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Will Minnesota do more business with Cuba? It depends

Jesse Ventura
REUTERS/Rafael Perez
Jesse Ventura holds up a University of Havana team shirt after a speech at the university in 2002 where he advocated overhauling the U.S. policy of trade sanctions against Cuba.

HAVANA, CUBA — The first time Minnesota Commissioner of Agriculture Gene Hugoson came to Cuba in 2002, he and then-Gov. Jesse Ventura spent an hour with Fidel Castro, telling the Cuban dictator how Minnesota companies were prepared to sell food and agricultural products to this last bastion of Soviet communism in the Caribbean. 

Ventura’s celebrity status helped open the door to this lucrative, if challenging, market for Minnesota’s corn, soybean and turkey growers, and for companies like Cargill, Land ‘o Lakes, CHS and Hormel. 

As a result, Minnesota companies have sold tens of millions of dollars since then in agricultural products to Cuba, including more than $24 million in 2007, or almost 6 percent of all U.S. agricultural exports to Cuba that year. The figure doesn’t include medical technology and construction materials, the only other legal U.S. exports to Cuba.

But the future of U.S.-Cuban business ties are uncertain, as Hugoson found when he made his fourth trip here last month during election week in the United States even though most Cubans, including Castro, hailed the election of Barack Obama as a positive sign for U.S.-Cuban relations.

Hugoson and marketing director Kurt Markham headed a delegation of Minnesota companies and agricultural producers who attended the week-long 26th Havana International Trade Fair at the giant Cuba Expo area outside of Havana. But this time, they didn’t meet with Castro, the ailing 82-year-old Cuban leader who stepped down as president last February, or with his brother Raul, the acting president.

And while Hugoson’s department and Minnesota companies had booths in a building under the umbrella of Alimport, the Cuban agency that handles American importers, other countries, like Canada, Mexico, Brazil, Venezuela, China, Germany, France, Great Britain and Italy had bigger exhibits in nearby pavilions.

Unlike the U.S. companies, which can only export food and agriculture products, medical supplies and construction materials to Cuba, the other countries had elaborate exhibits of computers, automobiles and other high technology products on display, all of which they can sell on a credit basis, which U.S. companies cannot do.

Big challenge
The official line from the Cuban government is that it wants to do business with the United States. “Cuba’s readiness to normalize trade and travel relations with the U.S. in an atmosphere of peace, friendship and mutual respect,” Alimport declared while claiming that it has “contracted over $3.4 billion and made timely cash payments of $3.3 billion to American exporters” in the past seven years.

But the fact that the sign over the Minnesota agency’s booth at the Cuba Expo, which read “Minnesotta Department of Agriculture,” was misspelled may have unintentionally signaled a more difficult business environment for U.S. companies here.

Kurt Markham and Marais Miralles Carty
MinnPost photo by Albert Eisele
Kurt Markham at Minnesota’s exhibit at the International Trade Fair in Havana with Marais Miralles Carty, a Cuban college student assigned as a liaison to the Minnesota exhibit. The sign over Minnesota’s booth misspelled the name of the state, perhaps an unintentional signal of the challenges of doing business in Cuba.

“There’s still a lot of potential here, but the whole way of doing business is a big challenge,” said Hugoson, a former Republican state legislator and weekend farmer near East Chain in Martin County. “There are still the U.S. trade embargo and travel restrictions, but the real problem is that Cuba can only buy U.S. products with cash. It puts us at a disadvantage with other countries.”

For Minnesota exporters, distance and the nature of much of the state’s agricultural products are also a problem, Hugoson said. “One of our drawbacks is our location. Transportation costs are a big factor. And it’s hard to be competitive when many of the products are higher end, whether turkeys or pork, and pricing becomes a challenge.”

As for Obama, whom Castro praised on Election Day as “surely more clever, better educated and calm than his Republican adversary” and “the best political speaker in the United States in the past decades,” Hugoson said the president-elect “certainly has the potential” to improve hostile U.S.-Cuban relations that date back to Castro’s rise to power a half century ago.

“There are still problems on both sides,” Hugoson said. “I understand and sympathize with their frustration, but at the same time, the Cubans don’t allow their people to come to the U.S. It would be nice if some of these people could come to Minnesota, but they can’t.”

Popular Minnesota products
Some Minnesota products, such as turkey and pork, are too high end for the Cuban market at present, Hugoson said, but could open up as the booming tourist trade continues. (Cuba had three  million foreign tourists this year.) Meanwhile, Minnesota is selling Cuba a lot of dried distiller grain — the high-protein residue left over from corn used to make ethanol — that makes excellent animal feed.

Another Minnesota product in demand in Cuba is dried edible beans from the Red River Valley — think of the Cuban stable of red beans and rice — as well as milk replacer for dairy calves weaned from cows.

Markham, who has visited seven countries in the past year while promoting Minnesota products, doesn’t see any immediate improvement in U.S.-Cuba trade, even with Obama’s election.

“It’s no slam dunk in 2009,” he said in an interview at Minnesota’s Cuba Expo. “It will take at least until 2010 for things to improve. The first thing that will happen is that [the United States] will allow the sale of construction materials, hopefully with credit. But I don’t think you’ll see anything major right away.”

Markham sees the critical issue as “the opening of credit for those companies that want it. But I don’t think that will happen, at least right away. The Cuban people don’t want a return of Las Vegas [before Castro overthrew the U.S.-backed Batista government]. They’ve had that and they know what bad things come with it.”

Markham, who grew up on a dairy farm in Whitewater, Wis., said he’s not as hopeful about doing business in Cuba as before, but added, “There are still opportunities for U.S. companies that want to do business with Cuba who are willing to struggle with the bureaucracy or the credit issue. I’m still optimistic that things will be much freer and open in 2010.”

Albert Eisele is founding editor of The Hill, a newspaper that covers Congress.

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