Cargill's Vorwerk makes case for ending Cuba embargo

Cargill's Vorwerk makes case for ending Cuba embargo
Article by: TOM MEERSMAN , Star Tribune Updated: March 21, 2015 - 5:15

A trade mission with 95 agriculture leaders from 12 states visited Cuba
earlier this month. Many were members of the U.S. Agriculture Coalition
for Cuba, formed early this year and chaired by Devry Boughner Vorwerk,
vice president of corporate affairs for Minnetonka-based Cargill Inc.
The group spent a full day with Cuban import, trade and investment
officials in Havana, Vorwerk said. Another day the delegation broke into
groups to visit Cuban farms growing and processing sugar, rice, cattle,
fruits and vegetables, fish, tobacco and other products. Vorwerk's
comments have been edited for space and clarity.

Q: What experiences did you have on the trip?

A: One of the groups went out to the Bay of Pigs to see the aquaculture
production taking place out there, with the support of the Norwegian
government. That team was surprised by the sophistication and the
absolute modern aquaculture infrastructure. My group visited a farm, and
we were able to see tobacco, sorghum, rice and dry beans. I was
impressed by the way they set up their management team. We also learned
a lot about differences in co-ops, and how they voluntarily organize
themselves and provide services to different farmers.

Q: Was there an overall impression that you had?

A: I would use one word, and that is potential. Potential on both sides.
Certainly the Cuban farmers need access to technology, inputs, capital
and services. They pretty much need access to what any modern
agricultural industry could provide. People on the sugar tour saw
brand-new International Harvester equipment being used that was supplied
by Brazilians. I saw farmers still using oxen and having wooden plows to
draw the rows for tobacco planting. So there's inconsistency in terms of
access to technology.

Another finding is that there's a real market. A market could
potentially exist in greater form for U.S. agricultural products. The
Cuban citizens need these products. They're in a net food deficit right
now, so they are importing products. If they are intended to grow and
leverage one of their main industries, which would be tourism, they're
especially going to need additional support. That may come from
increased yields, but certainly that's also going to come from outside
sources.

Q: What could we offer Cuba and what could Cuba sell to us in terms of
commodities?

A: There's clearly potential for U.S. exports across the value chain.
Soybeans, wheat, corn, rice, dried beans, and we also had individuals
from the U.S. meat industry. I think it's limitless in terms of our
ability as the U.S. food and ag sector to supply products whether it's
at the commodity level or higher value food products.

On the Cuban side, we just got a taste of their export potential.
Certainly one of their mainstay products is tobacco: cigars. Cuba is
also incredibly well-positioned to grow an outdoor aquaculture industry
because their water is pristine and they've got a lot of it. There could
be a play for high-value organic products like fruits and vegetables.
This would all require investment in their ag infrastructure. It's going
to be a journey for the Cuban farmers to figure out what their
comparative advantage is, and what they can export.

Q: How's the competition?

A: There are investors flocking in and dipping their toe in [the] water
to figure out whether they have a play there. But the most compelling
that we saw is the Brazilians in the agro sector. They're eating our
lunch in terms of market share for commodities. On top of that they have
competitive financing. The U.S. farmers' hands are tied behind their
backs because of the complex financing requirements that are set up at
the moment. But in addition what we saw was some actual investment,
which means competitors are seeing something. It's only a matter of time
until the U.S. ends the embargo, but other countries have first mover
advantage right now, and we're sitting on the sidelines.

Q: What are the chances of ending the embargo, especially since many
members of Congress and most of the Republican presidential hopefuls are
opposed to doing that?

A: One of the trip's main goals was to raise the level of consciousness
of the current U.S.-Cuba policy situation and help make the case to end
the embargo. We know that not everyone agrees with us. But the more we
can share the importance of Cuba as a natural market for U.S.
agriculture, hopefully we will be able to change minds. We and others
need to make the case to Congress, which has a lot on its plate.
Ultimately, it's in the hands of Congress to decide whether we get the
chance to trade and invest, or whether we sit on the sidelines while our
competitors engage more strategically than we're able to. We left Cuba
inspired to make 2015 our year. Maybe we're optimists, but unless you're
an optimist, you can't stay in this game. What we're talking about is
unraveling 54 years of a policy.

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