Minnesota takes second trade mission to Cuba

It’s a debate that is guaranteed to incite emotions, both for and against. Increasing trade opportunities with Cuba is a hot button topic in Washington D.C., but it’s an important topic for agriculture. Minnesota is one state in the Union that recognizes the opportunities in Cuba. Several state officials and Ag groups took part in a recent June trade mission to our neighbors 90 miles to the south of Florida.

The timing felt a little ironic. Minnesota Lieutenant Governor Tina Smith put the trip together months ago as a follow-up to a recent state trip to Cuba last December. The Friday before the delegation arrived in Cuba on the most trade mission, President Donald Trump decided to roll back some of the Obama-era regulatory moves that opened up opportunities for the countries to do business. That made the trip a little more important in the minds of Minnesota officials and Ag groups.

trade opportunities Cuba

Minnesota Farm Bureau President Kevin Paap was a member of the recent Minnesota delegation to travel to Cuba to talk about increasing trade opportunities between the state and the island nation 90 miles south of Cuba. (contributed photo)

“It (Trump’s announcement) didn’t change any of our goals going down there,” said Minnesota Farm Bureau President Kevin Paap, a member of the delegation, “but it certainly ratcheted up the importance of our being there. We were the first Ag trade team down there after the Trump announcement, so everybody down there was aware of it.”

Paap said it was a vital opportunity for Minnesota to highlight the importance for agriculture that the countries continue to work together to become better neighbors and trading partners. It was also an opportunity to do what they could politically to help change the situation.

That was vital because Minnesota and Cuba have been doing business for some time, dating back to 2002 when then-Governor Jesse Ventura hosted the first big trade mission to Cuba. That’s where things began to really take off with trade reaching a high water mark between Cuba and Minnesota, but things have been tailing off for the last few years. The potential is there for things to improve.

“We have to understand,” Paap said, “they aren’t the biggest market, but it is an important market and a close market. It’s important to remember when dealing with perishable goods, in terms of quality and price, distance has a negative effect on all that. We should be able to beat everyone else on quality, price, and transportation.”

Despite some of the rhetoric people may hear when talking about Cuba, it’s important to note that the people of Cuba are enthusiastic about possibly trading with America.

 

The opportunities are there in Cuba for commodities like corn, soy products, black beans, dried beans, and some livestock opportunities too. He said there are things Cuba just can’t produce on their own.

“They have a lot of silt in their soils with not much in the way of organic matter,” Paap said. “They really haven’t put down a lot of nutrients into the soil in the last 50 years or so. There are some tillable acres in the country but it’s just not high quality.”

It’s not just the soils. Farmers in Cuba are working with a lack of modern equipment that American farmers are used to. A Cuban farmer used a one-bottom plow and two oxen to work one of the fields Paap saw during the trip. He says it seems like the country is locked in time decades in the past.

A trade mission like this always has two goals at the top of mind. Obviously, one goal is to do business but the other, and more important, goal is to build relationships.

“When you deal with an international trade mission, it’s always about building relationships before doing business,” Paap said. “We (Americans) probably aren’t as aware of that when you talk about dealing with other countries. You have to have a relationship. There has to be a reason for doing business besides dollars and cents.”

That’s hugely important and not just in Cuba. It’s the same if you’re talking trade with Asian countries or anyplace else in the world. The trip was a big opportunity to make sure the Cuban people understood the importance America placed on the relationship in light of the Trump announcement.

“It was a chance for us to say agriculture worked hard to make sure it wasn’t affected by the Trump announcement,” Paap stressed. “When it comes to the changes by President Trump, we weren’t as affected by those as others were and we wanted the Cubans to see that as a good sign.”

It was a chance for Minnesota to also point out they have two “champions” for trade with Cuba in Senator Amy Klobuchar and Representative Tom Emmer, working in a bipartisan manner on the topic for a long time.

The delegation went face-to-face with a lot of different people while they were in the country and Paap said it ran the gamut.

 

 

One of the most interesting changes in Cuba has to do with how they deal with foreigners. As recently as the mid-1990s, Cuban farmers weren’t allowed by law to even talk to people from outside the country, even those on a trade mission. Now, everyday people in Cuba told the delegation members that they’re hoping to get some help from the USA.

 

 

It’s not the biggest market but there are opportunities there. Paap and the American delegation were walking into the Ministry of Agriculture to meet with Cuban officials and a Chinese trade delegation was walking out at the same time.

“If we’re going to choose not to be there and involved in infrastructure upgrades, that doesn’t mean it won’t happen,” Paap said. “There’s a lot of countries putting some money into the country. Even Minnesota Ag Commissioner Dave Fredrickson (who was on the first trade mission) said it was amazing how much the country had changed, even since last December.”

There’s a lot of work to do to improve the lives of the average Cuban who earns between 20 and 24 dollars a month. Paap is a farmer in Blue Earth County and his Cuban counterparts have lots of questions for the American farmers on the trip.

“I always make sure and bring along a picture book,” Paap said, “especially when there’s a language barrier. There was a lot of interest in that. They had a lot of livestock questions about pigs and what we feed them and how heavy they are. They had a lot of questions about things like rainfall and crop yields. We had a lot of great farmer-to-farmer conversations.”

Cubans understand there are things they can’t grow in their fields. Paap wants to know why wouldn’t we want to sell Ag commodities to a country that’s only 90 miles south of America. After all, farmers understand logistics and travel better than most. Farmers realized a long time ago the value of working together, and that the people you work the best with are likely those closest to you.

The biggest obstacle for agriculture to overcome in order to improve trade with Cuba is the financing mechanism. In order for America to sell agricultural products to Cuba, the buyers have to come up with all the cash up front through a third party. That’s a big disadvantage when America’s competitors are more than happy to offer financing.

“That’s where the work of Senator Klobuchar and Congressman Emmer comes in to help try to get rid of some of those requirements,” Paap says. “That would make us a more desirable trading partner as well as the closest.”

Meet the Oggun farm tractor

Oggun Farm Tractor

Southeast Minnesota residents got their first peek at the Oggun farm tractor at a viewing at Featherstone Farms of Rushford earlier this month. (Photo by Chad Smith)

It’s called the Oggun (Oh-goon), and it’s a different take on the farm tractor than many folks in agriculture may be used to. Southeast Minnesota residents got their first look at the new tractor during a showcase event at Featherstone Farms of Rushford on Wednesday, April 5.

 

The tractor was specifically designed for smaller farms, but that’s not what makes it unique. It’s unique in its design, it’s price, and the way it’s adaptable to newer technologies. The tractor has many unique characteristics, especially because it’s built with an open-source manufacturing design and parts you could find at a local tractor supply company. The idea for the tractor first began a short time ago.

The idea

Former IBM engineers and long-time business partners Horace Clemmons and Saul Berenthal (a Cuban-American) came together to form Alabama-based Cleber LLC. One day, Berenthal told Clemmons he wanted to do business back in his native country. The two talked over a lot of options, including software, but decided to go in a different direction.

“They started looking at things going on in the country,” said Locky Catron, a partner in Cleber, during opening remarks to the people in attendance, “and saw that the government had given land back to about 300,000 farmers, but there were only 60,000 tractors on the island.”

The tractors were all roughly 30 years old and of Russian design. Horace decided in June of 2015 that he and Saul were going to build tractors for Cuba. They needed to build something simple and easily fixed, because Cuban farmers were used to fixing everything themselves. They also needed to build something that was affordable. Mass production of tractors began in November of 2016.

The model

“That’s why they went to the open-source manufacturing model,” Catron said, “using all off-the-shelf parts. They designed the tractor based on the design of the Allis-Chalmers G. After doing all the work to put it together, the company realized business probably wasn’t going to happen in Cuba until the embargo is lifted.”

Once American farmers got wind of what Cleber was doing, they showed a lot of interest in the product as well. The business then set up shop in Paint Rock, Alabama, and began showing it to interested American farmers.

“I learned a valuable lesson from the Cuban farmers,” Clemmons said, “because they helped us understand how we can better serve farmers across the globe. $10,000 is still a lot of money to small farmers across the globe, so we have to create a business model where the price goes down every year.”

Cleber, LLC., told customers around the globe, including in Ethiopia, Peru, Chile, Brazil, and Australia, that they would give them the design of the tractor, which most companies don’t do. They agreed to ship parts that their customers couldn’t make in their countries with the idea that eventually the countries would take over the entire manufacturing process.

“We have offered a business proposition to our customers that says, ‘put me out of business,’” Clemmons said. “That’s about the only way we’re going to get 40-50 percent of the world’s smallest farmers equipped to do their work.”

People ask him how they expect to make money. His answer was a simple one.

“It’s called trust,” he said. “It’s called value-added. How hard would it be to use this technology and turn it into a skid steer? It’s got the engine, it’s got the hydraulics, so I’d take the tires off and put tracks on, and put a bucket on the front.”

He said they designed components to put together and they want to let people be creative in how they use those components.

The advantages

“Equipment (like tractors) is built using proprietary systems,” Catron said. “It’s unique components for a unique piece of equipment. We’re building the Oggun tractor that’s open-source, we’re building it using architectures, and we’re building it in the same way that technology is currently built today.”

Clemmons said the Oggun technology is simple, unique, practical, and it’s what small farmers need. Using off-the-shelf parts to build their tractors improves the local economies of their customers as well. The replacement parts can be found at local businesses like ag supply stores or auto parts stores.

“The parts don’t come painted certain colors, with patents on them, but instead they come out of the local economy,” Clemmons said. “All of that lowers the price over time because of the larger volume we get by using readily available components. Those components lower the price for everyone over time.”

Some of the specific tractor specs include a 19-horsepower Honda gas engine. The tractor length is just over 10 feet long and the weight is 1700 pounds. The brakes and the steering are hydraulic, with independent hydraulic drive. There’s also a unique zero-turn capability that comes with this tractor. It also has a 3-point hitch for implements. There’s also an optional PTO capability as well.

“It’s more than a tractor, the Oggun is a different way of thinking,” Clemmons added. More information is available at www.thinkoggun.com.

Cuba and GMO labeling on the weekly podcast

It’s time now for another edition of the chadsmithmedia weekly podcast.  Let’s talk a little agricultural news, just for fun.  We’ll discuss the GMO labeling debate, which, as you know, still toils on with really no end in sight in the short term.  I wrote an article on Genetically Modified Organisms awhile ago, and I thought you may listen to this and decide you want more information, so here’s the link.  Just to give the cliff notes version:  We’ve been modifying the genes in our food since we started GROWING our food.  We’ve crossbred traits in and out of plants since time began.  We’re just using technology to do it more efficiently.  But because it’s “technology,” it’s dark and scary?  We’ll get into the GMO labeling debate, because it’ll take compromise to end this thing, and no one seems to want to do that.

Cuba and the GMO labeling debate are on the weekly podcast

Iowa Republican Senator Chuck Grassley said he’s not in favor of lifting the 50-plus year old trade embargo the USA has in place against Cuba until he sees more effort from the Cuban government to improve the lives of it’s citizens. (Photo by Alex Wong/Getty Images)

We’ll also get into the debate over Cuba and the USA potentially normalizing relations and ending a 50-plus year old trade embargo.  On the surface, it looks like a good move for American farmers and the Agriculture industry, but I did find a Midwest Senator who said ‘not so fast.’  I don’t think this debate will be over anytime soon, either.

I love doing podcasts, although you wouldn’t know it because I don’t do a lot of them.  I would absolutely take suggestions on possible podcast topics, so don’t be afraid to share some ideas with me.  I take suggestions!

 

 

Agriculture wants Cuban trade embargo to end

Cuba-US relations thawing?

The first step in a long process that may end the 54 year old Cuban trade embargo with the US may have taken place last year. The debate over officially ending the embargo is expected to heat up soon (Photo from wptv.com)

A major market for American agricultural products lies 90 miles off the coast of Florida. However, thanks to a 54-year-old American embargo against Cuba, it’s very difficult for products to move back and forth between countries.

The first step in thawing relations between the two countries may have happened December 17 of last year. President Obama announced he would begin efforts to normalize relations with Cuba. Agriculture groups across the country took notice of a potential opportunity to expand exports to a country of 11 million people.

“What if corn exports to Cuba went from 137,000 tons to 900,000 tons?” Erick Erickson is Vice President of the US Grain Council, and said normalization would be a great opportunity for agriculture, and for Cuba as well.

“It’s got to be more cheap for Cuba to buy from America too,” said Erickson.  “You can almost pack it in grocery bags and carry it across the water because it’s so close. It’s got to be cheaper than buying from overseas.”

Erick Erickson

Erick Erickson of the US Grains Council is in favor of ending the US Trade embargo with Cuba, and feels the opportunities for agricultural trade would be a boon for US producers (Photo from grains.org

Ag groups have been working on getting the embargo lifted for a long time.

“There’s a lot of controversy about the embargo,” said Erickson. “We didn’t do it with the Soviet Union, we didn’t do it with China, and other countries we’ve had issues with.”

Said Erickson, “The position of the US Grains Council is that removing trade barriers is good. Without trying to weigh in on all the other complicating issues, actions that remove trade barriers and open up the marketplace to work are a good thing for both sides of the equation.”

One of the newer groups formed to work on this issue is the US Ag Coalition for Cuba (USACC). The group is made up of more than 25 agribusiness groups from around the country, and their goal is a simple one: to urge repeal of the 1996 law that made permanent the sanctions on Cuba.

The US Ag Coalition for Cuba held a press conference on January 8 at the National Press Club in Washington, D.C., to announce their formation.

“Through the formation of the USACC, we are re-energized,” said Devry Boughner Vorwerk, the USACC Chair. “We are re-energized to establish Cuba as a market for US food and agriculture products, and as an industry, we are re-energized to end the embargo.”

“The sanctions hurt the Cuban people, and harmful to our country,” said Vorwerk, the Director of International Relations for Cargill. “54 years of unilateral sanctions is an experiment that’s gone on too long. It’s a failed policy, and it’s time our two countries had a better option.”

US Ag Secretary Tom Vilsack spoke at the press conference. He said President Obama’s announcement represents an opportunity for Cuban residents to gain control over their own lives.

Ag Secretary Tom Vilsack

US Ag Secretary Tom Vilsack spoke at the US Ag Coalition for Cuba press conference, announcing major ag group’s intentions of pressing for the end of the US Trade Embargo with Cuba. The conference was covered by C-Span (photo from foodproductiondaily.org)

“It’s also an opportunity for America’s farmers and ranchers to sell goods in Cuba,” said Vilsack. “We’re removing some technical barriers between US and Cuban companies, and creating a far more efficient, and less burdensome, opportunity to buy US agricultural products.”

Said Vilsack, “Cuba imports roughly 80 percent of its food, which means there is significant economic potential for our producers. It’s a 1.7 billion dollar market.”

Missouri Governor Jay Nixon also spoke at the USACC press conference, and said American farmers face an uneven playing field when talking about Cuba.

“Because of current sanctions, American producers can only interact with Cuba through a complicated process that greatly limits our ability to sell goods,” said Governor Nixon. “It also stifles our ability to create jobs here, and bring more dollars home.”

Kansas Senator Jerry Moran spoke at the press conference, and said the US Sanctions haven’t worked, and it’s time for a change.

“In Kansas, we’ll try something once,” said Moran. “We don’t always expect it to be successful the first time. Kansans have enough common sense to know if you try something for 54 years, it’s time for something different.

If the goal is for the United States to change the relationship between Cuban citizens and their government, what we’ve been doing has not worked. It hasn’t worked because it’s unilateral. When we don’t trade with Cuba, it’s not that they’re not getting agricultural commodities. They’re getting them from somewhere else.”

The fight to normalize trade relations with Cuba will not be an easy one. Secretary Vilsack said the President has done all he can, and it’s time to engage Congress in the debate.

Erick Erickson, the VP of the National Grains Council, said, “The teeth of the embargo are congressionally mandated, so it’s not clear what Congress will do. Some in Congress have said this is a good idea, and some have said it’s a bad idea.”

Said Erickson, “The question is, will Congress decide they want to do anything to oppose this? Maybe they will, or maybe not. This is probably a long-term process the President has started, and it may not be done before he leaves office.”