importing agency, has estimated that 
Cuba could buy agricultural products from the U.S. valuing upwards of 
$21 billion over 5 years if normal trade and no economic embargo 
restrictions were in place. This of course would be most significant to 
U.S. farmers, processors, exporters, and those in related industries.
    It was also raised several times in the hearing that Cuba imports 
food and agriculture products through a single desk trading entity--
ALIMPORT. Trading with State Trading Entities is not new. The U.S. 
traded agriculture goods with STEs in many other countries in the past, 
including Australia, Mexico, the Soviet Union, Vietnam, and many 
others. Arguably that engagement helped to drive some centrally 
controlled economies toward more open markets, and to encourage the 
more open economies to move toward entering into Free Trade Agreements 
with the United States. We expect that trading with Cuba can move 
toward the same desirable result.
    Similarly, we believe that granting American citizens the right to 
more freely travel to Cuba will yield positive economic benefits, as 
well documented by the U.S. International Trade Commission and more 
recent work by Texas A&M University. Enhancing the engagement between 
our peoples can have other salutary benefits, as we believe was the 
case in the former Soviet Union, its several satellite states, and 
other formerly closed countries.
    For all of these reasons and those spelled out in our testimony 
before the Committee, we continue to strongly support the enactment of 
the H.R. 4645 Travel Restriction Reform and Export Enhancement Act.
    Thank you again for holding the very timely hearing and for 
accepting these comments to supplement the testimony that we provided 
at the hearing.
            Respectfully Submitted,
            
            
                                 ______
                                 
   Supplementary Material Submitted by Jerry McReynolds, President, 
  National Association of Wheat Growers; Wheat Producer, Woodston, KS
April 8, 2010

 
 
 
Hon. Collin C. Peterson,             Hon. Frank D. Lucas,
Chairman,                            Ranking Minority Member,
Committee on Agriculture,            Committee on Agriculture,
House of Representatives,            House of Representatives,
Washington, D.C.;                    Washington, D.C.
 


    Dear Chairman Peterson and Ranking Member Lucas:

    Thank you for your interest in the issue of agricultural trade and 
travel with Cuba as discussed in the House Agriculture Committee 
hearing on March 11, 2010. I appreciated the opportunity to testify on 
behalf of the National Association of Wheat Growers (NAWG) regarding 
the importance of this issue to growers across the country and would 
ask that this additional information be included in the record for the 
March 11 hearing.
    This letter specifically addresses the question regarding freight 
rate differentials on shipments to Cuba from different wheat origins. 
As requested, below are some general freight indications that U.S. 
Wheat Associates has compiled based on current values and sailing time 
for Cuba. Note that values change routinely based on market conditions 
such as ship availability and back-haul options. We believe these 
numbers speak very clearly as to the competitive advantage of U.S. 
wheat growers in shipping to the Cuban market.

------------------------------------------------------------------------
         Origin                Freight Rate            Sailing Time
------------------------------------------------------------------------
      Canada/St. Lawrence    $48/metric ton                  7 days
        Argentina            $46/metric ton                 17 days
        U.S. Gulf            $26/metric ton                  2 days
------------------------------------------------------------------------

    I hope this information is helpful and please don't hesitate to 
contact me or the staff of NAWG if you have any additional questions 
regarding this vital subject.
    Thank you again for your work on behalf of U.S. agriculture and we 
look forward to continuing the dialogue about this and other issues of 
importance to our industry.
            Sincerely,
            
            
                                  
