The Communist Party daily, Granma, said a state agricultural company had partnered with the unnamed firm for three years to cultivate the grain on 3,000 hectares (7,413 acres) in western Pinar del Rio province, hinting the lease and acreage would be extended.

“For the first time, a process of handing over land to a foreign company is being carried out to take charge of its cultivation,” engineer Jorge Feliz Chamizo, who is the deputy director of the Granos de Los Palacios agroindustrial company, was quoted as stating.

Cuba consumes up to 700,000 metric tons of rice annually, most imported from Vietnam.

But the import dependent county’s main staple has been in short supply in recent years due to an economic depression sparked by a lack of convertible currency to import food, fuel, spare parts, raw materials and agricultural inputs.

Local rice production peaked at around 250,000 metric tons of consumable rice in 2018 before the crisis began, and has fallen more than 80 per cent since then, the National Statistics Office has reported.

Granma also reported the venture would be the first to hire labor directly, instead of through a state-run hiring hall.

Many investors complain they are forced to hire labor through the hiring halls in hard currency which then pay their employees in pesos and in general make managing their labor force more difficult.

Foreign investment has declined in recent years due to tougher U.S. sanctions, according to the government, though no statistics are available.

Western diplomats and businesses also report difficulties repatriating profits due to the country’s cash shortage.

Prime Minister Manuel Marrero said in December the government would change the labor practice as part of reforms this year to the foreign investment law.

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U.S. President Joe Biden last May loosened restrictions on travel, remittances and migration, and promised the United States would do more to support the fledgling private sector in Cuba.

Change, however, has been too slow to come, said Paul Johnson, chair of the U.S. Agricultural Coalition for Cuba, a more-than-100-member organization that includes national and state farm organizations, corporations and producers.

“We’re losing, and we’re tired of losing,” Johnson told reporters on the sidelines of the gathering at a hotel in Havana.

The U.S. businesses are keen to both sell their own product to Cuba and to invest in private sector farms and cooperatives to help them develop.

Little has changed on the island since a similar group of would-be investors arrived last April. Many farms have been shuttered by lack of investment, equipment, fuel and supplies, leading to widespread shortages of food across Cuba.

“It’s frustrating to us in the United States, because we believe it’s something that we can fix. We need to go back to our government… and insist that the private sector is a path forward to development,” said Johnson.

Cuba, a long-time foe of the U.S., swapped capitalism for socialism shortly after Fidel Castro’s 1959 revolution, preferring state over private enterprise.

But in August 2021, the communist-run government lifted a ban on private companies that had been in place since 1968. Upwards of 7,000 such businesses have opened since, according to an economy ministry list updated on March 23.

Canada, according to the federal Trade Commissioner Service, is Cuba’s second-largest source of direct investment, with “significant” stakes in mining, energy, agriculture and heavy equipment, as well as in tourism, with over one million Canadians visiting Cuba annually, pre-pandemic. Cuba is also Canada’s top market in the Caribbean/Central American sub-region.

Investors from countries including Mexico, Venezuela, Vietnam, China, Spain and Russia, among others, have also previously participated in state and private business in Cuba.

The United States remains an outlier. The U.S. Treasury Department last May authorized a company owned by entrepreneur John Kavulich to invest in a small private business in Cuba’s services sector, the first such approval in decades.

But many other similar requests remain unanswered, Johnson said.

“Obviously that’s just not good enough,” Johnson said. “We’re capitalists. We invest in private business all around the world. Why can’t we do it in Cuba?”

Despite the loosening of some restrictions, a Cold War-era U.S. embargo on Cuba remains in place, prohibiting some trade and financing between the two countries and complicating investment ties.

— Nelson Acosta is a Reuters correspondent in Havana. Includes files from Glacier FarmMedia Network staff.

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A trade delegation from Minnesota, one of the largest U.S. agriculture states, vowed to carry on with its planned visit to Cuba next week. “We’re going to continue to beat the drum and let them (the Trump administration) know that trade is good for agriculture,” said Kevin Paap, a farmer in the delegation.

Trump signed a presidential directive on Friday rolling back parts of former President Barack Obama’s opening to the Communist-ruled country after a 2014 diplomatic breakthrough between the two former Cold War foes.

Farm groups saw the move as a step backward in what had been an improving trade relationship between the two countries which are just 145 km apart, even though agriculture is not directly targeted.

U.S. law exempts food from a decades-old embargo on U.S. trade with Cuba, but cumbersome rules on how transactions were executed have made deals difficult and costly.

Since Obama’s detente, substantial headway has been made, however, with shipments of U.S. corn and soybeans to Cuba soaring 420 per cent in 2016 from a year earlier to 268,360 tonnes, U.S. Department of Agriculture data shows.

Through the first four months of 2017, total shipments of U.S. grain and soy were 142,860 tonnes, up from 49,090 tonnes during the same period of 2016.

While the quantities are dwarfed by total U.S. exports — nearly 56 million tonnes of corn alone last year — the added volumes were welcome as farmers face a fourth year of languishing grain prices and crimped incomes.

“At a time when the farm economy is struggling, we ask our leaders in Washington not to close doors on market opportunities for American agriculture,” Wesley Spurlock, president of the National Corn Growers Association, said in a statement.

The group sees an opportunity for US$125 million more a year in trade to Cuba.

Trump’s move could cut off near-term sales and stymie economic development that would drive longer-term demand growth, said Tom Sleight, president of the U.S. Grains Council, a grain trade development organization, in a statement.

“Neither of those outcomes is favourable for the U.S. ag sector or the Cuban people,” he added.

Paap said the U.S. should be doing more to encourage exports.

“It’s frustrating because we’ve made some advances and built those relationships,” he said.

— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago. Additional reporting for Reuters by Michael Hirtzer in Chicago.

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The agricultural trade groups stated their views in a letter sent to Trump, who is to be inaugurated on Jan. 20.

“As a broad cross-section of rural America, we urge you not to take steps to reverse progress made in normalizing relations with Cuba, but also solicit your support for the agricultural business sector to expand trade with Cuba,” the letter said.

“It’s time to put the 17 million American jobs associated with agriculture ahead of a few hardline politicians in Washington,” the letter concluded.

Signatories included a wide range of agricultural trade groups, from the American Farm Bureau and American Feed Industry Association to the soy bean, corn, rice, wheat, peas, beans, cattle, poultry lobbies and other associations.

The letter was arranged by the Washington-based Engage Cuba Coalition and USA Rice.

Agricultural organizations in states that Trump won, such as Idaho, Alabama and Georgia, were also signatories.

Trump, a Republican, has said he will dismantle the still fragile detente begun by President Barack Obama two years ago unless Cuba gives the U.S. a better deal, while providing no specifics.

The letter was sent before the White House announced on Thursday that it was ending a policy that granted residency to Cubans who arrived in the U.S. without visas, the latest bid by Obama to make his Cuba policy irreversible.

Trump is expected to review the Cuba engagement upon taking office and has named Jason Greenblatt, a Trump Organization executive and chief legal counsel, as negotiator for sensitive international issues, including Cuba.

Under an exception to the U.S. trade embargo from the year 2000, Cuba may import agricultural products for cash. The letter calls on Trump to allow normal trade financing and credit so the sector can better compete for the Cuban market.

While the sector has sold billions of dollars in products to Cuba over the years, the letter said sales have steadily declined as the embargo makes it difficult to compete with other suppliers. Cuba imports some US$2 billion in food annually.

The signatories cited a deep dip in farm income to bolster their argument that U.S. farmers needed more trade.

“Net farm income is down 46 per cent from just three years ago, constituting the largest three-year drop since the start of the Great Depression,” the letter said.

According to USDA, the U.S. exports over US$300 million in agrifood to Cuba per year, mainly in poultry and soymeal.

Canada, by comparison, often exports upward of C$80 million in agrifood to Cuba each year, mainly in wheat flour and meal, dried peas, durum, milk powder and frozen boneless beef.

— Marc Frank reports for Reuters from Havana.

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President Raul Castro unveiled an ambitious market reform agenda in one of the world’s last Soviet-style command economies after he took office a decade ago, but the reforms moved slowly in the face of resistance from conservatives and bureaucrats.

At the April 16-19 congress, Castro railed against an “obsolete mentality” that was holding back modernization of Cuba’s socialist economy. But he also said the leadership needed to respond quickly to problems like inflation unleashed by greater demand as a result of reforms in other sectors.

In response, delegates voted to eliminate licenses for private wholesale food distribution, according to reports over the past week in the Communist Party daily, Granma, and state television.

Delegates said the state would contract, distribute and regulate prices for 80 to 90 per cent of farm output this year, compared to 51 per cent in 2014, according to debates broadcast in edited form days after the event.

Reuters reported in January that Cuba had begun a similar rollback in some provinces, increasing its role in distribution again and regulating prices. The decision at the congress will extend that program.

Data released in March showed that Cuba’s farm output has barely risen since 2008, when Castro formally took over from his brother Fidel, contributing to a spike in food prices blamed on supply-demand mismatch.

Cuba imports more than 60 per cent of the food it consumes.

The Union of Young Communists’ newspaper, Juventud Rebelde, reported late last year that the price of a basket of the most common foods increased 49 percent between 2010 and early 2015.

There are no government statistics on food inflation.

While hurricanes and drought have played a part in poor farm output, some experts and farmers say Cuba did not go far enough in allowing farmers freer access to seeds and fertilizers to increase production.

Backtracking

But demand is rising fast. Relaxation of restrictions on self-employment has led to a boom in small restaurants, at a time when Cuba’s detente with the West is leading to record numbers of tourists and an emerging consumer class.

According to the reports, there was no discussion at the congress of moving ahead with plans to allow farmers to buy supplies from wholesale outlets, instead of having them assigned by the state.

Nor was there mention of another reform, also adopted five years ago and never implemented, to have co-operatives join forces to perform tasks currently in state hands — for example, ploughing fields.

The state owns nearly 80 per cent of arable land in Cuba, leasing most of it to co-operatives and individual farmers. It has a monopoly on imports and their distribution.

“They never fully carried out the reforms and gave them time to work. They stopped halfway and appear unable to come up with any other solution than backtracking,” said a local agriculture expert, who asked to remain anonymous.

He said farmers often had no equipment and few supplies such as seed.

The government reported leafy and root vegetable output at five million tonnes in 2015, similar to 2008, and unprocessed rice and bean production of 418,000 tonnes and 118,000 tonnes, compared with 436,000 tonnes and 117,000 tonnes eight years ago.

Cuba produced 363,000 tonnes of corn last year, just 3,000 more than when Castro took office.

— Reporting for Reuters by Marc Frank in Havana.

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The normalization of trade relations would allow U.S. farmers to use lower transportation costs to edge in on the European Union’s food exports to Cuba, Vilsack said.

President Barack Obama has been using his executive powers to chip away at the half-century-old trade embargo, imposed on the communist-ruled nation in 1960, but cannot lift it without approval from Congress that is unlikely under current Republican leadership.

“There are still preliminary steps that can be taken to prepare for that day,” Vilsack said in an interview in Peru.

“When it happens, the United States will be in a very good position to reclaim a portion of the market we’ve lost.”

Vilsack cited soybeans, rice, poultry and biofuels as new markets U.S. farmers could tap in Cuba, which in turn could sell organic products to its former Cold War foe.

The Obama administration is asking Congress for US$1.5 million for on-the-ground studies into challenges to agricultural trade in Cuba, from pests to a diplomatic void left by decades of hostile relations.

“We have not had people on the ground,” Vilsack said. “We need to develop relationships with the people in Cuba so we know who to do business with and who actually makes the deals.”

Vilsack, who visited Cuba last month, said state agricultural commissioners and secretaries have also been traveling to the island on trade missions.

“They have been down to Cuba and they have come back with small contracts for commodities,” Vilsack said.

Vilsack said farmers were the most excited about the reopening of relations with Cuba, once a global sugarcane powerhouse.

The U.S. would aim to meet 50 per cent of Cuba’s food and agricultural needs if trade resumes fully, up from less than 15 per cent now, the U.S. Department of Agriculture said in a statement to Reuters after the interview.

Vilsack also said he was optimistic Obama would persuade Congress to pass the Trans-Pacific Partnership trade deal before the end of his term, despite the recent surge in anti-trade rhetoric in presidential campaigns.

“The president is very committed to getting it done and he intends to work as long and hard as he needs to ultimately get it passed,” Vilsack said.

— Reporting for Reuters by Mitra Taj in Lima, Peru.

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The Communist Party daily Granma said the harvest, which began in November, had ended. Last year’s harvest produced 1.6 million tonnes.

Company spokesman Liobel Perez attributed the higher tonnage to improved efficiency at the mills and increased production of cane, Granma reported.

The company had hoped to produce more than two million tonnes but was impeded by late startups at mills, breakdowns, transportation and other problems, Perez said.

The Cuban sugar ministry was closed down in 2011 and Azcuba formed after output declined to 1.1 million tonnes, the lowest in more than a century and far below the eight million tonnes produced in 1990 before the collapse of former benefactor the Soviet Union.

“Though the results are still less than hoped for, one has to recognize that for five years (Azcuba) has increased production,” Granma noted.

When Azcuba was formed it said output would be 2.4 million tonnes by 2015.

The latest harvest is the best since 2004, when it totaled 2.5 million tonnes.

Only eight of 56 mills in the country were built after the 1959 revolution, the last in the 1980s.

Cuba consumes between 600,000 tonnes and 700,000 tonnes of sugar a year and has an agreement to sell 400,000 tonnes annually to China.

Sugar was long Cuba’s most important industry and export but today ranks eighth in foreign currency earnings behind services, remittances, tourism, petroleum products, nickel, pharmaceuticals and tobacco products.

— Reporting for Reuters by Marc Frank in Havana.

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President Barack Obama announced on Wednesday that the U.S. plans to restore diplomatic relations with Cuba more than 50 years after they were severed — a major policy shift after decades of hostile ties with the communist-ruled island.

U.S. law exempted food products from an embargo on U.S. trade with the Cuba, but cumbersome rules on how transactions were executed made transactions difficult and costly — hurdles the U.S. policy shift will eliminate.

Though U.S. agricultural trade with Cuba was allowed, payment was required in advance and rules stated that money must be routed through third parties to avoid direct contact between U.S. and Cuban banks.

“The policy change is that now payment can be made while goods are in transit, which is the normal course of business, and no longer does the money need to be routed through a third party,” Vilsack told reporters on the sidelines of the a U.S.-China Joint Commission on Commerce and Trade meeting.

“This removes a friction that makes it easier, less expensive and less time consuming to do business for American agricultural products.”

In addition, the U.S. enacted policy changes governing sales of farm equipment to Cuba, which would benefit U.S. manufacturers.

Vilsack would not speculate on which farm products could benefit the most and was unsure how lucrative the market could ultimately be for U.S. agricultural products.

“There’s no comparable market in the sense that you’re dealing with a fairly significant set of consumers 90 miles offshore,” he said.

He had also not analyzed how the normalization of relations would impact imports of Cuban agricultural products such as sugar.

David MacLennan, CEO of U.S. agrifood giant Cargill, said in a release Wednesday the history of trade liberalization “has clearly led to economic and social benefits for others.”

Cargill said it has long supported ending the U.S. embargo on Cuba and backed humanitarian exemptions on food shipments.

Devry Boughner Vorwerk, a Cargill vice-president and chair of the U.S. Agriculture Coalition for Cuba, added that the policy move “will create a new market for U.S. farmers, ranchers and food companies, and give the Cuban people improved access to affordable food.”

— Karl Plume reports on ag commodity markets for Reuters from Chicago. Includes files from AGCanada.com Network staff.

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