U.S. Role in Cuban Ag in Flux Amid Trump Presidency
In a few short weeks, Fidel Castro’s death and the ascension of Donald Trump to the U.S. presidency brought the relationship between the U.S. and Cuba back into the spotlight, throwing a curve ball to U.S. businesses seeking to gain a foothold in Cuba’s agriculture production.
With a single tweet made on Nov. 28, a couple of weeks after winning the U.S. election and a few days after Castro’s death, President Elect Trump threatened to undo the progress made by President Obama and Cuban president Raul Castro toward easing trade relations between the U.S. and Cuba.
“If Cuba is unwilling to make a better deal for the Cuban/American people and the U.S. as a whole, I will terminate deal,” says Trump on Twitter.
Cuba may be known for its sugarcane, cigars, and baseball talent, but the country’s small farmers have been suppressed amid antiquated equipment and a heavy dependency on agriculture imports. U.S. businesses want to help bolster agricultural production there.
Meanwhile, as an extension of President Obama’s historic visit to Cuba earlier this year, the U.S. Department of Agriculture announced a partnership designed to “foster collaboration between U.S. and Cuban agriculture sectors,” according to the USDA. While the longstanding U.S. trade embargo against Cuba remains intact with the exception of limited U.S. agriculture commodity exports to the country, U.S. businesses had reason to be hopeful.
“President Obama opened up a dialogue and good communication, so we were able to understand the needs of the Cuban farmer,” Horace Clemmons, co-founder of Cleber, a tractor manufacturer, tells GAI News. “They have a need for equipment. But early on we, like most other businesses, realized that nothing will happen until the embargo is lifted.”
Meanwhile, Duluth, Georgia-based tractor maker AGCO Corp has reportedly been lobbying for open trade with Cuba. AGCO’s Senior Vice President and General Manager of the Americas, Bob Crain, says the company has no presence in Cuba today although its Massey Ferguson and Valtra brands were once sold in the country. “We believe many of these legacy machines are still at work today,” he tells GAI News.
AGCO representatives have visited Cuba in the past as part trade missions from the USA and Crain says the company will continue to participate, as appropriate, in the future. “AGCO views Fidel Castro’s death and Donald Trump’s election as U.S. President as factors to be considered, as would any U.S.-based global business, but causes no uncertainty and will not alter our strategies,” says Crain.
Crain explains that it is difficult to assess the true demand in Cuba for agricultural machinery given that the country does not represent a free market economy that’s driven by supply and demand factors.
“However, Cuba has been a major producer of sugar cane and it is still significant today. This sector is machinery intensive, therefore one can anticipate a robust and growing demand for agricultural machinery if Cuba intends to maintain or grow sugar cane production,” he says.
Crain goes on to say: “Beyond sugar cane, agricultural production in Cuba has become quite diversified as the Cuban government has sought increased food autonomy. Characteristically, this diversified farming comprises of small farms and is not machinery intensive but there is a potential to supply modern agricultural machinery to increase efficiency and productivity. Overall the demand for agricultural machinery in Cuba could be large if the country desires to increase and modernize agricultural production.”
That is what companies like Paint Rock, Alabama-based Cleber are banking on. Cleber seeks to introduce affordable equipment to the world’s small farmers, including those in Cuba, some of whom still rely on manual labor or livestock to farm.
“If you look at small farmers on a global basis, nobody makes a tractor small farmers can afford. Everyone has gone to sophisticated equipment and there’s nothing out there for the small farmer. We copied the farm tractor used when people were farming 40 to 80 acres, but the tractors are state of the art from a technology perspective,” says Clemmons of the company’s tractor dubbed Oggun (a religious term referring to the god of metals), which sells for $10,000.
Cleber’s business model is one that takes an open architecture approach to tractor design, or an open source manufacturing model that uses off-the-shelf parts that originate from various suppliers.
Clemmons and co-founder Saul Berenthal have been in ongoing talks with Cuban officials including the Ministry of Agriculture to build a manufacturing facility for the tractors in Havana. Those talks reached an impasse, however, when the sophistication of the facility didn’t meet Cuban officials’ standards.
“While our tractor is state of the art and ahead of almost anything being manufactured, our manufacturing facility is rather mundane,” says Clemmons, adding that the company is working on that.
As for any uncertainty that has risen with the U.S. presidential election, he is quick to point out that the business lessons learned by the Cuban farming industry are already being applied to other regions.
“The good thing about this is in working to try to understand the problems of Cuba, we created a global business model. We’re busy trying to get in a position to produce products for other countries. We have distributors in Australia, Ethiopia, Peru, and we’re talking to five or six more countries. These are exciting times,” says Clemmons.
Meanwhile, until the U.S. embargo against Cuba is lifted, Clemmons says there will not be any meaningful discussions. “Those conversations will start once we have a relationship with the Cuban people,” he says.