US Is $500 Million Supermarket to Cuba

US Is $500 Million Supermarket to Cuba

Published: Friday, 28 May 2010 |
By: Rob Reuteman
Special to CNBC.com

The U.S. businesses that sold $528 million in food products to Cuba last year range from small dairy farmers to multi- billion dollar agribusiness corporations.

But they seem to have one thing in common: they admit to mixing a little social messaging in with their sales.

Take the case of Ralph Kaehler, a St. Charles, Minn., cattleman who shipped the first livestock to Cuba after the U.S. lifted its 52-year trade embargo to allow sales of food products and medical supplies in 2000.

In 2002, news photos of Kaehler’s two sons were published around the world as they showed Fidel Castro one of their bulls, named Minnesota Red. (See one of the images below.)

“I’d rather have my boys someday go down there and negotiate a cattle contract than be members of a peacekeeping mission,” Kaehler said. “We’ve never gone to war with a trading partner.”

Escape from Havana - A CNBC Original Documentary

Kaehler is outspoken on the subject of doing business with Cuba, in sharp contrast to the rare and carefully chosen statements on the subject from agribusiness giants like Cargill or Archer Daniels Midland.

The Cuban trade embargo remains a hotly-debated topic of the sort most U.S. companies shy away from. You either believe that economic sanctions should remain in effect until the Cuban dictatorship switches to democracy or you believe that the quickest way to undermine the Cuban government would be to flood the island with U.S. goods and citizens.

Profit hasn’t been foremost on Kaehler’s list of motives.

“Like my banker says, for the amount of money we’ve gone through in trading with Cuba, we sure haven’t kept much,” he said. “We’re doing it as much for correcting policy we think is wrong as anything else. And as farmers, we have to promote agriculture whenever we can.”

Archer Daniels Midland
Seth Perlman / AP
The Archer Daniels Midland Co., logo on the main office at the ADM plant in Decatur, Ill.

Decatur, Ill.-based Archer Daniels Midland [ADM  36.17  0.13  (+0.36%)   ], with 2009 revenues of nearly $70 billion, was the first U.S. company to sign a contract with Cuba after the Trade Sanctions Reform and Export Enhancement Act of 2000 lifted part of the trade embargo.

By some estimates, ADM now accounts for nearly half of all U.S. food exports to Cuba. But the company doesn’t publicize its Cuban trade.

Asked last week about ADM’s trade with Cuba, media relations manager Roman Blahoski responded, “We generally do not discuss market conditions. We do not break down revenue by country or region, only by business unit—corn processing, etc.,—so we wouldn’t have any revenue information specific to Cuba to provide.”

In October 2003, Tony DeLio, a former vice-president of marketing and public relations at ADM, was quoted by the Chicago Tribune: “We are always concerned when there is a lack of freedom. But as a company, our ability to affect that, and where we can help bring about change, is through trade.”

Cargill Inc., one of the world’s largest privately owned corporations, also has been doing business with Cuba for 10 years. Since it’s privately held, Cargill is not required to file public reports on its financial profile, but its annual sales are estimated at well over $55 billion.

 

Asked this week about its trade with Cuba, media relations director David Feider responded by e-mail: “I can confirm that Cargill has sold U.S. agricultural commodities now for a number of years—corn, dried distillers’ grains, wheat—licensed by the U.S. government under the Trade Sanctions Reform & Export Enhancement Act of 2000 into Cuba.”

“This activity is consistent with our longstanding belief that that food is a basic right, and access to it should not be manipulated by governments for political purposes,” Feider added.

Getty Images
Cuban President Fidel Castro talks with Cliff Kaehler, 13, Seth Kaehler, 11, and their father Ralph Kaehler, as they show him livestock from their Minnesota farm during the U.S. Food & Agribuisiness Exhibition, Sept 26, 2002 in Havana.

Florida International University, which annually polls Cuban-American sentiment, identified a tipping point in 2008. For the first time less than half of respondents, 45 percent, supported the continuing U.S. economic embargo. Their 2004 poll showed that 66 percent wanted the embargo to continue.

“The embargo is about the Cuban exiles who backed Batista,” Kaehler said. “It’s all about old money and old power. Over 70 percent of Cuban Americans weren’t alive when the embargo was put in place. All families in Cuba have relatives in the U.S. Just like Mexican families, they all have someone up here making money and sending it home. Even with the embargo and all its impeding circumstances, we’re still one of Cuba’s top four trading partners.”

The U.S. food products now making their way to Cuba include corn from Iowa, cattle from Florida, millions of dozens of eggs from Massachusetts, rice from Texas and apples from Washington state. American coffee, shellfish, bread, wine, cigarettes and pistachios also are exported.

More than 30 states have sent trade missions to Cuba in the past 10 years, eager to do business with an island country of 11.4 million people that has to import 70 percent of its food.

“The more you learn about the embargo, the crazier it gets that we’re continuing it,” Kaehler said. “The logic of it defies a normal mind.”

Watch the premiere of ‘Escape from Havana: An American Story’ on Thursday, May 27 at 9pm ET on CNBC.

Advertisements

About Rob Reuteman

Reuteman is a freelance journalist based in Denver. He had been business editor at the Rocky Mountain News for 12 years before it was shut d
This entry was posted in Freelance - world affairs. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s