[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]










                 AMERICAN AGRICULTURAL TRADE WITH CUBA

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

                                HEARING

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 14, 2016

                               __________

                           Serial No. 114-57


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





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                        COMMITTEE ON AGRICULTURE

                  K. MICHAEL CONAWAY, Texas, Chairman

RANDY NEUGEBAUER, Texas,             COLLIN C. PETERSON, Minnesota, 
    Vice Chairman                    Ranking Minority Member
BOB GOODLATTE, Virginia              DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma             JIM COSTA, California
STEVE KING, Iowa                     TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama                 MARCIA L. FUDGE, Ohio
GLENN THOMPSON, Pennsylvania         JAMES P. McGOVERN, Massachusetts
BOB GIBBS, Ohio                      SUZAN K. DelBENE, Washington
AUSTIN SCOTT, Georgia                FILEMON VELA, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas  MICHELLE LUJAN GRISHAM, New Mexico
SCOTT DesJARLAIS, Tennessee          ANN M. KUSTER, New Hampshire
CHRISTOPHER P. GIBSON, New York      RICHARD M. NOLAN, Minnesota
VICKY HARTZLER, Missouri             CHERI BUSTOS, Illinois
DAN BENISHEK, Michigan               SEAN PATRICK MALONEY, New York
JEFF DENHAM, California              ANN KIRKPATRICK, Arizona
DOUG LaMALFA, California             PETE AGUILAR, California
RODNEY DAVIS, Illinois               STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida                 ALMA S. ADAMS, North Carolina
JACKIE WALORSKI, Indiana             GWEN GRAHAM, Florida
RICK W. ALLEN, Georgia               BRAD ASHFORD, Nebraska
MIKE BOST, Illinois
DAVID ROUZER, North Carolina
RALPH LEE ABRAHAM, Louisiana
JOHN R. MOOLENAAR, Michigan
DAN NEWHOUSE, Washington
TRENT KELLY, Mississippi

                                 ______

                    Scott C. Graves, Staff Director

                Robert L. Larew, Minority Staff Director

                                  (ii)
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Conaway, Hon. K. Michael, a Representative in Congress from 
  Texas, opening statement.......................................     1
    Prepared statement...........................................     2
Peterson, Hon. Collin C., a Representative in Congress from 
  Minnesota, opening statement...................................     3

                               Witnesses

Isbell, Mark, Partner, Zero Grade Farms, North Little Rock, AR; 
  on behalf of USA Rice Federation...............................     4
    Prepared statement...........................................     6
Gibson, Matthew K., Vice President and General Manager, Grain 
  Division, Bunge North America; Member, Executive Committee, 
  North American Export Grain Association, St. Louis, MO.........     9
    Prepared statement...........................................    10
Lowe, Karen, Senior Vice President and Manager, Agriculture 
  Export Finance Division, CoBank ACB, Greenwood Village, CO.....    12
    Prepared statement...........................................    13
Ribera, Ph.D., Luis A., Associate Professor, Extension Economist, 
  and Director, Center for North American Studies, Department of 
  Agricultural Economics, Texas A&M University, College Station, 
  TX.............................................................    14
    Prepared statement...........................................    16
Claver-Carone, J.D., Mauricio, Executive Director, Cuba Democracy 
  Advocates, Washington, D.C.....................................    27
    Prepared statement...........................................    29

                           Submitted Material

Poe, Hon. Ted, a Representative in Congress from Texas, submitted 
  statement......................................................    63
Anderson, Darius, President and Chief Executive Officer, U.S. 
  Cava Exports, submitted statement..............................    64
Gordon, Randall C., President, National Grain and Feed 
  Association, submitted statement...............................    65
Scholz, Ben, President, Texas Wheat Producers Association, 
  submitted letter...............................................    66
Stoner, Gordon, President, National Association of Wheat Growers, 
  submitted statement............................................    67
American Farm Bureau Federation, submitted statement.............    68
Corn Refiners Association, submitted statement...................    68
Missouri Rice Research and Merchandising Council, submitted 
  letter.........................................................    69
U.S. Agriculture Coalition for Cuba, submitted letter............    70
 
                 AMERICAN AGRICULTURAL TRADE WITH CUBA

                              ----------                              


                     WEDNESDAY, SEPTEMBER 14, 2016

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to other business, at 10:00 
a.m., in Room 1300 of the Longworth House Office Building, Hon. 
K. Michael Conaway [Chairman of the Committee] presiding.
    Members present: Representatives Conaway, King, Thompson, 
Gibbs, Austin Scott of Georgia, Crawford, Gibson, Hartzler, 
Benishek, LaMalfa, Davis, Yoho, Walorski, Allen, Bost, Rouzer, 
Abraham, Moolenaar, Kelly, Peterson, David Scott of Georgia, 
Costa, Walz, McGovern, Vela, Lujan Grisham, Kuster, Nolan, 
Bustos, Maloney, Aguilar, Plaskett, Adams, Graham, and Ashford.
    Staff present: Bart Fischer, Callie McAdams, Haley Graves, 
Jackie Barber, Matt Schertz, Stephanie Addison, Keith Jones, 
Liz Friedlander, Matthew MacKenzie, Faisal Siddiqui, John 
Konya, Nicole Scott, and Carly Reedholm.

OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE 
                     IN CONGRESS FROM TEXAS

    The Chairman. Good morning. The Committee on Agriculture 
hearing entitled, American Agricultural Trade with Cuba, will 
come to order.
    I have asked G.T. to open us with a prayer. G.T.
    Mr. Thompson. Thank you, Mr. Chairman. I am proud to lead 
us in prayer.
    Heavenly Father, we just thank you for this glorious day. 
Lord, we thank you for the resources you provide us. Thank you 
for the fact that you provide us with this industry of 
agriculture that allows us to feed and clothe and give us 
building materials, and all the great things that come through 
your blessings. Lord, we pray for the Members of this Committee 
and those in attendance here, that you may minister to their 
needs and bless them. All this I pray in my savior's name, 
Jesus Christ. Amen.
    The Chairman. Thank you.
    The United States has a long and complicated relationship 
with our neighbor to the south. While our close proximity to 
Cuba makes the island nation a natural trading partner, the 
stranglehold the Castro regime has had on Cuba has long 
prevented normalized relations between our two countries.
    That stranglehold resulted in the United States imposing an 
embargo on trade with Cuba that has been in place in various 
forms for almost 60 years. In 2000, the Trade Sanctions Reform 
and Export Enhancement Act, known as TSRA, authorized certain 
sales of food, medicine, and medical equipment to Cuba, subject 
to various restrictions on credit and financing. One such 
restriction requires Cuba to pay cash-in-advance for purchases, 
interpreted in 2005 by the Bush Administration to mean payment 
in cash before goods were shipped.
    In December 2014, amongst a host of other changes, the 
Obama Administration announced its intention to modify the 
cash-in-advance provisions to require payment before transfer 
of title. While that move was generally applauded, I, and many 
of my colleagues, believe the U.S. secured too little in return 
for the litany of other concessions made to the brutal regime 
that continues to remain in power. The Castro regime remains 
one of the world's most oppressive human rights violators. 
Their heavy hand is in everything, including agriculture, where 
ALIMPORT remains the sole entity allowed to trade in 
agricultural products with foreign entities.
    Against this sobering backdrop, I believe there lays an 
opportunity, albeit a rather narrow one, to make changes that 
will positively benefit both agricultural producers here at 
home, while contributing to economic growth in Cuba. To that 
end, our colleague and General Farm Commodities and Risk 
Management Subcommittee Chairman, Rick Crawford, authored the 
Cuba Agricultural Exports Act, H.R. 3687, which lifts the 
financing restrictions under TSRA, while providing for both 
market promotion and U.S. agribusiness investment under strict 
safeguards. The Committee was involved in the development of 
that bill, and both Ranking Member Peterson and I are 
cosponsors.
    While I am very hopeful that we can find a path forward on 
expanding agricultural trade with Cuba, I remain firmly opposed 
to lifting the embargo or restrictions on travel. We are 
dealing with a regime that cares about little more than 
ensuring its own perpetuity and prosperity, all at the expense 
of the Cuban people. That being said, I think we all look 
forward to the day when the United States enjoys full, 
normalized relations with Cuba.
    I also realize this is an issue where good folks will 
disagree, often quite passionately. That generally applies to 
both proponents and opponents of expanding agricultural trade 
with Cuba alike. My intention today is to have a respectful, 
constructive dialogue, with the goal of exploring common 
ground.
    With that, I thank our witnesses for being here today.
    [The prepared statement of Mr. Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                          Congress from Texas
    The United States has a long and complicated relationship with our 
neighbor to the south. While our close proximity to Cuba makes the 
island nation a natural trading partner, the stranglehold the Castro 
regime has had on Cuba has long prevented normalized relations between 
our two countries.
    That stranglehold resulted in the United States imposing an embargo 
on trade with Cuba that has been in place in various forms for almost 
60 years. In 2000, the Trade Sanctions Reform and Export Enhancement 
Act--known as TSRA--authorized certain sales of food, medicines, and 
medical equipment to Cuba subject to various restrictions on credit and 
financing. One such restriction requires Cuba to pay cash-in-advance 
for purchases, interpreted in 2005 by the Bush Administration to mean 
payment in cash before shipment of goods.
    In December 2014, amongst a host of other changes, the Obama 
Administration announced its intention to modify the cash-in-advance 
provisions to require payment before transfer of title. While that move 
was generally applauded, I--and many of my colleagues--believe the U.S. 
secured too little in return for the litany of other concessions made 
to the brutal regime that continues to remain in power.
    The Castro regime remains one of the world's most oppressive human 
rights violators. Their heavy hand is in everything--including 
agriculture--where ALIMPORT remains the sole entity allowed to trade in 
agricultural products with foreign entities.
    Against this sobering backdrop, I believe there lays an 
opportunity--albeit a rather narrow one--to make changes that will 
positively benefit both agricultural producers here at home while 
contributing to economic growth in Cuba. To that end, our colleague and 
General Farm Commodities and Risk Management Subcommittee Chairman Rick 
Crawford authored the Cuba Agricultural Exports Act (or H.R. 3687) 
which lifts the financing restrictions under TSRA while providing for 
both market promotion and U.S. agribusiness investment under strict 
safeguards. The Committee was involved in the development of that bill, 
and both Ranking Member Peterson and I are cosponsors.
    While I am very hopeful that we can find a path forward on 
expanding agricultural trade with Cuba, I remain firmly opposed to 
lifting the embargo or restrictions on travel. We are dealing with a 
regime that cares about little more than ensuring its own perpetuity 
and prosperity--all at the expense of the Cuban people. That being 
said, I think we all look forward to the day when the United States 
enjoys full, normalized relations with Cuba.
    I also realize that this is an issue where good folks will 
disagree--often quite passionately. That generally applies to both 
proponents and opponents of expanding agricultural trade with Cuba 
alike. My intention today is to have a respectful, constructive 
dialogue with the goal of exploring common ground. With that, I thank 
our witnesses for being here today, and I recognize Ranking Member 
Peterson for any comments he would like to make.

    The Chairman. I recognize Mr. Peterson for any comments he 
would like to make. Collin.

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

    Mr. Peterson. Well, thank you, Mr. Chairman. And I also 
want to welcome today's witnesses to the Agriculture Committee.
    As people know, I have been a long-time supporter of 
expanding trade with Cuba. Some of you who were here at the 
time when I was Chairman may remember that we passed 
legislation in this Committee that would expand U.S. 
agriculture exports, and allow Americans to travel to Cuba more 
freely. Unfortunately, that legislation died when it went to 
the Foreign Affairs Committee.
    Now, as we are all aware, the Administration has taken 
steps to ease both trade and travel restrictions, and I believe 
this is a good step, but there is still more work to be done 
and more work we can do to open this market to American 
agricultural products.
    I disagree with the Chairman; I would like to see the 
embargo lifted, but I am doubtful it is politically possible to 
do so.
    I do want to caution some of our friends in the Agriculture 
Committee, however, about some of these glowing press reports 
that I see after they have traveled to Cuba. I was there last 
year, but, with the exception of rice and wheat, maybe dry 
edible beans, lentils, the potential benefits are limited, at 
least in my opinion, in the short-term because Cuba is a small 
country, and most people living there have a very limited 
income. Whatever we do will be positive, but some of these 
press reports you would think that it was like the whole world 
would be overturned if we do something there. When you have 
people making $20 a day, there is not a whole lot they can buy, 
outside of staples. So we need to keep things in balance here.
    I don't know what it is going to take to get the incomes 
going up in Cuba, given the regime that is there, which I do 
agree with the Chairman that they leave a lot to be desired. 
And lifting the embargo would actually help raise the income in 
Cuba and, therefore, make it more likely that they would have 
money to buy things, going forward.
    As I said, long-term trade with Cuba is going to be a 
benefit to U.S. agriculture, to the Cuban people, and I will do 
what I can, working with my colleagues, to see that that 
happens.
    So again, I thank the chair, and look forward to today's 
testimony.
    The Chairman. The gentleman yields back. Thank you.
    The chair would request that other Members submit their 
opening statements for the record so our witnesses may begin 
their testimony, and to ensure that there is ample time for 
questions.
    I would now like to welcome to our witness table Mark 
Isbell, a rice producer from North Little Rock, Arkansas, on 
behalf of USA Rice. Mr. Matt Gibson, Vice President and General 
Manager of the Grain Division, Bunge North America, St. Louis, 
Missouri, on behalf of the North American Export Grain 
Association. And Matt's adult supervision is in the room. His 
son, Bryan, is here to make sure that Dad does it right. Ms. 
Karen Lowe is Senior Vice President and the Ag Export Finance 
Division Head at CoBank ACB, Greenwood Village, Colorado. Dr. 
Luis Ribera, Associate Professor, Extension Economist and 
Director, Center for North American Studies, Department of 
Agricultural Economics, Texas A&M University, College Station. 
And then we have Mr. Mauricio Claver-Carone, Executive 
Director, Cuba Democracy Advocates, here in Washington, D.C.
    And with that, Mr. Isbell, you are recognized for 5 
minutes.

  STATEMENT OF MARK ISBELL, PARTNER, ZERO GRADE FARMS, NORTH 
       LITTLE ROCK, AR; ON BEHALF OF USA RICE FEDERATION

    Mr. Isbell. My name is Mark Isbell and I am a fourth 
generation rice farmer. My family and I grow 3,000 acres of 
rice annually on our farm in Lonoke County, Arkansas.
    Two days ago, I was sitting on a tractor on our farm, and 
today, I am here in our nation's capital speaking with you. It 
is a remarkable privilege that we live in a country where that 
can happen. I am grateful for the opportunity to appear before 
the Committee today on behalf of the USA Rice Federation to 
discuss the importance of agricultural trade with Cuba.
    Rice harvest is underway, and I wouldn't be here without 
the help of my family who is harvesting even now, and I also 
wouldn't be here if I did not realize the incredible importance 
of this issue for our farm families and farm communities across 
our country.
    The USA Rice Federation represents all segments of the U.S. 
rice industry. And in the U.S., rice is grown on more than 3 
million acres, with the majority being in eight states that 
include Arkansas, California, Florida, Illinois, Louisiana, 
Mississippi, Missouri, and Texas.
    My grandfather started our rice farm in Arkansas soon after 
returning from World War II. In those days, Cuba was a major 
importer of U.S. rice. He was only 38, 3 years older than I am 
now, when the Cuban embargo began, and though he always hoped 
to see it, he never again saw any significant amounts of U.S. 
rice making its way back to the island before his death at age 
90.
    The Cuban market holds great potential for U.S. farmers, 
however, we are faced with obstacles, and they are not 
logistical, and have nothing to do with our product's quality 
or our ability to compete in the global marketplace. The 
obstacles we face in selling our rice to Cuba are statutory 
obstacles. With your help, these obstacles can be overcome.
    As an export-dependent commodity, we are continually 
looking for new markets like Cuba to maintain a profitable 
industry. At the same time, our markets are threatened by 
excessive government supports for rice producers in key 
advanced developing countries, like Brazil, India, China, 
Thailand, and Vietnam, that distort global markets.
    Over 50 years ago, rice shipments from the U.S. accounted 
for more than \1/2\ of Cuba's imports, but since the embargo, 
an essentially dormant relationship between the U.S. and Cuba 
persisted for decades. And during that period, Cuba sought 
their imports from other countries, as the U.S. shipped rice to 
every island nation except for the one most significant to our 
industry's vitality.
    Prospects brightened with the passage of TSRA of 2000 when 
U.S. agricultural and food exports to Cuba were granted, what 
many of us believed at the time to be a broad exemption from 
the embargo. In November of 2001, the industry made its first 
sale of U.S. rice to Cuba since the embargo was imposed. The 
sales showed what can happen when barriers are removed, and 
people meet and find common ground for cooperation and trade. 
Following that first sale, more continued, and as recently as 
2004, sales of U.S. rice to Cuba were valued at $64 million.
    But what might have been a renaissance in trade instead 
became a brief anomaly. Due to a regulatory change in the 
definition of payment of cash-in-advance in 2005, U.S. rice 
exports to Cuba again dropped to zero. We learned from this 
experience that, given the opportunity, Cubans will buy our 
rice, however, as a cash-deficient economy, the Cubans need 
flexibility in obtaining credit to purchase commodities, 
globally, everyone has offered it to them except for the U.S. 
The question is not if Cuba will buy American rice, the 
question is when our country will let them.
    The answer to that question lies with you, the Members of 
this Committee, and your colleagues in Congress.
    Today Cuba imports about $300 million worth of 
predominantly Vietnamese rice, which travels over 16,000 miles 
to reach Havana, while our southern ports are close by. With 
appropriate statutory changes, the U.S. could regain 30 percent 
of the Cuban rice business within 2 years. That is an estimated 
135,000 metric tons of new demand, and we anticipate the U.S. 
share of the market would exceed 50 percent within 5 years, and 
75 percent or more within 10.
    I recently had the opportunity to travel to the island with 
Committee Members Abraham and Crawford, and I saw firsthand the 
opportunity before us in Cuba. I am just one of many farmers to 
make that journey to Cuba in the last 2 years, and we, like 
many of the Cuban citizens, share the same optimism for 
improving our relations.
    We are grateful for the progress that has been made 
recently, however, obstacles to conducting normal trade with 
Cuba still exist, and for U.S. commodities to compete on a 
level playing field with foreign competitors, Congressional 
action will be required.
    As I stated earlier, the fact that a farmer can leave a 
rice field and travel to Washington to talk about issues that 
affect his industry says much about what is great about our 
country. However, the fact that a farmer has to leave his 
family's rice field and petition Congress to allow him to sell 
his family's goods on the open market speaks to some small 
thing that is broken within our system. That something that is 
broken is something that you can fix.
    Congressman Crawford's bill is an attainable path forward 
toward the natural lifting of U.S. commodity prices, and could 
be the beginning of the end of a multigenerational policy that 
hindsight has proven ineffective in helping the Cuban people, 
and harmful to our farm economies.
    USA Rice appreciates the opportunity to provide our views 
to the Committee and its distinguished Members, and I look 
forward to responding to any questions you have.
    [The prepared statement of Mr. Isbell follows:]

  Prepared Statement of Mark Isbell, Partner, Zero Grade Farms, North 
           Little Rock, AR; on Behalf of USA Rice Federation
    My name is Mark Isbell, and I'm a fourth generation rice farmer. My 
Father, Mother, Brother-in-Law, Cousin and I grow 3,000 acres of rice 
annually on our farm in Lonoke County, Arkansas. Our family has farmed 
there for nearly 100 years.
    Two days ago I was sitting on a tractor on our farm, and today I am 
here in our nation's capital speaking with you. It is a remarkable 
privilege that we live in a country where that can happen.
    I am here today to discuss the importance of agricultural trade 
with Cuba and share the perspective of a farmer who simply wants to 
sell his goods in a free and open marketplace.
    Rice harvest is underway on our farm and across our country, and I 
wouldn't be here without the help of my family back home who is 
harvesting even now. I also wouldn't be here if I did not realize the 
incredible importance of this issue for our farm families and farm 
communities across our country.
     I am grateful for the opportunity to appear before the Committee 
today on behalf of the U.S. farmer and the USA Rice Federation.
    The USA Rice Federation represents all segments of the U.S. rice 
industry from the farmers to the millers to the merchants and other 
allied businesses. Here in the U.S., rice is grown on more than 3 
million acres, with the majority being grown in eight states including 
Arkansas, California, Florida, Illinois, Louisiana, Mississippi, 
Missouri, and Texas. Our industry markets rice in all 50 states and to 
125 countries worldwide. USA Rice is a leading organization among 
commodity groups advocating for normal commercial relations, including 
the removal of financing restrictions on agricultural sales to Cuba, 
and works closely with multiple coalitions to raise awareness within 
Congress and the Administration on potential benefits. As a member of 
the USA Rice's International Promotion Committee, I can attest that 
gaining access to the Cuban market has been a long-time priority for 
the entire industry.
    My grandfather started our rice farm soon after returning from 
World War II. In those days, Cuba was a major importer of U.S. rice. He 
was only 38--3 years older than I am now--when the Cuban embargo began, 
and though he always hoped to see it, he never again saw any 
significant amount of U.S. rice making its way back to the island 
before his death 2 years ago at age 90.
Rice Consumption of Select Countries

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



          Source: University of Arkansas.

    Today, Arkansas grows more than \1/2\ of the rice in the U.S., most 
of which is long grain, the type consumed by the people of Cuba. Cuba 
imports nearly 600,000 tons of rice per year, and yet none originates 
in Arkansas, or anywhere in the U.S. for that matter.
    I believe the Cuban market holds great promise for U.S. farmers. 
The obstacles we currently face in selling our rice to Cuba are not 
logistical. The obstacles we face in selling our rice to Cuba have 
nothing to do with our product's quality or our ability to compete in 
the global marketplace. The obstacles we face in selling our rice to 
Cuba are statutory obstacles. With your help, these obstacles can be 
overcome.
    The United States exports \1/2\ of the rice produced here annually. 
Maintaining existing markets and securing new markets are critical to 
the rice industry's success and to the economies in rice growing, 
milling, and marketing states. Our largest export markets include 
Canada, Mexico and Central America. As an export-dependent commodity, 
we are continually looking for new markets, like Cuba, to maintain a 
profitable industry. At the same time, our markets are threatened by 
widespread and excessive government supports for rice producers in key 
advanced developing countries like Brazil, India, Thailand and Vietnam 
that distort global markets.
Top 10 Export Markets for U.S. Rice and Potential Cuban Market

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Prior to the U.S. embargo on Cuba more than 50 years ago, annual 
rice shipments from the U.S. reached as much as \1/4\ million metric 
tons, accounting for more than \1/2\ of Cuba's rice imports. But since 
the embargo, an essentially dormant relationship between the U.S. and 
Cuba persisted for decades. During that period, Cuba sought their 
imports from other countries as the U.S. shipped rice to every island 
nation except for the one most significant to our industry's vitality.
    Prospects brightened with passage of the Trade Sanctions Reform and 
Export Enhancement Act of 2000, when U.S. agriculture and food exports 
to Cuba were granted what many of us believed at the time to be a broad 
exemption from the embargo.
    In November 2001, the industry made the first sale of U.S. rice to 
Cuba since the embargo was imposed.
    The Cuban importers were well-informed and professional during 
negotiations through the final execution of that sale. The quality of 
rice they had purchased from U.S. farmers was met with excitement when 
it arrived at the Port of Havana. The sale showed what can happen when 
barriers are removed and people are allowed to meet and find common 
ground for cooperation and trade. Following the first sale, several 
more continued, and as recently as 2004, sales of U.S. rice to Cuba 
were valued at $64 million. However, this wave of excitement was 
seriously curtailed, and what might have been a renaissance in trade 
instead became a brief anomaly. Due to a regulatory change in the 
definition of ``payment of cash-in-advance'' in 2005, U.S. rice exports 
to Cuba again dropped to zero.
    What we learned from this experience is that given the opportunity, 
Cubans will buy our rice. However, as a cash-deficient economy, the 
Cubans need flexibility in attaining credit to purchase our products; 
globally, everyone has offered it to them except for the U.S. The 
question is not if Cuba will buy American rice, or even how they will 
buy American rice. The question is when we as a country will let them.
    The answer to that question lies with you, the Members of this 
Committee and your colleagues in Congress.
    Today, Cuba imports about $300 million worth of predominantly 
Vietnamese rice on an annual basis. To put that in perspective, those 
Vietnamese exports are traveling over 16,000 miles to reach Havana, 
while our southern ports are close by. The U.S. is positioned with 
every advantage to serve the rice needs of the Cuban people in terms of 
required transit time, the cost of freight, and the cost of the rice.
Average Cost of Shipping a Container of Rice to Cuba from Major Rice 
        Exporting Ports
        
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]        
        
        
          Source: USDA-Economic Research Service, World Freight Rates.

    With the appropriate statutory changes, the U.S. could regain 30 
percent of the Cuban rice business within 2 years. That is an estimated 
135,000 metric tons of new demand and we anticipate the U.S. share of 
the market would exceed 50 percent within 5 years, and it could reach 
75 percent or more within 10 years with full commercial relations.
    USA Rice Federation and rice farmers like myself and my family are 
committed to building the Cuban market for our product. I recently had 
the opportunity to travel to the island with Committee Members, 
Congressmen Abraham and Crawford, and I saw firsthand the opportunity 
before us in Cuba. I'm just one of many farmers to make the short 
journey to Cuba in the last 2 years, and we, like many of the citizens 
of Cuba, share the same optimism for improving our relations.
    We are grateful for some of the apparent progress that has been 
made recently with respect to trade with Cuba. However, obstacles to 
conducting normal trade with Cuba still exist, and solutions require 
action by Congress. Normal commercial relations must be restored for 
U.S. rice exports and other U.S. commodities to have the opportunity to 
compete on a more level playing field with foreign competitors.
    As I stated earlier, the fact that a farmer can leave a rice field 
and travel to Washington to talk about issues that affect his industry 
says much about what is great about our Country. However, on this 
issue, the fact that a farmer has to leave his family's rice field and 
petition Congress to allow him to sell his family's goods on the open 
market speaks to some small thing that is broken within our system.
    That something that is broken is something that you can fix.
     Many Members of this Committee have cosponsored legislation aimed 
at eliminating the restrictions on agricultural financing and 
agricultural trade with Cuba. Congressman Crawford's bill, H.R. 3687, 
the Cuba Agricultural Exports Act, is an attainable path forward 
towards a natural lifting of U.S. commodity prices, and could be the 
beginning of the end of a multi-generational policy that in hindsight 
has proven ineffective in helping the Cuban people and harmful to our 
farm economies.
    USA Rice appreciates the opportunity to provide our views to the 
Committee and its distinguished Members, and I look forward to 
responding to any questions you may have.

    The Chairman. Thank you. Mr. Gibson.

  STATEMENT OF MATTHEW K. GIBSON, VICE PRESIDENT AND GENERAL 
              MANAGER, GRAIN DIVISION, BUNGE NORTH
          AMERICA; MEMBER, EXECUTIVE COMMITTEE, NORTH
        AMERICAN EXPORT GRAIN ASSOCIATION, ST. LOUIS, MO

    Mr. Gibson. Good morning. Thank you for the opportunity to 
testify this morning. I am Matt Gibson, Vice President and 
General Manager of Bunge North America's Grain Division. It is 
my honor and pleasure to testify on behalf of North American 
Export Grain Association, NAEGA. NAEGA, a not-for-profit 
organization chartered in 1912, works to promote and sustain 
the development of export trade from the United States of 
grain, oilseeds, and primary products processed therefrom. 
Bunge is a commodity trading and logistics food ingredients 
company with a global footprint, headquartered in White Plains, 
New York. With over 35,000 employees that stretch the globe on 
four continents and 40 countries, Bunge has been a part of the 
world food security solution for nearly 200 years, by helping 
farmers connect seamlessly with our customers through logistics 
and the processing of high-quality products ranging from animal 
feed to consumer foods to renewable fuels.
    Trade is the lifeblood of NAEGA and its member companies, 
such as Bunge. Bunge, as well as NAEGA, understand that an 
expanding and well-developed global marketplace for food and 
agricultural products provides for a trading environment that 
meets the needs of all stakeholders by signaling to farmers 
what to produce, and investors, where to deploy their capital, 
so that we can most efficiently and effectively meet the needs 
of a growing world population. Practically speaking, Bunge 
serves two sets of customers; the farmer and the end-use 
customer.
    When it comes to the opportunity for agricultural trade 
with Cuba, our two sets of customers are very much aligned. 
Both see economic growth and improved diets as fundamental to 
their interest. Both seek to access these markets. U.S. farmers 
would like the freedom to sell their products into markets who 
appreciate the high quality of products the United States has 
to offer. Food companies would like to buy high-quality food at 
competitive prices. The U.S. has both productivity and 
logistical advantage in meeting Cuba's needs.
    As you well know, the Trade Sanctions Reform and Export 
Enhancement Act of 2000 allowed the United States to export 
agricultural products and medical supplies to the island. For 
several years thereafter, we saw a climbing market share in 
agricultural products. Over the past 8 years, however, that 
market share has deteriorated drastically. Cuba has imported 
zero wheat or rice from the United States over the past 5 
years. Whether it is USDA's Foreign Agricultural Service or the 
recently published International Trade Commission report on the 
subject, most sources cite financing as the restriction most 
significant for the reason for the decline of U.S. ag exports 
to Cuba.
    The Dominican Republic bears many similarities to Cuba in 
terms of population and per capita income level. Between 2013-
2015, the Dominican Republic imported $1.3 billion worth of 
agricultural products from the United States. During the same 
time, Cuba, however, imported only $262 million from the U.S. 
That is over $1 billion the U.S. agricultural industry left on 
the table due to financing restrictions under which we must 
currently operate.
    It is not that Cuba is not importing these products. They 
very much are. According to USDA's Foreign Agricultural 
Service, Cuba is buying wheat from the EU and Canada, corn from 
Argentina and Brazil, rice from Vietnam, soybean oil from 
Brazil, animal feed from Argentina and Mexico, and pulses from 
China. These are our competitors. These countries are able to 
compete and win in a market where we should be exceptionally 
competitive due to our quality, proximity, and time of 
delivery. We expect that Cuba's need for these products will 
grow. Cuba's GDP is expected to grow significantly over the 
next 5 years. And with an expanding middle class, the ease of 
travel restrictions from the U.S., agricultural imports will 
become increasingly necessary. While Cuba may never be a 
trading partner to the scale of Mexico and Canada, tangible 
effects would benefit the agriculture industry. Cuba depends on 
agricultural imports in order to feed its people. With the help 
of Congress to ensure that the United States has the ability to 
finance agricultural exports from the United States, we can 
once again play an important role in Cuba's security.
    Thank you again, and I look forward to any questions you 
might have.
    [The prepared statement of Mr. Gibson follows:]

  Prepared Statement of Matthew K. Gibson, Vice President and General 
    Manager, Grain Division, Bunge North America; Member, Executive
   Committee, North American Export Grain Association, St. Louis, MO
    Good morning--thank you for the opportunity to testify this 
morning. I am Matt Gibson, Vice President and General Manager of Bunge 
North America's Grain Unit. It is my honor and pleasure to testify on 
behalf of the North America Export Grain Association (NAEGA).
    NAEGA, a not-for-profit organization chartered in 1912, works to 
promote and sustain the development of the export trade from the United 
States of grains, oilseeds and primary products processed therefrom. 
NAEGA consists of private and publicly owned companies and farmer-owned 
cooperatives that are involved in and provide services to the bulk 
grain and oilseed exporting industry. Through a reliance on member 
action and support, NAEGA acts to accomplish this mission from its 
office in Arlington, VA, and in markets throughout the world.
    Bunge is a leading agribusiness and food company with integrated 
operations that circle the globe, stretching from the farm field to the 
retail shelf. Founded in 1818 in Amsterdam, Bunge has been part of the 
world food security solution for nearly 200 years. We have expanded our 
operations and capabilities with the development of modern agriculture 
around the world and today, we have facilities in more than 40 
countries on four continents. More than 35,000 employees help farmers 
produce larger harvests, connect seamlessly with growers, processors, 
handlers and customers, maintain relationships within and among 
regions, and produce our own high-quality products ranging from animal 
feed to consumer foods to renewable fuels. Bunge was a privately-held 
company for most of its history and in 1999, we moved our headquarters 
to White Plains, New York in anticipation of going public in 2001.
    Trade is the life blood of NAEGA and its member companies, such as 
Bunge. Bunge, as well as NAEGA understand that an expanding and well-
developed global marketplace for food and agriculture products provides 
for a trading environment that meets the needs of all stakeholders by 
signaling to farmers what to produce and investors where to deploy 
their capital so that we can most efficiently and effectively meet the 
need of a growing world population.
    Practically speaking, Bunge serves two sets of customers--the 
farmers and the end-use customer--which is often a food company that 
will further process our ingredients and ultimately provide a finished 
product to the consumer. At times, these two customers have conflicting 
interests but share several important objectives. Farmers want to sell 
their crop at the highest price possible to recoup their significant 
investment in land, labor and input costs. Food companies want to 
purchase food and food ingredients at a low price in order to develop 
them into an end product that is profitable yet affordable for the 
consumer. By the nature of our business, our world is spent striking 
the appropriate balance between those two sets of constituencies.
    When it comes to the opportunity for agriculture trade with Cuba, 
however, our two sets of customers are very much aligned. Both see 
economic growth and improved diets as fundamental to their interests. 
Both seek access to markets. U.S. farmers would like the freedom to 
sell their product into a market which appreciates the high quality of 
products the United States has to offer. Cubans would like to buy high-
quality ingredients at a competitive price. The U.S. has both 
productivity and logistical advantages in meeting Cuba's needs. In this 
instance when our two sets of customers' views are aligned, we must 
position ourselves to meet their needs.
    As you well know, the Trade Sanctions Reform and Export Enhancement 
Act of 2000, allowed the United States to export agriculture products 
and medical supplies to the island. And for several years thereafter, 
we saw a climbing demand for agriculture products. Over the past 8 or 
so years, however, that demand has deteriorated drastically. In fact, 
in the past 5 years, Cuba has imported zero wheat or rice from the 
United States. Most sources, including USDA's Foreign Agricultural 
Service or the recently published International Trade Commission report 
on the subject, cite financing restrictions as the most significant 
reason for the decline in U.S. ag exports to Cuba.
    The Dominican Republic bears many similarities to Cuba in terms of 
population and per-capita income level. Between 2013 and 2015, the 
Dominican Republic imported $1.3 billion worth of agriculture products 
from the United States. During this same time, Cuba, however, imported 
only $262 million from the U.S.\1\ That is over $1 billion to the U.S. 
agriculture industry left on the table due to the financing 
restrictions under which we must currently operate. In a low-margin 
business, such as ours, these numbers have a significant impact on the 
agriculture supply chain from the farmer to the retailer. It is not 
that Cuba isn't importing these products. They very much are. According 
to USDA's Foreign Agricultural Service, Cuba is buying wheat from the 
EU and Canada; corn from Argentina and Brazil; rice from Vietnam; 
soybean oil from Brazil; animal feed from Argentina and Mexico; and 
pulses from China. These are our competitors. These countries are able 
to compete and win in a market where we should be exceptionally 
competitive due to quality, proximity and time of delivery. And we 
expect that Cuba's need for these products will continue to grow. 
Cuba's GDP is expected to grow significantly over the next 5 years, and 
with an expanding middle class, and ease of travel restrictions from 
the U.S., agricultural imports will become increasingly necessary. 
While Cuba may never be a trading partner to the scale of Mexico or 
Canada, tangible effects would benefit the agriculture industry.
---------------------------------------------------------------------------
    \1\ Mark A. McMinimy, Financing U.S. Agricultural Exports to Cuba 
(CRS Insight: June 2016).
---------------------------------------------------------------------------
    For the leading U.S.-based companies who buy grain and oilseeds 
from farmers, the effect of U.S. sanctions on Cuba reaches beyond the 
United States to the global supply chain.
    As mentioned earlier, Cuba is buying grain from countries such as 
Argentina and Brazil. Many global agribusiness companies have operating 
companies in these countries as well, but for those which are U.S.-
headquartered, current sanctions also prevent these Brazilian and 
Argentine affiliates from selling to Cuba. This creates an un-level 
playing field between U.S.-headquartered companies and our other 
competitors costing us and our farmer customers sales opportunities.
    Cuba depends on agriculture imports in order to feed its people. It 
is estimated that imports account for between 60 and 80% of a Cuban's 
daily caloric consumption.\2\ With the help of Congress to ensure that 
Cuba has the ability to finance agriculture exports from the United 
States, as well as removing any barriers to trade by affiliates of U.S. 
headquartered companies, we can once again play an important role in 
Cuba's food security.
---------------------------------------------------------------------------
    \2\ Brian D. Healy, U.S. Agricultural Exports to Cuba Have 
Substantial Room for Growth (Foreign Agricultural Service International 
Agricultural Trade Report: June 22, 2015), 5.
---------------------------------------------------------------------------
    Thank you again, and I look forward to any questions that you may 
have.

    The Chairman. Thank you. Ms. Lowe.

  STATEMENT OF KAREN LOWE, SENIOR VICE PRESIDENT AND MANAGER, 
  AGRICULTURE EXPORT FINANCE DIVISION, CoBANK ACB, GREENWOOD 
                          VILLAGE, CO

    Ms. Lowe. Good morning, Chairman Conaway, Ranking Member 
Peterson, and Members of the Committee. I appreciate the 
opportunity to appear before the Committee today.
    I am Karen Lowe, Senior Vice President and Division Manager 
of Agriculture Export Finance for CoBank. Thank you for calling 
this hearing.
    CoBank is one of the nation's largest providers of credit 
to agriculture and other rural industries. With approximately 
$125 billion in assets, the bank provides loans, leases, and 
other financial services to farmer-owned agricultural 
cooperatives and rural infrastructure businesses in all 50 
states. That includes my division, which provides export 
financing for companies shipping agricultural commodities and 
food products to markets all over the world.
    CoBank is a member of the Farm Credit System, and also 
serves as the funding bank for affiliated farm credit 
associations, serving approximately 75,000 farmers and ranchers 
around the country. As a borrower-owned financial institution, 
CoBank returned $514 million in patronage to our customers in 
2015. That provided a 100 basis point reduction in the interest 
rate paid by most of our retail customers. Over the last 5 
years, that total patronage return has exceeded $2.2 billion. 
That is revenue that is invested and stays in our rural 
communities.
    I am here to discuss CoBank's export financing work and the 
impact that Congressman Crawford's bill, H.R. 3687, the Cuba 
Agricultural Exports Act, would have on removing barriers to 
exporting agricultural commodities to Cuba.
    CoBank is a leading global trade finance provider for U.S. 
agricultural exports, with approximately $4.5 billion in export 
loans outstanding. CoBank provides trade finance for the export 
of multiple American commodities to over 30 countries, 
including developing markets. These are the products grown in 
Congressional districts represented on this Committee. Your 
farmers produced these products, but they typically don't 
export them directly. We work with the companies and banks that 
engage in those exports to make efficient and effective markets 
for American farmers.
    As the Members of the Committee will realize, we are in an 
extended period of low prices on most agricultural commodities. 
This harsh reality makes every market, no matter the size, 
important to help move the crop and support prices. At the same 
time, sovereign risk in many emerging markets is increasing due 
to economic and geopolitical risk factors, which increases 
exporters' need for payment risk mitigation as well as the need 
for financing.
    CoBank offers trade finance products such as letters of 
credit and loans. These products help our customers mitigate 
their foreign receivables collection risk and/or offer payment 
terms to make their products more competitive in the 
marketplace. CoBank's export financing business benefits U.S. 
companies, including those focused on emerging markets. These 
markets include countries like China, Indonesia, Vietnam, 
Turkey, Saudi Arabia, Colombia, and Guatemala. Our largest 
market is South Korea, and our smallest the Dominican Republic.
    CoBank's Agriculture Export Finance division has two types 
of customers; the American exporter and the correspondent bank 
in the importer's country. We are proud of our work to support 
the export of agricultural commodities, and it is an important 
benefit to our customers and our country's economy.
    I would like to focus for a moment on H.R. 3687, introduced 
by Congressman Crawford. CoBank appreciates this effort to 
reduce barriers to ag exports to Cuba. Specifically, his bill 
would repeal restrictions on export financing for ag shipments 
to Cuba. In this time of low prices, it would help expand a 
market just 90 miles from Florida. The bill would also give 
producers and processors access to the USDA promotion programs 
for ag exports, such as the Market Access Program and the 
Foreign Market Development Program. These can help American 
producers compete more effectively in this market, while 
ensuring that U.S. taxpayer funds do not end up in the hands of 
the Cuban Government.
    At CoBank, we fully recognize this bill will not eliminate 
all of the challenges in trading with Cuba. A number of 
additional issues will need to be addressed, including a lack 
of transparency in the Cuban banking system, questions of 
repayment ability, contract enforceability, and even the 
establishment of a non-government import entity. All of these 
challenges will need to be addressed, going forward, to 
completely open the flow of trade between our countries.
    But in the meantime, CoBank strongly believes that every 
effort should be made to expand markets. This will help us 
further realize world-leading production capabilities of U.S. 
farmers and ranchers, as well as further solidify our position 
as the premiere provider of food, fiber, and nutrition to a 
growing world population. This will provide meaningful benefits 
to your constituents, U.S. agriculture, our rural communities, 
and the broader U.S. economy. We think H.R. 3687 is a good 
idea.
    I appreciate the chance to join you today, and I look 
forward to the opportunity to address your questions.
    [The prepared statement of Ms. Lowe follows:]

 Prepared Statement of Karen Lowe, Senior Vice President and Manager, 
 Agriculture Export Finance Division, CoBank ACB, Greenwood Village, CO
    Good morning Chairman Conaway, Ranking Member Peterson, and Members 
of the Committee. I appreciate the opportunity to appear before the 
Committee today. I am Karen Lowe, Senior Vice President and Division 
Manager of Agriculture Export Finance for CoBank. Thank you for calling 
this hearing.
    CoBank is one of the nation's largest private providers of credit 
to agriculture and other rural industries. With approximately $125 
billion in assets, the bank provides loans, leases and other financial 
services to farmer-owned agricultural cooperatives and rural 
infrastructure businesses in all 50 states. That includes my division 
which provides export financing for companies shipping agricultural 
commodities and food products to markets all over the world.
    CoBank is a member of the Farm Credit System and also serves as the 
funding bank for affiliated Farm Credit associations serving 
approximately 75,000 farmers and ranchers around the country. As a 
borrower-owned financial institution, CoBank returned $514 million in 
patronage to our customers in 2015. That provided a 100 basis point 
reduction in the interest rate paid by most of our retail customers. 
Over the last 5 years, that the total patronage returned has exceeded 
$2.2 billion. That is revenue that is invested and stays in our rural 
communities.
    I am here to discuss CoBank's export financing work and the impact 
that Congressman Crawford's bill, H.R. 3687, the Cuba Agricultural 
Exports Act would have on removing barriers to exporting agricultural 
commodities to Cuba.
    CoBank is a leading global trade finance provider for U.S. 
agricultural exports, with approximately $4.5 billion in export loans 
outstanding. CoBank provides trade finance for the export of multiple 
American commodities to over 30 countries, including developing 
markets. These are the products grown in Congressional Districts 
represented on this Committee. Your farmers produce these products, but 
they typically don't export them directly. We work with the companies 
and banks that engage in those exports to make efficient and effective 
markets for American farmers.
    As the Members of this Committee well realize, we are in an 
extended period of low prices on most agricultural commodities. This 
harsh reality makes every market, no matter the size, important to help 
move the crop and support prices. At the same time, sovereign risk in 
many emerging markets is increasing due to economic and geopolitical 
risk factors, which increases exporters' need for payment risk 
mitigation as well as the need for financing.
    CoBank offers trade finance products such as letters of credit and 
loans. These products help our customers mitigate their receivables 
collection risk and/or offer payment terms to make their products more 
competitive in the marketplace.
    CoBank's export finance business benefits U.S. companies, including 
those focused on emerging markets. These include countries like China, 
Indonesia, Vietnam, Turkey, Saudi Arabia, Colombia, and Guatemala. Our 
largest market is South Korea and our smallest the Dominican Republic. 
CoBank's Agriculture Export Finance Division (``AEFD'') has two types 
of customers: the American exporter and the correspondent bank in the 
importer's country.
    We are proud of our work to support the export of agriculture 
commodities and it is an important benefit to our customers and our 
country's economy.
    I would like to focus for a moment on H.R. 3687, the Cuba 
Agricultural Exports Act introduced by Congressman Crawford. CoBank 
appreciates this effort to reduce barriers to ag exports to Cuba. 
Specifically, his bill would repeal restrictions on export financing 
for ag shipments to Cuba. In this time of low prices, that would help 
expand a market just 90 miles from Florida.
    The bill would also give producers and processors--CoBank's 
customers--access to the USDA promotion programs for ag exports, such 
as the Market Access Program and the Foreign Market Development 
Program. These can help American producers compete more effectively in 
this market, while ensuring that U.S. taxpayer funds do not end up in 
the hands of the Cuban Government.
    At CoBank we fully recognize that this bill will not eliminate all 
the challenges in trading with Cuba. A number of additional issues will 
need to be addressed, including a lack of transparency in the Cuban 
banking system, questions of repayment ability, contract 
enforceability, even the establishment of a non-government import 
entity. All of these challenges will need to be addressed, going 
forward, to completely open the flow of trade between our countries.
    But, in the meantime, CoBank strongly believes that every effort 
should be made to expand markets. That will help us further realize the 
world-leading production capabilities of U.S. farmers and ranchers, as 
well as further solidify our position as the premier provider of food, 
fiber and nutrition to a growing world population. This will provide 
meaningful benefits to your constituents, U. S. agriculture, our rural 
communities, and the broader U.S. economy. We think H.R. 3687 is a good 
idea.
    I appreciate the chance to join you today and look forward to the 
opportunity to address your questions.

    The Chairman. Thank you, Ms. Lowe. Dr. Ribera.

         STATEMENT OF LUIS A. RIBERA, Ph.D., ASSOCIATE
         PROFESSOR, EXTENSION ECONOMIST, AND DIRECTOR,
 CENTER FOR NORTH AMERICAN STUDIES, DEPARTMENT OF AGRICULTURAL 
                ECONOMICS, TEXAS A&M UNIVERSITY,
                      COLLEGE STATION, TX

    Dr. Ribera. Mr. Chairman, and esteemed Members of the 
Committee, thank you for the opportunity to testify on 
agricultural trade with Cuba.
    I am Luis Ribera, the Director of the Center for North 
American Studies, and the Program Director for International 
Projects for the Agricultural and Food Policy Center, both at 
Texas A&M University.
    The Center for North American Studies has over 15 years of 
experience working on Cuban-related issues, and has conducted 
dozens of economic impact analyses, examining how increasing 
U.S. food and agricultural exports to Cuba will impact the U.S. 
economy and the economies of the states that produce those 
products for export.
    In general, we find that export creates jobs. And exports 
to Cuba are no exception. For every $73,600 in U.S. food and 
agricultural export to Cuba, one job is created in the United 
States, along with another $170,000 in economic activity to 
support those additional exports.
    Cuba's food imports totaled $1.9 billion in 2014. Cuba also 
has the potential to become a major market for U.S. 
agricultural exports, and to develop into a market that is 
quite diverse, with bulk staple products such as corn, wheat, 
soybean, and rice being important in the near-term. To put Cuba 
into perspective, U.S. agricultural export to Cuba of $149 
million represent less than one percent of the total U.S. 
agricultural exports of $133 billion in calendar year 2015.
    Our previous research indicates that U.S. export potential 
could exceed the record $709 million set in 2008. With a more 
open economy, less regulation by both governments, strong 
tourism, and remittances, U.S. food and agricultural export 
have the potential to exceed $1.2 billion annually within 5 
years.
    Nearly \3/4\ of the labor force is employed by the 
Government of Cuba, at a wage of approximately $20 per month. 
The literacy rate is estimated at 99.8 percent, the highest in 
the Western Hemisphere. The Government of Cuba, however, is 
involved in virtually every aspect of the business and personal 
lives of its citizens. Trade and investment are strictly 
limited and controlled by government regulation. Further, food 
and agricultural imports are required to enter the country 
through Empresa Comercializadora de Alimentos (ALIMPORT).
    International trade between the United States and Cuba is 
strictly regulated by both governments, however, with the 
passage of the Trade Sanctions Reform and Export Enhancement 
Act of 2000, it allowed U.S. firms to legally export their 
agricultural products to Cuba, and travel there for business 
purposes.
    From modest beginnings of $141 million in 2002, the U.S. 
export peaked at $709 million in 2008. U.S. export then fell to 
$149 million in 2015. And from January to July of 2016, U.S. 
exports to Cuba were down two percent from the same period last 
year.
    There are several reasons for this sharp decline in U.S. 
export. First, Cuba has diversified its food suppliers by 
shifting away from U.S. products in favor of those from Brazil, 
Canada, Argentina, Mexico, Spain, France, Ukraine, and Vietnam. 
Credit terms are offered by some of these countries, allowing 
ALIMPORT to conserve hard currency and use credit to make 
larger purchases. U.S. exporters cannot use layers of credit, 
reducing the competitiveness of U.S. products.
    Currently, and likely in the near future, three key factors 
will influence the volume and mix of U.S. food and agricultural 
exports to Cuba. First, remittances to Cuba, largely from Cuban 
Americans in the United States, represent a major source of 
income and purchasing power for about 60 percent of Cuban 
households, and an important source of foreign exchange for the 
Government of Cuba. Second key factor is tourism. With a record 
of 3.5 million visitors in 2015, up from two million in 2004, 
the potential increase in U.S. food and agricultural export to 
Cuba due to increased travel ranges from $48 million to $366 
million per year, creating up to 5,500 new jobs. These 
estimates include only the additional spending by new U.S. 
visitors to Cuba.
    In conclusion, the Cuban market for U.S. food and 
agricultural export has the potential for growth. Our estimates 
indicate that U.S. food and agricultural export to Cuba have 
the potential to exceed $1 billion annually. This additional 
export will support the creation of 6,000 new jobs throughout 
the U.S. economy. For this potential economic impact to be 
realized, however, several challenges lie ahead. First, 
sustained income growth and economic prosperity for Cubans is 
needed. Second, infrastructure improvement and investment will 
be necessary to improve the efficiency of existing supply chain 
and the creation of new cold chains to handle processed food. 
Finally, policies and regulations that facilitate trade, and 
that are transparent and consistent, are an absolute necessity.
    Mr. Chairman, that completes my statement.
    [The prepared statement of Dr. Ribera follows:]

   Prepared Statement of Luis A. Ribera, Ph.D., Associate Professor, 
 Extension Economist, and Director, Center for North American Studies, 
  Department of Agricultural Economics, Texas A&M University, College 
                              Station, TX
    Mr. Chairman, and esteemed Members of the Committee, thank you for 
the opportunity to testify on agricultural trade with Cuba. I am Luis 
Ribera, Associate Professor and Extension Economist in the Agricultural 
Economics Department at Texas A&M University. I am also the Director of 
the Center for North American Studies (CNAS) and the Program Director 
for International Projects for the Agricultural and Food Policy Center 
(AFPC), both at Texas A&M University. CNAS has over 15 years of 
experience working on Cuba related issues and has conducted dozens of 
economic impact analyses examining how increasing U.S. food and 
agricultural exports to Cuba will impact the U.S. economy and the 
economies of the states that produce those products for export. I would 
like to include as part of my testimony an study that my center, CNAS, 
developed titled[,] Estimated Economic Impacts of the Travel 
Restriction Reform and Export Enhancement Act of 2010. In general, we 
find that exports create jobs, and exports to Cuba are no exception. 
For every $73,600 in U.S. food and agricultural exports to Cuba, one 
job is created in the United States, along with another $170,000 in 
economic activity to support those additional exports.
Cuba Market Potential
    Cuba's food imports totaled $1.9 billion in 2014. Cuba also has the 
potential to become a major market for U.S. agricultural exports and to 
develop into a market that is quite diverse, with bulk staple products, 
such as corn, wheat, soybeans and rice, being important in the near-
term. But, as Cuba grows and the tastes and preferences of the average 
Cuban become more sophisticated, U.S. exports will be well positioned 
to capture a growing share of the high-value food market. Currently, 
most high-value foods exported to Cuba are consumed in the tourist 
sector. To put Cuba into perspective, U.S. agricultural exports to Cuba 
of $149 million represented less than one percent of total U.S. 
agricultural exports of $133 billion in calendar year 2015.
    Our previous research indicates that U.S. export potential could 
exceed the record $709 million set in 2008. With a more open economy, 
less regulation by both governments, strong tourism and remittances, 
U.S. food and agricultural exports have the potential to exceed $1.2 
billion annually within 5 years. While much of this additional export 
volume may be consumed by international visitors, a growing share will 
also make its way into the Cuban populace, spurring additional demand 
for food and creating a larger potential market for U.S. exports.
    In 2015, U.S. exports to Cuba were $149 million, supported $415 
million in total business activity and provided employment for 1,555 
workers throughout the U.S. economy. U.S. agriculture receives economic 
gains from increased agricultural exports, with benefits accruing to 
non-agricultural sectors such as business and financial services, real 
estate, wholesale and retail trade and health care. Approximately 45 
percent of the gains in business activity go to non-agricultural 
sectors, while the majority of gains, 55 percent, go to agricultural 
producers, agribusinesses and related firms.
    In 2015, U.S. exports were concentrated in poultry, soybean complex 
and corn. Major exports included frozen leg quarters and other poultry 
($78 million), soybeans and soybean meal ($65 million) and corn ($4.8 
million). Together these three product categories represented 99 
percent of U.S. agricultural exports to Cuba (Figure 1). Other U.S. 
exports were feeds/fodders ($9.4 million), dairy products ($1.4 
million), pork ($1.3 million) and fresh fruit, prepared and snack foods 
($379,000). U.S. poultry claimed 73 percent of the poultry market in 
Cuba, while the soy complex represented 20 percent and corn \1/2\ of 
the market. Cuba is now the seventh largest market for U.S. exports in 
the Caribbean/Central American region, but has potential to become more 
important.
    Cuba is a centrally-planned economy located 90 miles south of Key 
West, Florida. The proximity to the United States makes Cuba 
economically, socially and politically important. Since the U.S. 
embargo was implemented in 1962, effectively severing diplomatic and 
economic relations, U.S. firms have been prohibited from doing business 
there.
    Nearly \3/4\ of the labor force is employed by the Government of 
Cuba (GOC) at a wage of approximately $20/month. The literacy rate is 
estimated at 99.8 percent, the highest in the Western Hemisphere.\1\ 
The GOC, however, is involved in virtually every aspect of the business 
and personal lives of its citizens. Trade and investment are strictly 
limited and controlled by government regulation. Further, food and 
agricultural imports are required to enter the country through Empresa 
Comercializadora de Alimentos (ALIMPORT).
---------------------------------------------------------------------------
    \1\ Central Intelligence Agency of the United States. World 
Factbook, Cuba and the Dominical Republic, April 2015.
---------------------------------------------------------------------------
    International trade between the United States and Cuba is strictly 
regulated by both governments. U.S. firms may export foods, 
agricultural products and medicines to Cuba. Recent regulatory changes 
allow the importation of selected Cuban products, but these products 
must be purchased from private businesses, not the Cuban Government. 
So, while some relaxation of regulation has occurred, there are 
significant regulatory impediments to trade in food and agricultural 
products.
    However, a combination of factors led to the growth of U.S. food 
and agricultural exports to Cuba during the early 2000s. First, passage 
of the Trade Sanctions Reform and Export Enhancement Act of 2000 
allowed U.S. firms to legally export their agricultural products to 
Cuba and travel there for business purposes. Second, the rapid onset of 
Hurricane Michelle in 2001 led to the destruction of most food crops in 
Cuba, and subsequently to acute food shortages. This prompted Cuba to 
begin the importation of U.S. food and agricultural products on a 
commercial basis for the first time since the embargo was imposed.
    From modest beginnings of $141 million in 2002, U.S. exports grew 
to $398 million in 2004 and peaked at $709 million in 2008. U.S. 
exports then fell to $460 million in 2012, $350 million in 2013, $286 
million in 2014 and 149 million in 2015 (Figure 1). From January to 
July 2016, U.S. exports to Cuba were down two percent from the same 
period last year to $114 million.
    This recent export performance is in sharp contrast to 2009, when a 
much larger and more diverse mix of U.S. products were exported to 
Cuba. In 2009, U.S. agricultural exports to Cuba of $529 million 
required 8,588 jobs and generated $1.6 billion in total economic 
activity. Major U.S. exports were 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 99 percent of total U.S. agricultural exports to 
Cuba. Other U.S. exports were dairy products ($412,000), fruit 
($228,000), animal feeds ($36,000), dried broths ($32,000) and frozen 
breads ($18,000).
Figure 1. U.S. Food, Ag, and Related Exports to Cuba
Million Dollars


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


          Note: Total exports to Cuba include small amounts of non-ag-
        related exports.
          Source: U.S. Census Bureau, Foreign Trade, U.S. Goods by 
        Country, www.census.gov/foreign-trade/balance/.

    There are several reasons for this sharp decline in U.S. exports. 
First, Cuba has diversified its food suppliers by shifting away from 
U.S. products in favor of those from Brazil, Canada, Argentina, Mexico, 
Spain, France, Ukraine, and Vietnam. Credit terms are offered by some 
of these countries, allowing ALIMPORT to conserve hard currency and use 
credit to make larger purchases over periods of several months or 
longer, usually twice a year. Sustained high prices for many 
agricultural commodities and a strong U.S. dollar also negatively 
impacted U.S. exports over the last several years. Lower earnings from 
nickel exports also hampered the GOC from continuing large cash 
expenditures on imported food. Perhaps another reason may have been the 
deliberate decision by the GOC to move away from the United States as a 
food supplier. After a decade of trying to influence U.S. policy and 
failing, persistence may have waned. The net result was a loss of U.S. 
competitiveness and market share, followed by a precipitous 79 percent 
decline in U.S. exports between 2008 and 2015.
    Cuba, however, does have potential for growth as a market for U.S. 
food and agricultural exports. With a population of 11 million, Cuba is 
similar in demographic composition and structure to the Dominican 
Republic, the largest U.S. market in the Caribbean/Central American 
region, ranging from $1.1 billion to $1.4 billion annually. Cuba also 
mirrors Guatemala, a market that has grown 38 percent over the past 5 
years.
    In 2014, the Dominican Republic had a population of ten million, 
with a labor force of 4.9 million. The proportion of the population 
between the ages of 25-54 was 39 percent. Per capita gross domestic 
product (GDP) was estimated at $9,200. GDP was composed of 15 percent 
agricultural production, 22 percent industrial production and 63 
percent services. In 2014, the Dominican Republic imported $1.4 billion 
from the United States, compared to $1.1 billion in 2010, an average 
annual growth rate of nearly seven percent.
    Cuba, by contrast, had a labor force of 5.1 million in 2014. Per 
capita GDP was estimated to be $10,200. This figure includes adjustment 
for government subsidized food, housing, transportation and medical 
care. Agriculture accounted for four percent of GDP, while industrial 
production was 22 percent and services was 74 percent. The proportion 
of the population between the ages of 25-54 was 47 percent, higher than 
the Dominican Republic and positive in terms of U.S. export growth 
potential since that age group tends to experience the highest levels 
of expenditure on food and other consumer products. These demographic 
comparisons give some idea of the potential the Cuban food market could 
have if it becomes more market oriented, less restricted by government 
regulation and experiences investment in business and infrastructure.
    Currently and likely for the near future, three key factors will 
influence the volume and mix of U.S. food and agricultural exports to 
Cuba. First, remittances to Cuba, largely from Cuban Americans in the 
United States, represent a major source of income and purchasing power 
for about 60 percent of Cuban households and an important source of 
foreign exchange for the GOC.
    Cuba's exports are also important for sustaining the economy and 
the ability to import food. With imports representing a much as 80 
percent of food consumption in some years, access to foreign exchange 
is crucial. Tourism ($1.9 billion), nickel/cobalt ($1.0 billion) and 
pharmaceuticals ($547 million) were Cuba's three most important exports 
out of a total of $5.3 billion in 2013. Other major exports included 
sugar ($449 million), tobacco ($245 million) and rum ($154 million). 
Cuba's ability to purchase food fluctuates widely as global markets for 
these products influence prices and volumes traded.
    Finally, U.S. export success is heavily influenced by decisions on 
the part of the GOC and ALIMPORT related to which products to purchase, 
at what price and in what volumes.
    The present product mix of frozen leg quarters, soybean meal and 
corn could certainly increase to include more processed foods and high 
value products such as pork, beef, prepared meats such as sausage and 
hot dogs, along with condiments such as sauces, seasonings, mayonnaise, 
mustard and other products. Dairy products, rice and wheat also have 
strong potential in the market. Snack foods, frozen desserts, soups, 
gelatins and canned fruit and vegetables all have potential. Raisins, 
nuts, fresh fruit and vegetables, along with gum, bottled water, wine, 
beer and spir[i]ts all have potential. These products were exported to 
Cuba to some degree until 2012 when the Cuban Government began to make 
substantial food purchases from other suppliers.
Challenges in the Cuban Market
    There are several challenges that limit the performance of U.S. 
exports to Cuba. Consumer incomes, infrastructure/logistics, and policy 
and regulation are among the most important constraints. Consumer 
income growth is one of the critical factors affecting market potential 
in Cuba. With the large majority of the population on fixed, low 
incomes, consumer disposable incomes are limited.
    Remittances, largely from Cuban Americans in the United States are 
an important component of household income and a bright spot in terms 
of market potential. These funds are transferred directly to Cubans and 
represent a substantial boost to consumer purchasing power. Estimated 
to increase eight percent from $2.77 billion in 2013 to $3.0 billion in 
2014, remittances are likely to have a substantial positive economic 
effect on the Cuban economy and U.S. exports, spurring expenditures by 
those who receive them and fostering additional investment in small 
business ventures. Should remittances decline, however, there would be 
direct negative impacts on Cuban consumers and followed by lower 
purchases of U.S. food products.
    Tourism is also an important income source for those Cubans who 
work in restaurants, hotels and other tourist related businesses, such 
as transportation. With a record 3.5 million visitors in 2015, spending 
an average of $629/trip, tourism represents a key component of the 
Cuban economy that generated $3.0 billion last year. Approximately 40 
percent of all visitors to Cuba are from Canada, followed by Germany, 
England, Italy, France and Mexico. Allowing U.S. visitors to use credit 
cards will also have a positive economic impact, but the exact amount 
is uncertain and more research is required.
    Cuba also relies on exports of nickel and cobalt, pharmaceuticals, 
sugar and rum. International market volatility due to wide swings in 
commodity prices can limit the amount of currency available for food 
purchases, and certainly dampen U.S. export potential.
    Infrastructure and logistics pose special problems for U.S. 
exporters. Internet access in Cuba was severely limited, with only an 
estimated five percent of the population having access. However, over 
the last few months several Internet hotspots have been installed as 
well as smartphones data plans are made available for Cuban citizens. 
Although major strides have been made, limited Internet and e-mail can 
certainly have a negative effect on communications between Cuban 
officials and U.S. businesses after deals are made and the U.S. 
representative returns home.
    Electrical power, while adequate most of the time, does have 
limitations. Intermittent outages and complete loss of power are common 
occurrences. When this occurs, perishable food products located in 
warehouses, at Cuban Customs, in grocery stores or restaurants may be 
subject to damage, partial spoilage or complete loss. Additional 
investment in power infrastructure will be an important factor in 
determining the amount of U.S. perishables that can be imported and 
retained in storage. Bulk cargoes, such as corn, soybeans, wheat and 
rice also face constraints due to antiquated unloading facilities at 
ports, limited vessel size constraints and slow loading capacities. 
Although the GOC has already invested over $900 million in the 
development of the Zona Especial de Desarrollo (Special Development 
Zone) Port of Mariel to improve the port facilities and attract foreign 
direct investment. The Port of Mariel, operated by Singapore-based PSA, 
has four cranes with a capacity of 824,000 containers/year and the 
capacity to handle Post-Panamax shipping (ships that can handle over 
12,500 containers). The development of an efficient, reliable supply 
chain is crucial to future U.S. export success.
    Competition for the Cuban food market is keen. The U.S. share of 
the Cuban market has been declining for several years and continues to 
fall in 2016. Many U.S. competitors in the Cuban market offer some form 
of credit terms to ALIM[P]ORT for food purchases. U.S. firms are 
precluded from doing so and also face an added constraint of being 
required to offer only cash-in-advance sales, or cash against 
documents. U.S. exporters cannot use letters of credit to facilitate 
sales and manage risk, raising the cost of U.S. products and making 
them less competitive relative to Spain, Canada, Brazil, China and 
Vietnam (Figure 2). Reducing the cost and time necessary to process 
payment for U.S. exports to Cuba would have positive 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. In summary, 
consistent, transparent and facilitative policies related to export 
finance for U.S. exports to Cuba would have positive economic impacts 
on U.S. exports and the U.S. economy.
Figure 2. Compe[ti]tion in Cuba Food Market
Million Dollars

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



          Source: USDA Foreign Agricultural Service; WISERTrade; 
        Brazilian Ministry of Development, Industry, and Forei[g]n 
        Trade; and Argentina Institute of Statistics and Census.
Background on Agriculture in Cuba
    Agriculture (including sugar) accounts for 4.2 percent of Cuba 
gross domestic product (GDP), compared to 18 percent for repairs, 17 
percent for public health and manufacturing at 15 percent. Cuba has a 
moderate, subtropical climate with an average of 330 days of sunshine 
annually. The island's weather is characterized by a dry season 
(November-April) and a rainy season (May-October). The average 
temperature ranges from 75 in the West to 80 in the East. Humidity 
averages about 80 percent and average annual rainfall is 52", with 
about 39" falling during the rainy season.
    Roughly 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). According to the Food and Agriculture Organization 
of the United Nations, however, 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, and inadequate or improper use of 
irrigation and drainage systems.
    Agricultural land in Cuba is evenly distributed 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. 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). Cereals (rice and corn), sugar cane, tropical fruits, and 
vegetables accounted for 84 percent of harvested area in 2013.
    Cuba's field crop yields, harvested area and production have varied 
widely over the past decade. Corn yields averaged 47 bushels/acre in 
2013, compared to 160 bushels/acre in the United States. These yields, 
however, were up 20 percent from 41 bushels/acre in the period from 
2003-08. Harvested area for corn declined from 556,000 acres in 2010 to 
440,000 acres in 2013. In 2013, Cuba rice yields averaged 3,000 pounds 
per acre, compared to 7,400 in the United States. Harvested area for 
rice was down five percent to 489,000 acres. Rice production was up in 
2013 to 677,000 metric tons, however, nearly 20 percent more than 2010.
    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. According to 
FAO, 42 percent of Cuba's agricultural land is affected by medium to 
highly erodible soils. Poor drainage and low fertility affect 40 to 44 
percent of soils, while 70 percent experience low organic matter. As a 
result, Cuba will remain one of the top grain and oilseed product 
markets in the Caribbean region.
International Visitors in Cuba
    A record 3.5 million international visitors traveled to Cuba in 
2015, up from 2.0 million in 2004. Slightly more than 90,000 
international visitors were U.S. business representatives and other 
approved categories. Revenue from international visitors is a major 
source of foreign exchange for the Government of Cuba (GOC), ranked 
third behind technical services and remittances. It is also an 
important source of income for Cubans working in tourism such as wait 
staff, taxi drivers and tour operators. This revenue was equivalent to 
57 percent of all merchandise exports in 2009 and 28 percent of the 
balance of all services trade for 2007. Further, as Cuban tourism 
earnings increased by six percent from 2006 to 2008, U.S. exports 
doubled. As earnings from tourism declined 11 percent in 2009, U.S. 
exports fell by 25 percent. The potential increases in U.S. food and 
agricultural exports to Cuba due to increased travel range from $48 
million to $366 million/year, creating up to 5,500 new jobs, these 
estimates include only the additional spending by new U.S. visitors to 
Cuba.
    Changes implemented by the GOC in April 2008 allow Cubans to stay 
at some tourist hotels and resorts. Many of the four and five star 
facilities are out of the price range of most locals who earn the 
equivalent of about $20/month. During the low season of 2009 (August), 
however, some of the two and three star hotels in Varadero, Cuba's 
major tourist beach resort area, were booking 1 week stays to locals 
for around $200/week. 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 some additional demand for 
U.S. food products.
    While many other forces also influenced U.S. exports, and cause-
effect may be debatable, there does appear to be a fairly strong 
linkage between the amount of money Cuba earns from visits to the 
island and the amount of food it can afford to import from the United 
States and other suppliers. USDA estimated in 2008 that the proportion 
of imported foods supplying the tourist trade in Cuba was between 25 
and 33 percent. CNAS estimates indicate that the U.S. share of the 
Cuban food market for international visitors is about 40 percent, 
implying that each tourism dollar spent in Cuba generates an additional 
$0.10 to $0.13 in U.S. food exports needed to supply the Cuban tourist 
trade.
    In conclusion, the Cuban market for U.S. food and agricultural 
exports has potential for growth. From modest beginnings, the market 
has shown strong growth at times, but also weakness. Our estimates 
indicate that U.S. food and agricultural exports to Cuba have the 
potential to exceed $1.0 billion annually. These additional exports 
would support the creation of 6,000 new jobs throughout the U.S. 
economy. For this potential economic impact to be realized, however, 
several challenges lie ahead. First, sustained income growth and 
economic prosperity for Cubans is needed. Second, infrastructure 
improvement and investment will be necessary to improve the efficiency 
of existing supply chain and the creation of new cold chains to handle 
processed foods. Finally, policies and regulations that facilitate 
trade, and that are transparent and consistent are an absolute 
necessity. Open trade would certainly lead to more rapid growth, but 
absent free trade, less regulation of financing, the use of letters of 
credit and improvements in banking conditions in Cuba would stimulate 
U.S. export growth.
    Mr. Chairman, that completes my statement.
                               Attachment
Estimated Economic Impacts of the Travel Restriction Reform and Export 
        Enhancement Act of 2010
Parr Rosson, Flynn Adcock and Eric Manthei \1\
---------------------------------------------------------------------------
    \1\ Rosson is Professor and Director, Center for North American 
Studies; Adcock is International Program Coordinator and Assistant 
Director, Center for North American Studies; and Manthei is Extension 
Assistant, Texas AgriLife Extension Service. For more information, 
please call 979-845-3070 or e-mail [email protected].

---------------------------------------------------------------------------
CNAS 2010-01

March 2010
Introduction
    The following report was prepared for presentation 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. Finally, the results of the 
different analyses discussed below 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 and oil. Through February 2010, U.S. 
exports of corn to Cuba were down 47 percent compared to 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 resulting from the FY 2010 Omnibus 
Appropriations Act will provide some 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 (Importad[ora] 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. 
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 an 18 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 \1/2\ ($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            Long Run 7-Day Stay
                 -----------------------------------------------------------------------------------------------
                                       Total                           Total                           Total
                      Exports        Business         Exports        Business         Exports        Business
                                     Activity                        Activity                        Activity
----------------------------------------------------------------------------------------------------------------
                                              Top Exported Products
----------------------------------------------------------------------------------------------------------------
Poultry Meat and            $8.1           $13.6           $30.0           $50.5           $56.0           $94.2
 Eggs
Pork, Beef and              $6.3            $8.8           $23.4           $31.9           $43.6           $59.6
 Products
Miscellaneous               $5.5            $5.8           $20.9           $22.0           $39.2           $41.3
 Food Products
Flour and Malts             $3.3            $4.1           $12.4           $15.4           $23.2           $28.8
Dry Milk and                $3.0            $4.0           $11.3           $15.1           $21.1           $28.3
 Cheese
Canned Fruits/              $2.9            $3.4           $10.7           $12.5           $19.9           $23.3
 Vegetables
Soft Drinks                 $2.5            $2.8            $9.3           $10.3           $17.4           $19.2
Spirits/Wine/               $2.4            $2.8            $9.1           $10.6           $17.0           $19.7
 Beer
Fruits                      $2.4            $2.9            $8.9           $10.7           $16.6           $20.1
----------------------------------------------------------------------------------------------------------------
                                             Top Supporting Sectors
----------------------------------------------------------------------------------------------------------------
Ag Related                   N/A           $14.0             N/A           $51.9             N/A           $96.9
 Activities
Business                     N/A           $11.1             N/A           $41.2             N/A           $76.8
 Services
Oil, Gas, and                N/A            $8.7             N/A           $32.4             N/A           $60.4
 Petroleum
 Products
Other Food                   N/A            $8.0             N/A           $29.9             N/A           $55.8
 Production
----------------------------------------------------------------------------------------------------------------
                                             Total Estimated Impacts
----------------------------------------------------------------------------------------------------------------
Business                   $48.4          $165.1          $180.0          $614.2          $336.0        $1,146.5
 Activity
Employment (# of             181             786             671           2,923           1,252           5,456
 Jobs)
----------------------------------------------------------------------------------------------------------------
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 Travel
                                                           Restrictions                    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 estimated percentage changes to 2006 baseline exports were applied to 2009 exports except for rice,
  dairy products, beef, seafood, and wood products. For the latter set of products, the USITC estimated exports
  were used. 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.

    The Chairman. Thank you, Dr. Ribera. Mr. Claver-Carone.

STATEMENT OF MAURICIO CLAVER-CARONE, J.D., EXECUTIVE DIRECTOR, 
           CUBA DEMOCRACY ADVOCATES, WASHINGTON, D.C.

    Mr. Claver-Carone. Thank you, Mr. Chairman, Ranking Member, 
and Members of the Committee. It is truly a privilege to be 
here with you today to discuss these important and 
consequential issues surrounding U.S. agricultural trade with 
Cuba. I commend you for including a dissenting voice on this 
panel, and I am pleased to join my colleagues here, all of whom 
I have great respect for.
    My name is Mauricio Claver-Carone, and I am the Executive 
Director of Cuba Democracy Advocates, a nonprofit, nonpartisan 
organization dedicated to the promotion of human rights 
democracy and the rule of law in Cuba.
    As you are surely aware, pursuant to TSRA, the sale of 
agricultural commodities, medicine, and medical devices to the 
Castro regime in Cuba was authorized by Congress with an 
important caveat; that it must be for cash-in-advance. Prior to 
that, the export of food, medicine, and medical devices to the 
Cuban people had already been authorized under the Cuban 
Democracy Act of 1992. This is an important distinction that 
needs to be made, for in order to have a productive discussion 
about ag trade with Cuba, we need to understand how that 
island's totalitarian regime conducts business.
    In most of the world, trade means dealing with privately 
owned and operated corporations, but that is not the case in 
Cuba. In Cuba, foreign trade and investment is the exclusive 
domain of the State; namely, the Castro regime. There are no 
exceptions. A noteworthy fact for all of us to remember. In the 
last 5 decades, every single foreign trade transaction with any 
country in the world with Cuba has been with a State entity, or 
with an individual acting on behalf of the State. The State's 
exclusivity regarding trade and investment remains enshrined in 
Castro's 1976 Constitution, Article 18.
    Since the passage of TSRA in 2000, over $5 billion in ag 
products have been sold to Cuba from the United States, but it 
is a very unpleasant fact, however, that all of those sales, by 
more than 250 privately owned U.S. companies, were made to only 
one Cuban buyer: the Castro regime. Hence, another unpleasant 
fact: all business decisions in Cuba are based on political and 
control-based calculations of the Castro regime. They are not 
based on market forces. If the Cuban people enjoyed property 
rights and were able to establish their businesses and freely 
partake in foreign trade and investment, my testimony here 
today would be very, very different.
    Over the years in this same committee room I have heard 
testimony professing that the easing of sanctions, the 
redefining of cash-in-advance, the improvement of U.S. 
relations, increase of travel to the island, that that was 
going to benefit U.S. farmers. As we know, since December 17, 
2014, the Obama Administration has done just that. As part of 
those concessions, the Obama Administration redefined cash-in-
advance to ease payment terms, American travel has increased by 
50 percent, Cuba's GDP grew last year by four percent, 
diplomatic relations were established. I lost count on all the 
business and ag delegations that have gone down to Cuba. So 
surely, these sales have dramatically increased, right? No. To 
the contrary. They have plummeted by nearly 40 percent in 2015, 
and during the first quarter of 2016, the slide continues as 
ALIMPORT, through the regime, purchased now only $63 million of 
U.S. agricultural products. It is a further 21 percent drop 
this year.
    Of course, those of us who understand how the Castro regime 
operates are not surprised for his long-used agricultural sales 
as a tool of political influence.
    Let me be absolutely clear. Those of us who support 
sanctions and oppose financing transactions with the Castro 
regime do not do with the intent of harming American farmers. 
And conversely, I know that American farmers do not seek to 
sell their products with the intent of supporting or 
subsidizing the Castro regime. American farmers are the best in 
the world, and we share the desire to establish and expand 
markets. And as a matter of fact, I am sure that Cuban 
Americans in Florida consume more rice than any amount ever 
sold to Cuba pre- or post-1959, and we will continue to proudly 
do so. However, the ag groups represented here today remain 
steadfast in this desire to provide financing to Cuba, but that 
proposition must be weighed by serious factual considerations 
regarding the troubling structure of Cuba's business entities, 
military-run monopolies; its beneficiaries, the Castro regime 
and its cronies; the rights of victims, both Cubans and 
Americans; and whether such practices are in the U.S.'s 
security interest.
    I believe that these safeguards, which we will discuss 
today, fall essentially into three categories. First, protect 
American taxpayers. Cuba ranks amongst the world's worst credit 
risk and debtor nations. Thus, I am confident we all agree that 
American taxpayers must not be exposed to any direct bailout of 
the Castro regime. Protect American victims of stolen property. 
According to Inter-American Law Review, the Castro regime's 
confiscation of U.S. assets was the largest uncompensated 
taking of American property by a foreign government in history. 
There are over 6,000 unpaid certified claims, worth $7 billion. 
Many of the ports and infrastructure used for ag sales to Cuba 
were stolen from your fellow Americans. That needs to be 
addressed. We should not have Americans essentially having 
their rights trampled upon by other Americans, and that is 
something very important. Farmers understand the importance of 
these property rights, because that is at the core of farming. 
Thus, I am sure that American farmers appreciate the injustice 
in that regard. And finally, concerning the third safeguard is 
to prevent support for Cuban military entities. The Cuban 
military owns GAESA, and the AP this week and had an expose of 
how the Cuban military is essentially gaming the Obama 
Administration's travel regulations, and has taken over the 
biggest foreign trade bank, Banco Financiero Internacional, and 
hotel companies. Your colleagues, the Chairman of the 
Intelligence Committee, Devin Nunes, and the Chairman of the 
Armed Services Committee, Mac Thornberry, anticipated this 
trend and introduced the Cuban Military Transparency Act, which 
seeks to ensure that any amount of resources to Cuba, pursuant 
to any changes, truly reach the Cuban people and are not 
funneled through the military's entities and armed forces. That 
is a huge safeguard, and the same way that those companies were 
taken over, our concern is that as soon as financing comes 
through, our ALIMPORT will also be taken over by the military 
in the snap of a finger.
    Thank you, sir. That concludes my remarks.
    [The prepared statement of Mr. Claver-Carone follows:]

Prepared Statement of Mauricio Claver-Carone, J.D., Executive Director, 
               Cuba Democracy Advocates, Washington, D.C.
    Thank you, Mr. Chairman, Ranking Member, and Members of the 
Committee.
    It's truly a privilege to join you here today to discuss important 
and consequential issues surrounding U.S. agricultural trade with Cuba. 
I commend you for including a dissenting voice on this panel.
    My name is Mauricio Claver-Carone and I'm the Executive Director of 
Cuba Democracy Advocates, a nonprofit, nonpartisan organization 
dedicated to the promotion of human rights, democracy and the rule of 
law in Cuba.
    My testimony will be divided into two parts. First, I would like to 
present key facts regarding agricultural trade with Cuba and highlight 
the counter-productive trends we are seeing since President Obama 
announced a new policy of unconditional engagement with the Castro 
regime on December 17, 2014. Second, I would like to focus on the issue 
of financing agricultural sales to Cuba, which I understand is a 
priority for my fellow panelists, with the good faith and disposition 
to find common ground.
The Reality of Trade With Cuba
    As you are surely aware, pursuant to the Trade Sanctions Reform and 
Export Enhancement Act of 2000 (`TSREEA'), the sale of agricultural 
commodities, medicine and medical devices to the Castro regime in Cuba 
was authorized by Congress, with one important caveat--these sales must 
be for ``cash-in-advance.'' Prior to that, the export of food, medicine 
and medical devices to the Cuban people had already been authorized 
under the Cuban Democracy Act of 1992 (`CDA').
    This is an important distinction that needs to be made, for in 
order to have a productive discussion about agricultural trade with 
Cuba, one should understand how the island's totalitarian regime 
conducts business.
    In most of the world, trade means dealing with privately-owned or 
operated corporations. That's not the case in Cuba. In Cuba, foreign 
trade and investment is the exclusive domain of the state, namely the 
Castro regime. There are no ``exceptions.''
    Here's a noteworthy fact: In the last 5 decades, every single 
``foreign trade'' transaction with Cuba has been with a state entity, 
or individual acting on behalf of the state. The state's exclusivity 
regarding trade and investment remains enshrined in Article 18 of 
Castro's 1976 Constitution.
    Since the passage of TSREEA in 2000, over $5 billion in U.S. 
agricultural products have been sold to Cuba. It is an unpleasant fact, 
however, that all of those sales by more than 250 privately-owned U.S. 
companies were made to only one Cuban buyer--the Castro regime.
    As the U.S. Department of Agriculture's (`USDA') own report on Cuba 
notes, ``The key difference in exporting to Cuba, compared to other 
countries in the region, is that all U.S. agricultural exports must be 
channeled through one Cuban Government agency, ALIMPORT.''
    ALIMPORT is an acronym for Empresa Cubana Importadora de Alimentos, 
S.A. It is a subsidiary of Cuba's Ministry of Foreign Trade and serves 
as the sole procurement agency for U.S. agricultural products. 
Throughout the years, the Castro regime has ensured the Ministry of 
Foreign Trade is run by senior officials from Cuba's intelligence 
services (known as Directorio General de Inteligencia, or `DGI'). The 
current Minister of Foreign Trade is a DGI official, Rodrigo Malmierca 
Diaz, who is the son of Isidoro Malmierca Peoli, a historic Castro 
family confidant and founder of Cuba's counter-intelligence and state-
security services.
    Hence another unpleasant fact: All business decisions in Cuba are 
based on the political and control-based calculations of the Castro 
regime--not on market forces. If the Cuban people enjoyed property 
rights to establish their businesses and were allowed to freely partake 
in foreign trade and investment--my testimony today would be very 
different.
    ALIMPORT primarily supplies government institutions, and the Cuban 
military's hard currency retail stores (known as Tiendas de 
Recuperacion de Divisas, `TRDs'), hotels and other facilities that 
cater to tourists and other foreigners.
    So let's immediately debunk a myth: Financing agricultural 
transactions with Cuba is not about assisting small and midsize farmers 
on the island, but about financing a monopoly of the Castro regime.
    Again, as the USDA itself recognizes: ``U.S. food products will be 
sold and delivered to A[LIMPORT], which will take control of the 
imports at the Cuban point of entry, manage distribution throughout 
Cuba and coordinate payments. Consequently, U.S. agricultural firms 
planning on doing business with Cuba need to learn to negotiate and 
transact business with the Cuban [G]overnment through A[LIMPORT].''
    As a result, we already know what any further lifting sanctions 
towards Cuba would look like. TSREEA sales from the U.S. and business 
ventures with other nations exhibit the model: A mercantilist system 
whereby commerce is simply a tool to benefit and strengthen its 
totalitarian regime.
President Obama's Policy Changes Have Proven Counter-Productive
    President Obama's policy of unilaterally easing sanctions has 
proven to be counter-productive for agricultural sales to Cuba. But 
before focusing on those figures, it's important to note how President 
Obama's new policy has broadly proven to yield counter-productive 
results.
    For example, since December 17th, 2014:

   Political arrests have intensified. Throughout 2015, there 
        were more than 8,616 documented political arrests in Cuba. Thus 
        far, there have already been over 7,935 political arrests 
        during the first 8 months of 2016. This represents the highest 
        rate of political arrests in decades and nearly quadruples the 
        tally of political arrests throughout all of 2010 (2,074), 
        early in Obama's presidency.

   A new Cuban migration crisis has unfolded. The United States 
        is faced with the largest migration of Cuban nationals since 
        the rafters of 1994. The number of Cubans fleeing to the United 
        States in 2015 was nearly twice that of 2014. Some 51,000 
        Cubans last year entered the United States and this year's 
        figures will easily surpass that. The numbers of Cuban 
        nationals fleeing the island have now quintupled since 
        President Obama took office, when it was less than 7,000 
        annually.

   Castro's military monopolies are displacing ``self-
        employed'' workers. There are fewer licensed ``self-employed'' 
        workers in Cuba today than in 2014. In contrast, Castro's 
        military monopolies are expanding at record pace. The Cuban 
        military-owned tourism company, Gaviota S.A., announced 12% 
        growth in 2015 and expects to double its hotel business this 
        year. Even the limited spaces in which ``self-employed'' 
        workers previously operated are being squeezed as the Cuban 
        military expands its control of the island's travel, retail and 
        financial sectors of the economy.

   Internet ``connectivity ranking'' has dropped. The 
        International Telecommunication Union's (ITU) Measuring the 
        Information Society Report for 2015, the world's most reliable 
        source of data and analysis on global access to information and 
        communication. ITU has dropped Cuba's ranking to 129 from 119. 
        The island fares much worse than some of the world's most 
        infamous suppressors of the Internet suppressors, including 
        Zimbabwe (127), Syria (117), Iran (91), China (82) and 
        Venezuela (72).

   Religious freedom violations have increased tenfold. 
        According to the London-based NGO, Christian Solidarity 
        Worldwide (`CSW'), last year 2,000 churches were declared 
        illegal and 100 were designated for demolition by the Castro 
        regime. Altogether, CSW documented 2,300 separate violations of 
        religious freedom in 2015 compared to 220 in 2014. In the first 
        half of 2016, there have already been 1,606 separate violations 
        of religious freedom.

   Democracy's regional foes have been emboldened. President 
        Obama's unconditional recognition and engagement of the sole 
        remaining dictatorship in the Western Hemisphere has sent a 
        message to Castro's allies in the region that there are no 
        consequences for rogue and undemocratic behavior. Hence the 
        recent militarization (with Cuba's support) of Venezuela's 
        regime and the parliamentary coup in Nicaragua.
Agricultural Sales Have Not Escaped This Downward Trend
    Over the years, in this same Committee room, I have heard testimony 
professing that an easing of sanctions; re-defining of ``cash-in 
advance''; improving U.S.-Cuba relations; and an increase in travel to 
the island, would benefit U.S. farmers. And, as we all know, since 
December 17th, 2014, the Obama Administration has engaged the Castro 
regime and extended a litany of unilateral concessions.
    As part of these concessions, the Obama Administration has 
redefined ``cash-in-advance''; eased payment terms for agricultural 
sales; American travel to Cuba has increased by over 50%; Cuba's GDP 
grew last year by over 4%; diplomatic relations were established; and 
endless U.S. business and trade delegations have visited Havana.
    Yet, U.S. agricultural exports to Cuba plummeted by nearly 40% in 
2015. During the first quarter of 2016, the slide continued, as 
ALIMPORT purchased only $63 million in U.S. agricultural products. That 
is an additional 21% percent drop from the same period in 2015. These 
are the lowest numbers since the United States authorized agricultural 
exports to the Castro regime in 2000.
    Of course, those who understand how the Castro regime operates are 
not surprised--for it has long used agricultural sales as a tool of 
political influence.
    As a 2007 report of the U.S. International Trade Commission (`ITC') 
confirmed: ``A[LIMPORT] reportedly initiated a policy in 2003 that 
limited or ceased purchases from U.S. companies that did not actively 
lobby the U.S. Government for changes to laws and regulations regarding 
trade with Cuba. Purchases are also allegedly geared to particular U.S. 
States or Congressional districts in an effort to heighten local 
interests in pressing the Administration to normalize trade with 
Cuba.''
    Today is no different. The Castro regime wants the U.S. Congress to 
lift tourism, financing and investment sanctions that would 
overwhelmingly benefit its military monopolies, so it is putting on the 
squeeze.
Financing Agricultural Sales to Cuba
    We will surely hear testimony today about Cuba being one of the 
U.S.'s largest export markets pre-1959 and how we need to ``recapture'' 
it. Politics aside, I would caution that Cuba's economy is nowhere near 
the same today as it was throughout its pre-1959 history, when it was 
free-market oriented, with a dynamic private-sector, property rights, 
and among the largest middle class and highest per capita income in 
Latin America at the time. Today, Cuba is a totalitarian dictatorship, 
with a centralized control economy and the lowest per capita income in 
Latin America.
    We will also surely hear testimony about Cuba purchasing rice from 
Brazil and Vietnam, instead of from the United States, as a result of 
the prohibition on U.S. financing for agricultural sales. But I would 
caution that Brazil and Vietnam's rice sales to the Castro regime are 
heavily state-subsidized and made pursuant to political arrangements. 
They are not based on competitive terms and rates. I would further 
argue that the recent downfall of the socialist government in Brazil--
and its shady financing deals with the Castro regime that are currently 
under investigation by the Brazilian authorities--may lead to a bigger 
increase in U.S. rice sales to Cuba than anything the U.S. Congress 
could do.
    Finally, we will surely hear many theories and estimates about how 
much more money one commodity sector or another--or one state or 
another--can make from exports to the Cuba, if U.S. sanctions were 
further eased or lifted. However, as we've learned from the dramatic 
decline in agricultural sales figures over the last year--despite the 
Obama Administration easing of sanctions and establishing diplomatic 
relations with the Castro regime--that is hardly guaranteed.
    Let me be absolutely clear. Those of us who support sanctions and 
oppose the financing of transactions with the Castro regime do not do 
so with the intent of harming American farmers. Conversely, I know that 
American farmers do not seek to sell their products with the intent of 
supporting or subsidizing the Castro regime.
    American farmers are the best in the world and we all share their 
desire to establish and expand markets. As a matter of fact, I'm sure 
Cuban Americans in Florida consume more rice than any amount ever sold 
to Cuba pre- or post-1959. However, the agricultural groups represented 
here today remain steadfast in their desire for the financing of 
agricultural sales to Cuba and there is even legislation before this 
Committee to that end.
    But any such proposition must be weighed by serious factual 
considerations regarding the troubling structure of Cuba's business 
entities (military-run monopolies), its beneficiaries (the Castro 
family and regime cronies), the rights of its victims (both Cubans and 
Americans), and whether such practices are in the U.S.'s security 
interests.
    Thus, the question comes down to: How to authorize private 
financing for U.S. agricultural sales to Cuba without subsidizing its 
derelict regime and in a manner consistent with U.S. security interests 
and the rights of victims?
    We are obviously not going to resolve this challenge today. But 
hopefully, this discussion can be helpful in understanding each other's 
concerns and in highlighting important safeguards that could address 
broader policy implications.
These Safeguards Fall Into Three Categories
1. Protect American Taxpayers
    Cuba ranks among the world's worst credit-risks and debtor nations. 
Moody's Investors Service gives Cuba's sovereign debt a Caa2 rating, 
which translates into ``very high credit risk.''
    Despite highly publicized (and politicized) debt forgiveness 
concessions from Russia and the Paris Club, Cuba still owes upward of 
$75 billion to a long international list of creditors. As recently as 
2010, Reuters reported how Cuba ``failed to make some debt payments on 
schedule beginning in 2008, and then froze up to $1 billion in the 
accounts of foreign suppliers by the start of 2009.'' That should make 
anyone unwise enough to leave money sitting in a Cuban bank account 
reconsider.
    And just a few months ago, on July 8th, 2016, General Raul Castro 
stated, in his own words: ``I should recognize that there have been 
some delays in current payments to creditors.''
    I am confident we all agree that American taxpayers must not be 
exposed to any direct bailout of the Castro regime. It is for this 
reason that TSREEA includes a prohibition (Sec. 7207(a)) on United 
States assistance, which reads:

          ``No United States Government assistance, including United 
        States foreign assistance, United States export assistance, and 
        any United States credit or guarantees shall be available for 
        exports to Cuba.''

    But American taxpayers should also not be exposed to any indirect 
bailout of the Castro regime. Thus, TSREEA should further be 
supplemented by a prohibition in the Internal Revenue Code that would 
prevent any losses stemming from commercial transactions with Cuba's 
regime--pursuant to Obama's policy changes--from being deducted when 
calculating business taxes.
2. Protect American Victims of Stolen Property
    According to the Inter-American Law Review, the Castro regime's 
confiscation of U.S. assets was the ``largest uncompensated taking of 
American property by a foreign government in history.'' Unfortunately, 
President Obama's policy of expanding business transactions with the 
Castro regime is already encouraging American companies to traffic and 
exploit properties stolen from other fellow Americans. Any expansion of 
such transactions by the U.S. Congress would further expose American 
victims.
    There are nearly 6,000 unpaid, certified claims, worth nearly $7 
billion arising from the Castro regime's confiscation of American-owned 
business and properties. They include many of the ports and other 
infrastructure used for agricultural exports to Cuba.
    American farmers understand the importance of property rights. 
Property is the very core of farming. As such, it is easy for farmers 
to appreciate the injustice of having your property stolen, and then 
co-opted, exploited and marketed to someone else to the benefit of the 
thief. This injustice must be corrected and resolved for the victims. 
Part of that solution will involve restitution from those collaborators 
who have knowingly benefited from the theft. The injustices occurring 
today in Cuba regarding confiscated property must be resolved; U.S. law 
promises that it will, and it is not just the Castro regime that is on 
the hook.
    It is for this reason that Section 103 of the 1996 Cuban Liberty 
and Democratic Solidarity Act (`Libertad Act') contains a prohibition 
on the indirect financing of Cuba, which states:

          ``No loan, credit, or other financing may be extended 
        knowingly by a United States national, a permanent resident 
        alien, or a United States agency to any person for the purpose 
        of financing transactions involving any confiscated property 
        the claim to which is owned by a United States national.''

    The American victims of stolen property in Cuba must not only 
remain protected from any financing involving their property, but they 
should be provided recourse.
    Unfortunately, President Obama is denying any recourse--through his 
waiver of Title III of the Libertad Act--to Americans who are now 
seeing their property rights trampled upon by other fellow Americans. 
That used to be unimaginable. If the Obama Administration is unwilling 
to protect the rights of grieved Americans, then a private right of 
action should allow for the victims to do so directly through the rule 
of law.
    As such, the U.S. Congress should pass legislation to end the 
President's waiver authority over Title III of the Libertad Act and 
grant Americans the legal standing to pursue justice.
3. Prevent Support for Cuban Military Entities
    Today, the Cuban military owns and operates one of the largest 
conglomerates in Latin America, known as the Grupo de Administracion 
Empresarial, S.A., or GAESA. Its portfolio includes companies that 
dominate ports, trade zones, tourist attractions, restaurants, hotels, 
real estate, retail stores, currency exchanges, gas stations, airlines, 
and other transportation services. Its head, Gen. Luis Alberto 
Rodriguez Lopez-Callejas, is Raul's son-in-law.
    Far from empowering Cuba's small sector of ``self-employed'' 
residents, the Castro regime is taking full advantage of President 
Obama's new policy to accelerate the military's holdings of every 
entity poised to benefit from current U.S.-Cuba relations.
    As an Associated Press report this weekend confirmed: ``the [Cuban] 
military's long-standing business wing, GAESA, assumed a higher profile 
after Gen. Raul Castro became President in 2008, positioning the armed 
forces as perhaps the prime beneficiary of a post-detente boom in 
tourism. Gaviota, the military's tourism arm, is in the midst of a 
hotel building spree that outpaces projects under control of nominally 
civilian agencies like the Ministry of Tourism. The military-run Mariel 
port west of Havana has seen double-digit growth fueled largely by 
demand in the tourism sector. The armed forces this year took over the 
bank that does business with foreign companies, assuming control of 
most of Cuba's day-to-day international financial transactions, 
according to a bank official.''
    Let there be no doubt, the Cuban military is already encroaching 
into the U.S. agricultural trade sphere, which is currently under the 
direction of the nominally-civilian Ministry of Foreign Trade. However, 
if Congress were to authorize any financing for agricultural sales to 
Cuba, I guarantee that GAESA would absorb ALIMPORT as swiftly--with no 
legal process and lack of transparency--as it recently did Habaguanex, 
S.A. and Banco Financiero Internacional. (Both were the focus of the AP 
story referenced in the prior paragraph).
    With great foresight, just a few months after President Obama 
announced his new Cuba policy, the Chairman of the House Intelligence 
Committee, U.S. Rep. Devin Nunes (Cal.), and the Chairman of the House 
Armed Services Committee, U.S. Rep. Mac Thornberry (Tex.), anticipated 
this trend and introduced the Cuban Military Transparency Act (H.R. 
2937), which seeks to ensure that any increase in resources to Cuba--
pursuant the Obama Administration's recent policy changes--truly reach 
the Cuban people and are not funneled through the Castro regime's armed 
forces.
    After all, these are the same Cuban armed forces that recently held 
a stolen U.S. Hellfire missile for nearly 2 years; that have been 
caught twice internationally-smuggling heavy weaponry, including the 
worst sanctions violations ever to North Korea; that oversee the most 
egregious abuses of human rights in the Western Hemisphere; that are 
subverting democracy in Venezuela and exporting surveillance systems 
and technology to other countries in the region; that welcome Russian 
military intelligence ships to dock in their ports; that share 
intelligence with the world's most dangerous anti-American regimes; and 
of which three senior Cuban military officers remain indicted in the 
United States for the murder of four Americans.
    As such, I would urge that this important piece of legislation, 
introduced by your national security counterparts, remain the priority 
of any Cuba policy consideration by the U.S. Congress.
    Mr. Chairman, this concludes my testimony. Again, I thank you for 
the opportunity to testify today. I look forward to continuing this 
important discussion and working in furtherance of our common 
interests.

    The Chairman. Well, I thank our witnesses. Well, I thought 
I lost the script. The chair would remind Members that they 
will be recognized for questioning in order or seniority for 
Members who were here at the start of the hearing. After that, 
Members will be recognized in order of arrival. And I 
appreciate Members' understanding.
    I recognize myself now for 5 minutes.
    Well, I thank the witnesses for being here this morning. 
This is the clearest example of two sides to the story we could 
possibly have, and I appreciate the respect with which all of 
our witnesses treated the subject. This is a big deal, and I 
understand that.
    Mr. Isbell, I appreciate your acknowledgement that the 
privilege of getting off your tractor and coming here and 
petitioning your Congress, jacking us up about something you 
think is important. My mind went immediately to that Cuban 
farmer. He is not about to get off whatever it is he is on, and 
go try to petition his government for anything that is going 
on, so clearly, we have some stuff to get done in this regard.
    Dr. Ribera, yesterday, and staff, you made an interesting 
comment that, in your view, people first want food, and then 
they want work, and then they want to decide their own destiny. 
Would you help the rest of us understand what you meant by each 
of those three points, and why you put them in that particular 
order, and what is going on there in your mind?
    Dr. Ribera. Sure. Thank you for the opportunity again. And 
I have been to Cuba a couple of times; the first time in April 
of last year, and then February this year. And I saw a lot of 
changes. And what I do, because I speak Spanish, is just, 
instead of talking to Cuban Government, I talk to people. And I 
saw a big change and a little bit of hope from people on my 
second trip, as opposed to the first one. And I believe that, 
as people, the person that I talked to was a young father, 25 
years old, has a wife and a little kid, and he said, ``I work 
really hard just to get food to my family, to provide for my 
family, but the future it doesn't look very well.'' Basically, 
it looked like he didn't have any hope. And it really hit me 
when I talked to him because he is young, and that is going to 
be passing to the next generation as well.
    On my second trip, because of the things that had happened 
with President Obama and different changes, I talked to people 
just in the Malecon area and they said, ``Things are getting 
better, we have food, we have the hope that the embargo is 
going to be lifted or some things are going to change,'' but 
they still believe that they are going to stay as a communist 
country. They don't talk about that. But what I think is going 
to happen, and this is just me thinking, is that once they 
reach this other point that they have food, that they have the 
necessities, they want to be able to decide what their kids are 
going to be in the future.
    The Chairman. Mr. Isbell, you may not have this number off 
the top of your head, but, I am trying to get a sense of what 
percent of the increased rice sales to Cuba would be vis-a-vis 
total U.S. rice production. Where would the 138,000 tons fit in 
that in the near-term goal? What percentage of rice production 
would that be?
    Mr. Isbell. On a percentage, I wouldn't have that number 
off the top of my head, we can get back to you on that. But, I 
can say it is significant in comparison with some of our other 
markets. If you see, for instance, we have worked hard on sales 
recently to places like Iraq, and things like that. You get 
maybe 90,000 metric ton tender, and it moves the market, it 
moves the market significantly. We welcome when we see those 
types of demand come into the marketplace. So I am convinced 
that 135,000 metric tons, I don't know the exact percentage but 
it is a significant effect.
    The Chairman. Thank you.
    If you wouldn't mind, I am sure Ben or somebody could get 
that for us.
    Mr. Isbell. Yes, we will get that to you.
    The Chairman. I guess the other question would be is: 
exports into Cuba peaked in 2008 under even the most restricted 
financing terms the Bush Administration had, and now it has 
dropped to $149 million, which is pretty small. Do you see any 
evidence that the Cuban regime is targeting states and/or 
Congressional districts to buy specific products in order to 
have an impact on that Member's judgment? Do you all see any of 
that going on?
    Mr. Isbell. Personally, no.
    The Chairman. All right. I appreciate that.
    Mr. Claver-Carone. I do.
    The Chairman. All right. Mauricio.
    Mr. Claver-Carone. I do. I mean it is abundantly clear, and 
not just me, the International Trade Commission, in a 2007 
report, acknowledged that the Castro regime particularly 
targets states and districts with certain agriculture 
populations in order to indirectly influence the United States 
Congress. That was the International Trade Commission not me.
    The Chairman. And what year was that?
    Mr. Claver-Carone. It was a 2007 report that they did, and 
it was repeated in the recent report that International Trade 
Commission did.
    The Chairman. All right. I appreciate that.
    With that, I yield back. Mr. Peterson, 5 minutes.
    Mr. Peterson. Well, thank you, Mr. Chairman.
    As I said, I was in Cuba, and as I understand it, the 
numbers that I have for the rice people, that they are paying 
$242 a ton for rice from Vietnam. It is not as good a quality 
as ours, is that the correct number, or in the ballpark?
    Mr. Isbell. Probably, $240, that seems low. Yes, that seems 
significantly low. It would be more than that, but I wouldn't 
have an exact number for you.
    Mr. Peterson. And our reference price on long grain rice is 
$308 a ton, so we are probably comparable in price, although we 
have better quality.
    Mr. Isbell. Right.
    Mr. Peterson. So I am right about that? Yes.
    Mr. Isbell. Within reason, yes.
    Mr. Peterson. I agree and disagree with the gentleman here 
on the end. I don't believe under this situation that they are 
going to buy anything from us. In talking to this guy from 
ALIMPORT, or however you say it, he has obviously taken 
direction from the Castros. We met with Miguel Diaz-Canel, the 
Vice President, who some people say will take over from the 
Castros. He is in his fifties. He is just as hardline as the 
Castros are. So, you have one person to deal with, and they 
don't want to buy from us. And so I go to the grocery store and 
they have chicken from North Carolina, which is a big part of 
our exports. At $5 a pound, if the average people can't buy 
them, it is only the Embassy people that are buying them and 
tourists. I am supportive of Mr. Crawford and what we are 
trying to do here, but I just want to caution people, I think 
that these folks are not going to change, and it is because, in 
their words, of the blockade. It is not the embargo, it is the 
blockade. And this has been going on forever down there.
    So where I disagree with the gentleman on the end is that 
we have had this policy for 50+ years and it hasn't worked, and 
so I don't know what the other option is, if opening this thing 
up is going to work either, but clearly, what we are doing 
isn't working. And what I am worried about is this. If we are 
going to make some kind of a deal with Cuba to get them to come 
into the situation, and we are going to actually screw some of 
the people in the U.S. in the process, that is what I am 
worried about, more than anything else. I am for lifting the 
embargo if it is straight up and they don't get anything out of 
it, we just lift it and let the economics and the situation 
take care of itself. In my opinion, that is probably the only 
way the average people are going to ever get to a point where 
they have enough money to buy anything.
    We can pass this bill, I don't see it is going to make a 
whole lot of difference. Do you have any kind of special 
insight or relationship with this guy that runs ALIMPORT that 
thinks that you are going to get him to open up this market?
    Mr. Isbell. No, I don't, but what I would say is what we 
saw happening in the early 2000s is the perfect test case for 
what can happen again. When we were able to compete under fair 
terms, there were----
    Mr. Peterson. So who was buying it? So I thought that 
everything that came in had to go through this guy, because it 
seemed to me that even the grocery stores had to buy everything 
from this guy, even the domestic stuff. Am I right? This one 
guy controls the whole thing. I went into the grocery store and 
I said, ``I want to see the sugar, because I have a big sugar 
district.'' So they go take me over. There is an aisle, it is 
empty on both sides. And I said, ``Well, this is the sugar? I 
thought Cuba produced sugar.'' Well, they only get it once 
every 2 months, or whatever, and people know when it comes in, 
and then it all disappears and they don't have any for 2 
months. As far as I understand it, this guy controls 
everything, even domestic sales, seems like. Am I right?
    Mr. Claver-Carone. Yes, sir. And I too agree and disagree 
with you in the sense of that I do believe Cuba wants to buy 
our products U.S. products, but they want us to pay for it.
    Mr. Peterson. No, they do, yes.
    Mr. Claver-Carone. They don't want to pay for it, and it is 
like they have done everywhere else in the world. We see in 
Brazil, Vietnam, and they are selling these products, those 
aren't competitive terms. As a matter of fact, right now in 
Brazil the loan terms that were given by BNDES, which is the 
development bank, to the Cuban regime are under Federal 
investigation because it is political. They are political.
    Mr. Peterson. Yes. One of the things I am worried about is 
Brazil financed this port, as I understand it, $300-$400 
million, and they told me that Brazil is talking about giving 
them a whole bunch of money to re-establish their sugar 
industry, which has come apart, and we don't need any more 
sugar in the world. We have enough of it, we don't need people 
going back into something, and it would not be economic. They 
would lose money on it.
    Mr. Claver-Carone. And, Congressman, that now has changed 
with the change of government in Brazil. That loan that was 
given for the Port of Mariel is under Federal investigation by 
the Brazilian authorities for corruption.
    Mr. Peterson. Are they going to stop doing that?
    Mr. Claver-Carone. And I argue, funny enough, that the 
change of government in Brazil is going to do more to help U.S. 
rice farmers sell on their current terms than anything we can 
do, financing or otherwise.
    Mr. Peterson. Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back. Mr. King, 5 
minutes.
    Mr. King. Thank you, Mr. Chairman. I do appreciate this 
hearing. And I am curious about a number of things here, and I 
am resisting for the moment the urge to start off on a 
monologue, but I would instead turn my first question to Mr. 
Gibson. And you talked about the share of the market that you 
could gain if we could open up trade with Cuba, or at least 
open up some credit with Cuba. And you say Cuba's import is 
zero wheat or rice from the U.S. in the last 4 years or so, 
something like that. And so I want to ask you about your 
concept of the market, and that is then who is selling that 
rice to Cuba, and where is your product going? Are people going 
to, and the real question is this: Are Cubans going to eat more 
if we trade with them, or do we have an alternative market that 
our products go to, regardless of whether it is easy to export 
to Cuba because of the cash restrictions up-front?
    Mr. Gibson. Well, to answer the first part of your 
question, people are going to eat. The real question is how 
much do they have to pay for the product. So in the current 
environment----
    Mr. King. But I am not interested in that, I am interested 
in are they going to eat more or less, does that affect their 
diet, or is the overall world market going to be to the 
appetite of what people can afford, and then it is just the 
difference in the logistics of what the basis is between 
shipping rice to Cuba and selling it to an alternative market 
somewhere, say, for example, Vietnam?
    Mr. Gibson. Competition will always lower prices.
    Mr. King. Yes.
    Mr. Gibson. So when people have more money, they eat more.
    Mr. King. Okay. Well, slightly more. I don't think you have 
any numbers on that. And so I would just take it to this point 
that, in the business I am in, we want to see more construction 
projects out there because we have a bigger market to bid into. 
And this is a tiny, little margin. It is 11 million people on a 
little island, out of seven billion people on the planet. So we 
could divide 11 million by seven billion and come up with a 
percentage of appetites that would be potentially affected by 
this. I am just putting that into a perspective because we have 
a very narrow vision on this, and I am, like a number of people 
in this room, I have made my trip to Cuba and I ended up 
spending nearly a week with an individual, I had better not 
identify him because he would be busted by the Castro 
Administration. I paid him cash to travel with me around from 
early in the morning until late at night, and I learned a lot. 
I learned a lot that you don't learn when you are following 
Castro's minders around Cuba. And some of these things, 
milestones about the history that we ought to be thinking about 
in this 50+ year saga of trying to free the Cuban people, back 
when we believed in promoting freedom around the world, and we 
will again. First place is, the Soviet Union propped Cuba up, 
and Cuba was a sugar-promoting island at the time. The world 
market on sugar then was 6 a pound, and the Soviet Union 
traded them 51 of oil for 6 of sugar. That is how they 
propped that regime up through all of that time, until the 
Soviet Union collapsed economically, and then Venezuela picked 
up the slack.
    Oh, by the way, those Russian tractors are probably still 
sitting down there rusting, and they have been parked for 
parts, and now we have the only civilized country in the world 
that I know of that went from a mechanized agriculture to 
animal husbandry, went backwards instead of forwards. Now there 
is a billion feet of rope in Cuba to tie down their animals 
that they use to farm with. But Venezuela filled that hole. And 
when Venezuela goes under, then the President of the United 
States decided I am going to open up negotiations or relations 
with Cuba, and now we are in the business of negotiating here 
on how we might open up trade with Cuba to try to help their 
economy out and help the Cuban people. And I heard Ms. Lowe say 
that we wanted to keep the money out of the hands of the Castro 
regime. And I hear Mr. Claver-Carone say, ``Well, every trade 
agreement for the last 50 years has been exactly with the 
Castro regime.'' And so it looks to me that the President of 
the United States is interested in bridging this Administration 
over, and giving help to the transition from the Castro 
Administration to the successor, which we have talked about. 
And this whole policy has been about the biological solution in 
Cuba that has to come one day, and it more imminent every 
single day, and that is Castro has lived a lot longer than we 
anticipated that he would. And I don't know that this 
Administration has a plan to transition and promote freedom in 
Cuba. I suspect they don't because it looks like to me that 
they have a plan to prop up the Marxist regime. And I don't 
want to curse the 11 million Cuban people to the next 50 years 
of living under a Marxist regime.
    And then the money laundering that goes on in Cuba. It was 
21 pesos to the U.S. dollar when I was there. It is 23.14 pesos 
now. Cubans can earn American dollars. They can hold them, but 
they can't spend them. They have to go to a Cuban bank where 
they get $1 for every 23.14 pesos. And so they get 1 peso for 
every dollar. And Castro picks up 22 pesos out of that. He gets 
the vigorish. That props up the Cuban Administration.
    Castro runs the hotels. American dollars go into the 
pockets of the Castro regime.
    This big picture part of this thing has not been addressed 
in this hearing in an adequate way. And I recognize the 
testimony of Mr. Claver-Carone, and I think that we have much 
more we need to discuss before we move forward with something 
that would facilitate a Marxist regime in Cuba.
    Thank you. I yield back.
    The Chairman. The gentleman's time has expired. Mr. Costa, 
5 minutes.
    Mr. Costa. Thank you, Mr. Chairman.
    Well, we all have some ideas about the nature of the Castro 
regime. It has been a Marxist dictatorship since, really its 
inception, and it is obviously in all ways that we view human 
rights and freedoms that we cherish in this country, the Cuban 
Government's behavior toward its people has been the antithesis 
of what we believe in our country. Let's be clear about that. 
What we are witnessing is a transition. The Castro regime, I 
don't believe, is going to be in place indefinitely, and no 
one, I don't think, at this point can predict what will occur 
after the brother is no longer able to maintain the facade of 
his predecessor.
    And I guess, Mr. Claver-Carone, to your points, while some 
of your issues that you raised are valid, I don't think it 
anticipates that continuing to do what we have always done over 
the last 50 years is somehow going to create change that we 
would like to see occur.
    Dr. Ribera, what I didn't hear from you, and I would like 
to get your sense of, is if those of us who are looking at the 
long-term game, and, Ms. Lowe, you may want to comment as well, 
these steps to begin to open discussions and formal relations 
is a first step. Obviously, based upon conditions and 
reactions, and we are really talking about the next 
Administration. I mean this Administration has done what they 
have done, for better or worse, whether you agree or disagree, 
and it is going to be up to the next Administration to 
determine what kind of relationship they want to set up, under 
what sort of conditions as we go forward between ourselves and 
Cuba.
    Dr. Ribera, what do you see is the long-term game here, as 
well as Ms. Lowe? I too was one of those who have visited Cuba. 
From a California agricultural perspective, there are a lot of 
opportunities there, providing you have the right set of 
circumstances. And please give me your sense, Dr. Ribera.
    Dr. Ribera. Well, as I mentioned in my statement, more 
trade creates jobs. And for the U.S., it is basically an 
opportunity----
    Mr. Costa. No, we get that part, but I am talking about 
what is your sense of the transition or the changes when the 
current President Castro no longer is in power, how do you 
think that is going to change?
    Dr. Ribera. Well, and again, this is talking to couple of 
people in the Malecon area, and they believe that they are 
still going to be a communist country. We also had some faculty 
from Havana----
    Mr. Costa. Right, and we have a communist country in China 
that we do a great deal of trade with. They call it socialistic 
capitalism.
    Dr. Ribera. Right.
    Mr. Costa. Deng Xiaoping, when they were converting to 
socialist capitalism said, ``It doesn't matter whether a cat is 
white or black, as long as it catches mice.'' And they needed 
to change, and they did. And now everybody trades with China. 
And there are challenges there too.
    Ms. Lowe, do you have any insight perspective?
    Ms. Lowe. I want to make sure I understand the specific 
question. You mean on the regime change----
    Mr. Costa. Yes.
    Ms. Lowe. Oh, apologies. On the regime change?
    Mr. Costa. Well, on what we ought to be thinking in terms 
of trade in the longer-term.
    Ms. Lowe. Well, in the longer-term, I agree with the 
comment you made just a few moments ago, this is a really 
important first step in what is probably going to be a fairly 
long process. But, is a very important first step.
    Mr. Costa. I think 5, 10 years is what we are talking 
about.
    Ms. Lowe. Yes. I wouldn't even begin to guess how many 
years. But at the end of the day, for the good of the American 
farmer, the American ag economy, in the long-term, we want to 
create as many opportunities as we can in every market, 
including one that is so strategically close to the U.S., and 
frankly, needs to import a vast majority of their food 
products.
    Mr. Costa. No, they have lots of problems.
    Ms. Lowe. So that equation is good. As I mentioned, there 
is going to be a lot more work that has to be done. I mean, 
candidly, as far as a credit risk, I am very skeptical about 
Cuba as a credit risk today. Right? There is not any 
transparency, there is not good quality financial information 
that is credit, verifiable, et cetera. So a lot of things need 
to happen. The creation of a non-government-owned import entity 
is very important.
    Mr. Costa. Mr. Claver-Carone, your criticism, and I saw 
some of the European investments, Canadian investments, and 
others, in Cuba when I was there, are those governments 
propping up those investments, those foreign countries that 
have invested?
    Mr. Claver-Carone. Absolutely. Everyone has their dual 
strategic interests and dual political interests, European 
Union sanctions, Belarus and Zimbabwe, and other countries that 
we have different types of interest in regards, and that 
matter. But the important question you pose which is pivotal 
here is what is happening in Cuba right now, which is 
essentially a nepotistic transition. Essentially 80 percent of 
the economy right now is being put in the hands of the Cuban 
military, led by Raul Castro's son-in-law, Luis Alberto 
Rodriguez Lopez-Callejas. Raul Castro's son is now heading up 
the Interior Ministry and all the intelligence and repressive 
apparatus. His grandson is heading up the Personal Security 
Service with his own personal kind of Secret Police, per se. So 
we are now seeing all of this happen under our nose, and if we 
give away the United States, everything that is in trust for 
the future or Cuba, for future Cuba's democrats and others, we 
are essentially handing it to this mafia and this next 
generation.
    Mr. Costa. You are making it sound like Cuba's version of 
the mafia or the Seminoles.
    Mr. Claver-Carone. It is. It is the Vivabelli family, the 
Castro family.
    The Chairman. The gentleman's time has expired.
    Mr. Costa. Thank you.
    The Chairman. Mr. Thompson, 5 minutes.
    Mr. Thompson. Thank you, Mr. Chairman.
    Ms. Lowe, the U.S. farm economy is facing very low 
commodity prices, and in these situations we need to take 
advantage of every opportunity. Can you expand on the 
possibilities of increased trade with Cuba, and what exactly it 
can bring to the rural economy?
    Ms. Lowe. Well, in the very short-term, the impact of this 
bill passing would be somewhat limited. But the important 
thing, again, is to take that first step to create a level 
playing field. It is very, very clear as everybody appears to 
agree that the sales that are occurring are oftentimes with the 
support, in this case, of foreign government support. For 
example, the example of Korea providing export credits for the 
import of Korean products. In the short-run, I agree that there 
won't be a very significant change because many other things 
need to happen, particularly in terms of the creditworthiness 
of the importing entities in Cuba. But absent this next step, 
followed by other steps, we have to continue to keep the ball 
moving so that over the period of time we will create a level 
playing field for the U.S., and we will be able to compete.
    I also believe that once the possibility of financing and 
the market becomes a bit more open, that will be further 
impetus, and other countries will push in this direction as 
well for the Cuban Government, Cuban banks to be able to 
produce the type of financial information that they are going 
to need to be able to produce, to more fully integrate into the 
world economy, including the financing of their products.
    So other governments that are supporting them now, they 
have made their risk cost-benefit decisions, but they are going 
to require repayment of those obligations, Cuba is going to 
have to continue to demonstrate they can meet their 
obligations, those current obligations and the refinanced 
historical obligations. And over time, they will be able to 
take the steps that they will need, over years, I believe, to 
really be able to be a full partner in a level playing field of 
global trade.
    Mr. Thompson. I want to follow up specifically, obviously, 
our number one industry in Pennsylvania is agriculture, and our 
largest commodity is dairy. And right now, our dairy prices are 
around $14 per hundredweight; well under what it is costing to 
produce the milk. And it seems, as I have looked at this, I 
mean trade is a key issue with this. Specifically, in 
Pennsylvania, and nationwide, but I will just speak to 
Pennsylvania, our dairy exports are down 65 percent. 
Interesting enough, it is due largely, as I can trace it, to 
Russia. Not that we trade dairy with Russia, but Russia has put 
an embargo on European Union milk, and, therefore, where we 
would export our dairy products, the European Union is kind of, 
out of necessity, is flooding those areas, shutting our milk 
and our farmers' commodity out.
    And Dr. Ribera had testified that recently a large amount 
of Cuba's cropland was taken out of permanent crop production 
and placed in native or improved pasture, I suspect in an 
attempt to increase milk production, which has declined about 
ten percent since 2003. What role or opportunities do you see 
the United States dairy farmers playing in Cuba's market? 
Anyone who would like to take that question, would be great. Go 
ahead, Dr. Ribera.
    Dr. Ribera. Well, again, we used to send a lot of dairy 
products to Cuba back in 2008, 2009. Now we don't send 
anything. The main products that we send to them right now is 
leg quarters, chicken. We send a little bit of soybean and 
soybean meal, and corn. That is about it. There is this 
opportunity there because they basically consume 1.75 to 2.1 
times more of the grains, meat, and dairy products that they 
actually produce. So it is a big opportunity.
    You mentioned low prices, low commodity prices. When you 
look at the percentage of the farm income that comes from 
exports to overseas has increased from 28 percent in 1996 to 
over 35 percent in this year, or 2015. So we depend a lot on 
trade to survive, for us a percentage of the farm income.
    Mr. Thompson. Yes. It was remarkable to me that one country 
that we don't directly trade that commodity with, can have such 
an influence over where we are today with the runaway prices on 
dairy.
    So thanks to the panel. Mr. Chairman, I yield back.
    The Chairman. The gentleman yields back.
    Mr. McGovern, 5 minutes.
    Mr. McGovern. Well, thank you. And I want to thank the 
panel. I want to thank the Chairman for having this hearing. I 
want to thank my colleague, Congressman Crawford, for his bill. 
I support it, and I hope that this hearing will result in quick 
action by this Committee to markup H.R. 3687 and have it 
enacted before the end of the 114th Congress.
    I strongly support normal trade relations with all 
countries, unless there are internationally recognized and 
approved sanctions against them. And in the case of Cuba, the 
United States is the only nation in the world to maintain trade 
sanctions, indeed, a trade embargo, against that country. I 
believe we should lift the travel sanctions we imposed on our 
own citizens, and I believe we should end our unilateral trade 
embargo. And so I see ending restrictions on U.S. agricultural 
trade as a step in the right direction. And it is certainly an 
area of policy where there is broad bipartisan consensus that 
ending these restrictions on U.S. agricultural goods and 
allowing our farmers to trade with Cuba on normal terms will be 
good for our farmers, and good for the Cuban people.
    I have been to Cuba many times. My first visit was in 1979. 
And I was there when the President went down to announce the 
change in our policy. Things have changed. Not as fast as we 
would like them to change, but there are indications that 
things are changing in a way that, in 1979, the Castro regime 
would have been strongly against. And they are changing not 
because of anything we are doing, they are changing because the 
whole world is down there. The whole world is able to trade and 
to travel there, but we are not. And I am a believer that 
American farmers, the American people, American businesses can 
do more to open up political space in Cuba than all the saber-
rattling and tough talking speeches that come out of the United 
States Congress.
    As my colleagues on this Committee know, I am very 
interested in issues related to strengthening food security 
here in the United States and globally. And U.S. exports of 
rice and dairy to Cuba don't just support the State or the 
tourism sector, they also go to the warehouses and supermarkets 
that supply Cuban citizens. Our soybean oil and meal feed the 
livestock in Cuba and feed the people.
    So I would like to ask Mr. Isbell and Mr. Gibson, if you 
could expand a little bit more on how you view U.S. 
agricultural sales to Cuba, helping not just U.S. producers, 
but Cuban citizens and consumers.
    Mr. Isbell. The important thing about trade is that it can 
benefit both sides of the equation. And as many have mentioned 
here today, it is incredibly important that we continue to try 
to find ways to better the lot of the average Cuban citizen. 
And the way we can start is by extending freedoms back to our 
own people here in the United States and set an example for the 
Cuban Administration to do the same to theirs.
    Our goal is not just to trade rice and to make money, it is 
to benefit the average Cuban citizen. With USA Rice, we have 
technical exchanges that are in the works, and certain things 
like that. And over time, we can build bridges between 
individuals that greatly benefit not just the rice farmers in 
the industry through the United States, but the average Cuban 
citizen over there. And that is our goal.
    Mr. McGovern. Mr. Gibson.
    Mr. Gibson. Thank you. I agree with Mr. Isbell. One thing 
to add is, human nature is to get along better with people you 
trade with. I have been in the trade industry for 20 years, and 
I go to people that I trade with every day when problems arise 
or when we need to discuss things. And having any relationship 
with Cuba from an agricultural standpoint might just open up 
some dialogue to help the Cuban citizen.
    Mr. McGovern. Right.
    Mr. Gibson. When we look at the U.S. rice farmer, I have 
plenty of farmers in Mr. Isbell's area that would love to sell 
me more rice, but I don't have a place to go with it at the 
moment. So any trade we can open up, when it comes to U.S. 
rice, wheat, corn, beans, just opens up more markets for our 
U.S. farmers so that we can supply the rest of the world. We 
are going to have 2.3 billion bushels of corn left over after 
this harvest that has nowhere to go.
    Mr. McGovern. Right. Well, I appreciate it. All this 
emphasis is focused on how this benefits the Cuban Government, 
but when you go to Cuba and you talk to regular people, they 
see the benefit to themselves.
    And look, the one thing we all should be able to agree on 
is what we have been doing for close to 6 decades has been a 
miserable failure by every measure. It has not served our 
interests, it has not helped the Cuban people, and when 
something is not working, especially after almost 6 decades, 
maybe it is time to reassess. And I, again, hope that we can 
move quickly on Mr. Crawford's bill.
    With that, I yield back my time.
    The Chairman. The gentleman's time has expired.
    Mr. Austin Scott, 5 minutes.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. I 
have spent a lot of time over the last year or so speaking with 
the people from Cuba, and the one story that sticks in my mind 
is a gentleman that I spoke with a few months ago who said that 
when he was a child, they would tell the kids to put their head 
on their desk and to pray to God for candy. And they would lift 
their head up and there would be no candy on the desk. And they 
would tell them to put their head down on the desk and pray to 
Castro for candy. And they would lift their head up and there 
would be candy on the desk.
    And so then the indoctrination of the Castro regime has 
gone on down there for a long, long time, but those same types 
of indoctrinations have gone on around the world. There are a 
lot of oppressive people out there. A lot of oppressive leaders 
or people who happen to be in leadership positions, I should 
say, around the world.
    My question, and maybe this would be for you on the end, 
what is the state of the church in Cuba? Are people allowed to 
worship?
    Mr. Claver-Carone. Well, Congressman, that is a great 
question because we have now heard multiple times this whole 
question about, if we have the policy that we have had over 50 
years, and it goes to that. I am all for change, but not change 
for the worse.
    Mr. Austin Scott of Georgia. But, answer my question, what 
is the status of the church? Are people in Cuba allowed to 
worship, or is that regime so oppressive that they will not 
allow it?
    Mr. Claver-Carone. They are only allowed to worship in 
State-sanctioned churches. And since December 17, 2014, 
religious persecution in Cuba has gone up tenfold, according to 
Christian Solidarity Worldwide. So it is getting worse since 
the new policy.
    Mr. Austin Scott of Georgia. Okay. So we don't have travel 
bans to countries that are even more oppressive than that.
    Mr. Claver-Carone. But we don't have other countries or a 
tourism industry that is owned by the Cuban military and 
intelligence services.
    Mr. Austin Scott of Georgia. There are other countries 
though where the countries that are so oppressive and those 
governments do own those industries.
    I mean it is not the Castros, but it is others who are 
similarly oppressive as the Castros.
    Mr. Claver-Carone. If your number one source of income is 
tourism, like the number one source of income for Iran is oil, 
we are going to sanction tourism to Cuba and oil to Iran. It is 
logical.
    Mr. Austin Scott of Georgia. But, there is no travel ban to 
Iran.
    Mr. Claver-Carone. Because tourism is not a source of 
income for the Iranian regime.
    Mr. Austin Scott of Georgia. But, there is no travel ban in 
Iran, and, quite honestly, they are a much greater threat to 
American citizens than Cuba.
    Mr. Claver-Carone. Because the Iranian regime does not 
market tourism as their number one source of income.
    Mr. Austin Scott of Georgia. But there isn't a travel ban 
to Iran, and they are a much greater threat to the U.S. than, I 
mean Cuba is 90 miles from Miami. My wife is from Miami.
    Mr. Claver-Carone. Yes.
    Mr. Austin Scott of Georgia. If we are not there, shouldn't 
we expect other countries to be there that may not be our 
friends?
    Mr. Claver-Carone. Congressman, there is a seminary in the 
Florida Straits of hundreds of thousands, if not nearly a 
million, Cubans that were trying to flee to one country, the 
United States. We are their beacon of freedom. If we start 
acting like Canadians, Europe, and French, and everybody else, 
going on vacation in these Cuban military resorts and embracing 
this regime, we are going to lose being that beacon of hope to 
the United States.
    Mr. Austin Scott of Georgia. I am not talking about 
embracing a regime.
    Mr. Claver-Carone. Well, that is what it is.
    Mr. Austin Scott of Georgia. You are not answering the 
questions though.
    Mr. Claver-Carone. That is the reality.
    I am, sir.
    Mr. Austin Scott of Georgia. No, you are not, not with 
facts. I mean this is an emotional argument. I feel for the 
people of Cuba. And I don't understand how having a travel ban, 
keeping good people from going to that country, is helping the 
people of Cuba.
    Mr. Claver-Carone. We don't have a travel ban, sir.
    Mr. Austin Scott of Georgia. And so----
    Mr. Claver-Carone. People are going to Cuba. What they are 
not allowed to do----
    Mr. Austin Scott of Georgia. But no, let me----
    Mr. Claver-Carone.--is tourism transactions----
    Mr. Austin Scott of Georgia. Let me finish please.
    Mr. Claver-Carone.--to the military-owned hotels and 
resorts.
    Mr. Austin Scott of Georgia. Reclaiming my time. I want to 
ask you another question. I apologize. There has to be a way to 
tie human rights and the improvement of the human rights 
conditions and countries to expanding trade opportunities for 
those countries.
    And with that, Mr. Chairman, I would just like to say that 
whatever we do, going forward, we need to keep in mind the 
people of Cuba. I am not interested in helping the Castros, but 
not trading with Cuba is not helping the people of that 
country.
    With that, I yield back.
    The Chairman. The gentleman yields back.
    Mrs. Bustos, 5 minutes.
    Mrs. Bustos. Thank you, Chairman Conaway. And thanks for 
hosting this hearing today, along with the Ranking Member, Mr. 
Peterson. It is an important conversation that we are having, 
and it is very important to farmers from my state, which is 
Illinois, and farmers all over our country. And thank you to 
the witnesses for taking your time to spend with us today.
    In the last year, I have been to Cuba twice. One of those 
times was with my colleague, Congressman Davis, also of 
Illinois. The entire purpose of that was to talk about 
agricultural possibilities for the State of Illinois. Second 
time was with the President. And it was an honor to be able to 
go there and advocate on behalf of our family farmers.
    I too am a proponent of Congressman Crawford's resolution, 
and I am a strong supporter of it. And with that said, 
actually, my first question is to find out a little background 
that would help me. Dr. Ribera, from Texas A&M, you talk about 
the possibilities of ag trade from the United States being 
somewhere around $1.2 billion or $2 billion. And you have 
assigned ten percent of that to the State of Illinois, that 
those are the ag trading possibilities. I just want to know a 
little background on how you have come up with that number so I 
can explain it when I am talking with our farmers back in 
Illinois about that.
    Dr. Ribera. Sure. Basically, what we did is that, looking 
at the states that produce the main commodities, and also 
looking at the percentage of what is exported, and that is 
basically the percentage that was assigned to Illinois because, 
I believe it would be corn, a big commodity there in Cuba, they 
require a lot of corn. They are buying right now from Brazil, 
but we can sell them a lot of corn as well.
    Mrs. Bustos. Yes, we do a pretty good job in Illinois on 
corn and beans.
    Dr. Ribera. Yes, ma'am.
    Mrs. Bustos. Okay, my second question is, I would like each 
of you to address this if you could, when Secretary Vilsack 
also was on the trip with the President, and there was a 
Memorandum of Understanding that was signed. Obviously, you 
have each addressed some challenges, we have heard about some 
challenges here from our fellow Members of Congress, but 
wondering in light of that Memorandum of Understanding, what 
has happened since then, what do you see as the possibilities 
for that? Maybe we can start with Mr. Isbell and go down the 
line, and if each of you can give us your thoughts on that 
please.
    Mr. Isbell. More specifically, the change since--could you 
repeat the last part of your question?
    Mrs. Bustos. I am wondering what you see as the 
possibilities, with the Memorandum of Understanding that has 
been signed with the U.S. Department of Agriculture and Cuba, 
if we have seen any results of that, what you see is ahead for 
the possibilities because of that Memorandum of Understanding.
    Mr. Isbell. If I remember correctly, the Memorandum of 
Understanding created some exchanges on environmental aspects 
as well, and I think that is one place that agriculture can 
engage with Cuba and create some new relationships through 
that.
    Other than that, it just lays the groundwork to continue 
the work that we have been trying to do to open that next door 
and take the next step. Yes.
    Mr. Gibson. As far as the Memorandum itself, I am not 
familiar that it truly created a whole lot. We appreciate the 
Memorandum, but really until we solve the financing issue, we 
just can't go anywhere.
    Ms. Lowe. I honestly have nothing to add to what Mr. Gibson 
and Mr. Isbell have said. I agree with that. It is an 
indication of interest and intention, but we need to take some 
concrete steps to move the needle.
    Dr. Ribera. I would say the same thing as well. One other 
thing that it could help also is just to start looking at 
inspection agencies like APHIS, for example, and try to have 
the same regulations on both sides to try to harmonize what we 
export and what we import from them as well. But the financing 
is the main issue. That is what ALIMPORT tells us.
    Mr. Claver-Carone. As I mentioned in my testimony, since 
December 17, 2014, ag sales have plummeted last year, and they 
are further plummeting this year, than the time when we had the 
strongest sanctions in 2008. What that tells you is, 
essentially, the more of these hearings and conversations, and 
the more they think they can get from the U.S. Congress for us 
to pay for our own ag sales, the less they are going to buy. 
They are trying to squeeze the U.S. Congress, frankly.
    Mrs. Bustos. Thank you. And, Mr. Chairman, my time is up 
and I will yield back. Thank you.
    The Chairman. The gentlelady yields back. Mr. Crawford, 5 
minutes.
    Mr. Crawford. Thank you, Mr. Chairman. I appreciate you and 
the Ranking Member for holding this important hearing.
    I want to put a little perspective on here. I don't think 
we are acting like Canada, I don't think we are acting like 
France, we need to be acting like the United States. Let me 
give you an historic perspective here: 1985, that was the year 
I joined the Army. U.S. trade to the Soviet Union was around 
$2.1 billion. The height of the Cold War. The Soviet Union was 
actively engaged with the Afghans. I served in that theater 
later in my tenure in the United States Army. So somehow we 
managed to find a trade relationship with the Soviet Union; a 
very hostile regime, a very oppressive regime. I am not going 
to give you any further background on that.
    Vietnam, 2001 Bilateral Trade Agreement, established 
permanent normal trade relations with Vietnam. Ten-Year Hot War 
with Vietnam; a very oppressive regime. Don't have to give you 
all the background there. We have seen an increase of 1,200 
percent in trade in Vietnam.
    So I am not asking us to act like Canada, I am asking us to 
act like the United States of America.
    It is reasonable to think that we should provide 
opportunity for farmers. When I talk to farmers in my district 
they say, ``You know what, we can get by without all the policy 
things that you are messing up in Washington if we can do a 
handful of things. First, get the EPA off our backs.'' I think 
we can all agree on that. ``Second, open up market 
opportunities for U.S. producers. And third, we are seeing the 
evidence of yesterday with the WTO being taken to task over 
China corn, grain manipulations.''
    My point is, my goodness, we have to look at this thing 
over and over again through the lens of the Cold War that has 
been over for 20 years. I understand your concerns. This bill 
was written specifically to address the concerns and the 
sensibilities of the Cuban expat community in south Florida, 
very specifically, because we have a very sensitive 
understanding of how, as we have seen here, a very emotional 
issue, but my goodness, can we look at this in a different 
context?
    Mr. Isbell, if you would, give me a little bit of 
perspective here. I know you mentioned 135,000 tons, we have 
done the math here and I gave the Chairman a bad figure 
earlier, but it has been refined, that represents anywhere 
between three to five percent of total U.S. production. Is that 
right?
    Mr. Isbell. That sounds correct.
    Mr. Crawford. And you see some long-term potential there. 
My point is, I am concerned that if we are not actively engaged 
in Cuba at this point, that there is a void of American 
leadership. This is what we say all the time. This is what is 
going on with trade agreements and world affairs. We have seen 
a void of U.S. leadership, and when we don't lead, bad things 
happen. And I just think it is time that we revisited this in a 
more productive light. I know that these are not good people 
that are calling the shots in Cuba. I know that. Neither were 
the Vietnamese when we fought them for 10 years. Neither were 
the Soviets when we had the Cold War for 40+ years. For that 
matter, neither is China who is grossly manipulating their 
currency, and who oppresses religious minorities, and who 
squelches free speech, and yet we have billions, if not 
trillions of dollars in economic investment in China. So are we 
to retool those relationships? Are we going to scale back our 
investment in China? Are we going to quit doing business with 
our friends in Saudi Arabia, who beheaded more prisoners last 
year than ISIS? I mean come on. It is not that difficult for us 
to look at this in a different light, understanding that 55 
years hence, nothing positive has been yielded by the current 
posture.
    So I understand there is risk. We don't want to put 
taxpayers at risk. The bill is written so that taxpayers are 
not at risk. A private-sector entity can engage in these 
transactions at their own risk. And that is the chance you take 
in the marketplace. We do that today, every day. Heck, as a 
former radio farm network owner, I had slow payers, some that 
would take 6 months. I am talking about some big, big clients, 
take 6 months to pay me. That is the chance I take in the 
business world. Do I want to do business with them again? I 
don't know. I would have to rethink that. That is my decision 
to make. We are not putting the taxpayer on the hook with this.
    And I didn't intent to go down this trail. I really wanted 
to get some information from Mr. Gibson about recognizing that 
there is a lot of international investment, for example, in the 
Port of Mariel, and how that plays into this whole ag goods.
    I am running out of time, but my point is we have a lot of 
data here that we can be talking about, and it comes down to 
this, we are continuing to look at this issue over and over 
again through the lens of 55 years worth of failed policy that 
has yielded no positive benefit for anybody here or in Cuba.
    And with that, I yield back.
    The Chairman. The gentleman's time has expired. Ms. Graham, 
5 minutes.
    Ms. Graham. Thank you, Mr. Chairman. I was born in Miami in 
1963, you all can do the math, so I have lived with this issue 
my whole life of our relationship with Cuba, 90 miles from 
where I grew up. And I listened to a lot of the conversation 
here today, and have agreed with a lot of it and disagreed with 
some of it. We started this hearing with the Chairman speaking 
about leverage, and I have made a whole lot of notes on my page 
here as we have gone through this discussion. And it does come 
down to that. I do think we need to incrementally start opening 
up our relationship with Cuba. And I say incrementally because 
we do want to hold this oppressive regime accountable for its 
human rights violations. And I don't want, down the road, when 
the Castro brothers are no longer in power, I was concerned 
when I heard Mr. Peterson's comments about the Vice President 
coming into power and being equally as totalitarian. We can all 
agree that we don't want a void to be in Cuba that could 
potentially be filled by worse actors across the world. So I 
have been supportive of Mr. Crawford's bill because we do need 
to be taking incremental steps, but I think at the end of the 
day, and I didn't mean to go on about this either, but as a 
Floridian, this is personal for me, what we want is to help the 
Cuban people at the end of the day, many of whom have families 
in south Florida, and all over Florida.
    So what can we do? And I guess my question is for Mr. 
Claver-Carone, am I saying that correctly?
    Mr. Claver-Carone. Yes, ma'am.
    Ms. Graham. Was it close enough?
    Mr. Claver-Carone. Yes, ma'am.
    Ms. Graham. I do think we made a mistake in being overbroad 
in easing restrictions to Cuba, because we have lost our 
ability to have some leverage, but what do we do? As we lift 
restrictions, what steps can we take, and this could be one of 
them, to have enough leverage that the Castros will feel 
inclined to have some of the benefit of trade trickle down to 
the citizens of Cuba, the people we want to help, right?
    Mr. Claver-Carone. Yes.
    Ms. Graham. I mean I don't know if you have any 
suggestions, any ideas----
    Mr. Claver-Carone. Congresswoman, I agree with you 
wholeheartedly in regards that our goal should be to help the 
Cuban people, and in that, I would say if this bill essentially 
said we want to authorize private financing for agricultural 
sales to privately owned and operated companies and entities in 
Cuba, I would be its biggest cheerleader right here, but that 
is not what we are discussing. We are talking about providing 
private financing to one company owned by the Castro regime 
that is going to hold food hostage over a people. So we are 
increasing what essentially is their control over the Cuban 
people. That is my concern, and thus, the safeguards that we 
want to be able to lay through.
    Ms. Graham. So back to my question, because I can tell you, 
I Googled you. You know a lot about this issue.
    Mr. Claver-Carone. Hopefully, only good stuff.
    Ms. Graham. Is that the verb, right, to Google? No? To 
Google?
    The Chairman. I don't know, is it painful when you get 
Googled?
    Ms. Graham. We say in my office, because we are Southern, 
we say we Google it up. We Googled it up. I Googled it up. 
Okay, back to the question. What steps would you feel were 
appropriate to start, if any, to start to build a relationship 
with Cuba so that if, in fact, when the Castro brothers are 
gone, we are not left with this void that we have no 
relationship? See, I can see both sides of it. We don't want to 
leave a void where we have no relationship with Cuba, but it 
has to be incremental. One thing that I would suggest we would 
do would be to allow American companies to work with Cuban 
offshore oil drilling rigs because if, God forbid, they don't 
have the best--I know we are getting way off topic, but if they 
don't have the best science and engineering for those oil rigs, 
and there is a spill, it is going to all flow south. That is 
how the water flows. But, one of the reasons I was interested 
in Mr. Crawford's bill is because I do think we need to be 
taking incremental steps. And I don't know what the answer is. 
As a Floridian, as someone who was born and raised in south 
Florida and understands the passion of these issues, I don't 
know. So maybe you and I could have a conversation at a later 
time and talk more in-depth, because I am way off topic.
    And I yield back. I am out of time.
    The Chairman. The gentlelady's time has expired.
    Ms. Graham. Thank you.
    The Chairman. Mr. Benishek, 5 minutes.
    Mr. Benishek. Thank you, Mr. Chairman. Boy, this has been 
really interesting for me, and I, frankly, don't understand 
many of the issues. Are we the only country that doesn't trade 
with Cuba, Mr. Claver-Carone?
    Mr. Claver-Carone. We do trade with Cuba. We sell them 
agricultural products, and we have exemptions----
    Mr. Benishek. But like the embargo, what I don't understand 
is why, if we open the trade up, since the rest of the world 
trades with Cuba, why hasn't that opened up the regime? That 
doesn't work, so why adding us on there, how does that open up 
the regime more than the rest of the world already having a 
trading relationship, but already having difficulties in 
getting paid, if we do that, how is that going to make it 
different than the rest of the world failing, and their economy 
still being a failure?
    Mr. Claver-Carone. Well, I always argue the fact that all 
of the countries that do business with Cuba and have not 
promoted any type of positive change, in that regards, when 
people say the U.S. has a failed policy, ``I say, well, why do 
we want to follow the failed policy of even more countries?'' 
At the end of the day, whether we agree with U.S. policy 
towards Cuba or not, it is a principled policy which conditions 
about certain fundamental rights and security concerns. I mean 
and Congressman Scott had mentioned that the whole Iran versus 
Cuba, Iranian President Rouhani is going to Cuba, this week, to 
meet with the Castros. They are not going to discuss anything 
that promotes U.S. interests. This is 90 miles from our shores. 
So there are other concerns.
    Mr. Benishek. Oh, I agree that there is a very, very bad 
security risk for America to have them there. But another thing 
that you mentioned in your testimony was that trading with--
there was testimony--you have heard testimony here how that 
trading with Cuba would benefit U.S. farmers, but it seemed to 
me that you didn't feel that was true. So can you explain that 
position?
    Mr. Claver-Carone. My argument, what I was saying is when 
we have had the previous hearings, and as the Ranking Member 
was discussing when they previously discussed this issue, the 
whole argument, now it is about financing. It used to be about 
the definition about cash-in-advance. And in 2000, it was just 
about authorizing, in 2000, the argument was if we authorize 
agricultural sales to Cuba, that was going to fundamentally 
change Cuba because we are going to have all these 
interactions, et cetera, et cetera. It hasn't done so. To the 
contrary, it has made the funnel even narrower. And what I want 
to do is broaden the funnel so that Cuban people will be able 
to partake in----
    Mr. Benishek. And can you tell me more about why you think 
that the exports have gone--or the trade has gone down, and how 
you think that--you mentioned squeezing Americans, can you talk 
a little bit more about that because I am----
    Mr. Claver-Carone. Because, essentially, what the Cuban 
regime wants is the same as it has gotten from Brazil, Vietnam, 
and others, it essentially wants us to pay for it, it wants our 
taxpayers to guarantee it, and then, essentially, it wants to 
just control it. And it wants, also non-related to the issue 
today, it wants U.S. tourism. Tourism is its number one source 
of income. So you will note that when--and a lot of you that 
are in ag--that go down with farm delegations, what the Cuban 
regime always argues is that we need more American tourists to 
come down, so they spend more money so then we can buy more 
products from you. That is unrelated, per se, but that is 
essentially how they are trying to, go around and squeeze 
Congress on issues that are non-ag related.
    Mr. Benishek. Right. Let me just ask another question 
similar to what Ms. Graham mentioned, and that is there any 
kind of an incremental demand that we can make on the Cuban 
regime to free things up to, a tit-for-tat, if you do this, we 
can do this? What is the way forward, could you give me a 
concrete idea of what to do, other than I don't see an idea.
    Mr. Claver-Carone. I just laid one before you with the 
Congresswoman's question. If you were to simply craft a bill to 
say we will allow private financing with Cuba with private 
companies operated by private entrepreneurs in Cuba, like we do 
with every other country in the Western Hemisphere, frankly. 
That is how it works in every other country of the Western 
Hemisphere. We don't do it through a State entity in that 
regards. So if we do that, that seems to me like a positive 
step to press the regime to say, ``Hey, you are not going to be 
able to control everything that comes from the United States.'' 
And, I would arguably say that that would be an interesting 
move.
    Mr. Benishek. In the short time I have left, can you tell 
me more about the American assets that have been confiscated by 
the Cubans, and now are going to be using those assets to----
    Mr. Claver-Carone. Congressman, I know the owners, the 
American owners, they were American in 1959, of the Port of 
Havana, of the Port of Santiago, where a lot of these 
agricultural exports that go to Cuba go through and are 
transported through. Those were stolen without compensation. So 
we have to recognize that every ag sale that is made to Cuba, 
even under these terms, is essentially trafficking on another 
American's stolen property. That issue should be addressed 
because that is, frankly, unfair to the American victims that 
were, I want to say it kindly, that were screwed over.
    Mr. Benishek. I am out of time.
    The Chairman. The gentleman's time has expired.
    Mr. Benishek. Thank you.
    The Chairman. David Scott, for 5 minutes.
    Mr. David Scott of Georgia. Thank you, Mr. Chairman. I like 
to look at this as an economic issue because, fundamentally, 
that is what this is, economic interests and what is in the 
best economic interests of our American agriculture system. 
With Cuba, having a population of 12 million people that 
imports 80 percent of its food, only 100 miles from Florida, 
giving Cuba convenient access to the United States and our 
incredible array of agricultural food and products, having the 
world's largest, most significant agriculture economy, it is 
very imperative that we look into any and all possibilities of 
opening up increased trade with Cuba. It just makes good 
business sense to do this. I understand the regime, I 
understand the communist regime. And look at China. We have to 
look at this with a very jaundiced eye and say what is in the 
best interests of the American business? Our farmers, who are 
struggling.
    Now, Dr. Ribera, I believe, I read your testimony, and in 
your testimony that you said that U.S. food and agriculture 
exports have the potential to exceed more than $1.2 billion 
annually within 5 years. Why would we deny that to our American 
businesses?
    So let me ask you, if we could change just one thing in 
regards to the restrictions placed by the United States on 
trade with Cuba, tell us what would that be, with the aim of 
getting the largest increase in exports to Cuba, thus, money 
into the pockets of the American farmer?
    Dr. Ribera. The answer to that is just let our farmers 
compete for that market, with the same terms that other 
countries have, and we will do very well. That is what we 
believe, that we can capture about \1/2\ of that market, which 
is about $1 billion, in the short-term. We are really 
competitive in producing the products that they need; greens, 
meat, and milk, we are competitive.
    Mr. David Scott of Georgia. Yes.
    Dr. Ribera. And if you give the opportunity to our 
producers to compete, they are going to do a good job.
    Mr. David Scott of Georgia. I agree with you 100 percent. I 
mean for people that may not know, of course, I represent 
Georgia. In 2014, Cuba imported $147.8 million in poultry, 
meat, and eggs from the United States. But then in 2015, that 
number dropped to $77.6 million. That 45 percent drop is not 
good for my State of Georgia. We are the nation's and the 
world's leader in producing poultry. And Georgia produces on 
average per day roughly 29 million pounds of chicken, 6.3 
million table eggs, and 5.5 million hatching eggs. We want that 
to have an opportunity to get into Cuba. We are less than 600 
miles from Cuba. We have a fantastic Savannah port. All of the 
infrastructure is right there, and even right now, Cuba 
currently serves as the sixth largest poultry export market for 
Georgia's poultry. We are exporting right now $20 million worth 
of chicken to Cuba each year. So I want to look at this as a 
sound economic investment for the United States, and 
particularly from the interests of our farmers who deserve to 
be able to get their products to the Cuban market.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Mr. 
LaMalfa, 5 minutes.
    Mr. LaMalfa. Thank you, Mr. Chairman, and thank you for 
calling this hearing on this important and interesting topic. I 
also appreciate the thoughtful work that Mr. Crawford is 
putting in on this effort, and makes great points and arguments 
on this.
    As well Mr. Isbell can relate, I am one of those rice 
farmers too that made some of those trips to Washington, D.C., 
wondering when they were going to get straightened out. I 
hearken back to when there was an American ag movement, the 
Tractorcade came to D.C. a couple of times late 1970s, early 
1980s, and I remember one of the quips by one of the farmers, 
``We are going to stay back here and fix this thing if it takes 
all week.'' So I hope you have all week. But again, thank you 
for being here, and the chance to meet with you a little bit 
earlier as well.
    I had to leave home this week when we were starting rice 
harvest as well. It turns out about as green as Ms. Nicole's 
dress there, so we will have to wait a few more days to cut 
some rice, but you miss that at home.
    I am just wondering, since 2009, we haven't seen any rice 
imported into Cuba. And why do you think we were exporting more 
in 2009, which is during this same Administration, than now?
    Mr. Isbell. There are a number of market forces at work 
that guide how rice trade happens at any given time, but with 
the credit restrictions, that creates another impediment that 
we also have to overcome. I will make a very simple analogy. 
Every now and then, you have to get a new tractor on the farm. 
And if I go to one town over and the dealer says, ``I will sell 
it to you, but you have to pay me cash today and I am going to 
bring it to you next month.'' And I say, ``Okay, I am going to 
look around a little bit more.'' And I go to the other town, 
the other direction from the farm, and I say, ``How will you 
sell me a tractor?'' And he says, ``I will give you 90 days.'' 
Who do you think you want to buy the tractor from? You being a 
farmer, you understand that as well. I am going to go with the 
person that can extend credit. Right now, we do not have the 
ability to extend credit because of the statutory limitations 
that are in place.
    And so with that----
    Mr. LaMalfa. Well, I am going to see whoever has the 179 
still in place at the end of the year, but that is something 
else. But I have heard some numbers on how many tons we might 
be putting in there, 135,000 tons might go in. I was looking at 
a Farm Press article a little bit ago, one of the southern 
marketers was thinking maybe up to 550,000 tons. And, I guess 
those might be pretty optimistic numbers with the situation 
with Cuba economically, and some of the things that doesn't 
make me jump right at this is some of the concerns about one 
man, one regime, everything running through them in Cuba. And I 
am not there to help prop up Castro either, so this is really a 
tough thing that I am torn on. But, how realistic are some of 
these numbers we are hearing on what kind of tonnage could be 
going in of rice, or other commodities?
    Mr. Isbell. Right. Anecdotally, frankly, they are 
conservative, but those numbers come from an academic study 
that I believe has a lot of validity, so I have no reason to 
question them. But to your point about going through one 
entity, and this has been made several times in the hearing 
today, it is less than ideal, I admit that, however, I know 
your district sells quite a bit of rice to Japan, our friends 
over there, and all of those----
    Mr. LaMalfa. And TPP is looking like it might be a skinny 
70,000 tons, which would be about six, seven guys could grow.
    Mr. Isbell. Right. All of the rice that goes into Japan 
goes through a government entity. All the rice that goes into 
Iraq, Jordan, Saudi Arabia, goes through a single government 
entity. It is not unique in the world. That is something that 
takes place. They are in less than ideal situations, but they 
are ones that we work with, and there are ways that we can do 
that as we try to continue to influence change without taking 
out the opportunities for the American farmer.
    Mr. LaMalfa. Okay, thank you. Let me jump to Ms. Lowe real 
quick here too. I am concerned about the extending of the lines 
of credit, and the ability at the end of the day for them to 
actually pay for these products. Most of the stuff has gone 
cash on the barrelhead in the past, is that right? So how far 
are we going to be out there extended on credit that may come 
back against the taxpayer versus something--please.
    Ms. Lowe. Well, at this point, the discussion is 
extending----
    Dr. Ribera. Microphone.
    Ms. Lowe. Sorry. At this point, the discussion is extending 
credit from the private-sector. So each individual extender of 
credit, the person was going to have to make their business 
decision as to what terms they extend, for what period of time, 
et cetera. So I can't comment specifically. I mean certainly, 
we know that there is a lack of transparency in terms of the 
financial standing of the sovereign, and the banks and the 
banking system, and I am sure that would extend to any private 
companies as well, if they are ultimately able to buy our 
products. So that would be my biggest concern is a private-
sector lender to Cuba for trade finance.
    Other countries and other exporters are doing it. They are 
making their business decisions. I am not sure based on what 
information they are doing so, but as I mentioned earlier, the 
ability, the simple ability to extend financing will, over a 
longer period of time, lead those buyers to be able to produce 
that type of information so people can make good business 
decisions.
    Mr. LaMalfa. Thank you.
    Ms. Lowe. And if Cuba does have----
    Mr. LaMalfa. I had better yield back.
    The Chairman. The gentleman's time has expired.
    Mr. LaMalfa. I had better yield back on time, ma'am. Thank 
you.
    The Chairman. We are way over. Mrs. Walorski, 5 minutes.
    Mrs. Walorski. Thank you, Mr. Chairman. Mr. Gibson, I have 
a question. Again, I appreciate the whole panel's input here. 
It is a lot of information, and it has answered a lot of my 
questions, but some of the estimates we heard for the potential 
of increased trade with Cuba are dependent upon lifting the 
travel restrictions or the embargo. Is there potential for 
increased ag trade even if those restrictions are not lifted, 
or is this an integral issue here connected?
    Mr. Gibson. Specifically on the travel issue, or----
    Mrs. Walorski. Yes, on travel. Can we actually have 
increased trading without lifting, I am not advocating we do 
this, I am just asking how it works.
    Mr. Gibson. I am not going to say that trade would not 
increase without lifted travel restrictions, but, going to see 
your customer, understanding how they need the product, when 
they need it, that is really important in the trade business. 
Our company travels to most of our customers to make sure that 
we are meeting their needs, and, quite honestly, to make sure 
that we feel comfortable in the financing piece on how we are 
going to get paid. So that travel piece is definitely an 
important part of the bill.
    Mrs. Walorski. Okay. And, Dr. Ribera, I have a question. 
Your estimate, and we just talked about this a second ago, says 
that 60 to 80 percent of the Cuban diet is attributable to food 
imports. And that kind of echoes off of my colleague's 
question. Do you believe imports will continue to account for 
most of the Cuban food supply in the foreseeable future, and 
what capacity does Cuba have for increasing their own domestic 
production?
    Dr. Ribera. Cuba, being an island, we can compare it to 
other islands around, like the Dominican Republic or even 
Puerto Rico. Puerto Rico also imports about 85 percent of the 
food that they consume. So we would think that that will be the 
same thing in Cuba. Now, Cuba is the largest island in the 
Caribbean, but they are very limited in terms of agricultural 
land. They need a lot of input as well, a lot of investment in 
technology, fertilizer and other things, so I don't think they 
are going to be able to ramp-up their production, soon. And if 
they do, I still think that they are going to depend on a lot 
of inputs to feed their people.
    Mrs. Walorski. And just another question, and it really 
echoes off of what Representative Thompson was talking about, 
and I believe he was talking about sugar. I sit in the State of 
Indiana, with Purdue University, with the Chicago Mercantile 
Exchange, CME, a lot of folks reading barometers on agriculture 
constantly. And, looking to the report with the weak crop 
prices, just disaster coming with low corn prices. And so my 
question is kind of the same, and I know that none of you here 
are from Indiana to speak on behalf of Indianan farmers, but 
could you just kind of speak to that, to how the access to the 
Cuban market could actually help Hoosier farmers in my 
district? Would this help with commodity prices? Can the U.S. 
recapture some of that lost market share in corn, given where 
Cuba is with corn? Can you just speak to that whole issue of 
the corn market?
    Dr. Ribera. Sure. It is basically finding another market. 
If we don't find another market for our excess production, it 
is going to stay in stock, and the stock, basically, is going 
to, basically, increase and reduce our prices. If we can find 
countries that we can place our corn, basically, it is going to 
increase the demand, which raises prices.
    Now, again, Cuba is a small country. They import about $2 
billion, but it is still significant. If you ask the producers 
would they like to have access to a market of $2 billion in 
food imports, I am sure they are going to say yes. So it is 
important. And like I mentioned before, over 35 percent of farm 
income comes from agricultural exports, so we depend a lot on 
those foreign markets, and to keep those foreign market and 
compete to make a living for our producers.
    Mrs. Walorski. I appreciate it. And, Mr. Claver-Carone, 
just really quickly, you mentioned the idea, and somebody just 
asked this as well, about a good faith compromise. We are 
talking specifically about agricultural trade, where do you 
think the common ground is with Representative Crawford's bill 
in finding some kind of common ground with what you are talking 
about?
    Mr. Claver-Carone. Yes. Well, if we were to take the 
approach that I was mentioning before, and it was just about 
finding a way to do business and private finance it to private 
entities in Cuba it would be a different story, but what we are 
trying to figure out here is how to finagle a way to allow 
private financing to one entity owned by the Castro brothers. 
So obviously, what is a concern to us is, first and foremost, 
the issue of the property, of the trafficking and property from 
other Americans, that is something that needs to be addressed, 
and second, what happens tomorrow as we are seeing, 
particularly since the President's policy, when the Cuban 
military takes over ALIMPORT directly and says, ``Hey, I want 
that financing and I want to control it directly.'' Do we trust 
them with our money? I, frankly, don't, but----
    Ms. Walorski. I appreciate it. And I yield back, Mr. 
Chairman.
    The Chairman. Mr. Abraham, 5 minutes.
    Mr. Abraham. Thank you, Mr. Chairman. I appreciate that. 
And I appreciate this hearing.
    You have heard from everybody today that the status quo of 
the last 50 years has certainly not worked, and certainly 
hasn't been beneficial to our American farmers. And when we 
don't do anything, as Representative Crawford said, as a 
leadership country, we see what happens in countries like Cuba. 
And we are getting some interspersed with facts here. The fact 
is the last 50 years has not been good for Cuba, it has not 
been good for the American farmers, by any token, and as Mr. 
Scott referenced, we need to look at this, certainly, as an 
economic issue, and, certainly, we don't want to forget the 
human rights issues of the Cuban people. But what we have been 
doing has not been working whatsoever.
    And you have Rouhani meeting with the Castros today, you 
have Kim Jong-un that wants to come over and meet with them, 
you have all these bad players that all of a sudden want to be 
part of the puzzle because we are not there, and that concerns 
me that if we are not there, they are there. Russia was there. 
I was in Cuba earlier this year, and I talked to no less than, 
I quit actually counting after 50 people. I was with cab 
drivers, we went out to the farms. I would talk to people on 
the side of the road that could understand my English, because 
of my southern drawl, and I asked them all the same question: 
do you want American products and do you want American 
tourists? And I already had a notepad because I thought I would 
get some debate, 100 percent said they want the products and 
they want our goods.
    So again, we need to look at this as a trade issue for our 
rice, and certainly other products, that will take care of our 
farmers first, and certainly, we want to help the Cuban people, 
but they have to help themselves, and we know that, and we have 
to help empower them with the American dollar.
    Ms. Lowe, on other countries that do trade with Cuba, do 
they honor their credit agreements, do they pay?
    Ms. Lowe. Well, I guess I don't have any----
    The Chairman. Microphone.
    Ms. Lowe. I keep forgetting that. Sorry. I don't have any 
detailed personal knowledge of that. I do know there are many 
countries that are extending export credits in terms of 
insurance and guarantees to help their exporters make sales to 
Cuba and mitigate that payment risk. I know there was a 
renegotiation of a lot of the debt on Paris Club at the end of 
last year. There is some concern about the government's ability 
to, over time, continue to make all of their payments on a 
timely basis. And I have heard anecdotally about some slow 
paying, but I am not aware of any defaults that have occurred 
recently.
    Mr. Abraham. Mr. Claver-Carone, I read your testimony 
before I came here. Now, is it my understanding that ALIMPORT, 
that is not the only State-sponsored agency where you can get 
goods in. Is that a correct or an incorrect statement? I mean 
there are other ways to get goods into Cuba, is that right or 
wrong?
    Mr. Claver-Carone. No, sir. All U.S. exports to Cuba have 
to go through ALIMPORT. It is the sole entity. And in regards 
to your first questions they were very interesting with regards 
to the credit risks, they have defaulted on every debt. The 
reason why they are now going through these debt restructurings 
with Paris Club and all its people is because they are 
forgiving debt that they have defaulted on before.
    I was looking for the exact quote, but I will just 
summarize, just in July 18 of this year, so a few months ago, 
Raul Castro said, oh, by the way, yes, we are late paying debts 
again, and----
    Mr. Abraham. Well, if we don't step up and get our products 
in there, and if you have people like Rouhani from Iran and 
Putin and Kim Jong-un that want to come in and support, are 
they going to pay the bills for Cuba? I mean who is going to 
prop this government up financially, and I use that term 
poorly, I know, but if we don't get our products in there, and 
if we don't get our tourists in there, putting American dollars 
in there, who is going to do it?
    Mr. Claver-Carone. It is a great question. The only time 
that the Cuban regime has ever made any types of reforms has 
been when they have lost their subsidies. So the Soviet Union, 
after their collapse, and then now they made some after 
Venezuela and their oil collapse. But now, what we are seeing 
is that, since the Obama Administration's new policy, they are 
actually stopping and they are slowing down, and things are 
getting worse again, because they think that we are now going 
to go subsidize them.
    Mr. Abraham. Well, I guess that is my concern, is that I 
don't want----
    Mr. Claver-Carone. That is right. It should be.
    Mr. Abraham.--Venezuela or Russia or China paying Cuba's 
bill because then they become a puppet government of that 
country. And believe it or not, it can get worse.
    Mr. Claver-Carone. Yes.
    Mr. Abraham. We want to make it better. I just can't, we 
can't, I am out of time. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Mr. 
Moolenaar, 5 minutes.
    Mr. Moolenaar. Thank you, Mr. Chairman. I appreciate this 
discussion very much, and, Mr. Crawford, for putting this 
legislation forward so we can have this discussion.
    I just want to assure Mr. Isbell and Mr. Gibson, I am very 
interested in seeing our agricultural product exports very 
strong and looking for new markets for our products. So I guess 
what we are talking about here is somewhat of a foreign policy 
question, and you are in the midst of this. So just to be sure, 
Ms. Lowe, I appreciate your comments. I believe you had at one 
point said creation of a new entity that would need to occur 
before you felt comfortable with financing. Is that accurate?
    Ms. Lowe. Well, I think----
    Mr. Moolenaar. Microphone.
    The Chairman. Microphone.
    Ms. Lowe. You think I would learn by now. I think that 
would depend on, my understanding was that if we were not 
allowed to extend financing to ALIMPORT then there would have 
to be the creation of an entity that would be acceptable to us. 
So that may be a necessary step.
    Mr. Moolenaar. Okay.
    Ms. Lowe. Whether or not we would extend financing would be 
based on our due diligence, as we do on all of our borrowers to 
make sure they were creditworthy in our eyes.
    Mr. Moolenaar. Yes. Okay, I just found it interesting that 
we have talked about foreign government sort of subsidizing 
exports to Cuba, and also this idea of forgiving debt, that was 
kind of new information to me as well. And some people had 
mentioned the credit risk involved. I would think that would be 
part of your due diligence. So you think you ought to have the 
opportunity to evaluate that, but you weren't in any way making 
a commitment to that right now.
    Ms. Lowe. No. I mean I don't have enough information to do 
so.
    Mr. Moolenaar. Yes.
    Ms. Lowe. And I will say in the case of, for example, the 
Korean Trade Insurance Corporation, I would assume it is 
similar to our Export-Import Bank, they have announced $60-$70 
million of credit insurance guarantees, so they recognize 
Korean companies are probably not going to feel comfortable 
exporting and taking that payment risk themselves to Cuba. So 
they are providing insurance, they want to promote that trade, 
and they are making some sort of cost-benefit assessment, 
right? I don't know how much information they have as to the 
ability of the Cubans to pay them back on a timely basis or 
with some reasonably small amount of delay, but they have 
apparently determined that they want to have the job creation 
the access for their products, and they are willing to take on 
that credit risk to promote that trade because probably those 
Korean private companies wouldn't want to sell just on open arm 
credit terms.
    Mr. Moolenaar. Okay. Well, thank you. And then, Mr. Claver-
Carone, I was intrigued by your idea of private entities, that 
you would be okay with legislation that would open that up. Are 
there entities like that? Is there an infrastructure, or is 
that just something that would have to be developed?
    Mr. Claver-Carone. I always mention, and there was an 
inherent contradiction in something that has been said before, 
when we say, oh, because we want to kind of expose the Cuban 
people to our ideas and have entrepreneurs, and I always tell 
people, have you ever been to Miami? It takes a Cuban about a 
week and a day to open up a store in Miami and to be a very 
successful entrepreneur. I mean this is inherent in them. And 
also when people travel to Cuba, and your delegations, and as 
you just mentioned, and others, they always say we love 
Americans. Now, this about this inherently. For 50 years, we 
have had sanctions and we have been enemies of the Castro 
regime, and the Cuban people love us despite all that onslaught 
of propaganda and lack of information.
    Mr. Moolenaar. So let me----
    Mr. Claver-Carone. So we are doing something right.
    Mr. Moolenaar.--let me build on that. So you feel confident 
that it would be possible to develop those kind of 
relationships, but would your concern be that the Castro regime 
would not allow that to take place?
    Mr. Claver-Carone. Well, the Castro regime currently does 
not allow that in the sense that we believe in private 
enterprise, but there is something called the cuentapropistas, 
which are self-employment people, but they don't own 
certificate of corporations, they are not able to sell their 
companies, they don't have any stake. We want to encourage that 
and we want to build upon that. If those individuals were able 
to do that, just like when they get in a week and a day to 
Miami and open that up then that would be a positive trend. If 
the Congress sent that message to the regime that you need to 
allow your people to be independent entrepreneurs, have 
property rights, and be able to engage freely in trade with the 
United States, count me in.
    Mr. Moolenaar. And your feeling is the leverage that we 
have right now, we ought to use that to have some constructive 
change.
    Mr. Claver-Carone. I believe that if our principle policy, 
if we are going to export our principles as we said, we should 
also make sure that we do it under conditions and under terms 
that are consistent with those principles.
    Mr. Moolenaar. Okay. Just to clarify, are you of Cuban----
    Mr. Claver-Carone. Yes, sir.
    Mr. Moolenaar. Okay. Do you have family or relatives in 
Cuba?
    Mr. Claver-Carone. Yes, sir. Family and friends.
    Mr. Moolenaar. So when we talk about caring for the Cuban 
people, this is very close to you.
    Mr. Claver-Carone. I venture to say that no one cares more, 
on this panel, than myself, as much as I believe, obviously, 
that everyone cares, but it is definitely personal. And to make 
a quick point in that sense, I am not against taking money from 
Castro. To the contrary, sell him as much as you can. Take his 
cash. Our concern is handing money to that regime through that 
funnel and through that filter, that then we don't know how 
they are going to function with it, but that is our main 
concern.
    Mr. Moolenaar. Thank you. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. Anyone 
else? Mr. Crawford?
    Mr. Crawford. Thank you, Mr. Chairman. I appreciate you 
allowing me a little bit of latitude here.
    As you noted in your opening statement, there are certainly 
passionately held views on both sides of this issue, and I am 
certainly one of those. And I care about this issue, I care 
about the Cuban people, and as we have a familial bond with the 
Cuban people, as you have just expressed. I also care about our 
farmers. I represent \1/2\ of the U.S. rice crop. It is 
important to me. But let me just say that we have had this 
conversation about the need for safeguards, and I completely 
understand that. That is why the bill was written with those 
safeguards in place. In fact, it is the only bill I know of 
that lists financing restrictions on agriculture, but has the 
built-in safeguards. In this bill, the U.S. Government is 
prohibited from promoting products or financing exports with 
the Cuban Government, or any extension of the Cuban Government. 
This can only be done with private entities that are certified 
by the Secretaries of Agriculture and State. So it is right 
there in the text.
    Let me be clear about the concerns that we hear. We have 
already attempted to build the safeguards. Let me just ask you 
this. With all sincerity, and I know that because we are both 
so passionate about this, Mr. Claver-Carone, if you would be 
willing to continue the dialogue to work with us and work with 
me on refining this to the satisfaction of the folks in south 
Florida that are so passionate about it, as we are, and if we 
can do that, we have a path forward to try to reach an 
agreement that everybody can live with.
    Mr. Claver-Carone. As I mentioned from the get-go, I have 
tremendous respect for everyone on this panel, for you, for 
everyone here. And we love agriculture, so we want to help U.S. 
agriculture. And likewise, I know that you don't want to 
support a regime that is hurting our people.
    Mr. Crawford. Right.
    Mr. Claver-Carone. So, therefore, I am all open for 
continuing this dialogue and discussion, and finding ways to do 
so.
    Mr. Crawford. I appreciate that. As time goes on, we are 
both probably going to be prone to displays of emotion on this, 
and hopefully we can overcome that and move forward 
productively.
    And again, I want to thank the witnesses, and particularly 
my friend, Mr. Isbell, who is in the middle of harvest and he 
took time away to come and be heard and represent the rice 
industry. Mr. Gibson, thank you. Ms. Lowe, Dr. Ribera, thank 
you so much. I appreciate it.
    And, Mr. Chairman, I thank you and the Ranking Member for 
your latitude.
    The Chairman. Thank you. The gentleman yields back.
    I also want to thank our panelists. As I said early on, 
there are passionately held positions on both sides of this 
issue. Mr. Isbell, you are at risk, if that harvest goes better 
while you are here, they may ship you off all the time to get 
you out of their hair so they can do it correctly. I know that 
is what they do with Doug LaMalfa. They couldn't wait to get 
him back here. There are good people on both sides. And, quite 
frankly, I didn't hear anyone say anything different as to 
where we want to get to. It is how you get there that is the 
struggle. Neither side's arguments are completely persuasive. 
You are right, 60 years of a policy hasn't worked, got that, 
but I am unpersuaded that our involvement in China and Russia 
has turned them into beacons of hope. All the zillions of 
dollars of investment there, the travel, all that stuff, didn't 
work in those regimes either. This is the only country where it 
is the same two guys. I mean we all thought Father Time would 
get Castro by this point in time.
    I was down there in December of 2007, and we thought he was 
done. We were worried that if he died and the revolution broke 
out, we couldn't get out of the country. Well, that is 8 years 
ago, and the old goober is still working it. So unlike Vietnam, 
unlike the Soviet Union, we are dealing with the same folks. 
And so I am not persuaded. You look at what happened after the 
President did the reset in December of 2014, as soon as he 
announced he was going to Cuba, that historic event, they 
started rounding up dissidents as a preemption, then arresting 
people for no good reason. Since that has happened, Internet 
connections have dropped. Cuba is now worse than Syria, 
Zimbabwe, Iran, China, Venezuela in terms of letting their 
people have access. When I was down there in 2007, there were 
ten of us on the trade delegation, and President Bush said 
don't go. And we were down there. I was with nine guys, like 
McGovern, they all wanted instant opening relationships with 
Cuba. And so in every meeting there would be either McGovern or 
Greg Meeks or Jeff Flake or Jerry Moran, would say we are all 
for getting this thing done, except this guy, and they point to 
me. Right? So I got thrown under the bus every single time. At 
the exit interview, we had a big press conference, they had all 
the cameras up there, it was a big, huge array, and I got to go 
dead last because everybody else was worn out, and my comments 
were a regime that is afraid to let the Cuban people know the 
baseball box scores for the Major League Baseball, they are 
afraid to let their people see those Cubans who have fled the 
country doing well in baseball, are we making any progress?
    And so there are no good answers in this deal. There is no 
good solution. I am pleased that we are making some progress. 
Mauricio represents a passionate group of folks who want to get 
something done. Rick, you are representing a passionate group, 
and I am a cosponsor on your bill. There is a path forward. It 
is going to take wisdom and discernment, and nobody has the 
exact right answer, but I don't see anybody saying we need to 
get to a different point. We all want to get to that point 
where the everyday lives of the Cuban people are a little bit 
better. This is not going to turn into a nice democracy the way 
we understand it, that is just not going to happen, but it 
ought to be better than it is. And we are in a position with 
leverage now that no other country has, that we can exert that 
leverage, at the same time not hurting our farmers' and 
ranchers' exports. The number, 135,000 tons, is about one 
percent of our rice production, and so the 500 would get closer 
to your four or five percent number. So it is not a panacea. I 
am unconvinced that corn is not being sold down there now, that 
somehow us selling our corn there is going to move the market 
price, because that is not an unfulfilled market. You have to 
have new demand, and that would be supplanting somebody else's. 
And so all of the arguments have their goods and their bads, 
mine included, but this was probably the most respectful 
hearing we have had on a really contentious issue, deeply, 
passionately held opinions, and I am really proud of the 
Agriculture Committee for the way they conducted themselves 
today and explored this. And obviously, we are not done.
    So with that, I have, yes, sir.
    Mr. David Scott of Georgia. Mr. Chairman, I just want to 
congratulate you on, again, pulling together a very timely, and 
it is a very, very important issue. And I would say that our 
strategy moving forward with Cuba could be summarized as sort 
of being like we need two trains running. There is no question 
that we need to deal with the horrendous human rights 
situations that you are concerned about, Mr. Chairman, in Cuba. 
There are no if, and, or buts about that. And then we have the 
other train running, which is an obvious one that helps us to 
get ready. Father Time has a way of dealing with a lot of 
problems that we may not be able to deal with. And I am 
reminded of when the Prophet Samuel came to David in the Bible, 
and he poured the oil on his head. David was a young fellow. 
And so he asked, ``Samuel what do you do here, what are you 
doing.'' And the only answer Samuel could give was, ``Be ye 
ready.'' He didn't know what that meant was be ready for the 
king. So all I am saying is that this other train that we have, 
making sure we are ready to get in there and to be able to open 
that market for many of our farmers are struggling, many of 
them depend upon that. And so this other train we will call, 
let's just be ready, as Father Time might help us to work out 
the other side of the problem that you are so concerned with.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman yields back.
    With that, under the Rules of the Committee, the record of 
today's hearing will be open for 10 calendar days to receive 
additional materials and supplementary written responses from 
the witnesses to any question posed by a Member.
    This hearing of the Committee on Agriculture is adjourned.
    [Whereupon, at 12:08 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
Submitted Statement by Hon. Ted Poe, a Representative in Congress from 
                                 Texas
    The United States' policy towards Cuba is more than 50 years old, 
and it has failed. It has not hurt the Castro regime that is still in 
power, but it has hurt others, including Cuban citizens and American 
farmers. It's time for a change, and an important step forward would be 
to reestablish agricultural trading ties between our two nations.
    Prior to the embargo, the United States was one of Cuba's most 
important trading partners. With the embargo, that market has 
disappeared. In the years leading up to the embargo, Cuba was the ninth 
largest importer of American agricultural products. For U.S. long-grain 
rice, Cuba was the largest market for the exports.\1\ Now, instead of 
buying long-grain rice from Texas, Cuba buys its rice from farmers 
across the world, in places like Vietnam and South America (Argentina, 
Brazil, Uruguay), despite the Port of Houston being a mere 400 miles 
from the Cuban coast.
---------------------------------------------------------------------------
    \1\ McMinimy, Mark A. ``U.S. Agricultural Trade with Cuba: Current 
Limitations and Future Prospects.'' www.crs.gov. Congressional Research 
Service, 1 Oct. 2015. Web. 12 Sept. 2016.
---------------------------------------------------------------------------
    The economic advantages of reestablishing agricultural ties between 
our two nations cannot be understated. For Texas alone, exports to Cuba 
would reach almost $19 million annually with an additional $24 million 
impact for supporting sectors, resulting in a total annual economic 
impact of approximately $43 million for the state, according to the 
Texas A&M Center for North American Studies. The economic boon would be 
felt across the nation. Trading ties to Cuba opens up a new market in a 
country that imports approximately 80 percent of its food supply. 
Gaining access to that market would be a huge opportunity for American 
agricultural producers, and we would have a competitive advantage that 
almost no other country has: geographic proximity.
    Sixteen years ago, the United States tried to reform our trading 
relationship with Cuba by enacting the Trade Sanctions Reform and 
Export Enhancement Act (TSRA). This law allowed the export of 
agricultural and medical commodities to Cuba for the first time since 
the embargo took effect in 1962. It did, however, come with a heavy set 
of regulations and stipulations. Exports to Cuba were only allowed on a 
cash-only and cash-first basis, requiring that cash payments must be 
made before U.S. agricultural products left U.S. ports rather than the 
more customary payment upon delivery. Though the law allows third party 
countries to help finance these exports, U.S. agricultural exporters 
are still prohibited from extending credit to Cuban buyers. Despite the 
difficulties that arose from complying with TSRA, U.S. exports to Cuba 
ballooned in the immediate years after its implementation, reaching a 
record $711 million in 2008. However, exports fell down to $300 million 
by 2014 as the U.S. Government redefined the definition of a cash 
payment, a policy change that put Cuba at a higher risk and 
agricultural exporters discovered that the hopeful opportunity brought 
unwanted financial burden. Consequently, there have been no U.S. rice 
exports to Cuba since 2008. While there was a decline in U.S. exports 
to Cuba during this period, the overall market for Cuban agricultural 
imports skyrocketed to $2 billion.\2\
---------------------------------------------------------------------------
    \2\ Adcock, Flynn, Luis Ribera, and Parr Rosson. ``The Potential 
for Texas Agricultural Exports to Cuba.'' www.cnas.tamu.edu. Texas A&M 
Center for North American Studies, Nov. 2015. Web. 12 Sept. 2016.
---------------------------------------------------------------------------
    Under current law, there is no opportunity for U.S. agricultural 
businesses to trade directly with the Cuban people. Consequently, there 
is no real Cuban market. The current ``market'' is for trade with Cuba 
to go through ALIMPORT, Cuba's state-owned and state-controlled entity 
that makes all decisions regarding U.S. imports into the Cuban market.
    Though well-intended, the 2000 reforms did not do enough. It's time 
to do more, and that's why I cosponsored H.R. 3687, the Cuba 
Agricultural Exports Act, with Congressman Rick Crawford (AR-1). This 
legislation amends TSRA to repeal the restrictions on export financing 
and give American agriculture producers access to the Department of 
Agriculture's marketing programs. It also allows American entrepreneurs 
to invest in Cuban agricultural businesses so long as the State 
Department and the Department of Agriculture determine that the 
business is independent and has no affiliation with the Cuban 
Government. And, importantly, it explicitly prohibits investments in 
property that was confiscated by the Cuban Government on or after 
January 1, 1959.
    This bipartisan legislation is a testament to the will of our 
country's agricultural producers. With fifty years of failed policy, 
it's time for a change. It simply doesn't make sense for us to restrict 
trade with Cuba.
                                 ______
                                 
 Submitted Statement by Darius Anderson, President and Chief Executive 
                       Officer, U.S. Cava Exports
Introduction
    Chairman Conaway, Ranking Member Peterson, Members of the 
Committee, thank you for the opportunity to submit this testimony for 
your consideration.
    I am Darius Anderson, Founder and CEO of U.S. Cava Exports. We are 
a California-based small business looking to export California wine, 
specialty crops and other products to the Cuban market.
    Despite the fact that we have willing sellers in the U.S., and 
willing buyers in Cuba, the current regulatory and statutory barriers 
in U.S. law make the business of exporting U.S. agricultural products 
exceedingly difficult.
    Today, in a warehouse in California, my company has four containers 
of California wine awaiting shipment to Cuba. Federal law prohibits our 
buyers from utilizing U.S. banks to finance their purchase of our 
product. So we wait. This delay costs us money. It means we cannot hire 
new employees. And it means we cannot develop this new and promising 
foreign market.
    For this reason, U.S. Cava Exports supports the Cuba Agricultural 
Exports Act, H.R. 3687, and any legislation that repeals 22 U.S.C. 
7207(b) or the other unnecessary provisions that restrict trade and 
travel to one of our closest potential markets.
Experience in the Cuban Market
    I chose to enter into this business with my eyes wide open. I am 
well versed in the long and sometimes unpleasant history between the 
United States and Cuba. And when I decided to start the company, I 
fully understood the significant legal and market access challenges 
that existed.
    But even knowing of the challenges, the facts are clear as day: 
there is a strong and growing demand for U.S. products in Cuba.
    I know this because I have been personally invested in working with 
the Cuban people, and to a lesser extent the Cuban Government, for more 
than 25 years.
    When I made my first visit to Cuba in 1992, I fell in love with the 
place. I loved the beaches, the culture, the music, and the food. I 
returned to the country several times through the 1990's and as my 
appreciation continued to grow, I also came to understand the 
distinction between the political chasm between our governments and the 
real need to build cultural and personal ties between our citizens.
    So in 2002, I started to lead facilitate trips of like-minded 
Californians to visit Cuba to learn more about one of our closest 
neighbors. The trips focused on cultural, humanitarian and 
entrepreneurial exchanges. By 2010, our trips were so popular that we 
formalized our work and founded the nonprofit 501(c)(3) Californians 
Building Bridges. As of today, CBB has facilitated more than 70 trips 
to the island, and I have personally visited more than 50 times.
    I provide you with this background to underscore my point: I know 
first hand that the Cuban market is ripe for imports of U.S. 
agricultural products.
The Wine Market
    There are three key factors that make Cuba a promising market for 
California wines.

  (1)  Who visits Cuba and will visit Cuba in the near-term;

  (2)  Proximity to the U.S.; and

  (3)  Growing wine consumption.

    California wines are known around the world. But like any product, 
there are certain markets where California wines excel.
    The U.S. is, of course, the largest market for California wines.
    The next largest market is the EU, valued at $622 million in 2015 
according to the California Wine Institute. The third largest market 
for California wine is Canada, valued at roughly $461 million.
    Compare these numbers to tourism data in Cuba. The Oficina Nacional 
de Estadistica e Informacion, the national statistics office, estimates 
that 41.6 percent of all tourists visiting the country in 2015 were 
from Canada; 5.6 percent of tourists visiting Cuba were from Italy; 5.1 
percent were from Germany; 4.6 percent were from France; 4.1 percent 
were from England; 1.6 percent were from Spain.
    That means that 62 percent of all foreign travelers in Cuba are 
from regions where California wine exports excel.
    While that statistic alone would be enough to justify investment in 
this market, when you factor in the potential for U.S. citizens to more 
freely travel to Cuba, it is clear that the thriving tourism market is 
ripe for California wine.
    Furthermore, proximity to Cuba puts California wine at a 
competitive advantage over exports from other wine producing nations. 
Early market analysis shows that because of how close Cuba is to the 
U.S., California producers can get wine into the Cuban market at a 
fraction of the cost of our competitors in the EU, Australia, New 
Zealand, Argentina, and Chile.
    Finally, it is worth noting that it's not just the tourism market 
that has great potential. Wine consumption in Cuba has consistently 
experienced double-digit growth since at least 2007. And with more than 
11 million people on the island, the market potential for domestic 
sales is significant as well.
Conclusion
    In order for U.S. Cava Exports and the rest of the U.S. agriculture 
industry to have full and competitive access to this market, Congress 
must act.
    The current laws put U.S. agriculture at a disadvantage not only 
compared to our competitors abroad, but also compared to other U.S. 
industries. Because even if the embargo is lifted, the financing 
restrictions operate as an independent barrier to trade with our 
neighbor.
    U.S. Cava Exports urges you to remove these un-necessary 
restrictions and in doing so, promote economic growth in the U.S. 
agriculture industry.
    Thank you for the opportunity to offer this testimony today, and 
for your thoughtful consideration of this issue.
                                 ______
                                 
Submitted Statement by Randall C. Gordon, President, National Grain and 
                            Feed Association
    The National Grain and Feed Association (NGFA) appreciates the 
opportunity to respectfully submit this statement for the record in 
conjunction with the House Agriculture Committee's hearing on U.S. 
agricultural trade with Cuba conducted on September 14, 2016.
    The NGFA supports efforts to expand global market demand for U.S. 
agricultural products. As a charter member of the U.S. Agriculture 
Coalition for Cuba, the NGFA believes substantial benefits would be 
achieved by enacting legislation to authorize U.S. exporters to extend 
financing credit for purchases of agricultural exports.
    The NGFA, established in 1896, consists of more than 1,000 grain, 
feed, processing, exporting and other grain-related companies that 
operate more than 7,000 facilities and handle more than 70 percent of 
all U.S. grains and oilseeds. Its membership includes grain elevators, 
feed and feed ingredient manufacturers, biofuels companies, grain and 
oilseed processors and millers, exporters, livestock and poultry 
integrators, and associated firms that provide goods and services to 
the nation's grain, feed and processing industry. The NGFA also 
consists of 29 affiliated State and Regional Grain and Feed 
Associations, and has strategic alliances with the North American 
Export Grain Association and Pet Food Institute.
    Cuba is more than 4,000 miles from Europe and more than 2,000 miles 
from Brazil. But despite these logistical disadvantages, as well as the 
inherent productivity and competitiveness of U.S. agricultural 
producers and agribusinesses, the European Union and Brazil--not the 
United States--were the leading agricultural exporters to Cuba in 2014. 
Meanwhile, the United States, located just 90 miles from Cuba, 
constituted a mere 16 percent share of Cuba's agricultural imports.
    A 2015 report by the U.S. Department of Agriculture's Foreign 
Agriculture Service found that the U.S. share of the Cuban agricultural 
import market has declined, in part because of increased competition 
from countries that are able to provide export credits to Cuban import 
authorities. In Fiscal Year 2014, Cuba imported $1.873 billion worth of 
agricultural products, with the U.S. portion amounting to a paltry $300 
million. Almost all U.S. agricultural exports to Cuba either were 
grain, feed or value-add products, such as poultry and meat that boost 
domestic grain and feed demand and create U.S. jobs. Thus, the Cuban 
agricultural market is a natural fit for U.S. agricultural product 
exports.
    The NGFA is realistic about the potential demand from Cuba's 
agricultural import market. Total U.S. agricultural exports were valued 
at $152.5 billion in 2014, whereas Cuba's total agricultural imports 
from all sources amounted to $1.873 billion. Regardless, Cuba is an 
available market in which the United States has a natural competitive 
production and transportation advantage. Additional agricultural trade 
with Cuba would provide real economic benefits to our country and 
represent another demand source for U.S. agricultural producers 
currently experiencing a decline in farm income.
    The U.S. agricultural supply chain competes very well throughout 
the world when export markets with a level playing field exist. There 
are numerous public and private organizations, such as the NGFA, that 
devote considerable time, effort and resources advocating policies and 
working with foreign governments to remove barriers to U.S. 
agricultural exports. But Cuba is a market where the United States 
unilaterally can remove a significant trade barrier--the restriction on 
financing purchases of U.S. agricultural products. The current ban on 
offering credit terms and requiring U.S. agricultural products to be 
purchased using cash or through third-party guarantees from foreign 
banks has put the United States at a competitive disadvantage compared 
to key foreign competitors. The lifting of these credit restrictions is 
needed to level the playing field.
    The NGFA thanks Chairman Conaway, Ranking Member Peterson, and the 
Committee for conducting this important hearing, and would be pleased 
to serve as a resource in providing the expertise of its member 
companies in working to better enable U.S. farmers, ranchers and 
agribusinesses to secure an increased share of Cuba's agricultural 
import market.
            Sincerely,
            
            [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
            
            
            
Randall C. Gordon,
President,
National Grain and Feed Association.
                                 ______
                                 
   Submitted Letter by Ben Scholz, President, Texas Wheat Producers 
                              Association
September 12, 2016

  House Committee on Agriculture,
  Washington, D.C.

RE: Written Testimony of the Texas Wheat Producers Association for the 
            House Agriculture Committee Hearing On American 
            Agricultural Trade with Cuba, September 14, 2016

    The Texas Wheat Producers Association (TWPA) appreciates this 
opportunity to provide comments to the House Committee on Agriculture 
pertaining to the public hearing: American Agricultural Trade with 
Cuba.
    We are extremely grateful for the hearing today to discuss this 
important issue and will continue to support legislative efforts that 
will promote the flow of trade with Cuba, including H.R. 3687, the Cuba 
Agricultural Exports Act. We commend the Members of this Committee for 
recognizing the great potential of the Cuban market and the need to 
expand export opportunities for U.S. farmers.
    Cuba is the largest wheat market in the Caribbean, a region in 
which U.S. market share is typically 80-90 percent. According to data 
reported by Texas A&M University, Cuba imported $299 million of wheat 
in 2013 from the European Union and Canada. If financing restrictions 
and other obstacles were removed, the U.S. wheat industry fully expects 
to gain significant market share in Cuba, providing additional export 
value to Texas wheat producers.
    At one time, Texas was a leading exporter to Cuba, but due to 
excessive regulations and current ``cash-in-advance'' requirements, no 
wheat has been traded between the two countries since 2011. Texas wheat 
producers have increased our efforts to promote the flow of wheat to 
Cuba, but we now rely on Congressional action to ease the obstacles 
associated with the trade of agricultural goods between the two 
countries.
    This important discussion is taking place while farmers are 
struggling with a 56 percent decline in farm income, as estimated by 
USDA. Our producers are faced with record global wheat supplies and 
large crops at home which highlight the need for additional export 
opportunities. As an organization, we urge the Committee to strongly 
consider policy options, such as the elimination of financing 
restrictions, which will open the critical market in Cuba.
    In closing, U.S. and Texas wheat farmers could benefit greatly from 
easing trade restrictions with Cuba. We see a market that is close in 
proximity and in great need of our product. These factors create the 
opportunity to develop a $450 million new market for U.S. agricultural 
producers. Once again, we appreciate you bringing a spotlight to this 
issue and look forward to working with Members of the Committee to 
bring legislative action which will promote agricultural trade with 
Cuba.
            Sincerely,
            
            
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]         
            
            
            
Ben Scholz, President,
Texas Wheat Producers Association.
                                 ______
                                 
 Submitted Statement by Gordon Stoner, President, National Association 
                            of Wheat Growers
    Thank you, Chairman Conaway and Ranking Member Peterson, for 
holding an ``American Trade with Cuba'' hearing to address financial 
concerns that affect U.S. producers in trade with Cuba. The National 
Association of Wheat Growers (NAWG) appreciates the opportunity to 
submit this written testimony for the record.
    Cuba is the largest country by area and population in the 
Caribbean. With a population of over 11 million people Cuba consumes on 
average 800,000 metric tons (MT) worth $200 million of wheat per year 
over the past 10 years. Since Cuba produces no wheat domestically and 
is the largest Caribbean country, this also makes them the largest 
wheat importer in the Caribbean. Unfortunately, due to U.S. 
restrictions, Cuba imports the bulk of their wheat from the European 
Union (EU), 73%, and Canada, 25%, with none coming from the U.S. in 
recent years.
    As a country with a logistical and price advantage, we find it 
greatly troubling that our own self-imposed restrictions add a 
financial burden to the purchasers which in turn creates a barrier for 
U.S. wheat access to the marketplace. When Congress passed the Trade 
Sanctions Reform and Export Enhancement Act (TSRA) of 2000 it allowed 
trade in agricultural products with Cuba. TSRA requires Cuban buyers to 
pay cash-in-advance. For agriculture products the sole buyer is Cuba's 
food import agency known as A[LIMPORT]. In 2005 the regulation was 
amended by the Treasury Department's Office of Foreign Assets Control 
(OFAC) to also require purchasers to obtain and present letters of 
credit from a third-party, foreign bank, that would be responsible for 
the cash payment, prior to shipments, in lieu of payment from 
A[LIMPORT]. This method of payment prior to shipment is not practiced 
in international grain trade due to necessary processing time and 
document verification that typically takes 1 to 3 days of transit 
before payment approval. Once this change, which was unique to 
agriculture, took place the U.S. share of wheat exports to Cuba dropped 
from 48% in 2005 to 38% percent in 2006 to 28% in 2008. As of 2011 the 
U.S. has not exported wheat to Cuba, losing out to competitors like the 
EU and Canada.
    However, in 2015 regulations were implemented that specified ``cash 
payment in advance'' to mean ``cash before transfer of title and 
control'' to alleviate the necessity of cash payment prior to shipment. 
The White House statements indicated this change was intended to 
improve U.S. agriculture and food sales to Cuba, but due to Cuba's high 
credit risk status, its cash-poor position and the U.S.'s inability to 
offer credit terms, this has not driven more agriculture trade and 
these financial obstacles still remain.
    All of this continues to help competitor countries, who do not have 
similar barriers, access the Cuban wheat market at the expense of U.S. 
wheat farmers. For example, EU exporters have the flexibility to offer 
financing, structure payments most profitable for them and their banks 
can interact with Cuban banks directly, eliminating these unnecessary 
burdens that affect the U.S. wheat producers. Meanwhile, U.S. wheat 
producers are missing out on the largest country in the Caribbean, a 
region where U.S. wheat has 80% of the market share. Cuba imports 30 
million bushels of wheat every year worth $200 million, and with the 
U.S. having the closest ports to Cuba from which to import wheat this 
could be a significant market if financial barriers were improved.
    With improved financial means to conduct business with Cuba, 
specifically in grain trade, U.S. wheat would gain additional market 
access that could benefit the farm economy, which is simultaneously 
experiencing record low wheat prices and record high surplus straining 
wheat farmers across the nation. NAWG supports the Cuba Agricultural 
Exports Act (H.R. 3687) introduced by Rep. Rick Crawford (R-AR) and 
Chairman Conaway, and others, and wheat farmers from across the country 
urge the Committee to take up this or other legislation that will lift 
these financing restrictions.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


Gordon Stoner,
President,
National Association of Wheat Growers.
                                 ______
                                 
         Submitted Statement by American Farm Bureau Federation
    There is potential for substantial growth in U.S. agricultural 
sales to Cuba, but agricultural financing restrictions are hurting that 
growth. The U.S. food and agriculture industry is the only industry 
that must use third-country, non-U.S. banks for financing sales or have 
a cash transaction from a Cuban customer. These requirements increase 
transaction costs and limit the opportunity for sales into the Cuban 
market. Instead, Cuba buys most of their food imports from Brazil, 
Argentina, Vietnam, the European Union and Canada. Cuba imports up to 
80 percent of its food, with a focus on rice, poultry, dairy, soy 
products, wheat and corn. The top U.S. agricultural exports to Cuba are 
poultry, soybean meal and corn. With normal financing, the U.S. could 
capture a significant share of the Cuban market for rice, wheat and 
many other food and agricultural products.
    U.S. agricultural and food products can be exported to Cuba for 
humanitarian reasons under the Trade Sanctions Reform Act of 2000 
(TSRA). While TSRA opened the channel for shipping agricultural 
commodities and food products to Cuba, restrictions on financing those 
sales have made it difficult to compete with our foreign competitors in 
the Cuban market. The U.S. has fallen from its position of a top 
supplier of agricultural products to Cuba to being the fifth largest 
supplier after the EU, Brazil, Argentina and Vietnam.
    U.S. agriculture is at a global disadvantage as we watch foreign 
competitors continue to take away our market share because of their 
ability to offer generous credit terms. As recently as 2008, we were 
selling nearly $700 million in agriculture products to Cuba annually. 
In 2015, our sales were $150 million in what is nearly a $2 billion 
market--U.S. market share is now less than ten percent of Cuba's 
agricultural imports despite the superior quality of our products. 
Located just 90 miles from the U.S. coast, with all of the 
transportation and logistics advantages for efficient marketing, Cuba 
should be growing, not shrinking, as a market for American agriculture.
    Real opportunities exist for increased sales of U.S. agricultural 
products to Cuba as growing demand is driven by 11 million Cubans and 
by increasing tourism. Cuba is the second most visited island in the 
Caribbean, welcoming more than 3.0 million visitors in 2014. In 2015, 
Cuba experienced double digit tourism growth welcoming 17.4 percent 
more visitors than it did in 2014.
    Since the normalization process between the U.S. and Cuba began in 
December 2014, successive rounds of amendments to Cuba-related 
regulations have been made through the Treasury and Commerce 
Departments. However, agriculture is at a unique disadvantage due to 
the codified restrictions of TSRA that prevent similar regulatory 
authorizations from being extended: as of January 2016, there is a 
general policy of approval for exports and re-exports of some 
agricultural items, but not those defined as agricultural commodities.
    Because U.S. agriculture is the outlier among American business, 
focus is needed on the economic value Cuba provides as a trading 
partner. In the U.S., net farm income fell by 55 percent from 2013 to 
2015, the biggest 2 year decline since the 1920s farm crisis. There is 
no better time than now to provide American farmers and agribusinesses 
the tools they need to expand agricultural exports to Cuba and help our 
industry survive this difficult economic environment.
    We support legislative efforts to advance American agricultural 
trade with Cuba. It is necessary for Congress to act to allow private 
financing for agricultural exports to Cuba.
                                 ______
                                 
            Submitted Statement by Corn Refiners Association
    The Corn Refiners Association commends Chairman Conaway for 
convening this hearing on ``American Agricultural Trade with Cuba,'' 
and appreciate the opportunity to submit our views. Since 1913, the 
Corn Refiners Association has represented the U.S. corn refining 
industry. Our members manufacture products such as sweeteners, starches 
and feed that are used in food, animal feed, textiles, home improvement 
and commercial products that are consumed all over the world.
    In late 2014, the U.S. began the normalization process with Cuba 
through a series of amendments to Cuba-related regulations within the 
U.S. Departments of the Treasury and Commerce. Those changes have 
allowed for different U.S. industries to seek out new business 
opportunities in Cuba and for the authorized export and financing of 
those exports in particular sectors, such as telecommunications, civil 
aviation, and entertainment.
    However, agriculture remains at a unique disadvantage due to the 
codified restrictions of the Trade Sanctions Reform Act of 2000 (TSRA). 
While the Act has allowed for U.S. agricultural and food products to be 
exported to Cuba for humanitarian reasons, it also prevents regulatory 
authorizations from being extended and prohibits U.S. exporters from 
extending credit to Cuba's agricultural importers. As a result, the 
U.S. fell from being Cuba's number one supplier of agricultural 
products in 2003 to fourth in 2012.
    Given its proximity to the United States--just 90 miles off U.S. 
coastline--and with 11 million consuming citizens, Cuba is a natural 
market for the United States. In addition, Cuba's agricultural imports 
are expected to grow as increased tourism fuels demand for food 
products, especially value-added products, and as remittances flow more 
freely due to recently revised U.S. policies.
    It is clear that significant opportunities exist for American 
agribusiness in Cuba, from exporters of agricultural commodities and 
food products to associated industries that would benefit from greater 
market access. Unfortunately, foreign competitors such as Canada, 
Brazil, the European Union and Argentina are increasingly taking market 
share from U.S. industry because those countries do not face the same 
financing and antiquated trade policy restrictions. Removing commercial 
barriers would allow U.S. agriculture to competitively serve the Cuban 
market.
    It should also be recognized that normalizing commercial relations 
with Cuba would enhance Cuban citizens' access to affordable food while 
allowing U.S. farmers, ranchers and food companies to efficiently 
address Cuban citizens' food security needs. Expanding trade with Cuba 
would represent a positive development for the nutritional health and 
economic opportunities of the Cuban people, as well as an expanded 
market for American agriculture.
    For the reasons listed, the Corn Refiners Association urges you to 
support favorable legislation that leads to normalizing commercial 
relations with Cuba. In so doing, we respectfully urge you to reject 
any legislative language that would reverse or hinder our ability to 
fully compete with other countries currently exporting agricultural 
products to Cuba.
    We appreciate your consideration of our views and stand ready to be 
of assistance to the Committee.
                                 ______
                                 
  Submitted Letter by Missouri Rice Research and Merchandising Council
September 14, 2016

  Hon. K. Michael Conaway, 
  Chairman,
  House Committee on Agriculture,
  Washington, D.C.;

  Hon. Collin C. Peterson,
  Ranking Minority Member,
  House Committee on Agriculture,
  Washington, D.C.

    Dear Chairman Conaway and Ranking Member Peterson:

    The Missouri Rice Research and Merchandising Council (MRRMC) is 
pleased to present written comments in relation to today's hearing on 
American Agricultural Trade with Cuba before the House Committee on 
Agriculture. Thank you for holding the hearing and for providing us the 
opportunity to make comments on the Cuban market.
    Twelve years ago on about this very day, U.S. Special Trade 
Ambassador Al Johnson got an earful today from the leaders of the 
Missouri Rice Research and Merchandising Council over a lunch of 
Missouri barbecue in the heart of Missouri rice country.
    ``We appreciate Ambassador Johnson coming all of the way out to 
rural Missouri to talk trade with us,'' said the late Sonny Martin, 
Chairman of the MRR&MC.
    ``We know he's been working to pry open some of the world markets 
that close the door in the faces of U.S. rice farmers, and we 
appreciate his hard work.''
    At the meeting, rice producers from around Missouri aired a number 
of trade concerns with Ambassador Johnson. The issues discussed 
included the pending WTO agriculture negotiations; the recently 
concluded CAFTA agreement; brewing rice trade disputes with Mexico and 
the European Union; and the need to assist U.S. rice farmers to regain 
markets embargoed by the United States, especially Cuba and Iraq.
    Mr. Martin pointed out ``Rice farmers have been hurt more than the 
producers of any other crop by our own government's trade embargoes. 
Markets like Cuba, Iran, and Iraq--once our largest export markets--
have all been closed to us by the unilateral actions of our own 
government. It is too bad that Ambassador Johnson must work his tail 
off flying all over the world to convince other governments to crack 
open their rice markets, while customers like Cuba could and would open 
the doors wide to buy hundreds of thousands of tons of U.S. rice if our 
own government would simply let us sell our rice without restriction.''
    So as former Congressman Mo Udall once said ``Everything has been 
said but not everyone has said it.''
    The Missouri Rice Research & Merchandising Council is established 
under state law to represent Missouri's rice producers. The Board of 
the Council is duly elected by the membership, which includes all of 
Missouri's rice growers. The Missouri Rice Research & Merchandising 
Council is a member of the U.S. Rice Producers Association. The U.S. 
Rice Producers Association representing rice farmers in Mississippi, 
Missouri, Texas, California, Louisiana and Arkansas is the only 
organization solely representing the views of the U.S. rice farmer.
                                 ______
                                 
        Submitted Letter by U.S. Agriculture Coalition for Cuba
September 14, 2016

 
 
 
Hon. K. Michael Conaway,             Hon. Collin C. Peterson,
Chairman,                            Ranking Minority Member,
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Conaway and Ranking Member Peterson:

    The undersigned organizations of the U.S. Agriculture Coalition for 
Cuba (USACC) are pleased to present written comments in relation to 
today's hearing on American Agricultural Trade with Cuba before the 
House Committee on Agriculture. Thank you for holding the hearing and 
for providing American food and agriculture interests the opportunity 
to explain the importance of the Cuban market to our farmers, ranchers, 
and businesses.
    USACC represents a broad range of more than 100 agricultural 
commodity and farm member organizations along with members of the food 
and agricultural private-sector that support fully lifting the 
financing, trade, and travel bans for Cuba.
    As you are well aware, U.S. agricultural and food products can be 
exported to Cuba for humanitarian reasons under the Trade Sanctions 
Reform Act of 2000 (TSRA). While TSRA opened the channel for shipping 
agricultural commodities and food products for humanitarian purposes to 
Cuba, remaining U.S. restrictions on financing those sales have made it 
difficult to compete with our foreign competitors in the Cuban market. 
U.S. restrictions require Cuban buyers of U.S. agricultural products to 
pay cash-in-advance or finance the transaction through third-country 
banking institutions.
    U.S. agriculture is at a global disadvantage as we watch foreign 
competitors continue to take away our market share because of their 
ability to offer more favorable credit terms. As recently as 2008, our 
industry was selling nearly $700 million in agriculture products to 
Cuba annually. In 2015, our sales were under $200 million in what is 
nearly a $2 billion market. U.S. market share is now less than ten 
percent of Cuba's agricultural imports, despite superior quality, 
competitive prices of our products, and logistical advantages. Located 
just 90 miles from the U.S. coast, Cuba is a natural market for 
American food and agriculture businesses, as it has been in the past.
    Since the normalization process between the United States and Cuba 
began in December 2014, successive rounds of amendments to Cuba-related 
regulations have been made through the Departments of Treasury and 
Commerce. Those changes have allowed for different industries to 
explore business opportunities in Cuba and for authorized export and 
financing of those exports in particular sectors, such as 
telecommunications, civil aviation, and entertainment. However, 
agriculture is at a unique disadvantage owing to the statutory 
restrictions of TSRA that require Congressional action. As of January 
2016, the general policy of approval for exports and re-exports does 
not extend to all agricultural commodities.
    Given that U.S. net farm income fell by 55 percent from 2013 to 
2015, the biggest 2 year decline since the 1920s farm crisis, this is a 
time to focus on ways to expand agricultural trade. Providing American 
farmers and agribusinesses with the tools they need to engage in 
mutually beneficial commerce with Cuba can contribute to U.S. 
agriculture's economic growth.
    Focus is needed on the economic value Cuba provides as a trading 
partner, allowing for this Congress to weigh-in by moving the critical 
legislation needed to allow private financing for agricultural exports 
to Cuba. As Congress considers legislation during the remainder of the 
year, we urge you to reject any language that would reverse or hinder 
our ability to fully compete with other countries currently exporting 
agricultural and food products to Cuba.
    USACC appreciates your consideration of favorable legislation that 
advances the efforts of American agricultural trade with Cuba and USACC 
encourages your continued support of our vital industry.
            Sincerely,

 
 
 
                        Agriculture Organizations
 
American Farm Bureau     National Sorghum         Iowa Farm Bureau
 Federation               Producers
American Soybean         National Turkey          Kansas Wheat
 Association              Federation
American Seed Trade      North American Export    Food Export
 Association              Grain Association        Association of the
                                                   Midwest USA
American Feed Industry   North American Meat      Food Export--USA
 Association              Institute                Northeast
Association of           Rural & Agricultural     Louisiana Rice Council
 Equipment                Council of America
 Manufacturers
Cherry Marketing         U.S. Canola Association  Michigan Apple
 Institute                                         Association
Corn Refiners            U.S. Cattlemen's         Michigan Bean Shippers
 Association              Association
Council of State         U.S. Dairy Export        Michigan Bean
 Governments              Council                  Commission
CNFA: Cultivating New    U.S. Dry Bean Council    Michigan Milk
 Frontiers in                                      Producers Association
 Agriculture
Dairy Farmers of         U.S. Soybean Export      Michigan Corn Growers
 America                  Council                  Association
Global Aquaculture       U.S. Rice Producers      Michigan Soybean
 Alliance                 Association              Association
Independent              USA Dry Pea & Lentil     Michigan Potato
 Professional Seed        Council                  Industry Commission
 Association
International Dairy      USA Rice Federation      Missouri Corn Growers
 Foods Association                                 Association
Matter                   Agribusiness Council of  Missouri Soybean
                          Indiana                  Association
National Association of  Arkansas Rice Growers    Missouri Department of
 Wheat Growers            Association              Economic Development
National Association of  Arkansas Farm Bureau     Missouri Department of
 Egg Farmers                                       Agriculture
National Barley Growers  Arkansas Rice Growers    Missouri Rice Council
 Association              Association
National Black Growers   California Rice          Missouri Forest
 Council                  Producers                Products Association
National Chicken         Illinois Corn Growers    Missouri Farm Bureau
 Council                  Association
National Corn Growers    Illinois Cuba Working    Mississippi Rice
 Association              Group                    Council
National Council of      Illinois Soybean         Ohio Farm Bureau
 Farmer Cooperatives      Growers
National Farmers Union   Illinois Farm Bureau     National Potato
                                                   Council
National Foreign Trade   Indiana Farm Bureau      Texas Farm Bureau
 Council
National Grain and Feed  Indiana Corn Growers     University of Missouri-
 Association              Association              Fisher Delta Research
                                                   Center
National Milk Producers  Indiana Soybean          Virginia Department of
 Federation               Alliance                 Agriculture and
                                                   Consumer Services
National Oilseed         Indiana Corn Marketing   Alcorn State
 Processors Association   Council                  University
 
                        Agriculture Corporations
 
ADM                      Hampton Alternative      Sandy Ridge Cotton
                          Energy & Feedlot         Company
Advanced Drainage        Hover Farms              Smithfield Foods
 Systems
AGCO                     Intertek Agriculture     South Louisiana Rail
                          Services                 Facility
Bunge                    Kaehler Agriculture      Sun-Maid Growers of
                          Enterprises              California
Butterball               Kerley Nutritional       St. James Winery
                          Consulting
Cargill, Incorporated    Louis Dreyfus Company    Synergy Resource
                                                   Solutions, Inc.
Chicago Foods            Missouri BioZyme, Inc    Thomas E. Jennings and
 International                                     Associates, Inc.
Campbell Farms           Missouri Burnett Farms   Turkey Knob Growers
Clark AG Company         Martin Rice Company      TRC Trading Group
CoBank                   Michigan Allied Poultry  U.S. Wellness Meats
                          Industries, Inc
Franklin Electric        Net Worth Feeds &        U.S. Cava Exports
                          Feeding
GreenStone Farm Credit   Orrick Farm Services
 Services
 

CC:

Members of the House Committee on Agriculture

                                  [all]