tv Key Capitol Hill Hearings CSPAN April 22, 2015 5:00am-7:01am EDT
export to cuba comes to congress and we refer to the state department and get a position from the state department and give them an answer typically in 12 days. it's an expedited process but still is a licensing process. and largely sanctioned. under that process exporters can get an online application and we screen those to make sure they're not involved in terrorist or proliferation activities. the last requirement is those exports licensed must be made within one year of the license within the year of the license. last we processed 56 applications valued at about $2.4 billion. that's what we authorized. as you heard, the actual dollar
value of exports is far less than that in roughly $2950 million. u.s. exporters see a tremendous market in cuba by the authorizations they seek from us though currently they only export a small fraction of that. those exports go through the cuban import agency. so thrs no changes in our regulations on exports to cuba because that's limitted by the trade sanctions. thank you, mr. chairman. mr. chairman: thank you for your statement. our next witness, johnny smith acting director, office of foreign assets control, the department of treasury. mr. smith serves as acting director of the department of treasury department of foreign assets. control or opac is mr. smith's acronym for which he works which is tasked with
administrating economic trade sanctions to advance u.s. national security and foreign policy goals. prior to joining opac he served as expert to the united nations taliban and sanctions committee. as a trial attorney at the u.s. department of justice. welcome to your new job. thank you for joining us, mr. smith. i look forward to hearing from you, sir. please proceed. mr. smith: good morning mr. roberts and ranking member stabenow and ranking members of the committee. thank you for the opportunity to appear before you today to discuss our recent amendmentses to the cuban assets control regulations and implications for agricultural trade with cuba. on december 17, the president announced a number of significant policy changes regarding our relationship with cuba. to implement the policy changes, treasury's office of foreign assets control or ofac, amended the control regulations and our colleagues at the
department of commerce amended the export administration regulations on january 16. these amendments ease sanctions related to cuba and a number of key areas. including trade financial services traffic and remittances. this is to help the cuban people freely determine their own future. ofac expanded the finance provisions to allow america's agricultural exporters to be more competitive in selling their wares to cuba. ofac broadened the ability of u.s. financial institutions to provide services and effectuate payments for those authorized to engage in trade with cuba. third, ofac authorized trade
delegations and exporters, satisfying the conditions of its regulations to travel to cuba without needing to come to ofac and receive a license and expand the use of airlines and other companies to offer more reliable and potentially cheaper travel with far less paperwork to cuba. ofac permitted certain hue man tearian projects including those related to rural development to promote independent activity. with respect to the first change ofac modified the legislate interpretation of the term cash in advance which describes the financing requirement for agricultural trade between the united states and cuba which is imposed by statute. prelft ofac meant it to mean you this to receive payment from the cuban importer prior to the goods leaving american shorts a interpretation u.s. exporters said made their
products less competitive than those with other countries. ofac revised its interpretation of the term to mean the payment from the cuban performer is required now in transfer of title 2 in control of goods. this change should provide for more efficient and less expensive means for cuban importers to purchase american produced agricultural, medical and other authorized products. u.s. exporters continue to face barriers including all u.s. agricultural goods are imported via allen port a cuban state run monopoly also u.s. exporters continue to be prevented by statute from offering financing inducements such as loans for authorized agricultural exports, a limitation that may prevent them from being as atrackive to cuban importers as third country competitors. with respect to the second key
regulatory change to improve the speed efficiency and oversight of authorize the payments between the united states and cuba, ofac has authorized u.s. banks to establish correspondent accounts at financial institutions in cuba. this change is intended to ease the flow of authorized payments and eliminate the need for third countrys to limit exports to cuba. with respect to the third change, it's important to know ofac cuban sanctions program is the only such program that restricts travel to a country the recent amendments eased travel restrictions by allowing travel within the 12 existing travel in ofac regulations without the need for specific license from ofac. this means that exporters and other travelers who satisfy the criteria in our regulations may travel to cuba and may conduct
travel related transactions there without requesting or receiving individual authorization from ofac. with respect to the fourth change, to help strengthen cuban civil society, ofac eased certain restrictions on remittances to cuba and authorized remittances to certain individual organizations in cuba for humanitarian projects, including those related to agricultural and rural development. increased remittances will afford individual cubans with increased financial resources to purchase american produced goods. thank you. i look forward to answering any questions. sen. roberts: to the entire panel, thank you again for sharing your professional experiences and perspectives about the opportunities and challenges in opening trade with cuba. what was the administration's process in preparing for this major policy shift in the united states' relationship with cuba?
what was the involvement of the stakeholders in determining what changes could be made, and how have you worked with industry during the process? big question. hopefully a short answer. irapologize for that, undersecretary seuse. >> mr. seuse. mr. chairman, we'vebeen working with the cooperators now for quite some time, not just at the national level, but also at the state level. it is evident for a number of years that our stakeholders have wanted cuba opened up for the markets, further products that our farmers and ranchers produce in this country. we've been at a very big disadvantage because of the restrictions that have been in place. our stakeholders have made it known that this is a country
that they want to do business in. when you look at -- i'll give you an example. rice. half the rice consumed in that country is imported and it is coming from vietnam. it is not coming from the united states and it should be. our stakeholders, this is something they've been wanting for a great deal of time. we look forward to the opportunity to eventually get products in there on a level playing field. sen. roberts: mr. bormann. mr. borman: thank you. in the executive branch to identify ways that we could facilitate trade to the private sector in cuba within the bounds of the existing embargo. that is how we came from license requirements to license exceptions. since the announcement of our regulations, we've done several dozen outreach events in washington and across the country where we explain the changes and answer questions.
we probably talk to, as part of these events, well over 3000 people. we continue to solicit feedback from those that want to understand the regulations. sen. roberts: mr. smith. mr. smith: we worked very closely within the executive branch to utilize the comments we receive from the industry and members of congress about how we could better change our regulations. we have worked with other agencies to actively promote our regulatory changes so people know what the new rules are. sen. roberts: this is for undersecretary scuse. i've traveled to cuba as many others have done. i went down, we didn't tell anybody, we just went down. for 18 hours, discovered the world according to fidel
castro, and also with an ag group, trying to establish trade. i want to make sure we go about this change in the right way. after a long history of no engagement with cuba, many of these folks have met with people and been informed, yes you can trade, only to find out you can trade with hospitals schools, and what was the other 1 -- i'll think of it in a minute. three very limited situations. all of a sudden, you come up against this state owned enterprise. that is where it ended. all of the talk happened and nothing really happened. do you envision the reestablishment of diplomatic relations to be helpful to agricultural trade? are there any concerns you have with this new relationship and the interaction with exports within cuba? mr. scuse: i think normalizing
relations and opening trade will have a tremendous impact on agriculture. the united states is the only country, to my knowledge, that has to go through the state owned corporation to get its products in. hopefully with the normalization of relations and opening of trade, that restriction would be lifted. number two, there's been a study done by texas a&m as well as the american farm bureau that said once relations are normalized and trade is opened there will be an increase in the purchase of products by cuba. what the study showed was that u.s. sales of agricultural supplies to cuba could accede $1 billion. that is a tremendous increase over the $300 million we are selling today.
sen. roberts: this is for all of the panel. i apologize to my colleagues for going over time. all of you made reference to allen port,the state run monopoly through which all u.s. agricultural imports are channeled. it was churches, schools, and hospitals. we were able to export products to them. then hit a brick wall. as theremoving restrictions on our u.s. isside, what commitments have been made by the cuban government to provide the same ability that our competitors receive to trade with other cuban organizations? mr. smith? mr. smith: i'd have to say that's a question i defer to the state department. that is something we'd expect as part of a normalization. that would be discussed as part of the talks. it would be something we expect
to open up. i don't know of any him -- any commitments that have been made. sen. roberts: mr. borman? mr. borman: we have an ongoing series of discussions with cuban government officials. i suspect this would be one of those topics in those discussions? sen. roberts: undersecretary scuse. mr. scuse: i defer to my colleague. sen. roberts: senator stabenow. sen. stabenow: thank you, mr. chairman. i had the same conversations with the secretary of agriculture about the process. they were indicating about 80% of the farmland is owned by the government. about 20% by the private sector. i said, can we sell to the 20%? no. it has to all go through the same process. there's a lot of change that needs to occur. i do want to stress that we
have tremendous opportunities. senator leahy was talking about products in new zealand. they are getting powdered milk from new zealand. milk producers would be happy to oblige. we're closer to potatoes and beans and things that are available. apples seem to be a delicacy at christmas time. i said, we can give you christmas every day. we have a lot of opportunities. let me ask undersecretary scuse. there is an expression that says, the first step to achieving success is showing up. i think that is really true on trade. also, our ability to market. you mentioned the market access program and the other tools at the department of agriculture. i wonder if you might speak more to what -- how would you
envision the usda's programs going forward, creating opportunities and tools for american agriculture? mr. scuse: again, if we were allowed to use our marketing programs, such as our market access program, it is an area where we work with operators to go in, to do the trade missions, to look at ways to develop markets and what the actual needs are through the market assistance program. help our producers, helped the commodity groups make inroads into establishing markets in that country. the development program was where we worked with cooperators to do studies on what the demands are for different products. if we were allowed to use these products as well as do a trade mission to cuba, i think it
would go a long way in getting back much of the market that we have lost in the past. the lack of the ability to use these programs as well as our inability to extend credit is the main issue why we've lost market share since 2008. the economists at the university of florida did a study, and what their study showed was that the biggest loss, the reason for the most loss in our market share was our inability to extend credit as our competitors are doing. such as e.u. and brazil. the playing field right now is not level. a level playing field, they are going to buy the best products from the united states. sen. stabenow: we heard that over and over again when i spoke to the minister of agriculture in cuba. we heard the same thing with
the foreign minister, talking about the lack of credit. when we look at how we get through that, i wonder if anyone wants to comment further on the specifics of what we need to do to make sure that process is open. the president has taken the first step, taking out the intermediary, being able to allow payment when it is in process and arrives. but we all know that the issue of credit opportunities, other credit opportunities, is a serious issue for us. what do we need to do? is this all about lifting the embargo completely, or are there other things we should be doing? mr. smith: i could start out. at least one provision that is at issue is the statute that prohibits any financing of goods to go to cuba other than
third country financing or payment by cash in advance. we are not allowed to offer any payment deals other than going through a third country to receive that financing, or to pay the cuban importer in advance of the goods being turned over. i think that is what my colleague has indicated is necessary to be able to extend credit. we would need to remove that prohibition. mr. borman: i would also add clarity on the provision that appears to require individual license for any ag export to cuba, to change that, or make it clear that we could facilitate ag exports to cuba. sen. stabenow: and undersecretary scuse, is that those two things specifically, or is there anything from the usda standpoint that we need to be changing to create opportunities?
mr. scuse: i think those are the biggest changes that we need to have made so that we could use our marketing money, as well as the commodity groups. they are not allowed to use their checkoff funds in cuba either. those changes would allow us to do marketing in cuba as well as give us the ability to extend credit, to put us on a level playing field with our competitors. sen. stabenow: thank you. mr. chairman, there's a hearing going on. i'm going over there for a moment, and then i will come back. be on your best behavior. sen. roberts: i will try to do that. i would urge you to do the same on behalf of the fair trade bill. senator bozeman. senator bozeman: thank you, mr.
chairman. thank you all for holding this important hearing. i believe that the way to change the world is through personal relationships. if you are serious about bringing change to cuba, we need to expose the cuban people to america. we are not only trading our products, we are trading our democratic ideals. cuba represents a remarkable opportunity for cubans to gain access to safe, affordable, and high-quality agricultural products from the united states. i'm encouraged by recent steps to reform the relationship. boosting our commercial ties would have significant benefits for our economies. easing finance and travel restrictions will result in an increase of over $35 million in agricultural exports from arkansas annually. mr. scuse, let's talk again about what percentage of the
food that cuba consumes is actually grown in cuba. mr. scuse: according to the world food program, 80% of their food is imported. sen. boozman: and what countries -- you mentioned vietnam. mr. scuse: vietnam is supplying half their rice. corn is coming from brazil and argentina. wheat is coming from the european union and canada. our sales, currently 50% of our sales are poultry. 25% of our sales are soybean meal and soybeans. that makes up three quarters of the sales from the united states. sen. boozman: what about the quality of a vietnam rice compared to american rice? mr. scuse: senator, i'm partial to u.s. products. mr. boozman: you answered
correctly. mr. scuse:i said earlier, i think our farmers and ranchers produce the best products in the world. i'm going to stick to that. sen. roberts: said very well. sen. boozman: exactly. i think that is important in the sense that it is not only an opportunity, but it is an opportunity for the cuban people. mr. smith, you've talked about easing financing and things like that. out of the things we are doing what is the most important thing we need to be doing? mr. smith: i think when you started out you talked about travel between the american people and cubans. i think that is right. as the president said, the best ambassadors for america can be ordinary americans going to travel and embodying our ideals. i think we have authorized travel within the 12 categories that we've had. congress has prohibited any
further opening for tourist travel. we also have a statutory prohibition with respect to private assistance to cuba for exports, but also for u.s. government exports. sen. boozman: do you agree with that mr. borman? mr. borman: i certainly do. there's also a prohibition on u.s. government export promotion for trade with cubans. that limits the commerce department's ability to carry out the work that it does in virtually every other country. sen. boozman: even with the changes we've made, is it fair to say that the majority of restrictions regarding trade are still in place? mr. smith: it is true that most other transactions remain prohibited. sen. boozman: so we've got a
good step in the right direction but we've got a long way to go. we've talked about financing. are you aware of any other countries that go through the financing scheme that americans go through? mr. borman: i'm not aware of any other country that has those type of restrictions. we do trade in approximately 200 countries around the world. sen. boozman: so america is unique in that regard. in dealing with the cubans, how does cuba differ from other major export markets, in terms of how normal commercial operations work? mr. scuse: as i pointed out
earlier, we are restricted to dealing with one state owned corporation, alimport, for access for our u.s. products. that is unique. it does present its own problems. sen. boozman: mr. borman. mr. borman: my understanding as that for virtually all imports they have to go through some import agency. mr. smith: the other difference is the financing terms. in most other contexts, the exporter could get financing of some kind from the u.s. or the importer. sen. boozman: thank you, mr. chairman, and thank you all for being here. sen. roberts: senator donnelly. sen. donnelly: thank you. i'm a big supporter of increasing exports to our markets and i'm intrigued to the possibility of opening the cuban market.
not only for huseeshes but all of the country to export the goods we produce. the concern is, i want to make sure that the cuban people actually benefit from it. what can we do from a policy perspective to better ensure that the benefits of trade reach the cuban people, as opposed to all the products going into one agency and then being divvied out? what do you see as the keys to making sure the cuban people benefit from this? mr. scuse: senator, i think that by normalizing relations, by breaking down the restrictions we have, the cuban people are going to benefit from that right away. if you look at the cost of transportation, rice coming from vietnam, corn coming from argentina, wheat coming from the european union, we have a tremendous advantage in logistics and being able to supply them top-quality
products at what i would believe would be a more reasonable price than what they are currently paying for shipping from those countries. i would think there would be an immediate benefit. could there be additional benefits if we are treated like other countries and don't have the go through one state owned corporation for our products which i hope would happen -- i think there would be additional benefits. sen. donnelly: one of my concerns is going through alimport, the state agency. we talk about the higher quality. i have been to my friend senator boozman's home state. the extraordinary rice they produce there, the pork products produced in my home state and all of us, wetalk about the benefits of lower price, easier transportation. the question is, how do we make sure that lower price gets
passed on, so the cuban people are not paying the same, and this group -- who will set it, in effect? mr. scuse: i understand the concerns. hopefully, once relations are normalized and trade is liberalized, i would hope that we would be treated like the other countries that are currently trading with cuba, so they don't have to go through one state owned corporation. sen. donnelly: and this would be for any of you. what canadian products are sent to cuba, how are they entered into the country? who are they distributed through? do you know? do they have to go through alimport? mr. scuse: to the best of my knowledge, no. the united states does.
sen. donnelly: one of the points i would like to make is as you move forward with this, one of my concerns is that we be treated the same as everybody else. that is the way the cuban people benefit, that our products are able to go directly to the cuban people that we are treated the same that we are treated the same. i think that much of what we look at as we move forward will be dependent on that being incorporated to any agreement that comes through. take you, mr. chairman. sen. roberts: thank you senator. senator hogan. sen. hogan: i want to pick up on a point that senator donnelly is making. there has to be a tariff here. we want to expand trade that is good for farmers and cuban people are, about the same time, we want to put more pressure on the cuban government to change their policies on cuban rights.
what we can work here is on a trade to make sure that we are doing that. how do we get these products down to the small businesses in the entrepreneurs that are actually trying to make something happen in terms of free enterprise in cuba and how do we at the same time create some pressure on the cuban government and the cash or regime to change, and particular change in the charred -- regard to human rights? i would like to hear from each one of you on that. mr. scuse: you know coming from the big act state that you are from is that agricultural throughout history has been a way to break down some of the barriers that we have faced. if we can open up trade with cuba and because they are only
supplying 20% of what they currently consume, but demand certainly there, there is a way to help build the agricultural sector in that country. which would create jobs which was create income, which would create more demand. and as that happens, i think you're going to see an awareness just opening up the country and normalizing relations. there will be an awareness of the people that i don't believe that currently exist. i think this is a really good first step in to help in the cuban people. our policies over the last 50 years have not been one that has provided that openness and transparency and the education about the united states that i think normalizing relations and opening up trade well. sen. hoeven: mr. bormann, you and i talked specifically to
make sure that these restaurants and other small businesses that people in cuba are trying to get going. how do we support that effort as we do this? mr. borman: several ways. one is the folks who make the experts from the united states know who they are intended for an end of the individuals because they are often relatives are running bed-and-breakfast in the auto repair shops. if the items don't get to them, they will to about that. we have a very good working relationship with a lot of exporters to make sure that they items go to where they are supposed to go. sen. hoeven: now you're talking about helping people in the business and altered northside which will create some pressure for change over there. do you have a way to enforce that if we're going to have good products or other products going in there to make sure that they are actually getting to the small businesses that are trying to get going? the other thing is payment. how do you make sure that people get paid for products that they ship and that market? mr. borman: so far, we have not
heard any complaints of u.s. exporters not getting paid. sen. hoeven: you are changing that policy. mr. borman: it cash on delivery. sen. hoeven: cash when you change title. mr. borman: right. sen. hoeven: delivery of the product is delivered. it's there. it limits your ability to go to get it, doesn't it? mr. borman: is that in fact happens, we will find out quickly. sen. hoeven: getting it to the small businesses, how do you enforce it? mr. borman: the first part is that we make sure the folks who want to make experts know what the small businesses are. number 2 -- the cuban people are aware of these changes. over time, if they do not see significant changes, they will be more pressure on the cuban government. we have seen more exports made in agricultural co-ops in the trade days. mr. scuse: i think we can focus on the cuban people as we make
changes. i think the recent round of changes that we made were made on the strength of the cuban people. we increase the ability for key medications, for internet, for other things, so they can better understand the changes that were being made. we increase the limits that were made on remittances and a financial amount that u.s. citizens can give to cubans and we increase as amounts for support for the cuban people and humanitarian projects and other things that would help agricultural development as well including micro-financing activities. there are very much focused on the individual cubans in the small cuba develop meant businesses that want to grow. that is the focus of the change. sen. hoeven: i think it is important that your focused on that area, including putting information into that market every way you can. because as we pride more people with more information, i think that also helps with their efforts to try to force change from the inside as we try to force change from the outside.
finally, a question for mr. skews -- scuse. you said three force of our exports now are poultry in soybeans. what else are good opportunities? mr. scuse: i think we have a great opportunity to increase exports and corn. there's no reason why the european union and canada have the wheat market. that market should also be ours. i think there is a great opportunity for us to have rice business in cuba. as i pointed out earlier in this meeting, there is a great opportunity for dairy and any products. sen. hoeven: thank you. sen. roberts: i think the center for his most pertinent comments and i think the panel for responding. >> thank you, mr. chairman and thank you for holding this meeting. you all said that you hope we
will see this restriction lifted. i think i can remind you folks that it's not a strategy and we are hopeful that you all will take the concern that is being expressed today about imports back to your smaller groups as you discuss opportunities going forward. we have long been concerned about the extension of credit for act transactions and trade. hopefully tomorrow, we are going to try to take a move in the right direction. i think you guys have highlighted the number one thing that we think we can deal with witches 908 -- which is nine away. i personally support lifting the embargo entirely. that may be a bridge too far for this congress. we have to take baby steps. with that, i have a couple of specific questions for you undersecretary.
the federal checkoff dollars have not been used for promotion with trade with cuba. the loose reasoning is the ascension that this is due to the language of the psr a which precludes the use of any united states assistance, including united states exports assistance. the checkoff dollars are not taxpayer dollars. they are producer dollars. the federal checkoff programs our staff so that the farmers alike abortive peers who decide how that's checkoff dollars or use. it is not tax money. as a result, the u.s. da recognizes the difference tween government assistance programs and producer raised in controlled checkoff funds and can producers utilize their own checkoff dollars for promotion for activities in cuba? if not, why not? mr. scuse: my understanding is that the federal checkoff funds cannot be used for trade promotion in cuba. now --
sen. heitkamp: i'm asking you why. mr. scuse: my understanding is because of the current law in place. sen. heitkamp: i'm suggesting that the current law is being broadly interpreted and you might want to go back and take a look to see if we can make that change without legislative changes. mr. scuse: we will do that. i also understand that it is my understanding that there is state checkoff money bet that can be treated differently. but the federal dollars and the federal checkoff money cannot be used. but again, we will go back and take a look at just what the law says and if it can be used. sen. heitkamp: i think just to re-examine that policy. mr. smith, i am under time. i want to go back to the cash and advance. the original definition and the other changes that you are making to facilitate a more efficient and affordable export to cuba.
at this time, d feel like the administration has gone as far as legally possible? in terms of the definition to open up opportunities? where the other things on the table as you discuss the changes that you did make that may be said, maybe we can't do that -- are there other kinds of policy things that maybe we should abandon? mr. smith: i think the definition we used was an appropriations bill and a congress that had been as far-reaching as i have heard and terms of transfer of title and control. it is hard to imagine that you can interpret cash in advance far beyond the transfer of title because it is largely the last step before you actually turn over the good. there has been no other definition that i have heard that could meaningfully interpret that statutory term. sen. heitkamp: so cash in advance means cash in advance? mr. smith: that's what i mean.
sen. heitkamp: finally mr. scu se, i know you don't have boots on the ground in cuba, but you have boots on the ground in d.c. that hold this closely. cuba is a huge opportunity for my state and the states that are represented in the ag community. given that export assistance is prohibited by tsr eight, are you still allowed to play someone in the havana embassy that could make those contacts and begin to do that groundwork without crossing the boundaries and are you intending to do that? mr. scuse: correct me if i am wrong. i don't believe we have an embassy just yet. sen. heitkamp: we are hopeful. mr. scuse: saw my. we can put individuals in their on a short time basis for what ever assistance may need to be
needed to look at different projects or to help them with different regulations that we may need. but that is only short-term. long-term -- i would hope that when the day comes that we have an embassy there that we could work with the state department and we would be able to put staff in the embassy to help us facilitate trade and to move american products into cuba. sen. heitkamp: how many staff do you have currently in cuba? mr. scuse: to the best of my knowledge, we don't have any. sen. heitkamp: you believe that you are prohibited from having staff in cuba right now? mr. scuse: i don't know to be quite honest with you. to have full-time staff in cuba i don't believe that we would have the need right now to have any full-time staff and told trade is actually open. sen. heitkamp: i think you get my attention which is that we
think that this is going to happen sooner rather than later. we want to hit the ground running and we would appreciate it if you guys would take a look at what kind of opportunities you could avail yourself of today that could come in fact, once we get things lined up, can , in fact, facilitate further trade. mr. scuse: senator i believe that when that day comes, we will be able to act very quickly. sen. roberts: senator. >> thank you for holding this hearing. it is good to see you undersecretary skis. we love you in minnesota because you are believed to come out to a forum on cuba in february. that means a lot in minnesota and north dakota. we discussed in the forum that you did a great job by the way about the potential for the u.s. export products to a country that is just 90 miles off of our shores and 11 million people when i went there a few months ago senator warner and mccaskill
to see the newport that is being built which is a very big port. it is going to replace the port of havana which will be used for tourism. when i saw that port i thought if they're going to bring goods and sell things here in cuba, we want them to be american goods. i am chairing the build the list the embargo. -- to build -- the bill to lift the embargo. there are other senators who are interested and we are adding to our number. it may take a while to get it done, but i truly think you agree that is the way to have some trade with cuba to sell our goods now that are being done on a humanitarian basis. can you talk about the effect that it could have if we were actually to lift the embargo? mr. scuse: it will have i believe a tremendous impact on our ability to sell products and greatly increase the amount of products that we are currently selling to cuba.
again right now, you're looking at about $300 million worth. the study by texas a&m and american farm bureau believe that normalize relations and lifting of the trade restrictions that that number could be in excess of the billion dollars. what this also i believe would mean to the cuban people with the ability to purchase agricultural inputs, fertilizers, seed, chemicals and equipment, i think it would give them also the ability to have agricultural businesses produce more of what their actual demands are in the country and create revenue throughout the countryside and again help the cuban people, especially in the rural areas. i think it is a win for both of us in my opinion. sen. klobuchar: some have argued that while cuba is a small market and also clearly has a lot of poverty, why would this be such a benefit?
are there other reasons outside of selling to keep it that could be a benefit to american agriculture? mr. scuse: i think it is not just selling commodities but selling agricultural equipment. it is not just about the sales, it is about the jobs that will also be created here in the united states. when you look at our experts currently, there are $152.5 billion supporting american jobs. any increase that we are going to be having in sales that is an increase that we are having an american jobs. i think it is a win for the cuban people, supplying them with the best products that can be found anywhere and can be purchased. it is an opportunity also to create jobs there as well. sen. klobuchar: you don't need to get into, but i've heard this raise. it is often thrown in our countries face and other countries in latin america of our situation with cuba. we help that it will open markets for agriculture and other products as well.
i want to ask about foreign competition. when i was there, we met with a number of the ambassadors from places like brazil and spain and other places and as you know they don't have embargoes, but their investment is slow. however, i detected that they might start taking up as they see the potential for the u.s. coming in. do you think other countries are going to continue to expand their market share? i will never forget being at the port and they are saying, they got their computers from china because they were not able to use u.s. computer companies like most ports do across the world. do you want to discuss that? mr. scuse: again, there is opportunity is there. yes, we are going to face competition from those countries that are currently doing business there. if you go back again and look of the business and the trade that we had in 2008, $658 million down to $300 million last year. look at the reason why.
other countries were able to extend credit. and we were not. the main result of that was a substantial loss in the cuban market for u.s. products. we are going to face competition from -- continued competition from countries like brazil argentina, canada, and the eu. mr. scuse:sen. klobuchar: one last question. what do you see as the biggest obstacles to increase cuban agricultural exports? we have issues with human rights. it is our hopes that as negotiations go for that this would be a part of negotiations. i saw a currency issue and other things. what do you see as some of the obstacles to trade? mr. borman: just more generally the cuban bureaucracy's ability to let those into the country. i think that is historically not the way that they have done things. sen. klobuchar: all right, mr.
smith. mr. smith: i would i go what he said and the development of private business and that is something that we are trying to encourage here. to encourage that there is more money for individuals and more money for private businesses to be able to import. sen. klobuchar: i think there's something like 600,000 obligors now that loosened up recently. they have their own currency but they're still a long way to go. i will say and ending that i have such a spirit of entrepreneurship there with the people. the people are a bit ahead of the government. i want to thank the chairman for holding the hearing and being willing to hold such a hearing as we know this can be a controversial issue on both sides of the aisle. i really appreciate you doing it. sen. roberts: thank you. senator brown. that is mr. leahy. you may want to put your sign appeared. what on earth happened to mr. brown?
did you lose your --? that's ok. sen. brown: i lost my china thought -- train of thought. talk to me about what this means and what these trade restrictions me to a state like ohio in terms of agricultural exports. mr. scuse: first aid like ohio, what our current restrictions mean -- for a state like ohio what our current research and mean is that it's difficult to get agricultural products from our state into cuba. we are at a tremendous disadvantage. the playing field is not level because we are not allowed to do marketing programs like other countries do. we are not allowed to extend credit like other countries do. the playing field is not level and it creates a great deal
difficulty for us to compete against those countries. sen. brown: tell me what it will mean as we use them. mr. scuse: as we ease the restrictions, it will be easier to get products in there. i went through the list. right now, the corn is coming from brazil and argentina. i think that we should be the number one supplier for corn. if you look at weeds, we'd is coming from european union and canada. again, there is no reason why that shouldn't come for the united states. 50% of rice is coming from vietnam. we should be the one supplying the rest to cuba. a can -- again, i think there is opportunity to ship dairy and dairy products in cuba. when these current restrictions are gone, i think there is a lot of others. our fruits apples would be a good example of a product that there is a dam man for that we
could ship down there. -- demand for that we can ship down there. i think there is opportunity, but we need to get the current research and lifted. we need to be able to use our marketing programs and we need to be able to extend credit. sen. brown: thank you. mr. smith, and light of the treasures policy changes, is there interest shown by u.s. banks willing to do this type of trade? have there been issues or problems with establishing correspondent accounts with cuban banks? can you give me your assessment on what is happening and what you think will happen? mr. smith: there has been tremendous interest from u.s. institutions on what can be allowed in cuba. as i'm aware, noting u.s. institutions have opened accounts there's been a number of u.s. financial institutions have decided to begin engagement on the credit card and debit card front. we have allowed many financial institutions to talk about concerns of the state sponsor of terrorism designation that still
exist with respect to cuba that maybe change. sen. brown: would that be the on switch for correspondent accounts that's lifted? mr. smith: it could be. we have authorized it. it is up to the financials risk at the time and whether their concerns will be ameliorated by the removal of the state sponsor of terrorism designation. that remains to be seen. sen. brown: one of the things that has changed in today's banking system from particular 10 years ago, but it began to change five years ago with the financial crisis is. thanks increasingly, even smaller banks of 20 30 am a 40 billion, and some smaller than that, they have elevated in stature with their risk officer to look at and to make sure that they sit at the table to be part of decision-making. is this too risky for a bank to engage in?
in the past, that question wasn't asked often enough. his treasury talking to risk officers about this risk issue of risk and injecting that into the conversation in boardrooms at least at the largest banks in the country, to help them think through the issues of risk? mr. smith: almost on a virtually daily basis, we are talking to compliance officers to understand the changes that we are making and what our policies are and what our requirements are so they have a chance to dialogue with us. we have had a number of open outreach events where we have had financial institutions. we have also had one-on-one conversations with many financial institutions. sen. brown: thank you. thank you, mr. chairman. sen. roberts: i'm going to ask one quick question before we ask the second panel to come up with all due respect my colleague. director smith, in lieu of the
questions asked by senator brown , i like the term risk appetite. where did you come up with that? have any u.s. financial institutions set up correspondent accounts with the financial institutions in cuba? how many businesses do you expect to utilize this type of account with a bank? mr. smith: i'm not sure where i came up with risk appetite. i'm sure i heard it somewhere. as far as i'm aware, no u.s. financial institutions yet have open correspondent accounts. i think what we do is that we all the rest certain activities, but we don't require financial institutions to engage in any activity. sen. roberts: if that were the case, how many u.s. businesses do you expect to utilize this type of account with their bank? do they have the risk appetite to do that? mr. smith: the more u.s.
industry wants to trade with cuba, the higher the trade goes with cuba, the more demand there will be on the banks from their clients to say that we need you to be in their servicing us. i think the trade increases, the more we expect pressure on banks to go in. sen. roberts: this will conclude the first portions of our hearing this morning. thank you to our witnesses are taking time out of your very busy schedule to share years perspective -- your perspectives and insights on the challenges that we face an expanding agricultural trade with cuba. to my fellow members, i asked that any additional answers that you have be similar to a committee by business days or by next tuesday, april 20. we now invite the second panel of witnesses to come to the table. thank you very much, gentlemen.
before joining ncba, he served as president and ceo of the missouri credit union association and presidency of the maryland education of columbia. he additionally held positions at the world council of credit unions and the north carolina credit union league. if anyone needs credit in the audience, just had to him. welcome. i look forward to hearing from you. you will wait to introduce the second panelist after you conclude sir. please feel free to summarize your comments. mr. beall: good morning, chairman roberts. we work through technical edge striptease and advocacy that helps -- technical expertise and advocacy that helps. my remarks will help us focus on the new day in cuba relations and help us foster more productive relationships tween the two countries, notably through agricultural trade. as a preface, i want to convey
to thoughts between u.s.-cuban cooperative annulments. first, u.s. could you cuban cooperatives as a fundamental to building market places in cuba, one that incorporates a business model and empowerment for business owners and consumers. cooperatives are functioning successful businesses that provide tangible economic ownership and benefits consumers wherever they are found. ncba hopes that cuban cooperatives will be no exception to the rule. u.s. cooperatives are here to assist right now. we have begun to build ties with cuban cooperatives and we can hit the ground running whenever the laws discussed in the first panel permits. the message here is simple. put u.s. cooperatives to work with cuban cooperatives. by way of background, there are 29,000 member owned co-ops in the u.s., employing about 2 million folks. one in three american consumers does business with the cooperative.
businesses and consumers do business with cooperatives and agricultural, but also housing rural electric, telecommuting and co-ops work. where the members on the enterprise, it is particularly well-suited for the cuban people and especially in this time of transition. cooperative ownership combined with cooperative business practices that use the profits for the benefit of members in the form of governments were each member gets one vote are all features that are going to have special appeal as they grow in cuba. our understanding is that cuba has begun to change its cooperatives loss, starting in 2011, making lots of businesses become cooperatives and changing the ownership structure. this is a welcome departure from the other types of government or state owned enterprises. ncba have been told by cuban cooperative officials that there
are about 5200 agricultural cooperatives currently operating in cuba that contribute 80% of all the fruits and vegetables consumed by consumers. by all appearances, this cuban agricultural sector is the foundation for the economic stability and growth. ncba has taken preliminary steps to issue stronger ties with cuban co-ops. last year, we established the u.s.-cuban cooperative working group to explore opportunities to develop cuban development. we explored with co-op leaders and establish connections with co-op agricultural leaders and the first week of may. and terms of what i have seen in travel with co-ops, there are challenges. there is lots of focus on the 1950's era cars but in the co-op farms the agricultural equipment is from that era as well. it would be considered vintage. one of the other main concerns that i will say that i saw is
that memory cooperatives produce financial statements. we are not able to verify how profitable the cooperatives are and what extent as they are taking on. and most importantly, what is the treatment of the state owned equipment that is being delivered over the co-ops? what is the treatment on the balance sheet of the land that cooperatives are operating on? as cooperatives build relationships with cuban cooperatives, this is where we want to see progress. this is where we want to see fruits -- proof that cooperatives are independent and able to manage these assets and not have interference in the cuban government. i did return a optimistic about the future of u.s.-cuban cooperative endeavors. furthermore, the challenges facing the cooperatives there are technical. they are accounting. there are educational obstacles. these are the exact kinds of issues that could be addressed
and addressed well by americans and american co-ops. we stand with u.s. co-ops ready to provide assistance with the legal and governmental issues. until they are resolved, u.s. co-ops are a compatible tool that can make a difference in providing vital co-ops in cuba and providing co-ops that become valuable to both american and cuban consumers. the legally governmental issues that we talked about this morning are real. they are something for us to look to policymakers like you to resolve. ncba is a business group concerned on economic results and relieving diplomacy to the diplomats. as the new relationship takes place, the ncba respectfully but forcefully wants to remind cop ribs desk congress that we are here and that cooperatives are ready to roll up their sleeves and work and that cooperatives are an ideal democratic structure and form of operation that can produce results on the ground. cooperatives are going to help the cuban people develop
financially viable mender owned businesses that can assist in that the boatman of cuban oxford north and we provide even consumers with marketplace choices and further u.s. interest by adding independence that ownership in first. sen. boozman: i'm very honored to introduce mr. harris. mr. harris has worked for rice and food since 1975. currently, he is the senior vice president for marketing and risk management. mr. harris has traveled to cuba more than 20 times and he has a wealth of knowledge on the practical challenges that america's farmers and ranchers face with trading with cuba. mr. harris lives and work in
arkansas which is the rice and dove capital of the world. i look forward to hearing mr. harris's testimony. thank you for being here. mr. harris: thank you. thank you for the opportunity to appear before this committee today. it is a family owned cooperative that was formed in 1921 to market rice. we approximately serve 6000 former members in arkansas and missouri that grows rice soybeans, and we. they have a third of the market in the united states and 25% of the national production. rice land is a direct export selling directly to buyers and i sported countries. as a result, our staff is real school on details of everyday management and logistics and finance and related to the export business. rice plant foods is also proud to be a member of the usa rice federation. it involves segments of the u.s. rice industry. it is in seven states including
arkansas, louisiana, texas missouri, and florida. nearly half of the u.s. crop is grown in eastern arkansas. industry markets rise in all 50 states and do 100.5 countries worldwide. usa rice is a founding member of the u.s. agricultural coalition for cuba, a broad-based group of u.s. food and agricultural organizations seeking to reestablish relations with cuba as they mark food and agricultural exports. i intend to discuss the past and potential trade relations between u.s. and cuba, a feature that holds great promise for u.s. rice farmers and agricultural. we produce half of the rice annually so maintaining new markets would be key components for industry success. the rice industry wholeheartedly supports the opportunity to move to normal commercial relations with cuba. prior to the u.s. embargo more than 50 years ago, the island was the number one export destination for u.s. rice. annual rice shipments reached as
much as a quarter million metric tons in the 1950's. the u.s. accounted for more than half of cuba's rice imports. u.s. agriculture and food exports in cuba were granted for what many of us believe that the time to be a broad attention from the embargo. in november 2001, i had the opportunity to make the first sale of u.s. rice to cuba since the embargo was imposed. it was incredible and interesting negotiations as we develop contract terms and quality specifications for country which at that time had not purchased goods from the u.s. for more than 30 years. i found the leadership of the cuban buying organization and formed shrewd, and a professional. i also was able to witness the first shipment of u.s. rice when it arrived in the port of savannah. -- havana. it was an unforgettable experiences see how excited they were with the quality of rice that they were able to purchase in cuba. i saw what can happen when
barriers are removed and people are allowed to meet and find common ground for cooperation and trade. the success of rice and other cultural products in cuba would detail in large part the change of foreign assets control in the definition of cash in advance in 2005. u.s. rice exports to keep a job to zero following this regulatory change. most of cuba's rights imports come from vietnam. a port of new orleans is located 700 miles from havana. the u.s. is bader -- better to serve cuba with the cost of time and trade. by lifting the embargo with trade and cuba, we estimate that the u.s. would gaze -- gain 30% of the u.s. rice business and two years or metric tons of new demand for u.s. rice farmers based on usda estimates of cuba's annual import needs. we would anticipate the u.s. share of this market would exceed 50% within five years and
could reach as high 75% or more within 10 years. on july 15, 2015, we made changes to the right relations on trading cuba that allows the definition of cash in advance to its pre-2005 warning. we applaud this measure as well as other actions by the obama administration to facilitate trade. however, there are still obstacles conducting normal trading cuba. i stated earlier that we are seeking normal commercial relations with cuba. this will allow u.s. citizens to travel and spend money with cuba as well as allowing cuba to export goods to the u.s. as they do in most countries around the world, so they can gain resources and increase demand to support u.s. food and agricultural products. it also means permitting the full range of commercial banking and financial relationships to facilitate trade based on individual export assistance in the risk. the u.s. rice industry has the ability to have a market for our products. our company has made numerous trips to cuba to meet with cuba's national importer of
ricin food. it is under $900,000 and rice promotion funds since 2003 to promote the high quality and efficiency of u.s. rice and the cuban markets. we need to continue those activities. to give u.s. rice a chance in cuba, the rice industry 60 ultimate lifting of the embargo and the elimination of all restrictions on tourism and trade with cuba. this requires congressional action. sen. roberts: thank you. >> i am very pleased today to introduce mr. rolf kachler. he has been on a number of different trade missions to cuba and he understands how modernizing our countries relation with cuba impacts farmers here home and also understand how it could impact cuba's culture and people. in february, he was one of the
panelists at the cuban form that i referred to and it is good to see him here today. i look forward to hearing his testimony. we are really excited to have a minnesotan on the panel. mr. kaehler: thank you. chairman roberts, ranking members, senator klobuchar and all the members on the committee, thank you for holding this panel on agricultural trade with cuba. sen. roberts: would you just take a moment here? you have two boys, two girls, it is also my understanding that this is correct? mr. kaehler: i've two boys and one daughter-in-law to be. sen. roberts: i've two daughters and one. sen. klobuchar: these are the trick questions that we were telling you about. you did well. you didn't agree. [laughter] sen. roberts: i think the whole
world knows and i want to let it go. [laughter] please proceed circuit -- sir. feel free to summarize her comments after my remarks. mr. kaehler: no problem. my two sons are the fifth generation to be operating our family farms in st. charles which sits in the southeastern part of the state. our farm produces traditional crops and came across and livestock. we are nationally recognized in treating livestock producers whose claim to fame includes export in the first livestock to cuba in 2002 since the enactment of the trade embargo. our youngest son is going to be married in november. he is actively involved in the cap operation and will be taking over the export activities. my oldest son recently returned home from wall street to start a solar energy company and we are
pretty excited to bring a kid back from wall street and to rural minnesota. our initial exposure to cuba was in the first u.s.-cuba agricultural expo from 2002 by an invitation for governor ventura. there were over 80 exhibitors from 30 states. the family display was the only one with live animals especially known as the cuban arm. a consistent of two dairy, two takes, to sheep, and to bison calves that we took on behalf of the north dakota farmers union. it was intended to display the diversity of livestock producers and to show cuba a typical farm family. returning home from that expedition motivated me to do more. since then, we had led over trade delegations to cuba. these missions have included producers from over seven states and a bipartisan mix of state
lawmakers and officials. today, some of the most successful exports the -- to keep it that we have initiated include the systemax -- for shipment of livestock the first distilled grains the first powder milk, the first animal milk replacer, and the first texturized caffeine which was made by a local farm owned co-op. given the opportunity, u.s. farmers do well in cuba. we had a significant advantage over europe, asia, and other exporters. in addition, cuba can take advantage of our u.s. rail container service and sizing options would bring significant benefits to smaller privately owned businesses like ours and other producers in the midwest. on top of this, u.s. producers offer a wide variety of affordable and safe food products for the cubans. unfortunately, some be policies currently in place diminish the
natural advantages american agriculture has over competitors. for instance, requirements for using third country banks or finances is a lot of paperwork time, and personality to every transaction. a cash in advance policy has helped to be improved in recent mark -- much. as a family operation, trying to build our business through exports this self-inflicted inefficiency can be really difficult to manage. what i do hope to see for farmers international cuba debate, first, i hope farmers can work with congress to improve the trade financing rules for cuba. the efficiencies gained by doing this would be immediately beneficial. it would make shipping cheaper for producers and food less-expensive for cubans. both of which can only be a good thing for our trade
relationship. second, i have to mention the importance of the u.s. fda exporters. large companies have plenty of resources without the promotion and technical assistance that small firms like ours to not have the luxury of extra available cash or jail horrible -- shareholder offsets. we need assistance that help support our companies and figure out what is going on in the markets abroad. i hope to see these resources available someday soon for our small and medium-size producers to help us work on selling our products to cuba. finally, i hope that congress will expand the people involved with u.s.-cuba trade to expand a variety of products being traded. i don't know much about u.s. politics, but i've spent time in cuba and gotten to know farmers and families. our farm has went through many ups and downs in doing business
with cuba including recession high commodities and prices, and difficult financing rules. but we have made progress over time and we have never been shortchanged by her customers. i can only imagine that having more information's -- and actions like these will build a better understanding between the two countries and build a better quality of life on both sides. i look forward to answering any questions. thank you for this opportunity. sen. roberts: thank you. i apologize for the congressional oversight in regards to you adopting his family. mr. kaehler: folks can't get our name right half of the time either. sen. roberts: mr. keesl is representingin the kansasg wheat commission which you serve since 2005. it deals with: wheat, and alfalfa on their fifth
generation farm. he has two boys. yes two girls. -- he has two girls. the whole point is that i would like to take a moment to wish elsie a very happy one week birthday. you better get back home as soon as you can. [laughter] mr. kesesling. mr. keesling: good morning. thank you for allowing me the opportunity to testify today on agricultural trade with cuba. out of like to thank for the kind invitation and dedication to kansas and their farming. i miss it generation farmer from chase, kansas. i have been on the wheat commission for the last 10 years and have been able to travel to many places because of that. i recently returned from cuba where i was part of the delegation organized by the u.s. agricultural coalition with cuba. the primary purpose for u.s. acc is to reestablish cuba as a market for u.s. food and agricultural exports.
and the wheat industry fully endorses that goal. there will nearly a hundred participants on the trip representing a wide range of agricultural organizations and companies. and what i could see, there was a lot of potential in cuba, a potential in the agricultural sector and a potential for market of u.s. exports. as a kansas wheat farmer, that potential is obvious every time and meal included bread. cubans eat a lot of it and they are the largest wheat importer in the caribbean. they import nearly 30 million bushels of year. that would be over tendency -- 10% of the week grown in kansas and a couple sales of exports. cuba is the largest country in the caribbean and the largest wheat importer. that is because cubans are not only -- sorry. today with these imports in the united states, they have an upward potential of a whole 30 million bushels and that is because cuba is not buying wii from united states. they buy almost all their wheat from canada and europe as has been discussed before.
even though cuba is much more closer to u.s. ports that is a $200 million opportunity that passes this by every year. if congress lifted restrictions on u.s. exports we would be excited that were viewed opportunity to reestablish cuba as a weak market for making farmers. for a while, it was like that might happen as exports slowly grew through the decade till they treat at 50 million bushels in 2000 eight. but exports tank of the next couple of years and eventually drop to zero. that has nothing to do with economics. as particular a difficult for import wheat grown in kansas and march easier for wheat grown in canada or france. i compete -- put my wheat in elevator and put it on a ship a couple of days from the havana harbor, but my wheat will still lose out from wheat that will have to be on a boat from canada or two weeks from france. the problem is rules and laws that make it too extensive to
compete in that market. the log requires exporters to receive cash from the cuban import. the company wants to provide a loan from liars because selling on credit is not an option for them. there are shipping restrictions that prohibit docking in the united states if the cuban ship has been dr. i have to value all the costs of wheat and compliance of financing. if it is too extensive, i will have to give up on wheat and plant a competing crop. that is what the cuban's face when they had tried to purchase my wheat. it is too offensive. they are not going country -- hungry. they're buying from more sense of places. it is now much better value because there are massive compliance costs. it does not make any sense to me that if someone wants to buy weed that i growth that they have to go -- wheat that i grow that they have to go through hurdles to do.
these regulatory obstacles need to be repealed, but more than that, we need to see the trade sanctions in their entirety lifted. cuba has a enormous economic potential. while certainly remains a communist country, that hardly justifies the skill of the sanctions, especially when trade foot communist countries are going deeper all the time. u.s. agricultural is never going to realize its full potential with cuba if trade research and farm place. if they cannot make their own terms with services like rum cigar, and other products where they have an advantage, we will always face an uphill data. it is time for us to illuminate these various and see how far this free-trade relationship can grow. i would suggest that congress carefully consider where there is a compelling reason to restrict the freedom of americans to engage in commerce especially for those who are just trying to sell wholesome american grown food. i sure don't see one. in conclusion, i like to reiterate the support of kansas
wheat and the broader kansas agricultural community for normalizing trade relations with cuba. agriculture and subsidiary industries that supported will stand to benefit if we open unfettered trade with cuba. inc. you again for the invitation to testify this morning and for your attention. sen. roberts: thank you. we have now a welcome doctor. we will try tosson. he is joining us from texas a&m university. she is professor and department head of the agricultural economics department where his extension and research interests focus on international trade and international marketing. he however is not responsible for texas a&m leaving the big 12 and going to that other football conference. [laughter]
he received his phd and masters all from texas a&m and served as officer in the united states army and was a captain in the u.s. army reserve. we thank you for your service, sir. i believe that you're joined today by your wife. is that correct yucca dr. rosson: she is not her here. sen. roberts: we will not have her stand. let us get right to questions will quit. -- real quick. my gracious. oh, you have your testimony. pardon me. dr. rosson: good afternoon, mr. chairman. steam members of the committee, it is my pleasure to be here today and i want to thank you for inviting me to testify on the challenges and opportunities associated with trade with cuba. i've been studying the cuban market for about 15 years and i've been there a number of times. we continue to monitor what happens in cuba and how that impacts u.s. agricultural
exporters. in fact, our work at texas a&m indicates that one u.s. job is created for about every $76,000 in u.s. exports to cuba and we think that makes it worthwhile to us to stay engaged on this important issue. just a little bit about background. our exports have averaged about $300 million annually since 2002, but there fluctuated wildly from about $140 million in 2002 to 700 and and 9 million and 2008. that uncertainty has been a problem for businesses. during the first decade of our expert -- export experiences with cuba, we exported a wide variety of products such as corn, sardines, animal feed cotton, along with processed foods such as port, day products,'s -- snack foods,
bottled water, and grapes in pairs and treated telephone poles. a fairly broad array of products that until 2012 when things began to deteriorate. the more recent export categories of the last couple of years have really been concentrated in three areas and that is frozen like quarters, soy complex, and corn. in fact, last year, those three accounted for 96% of our exports. in my mind, that is precariously risky. we just don't have the diversity of our marketing based to withstand the kind of declines we have seen over the last few years. there is a number of things that have happened that have intimated to these declines that i would like to briefly go over those. one is -- cuba has moved away from u.s. exporters. products such as rice, wheat and higher value foods, to lower price competitive competition and we have talked about brazil,
canada mexico, spain, and vietnam. i have seen some of those products in the market -- rice, for example, .5% cracked and broken. it has to be sifted before it is served and restaurant and hotel's. it gets there, but by the time they get through fooling with it, the quality interior its further and becomes a much lower quality product when it is cooked and served. no doubt, the strong dollar of the last several years has put some downward pressure on our exports. it is made our products more -- higher-priced products to cubans also have diversified away from us to lower price competitions. during the global recession, he was earnings from tourism declined, along with declines in the value and volume of their all-important nickel and cobalt exports. remittances from cuban-americans also declined during that time. it put a lot of pressure on the government of cuba. it limited their ability to
purchase products in the u.s.. the key thing to note about the cuban market today is that the term market today is a misnomer. as we have talked we control all importing from food in united states and i'm also of the attendant -- opinion that time to time, the cuban government is directly involved in some of the decisions of how much is purchased, how much, and from whom. despite these constraints, cuba has some potential. we have been looking at this for a long time. it could be a much larger market for u.s. exports. we estimate about a billion dollar market over the next five years. cuba's demographics are favorable for growth. they have a population of 11 million people, 99.8% of which are literate. keep a has a highly trainable workforce of more than 5 million people. in addition, those aged 25-54
represent 47% of the population and are in their peak consumption years. these characteristics are very similar to the dominican republic to which we exported 1.4 billion and few -- food products last year. for this potential to be realized, we must say gains in cuba. we must see improvements in infrastructure and logistics. we need to see more stable policy regimes, policy environment that would stimulate interest on the part of u.s. businesses. the cuban market for u.s. food has potential to exceed $1 billion annually. this would create 6000 new jobs in this country. to be realized, we need to see positive changes in income infrastructure, and regulations. thank you very much.
senator roberts: doctor, thank you very much for that most informative testimony. doug, you mentioned the rest of the caribbean region, the market share for wheat is over 80%, if cuba resumes the purchases, what is your estimation of the market share for u.s. wheat in cuba? doug: first of all, i see it there is no reason for it not to go up. senator roberts: dr. rawson, you have worked on projects in nicaragua, costa rica, ecuador australia, japan, iraq indonesia, philippines, and
thailand, did you sing that country-western song, "i've been everywhere man." you are a tiger as well as an aggie, thank you for your testimony. you have an impressive background. we have a opportunity to expand our position of u.s. agriculture in the cuban market. i know that the senator from arkansas does as well, but when farmers and ranchers explore a business opportunity, they examine the costs. what are some of the factors that could impact our agreement with the cuban market?
>> we have -- we don't have service out of our local ports to move directly. we have to go to florida, trans load, and then go into cuba market by barge. that takes a next her several days to move the cargo. it raises the cost, and endangers the products. improving our logistical system is one thing, a second thing is within the cuban market, the times i have been there and then with companies that have been trading perishable products, we have had trouble with reliable electric power both at customs and hotels and restaurants. if you have a frozen dessert going that long without power, it is not exactly what you would come in with.
those logistical requirements are an issue. the other thing is simply the capacity of refrigerated warehouse space needs to be enhanced. that would allow us to move more products into the market on a more reliable basis. senator roberts: i appreciate that. all of you have traveled to cuba over the years, what are some of the challenges? any of you like to pitch in? mr. beall: i think in terms of some of the issues, i think you are going to see that cooperatives will have to figure out ways to create some of the relationships that we are talking about. those relationships we think are the piece that will bridge some of these problems and gaps. frankly i think we need the government to be a will to get off of that so that these are
solutions. senator roberts: mr. harris? mr. harris: we made the first sale of rice to cuba in 2001, we took advantage of their lower cost labor. we actually had the rice bagged on the docks in cuba. one of the benefits that we see is that when cuba buys rice from vietnam, they have to buy it and extremely large vessels, because of the proximity to the u.s. we can actually run small vessels not only to the port of havana that go to other ports, it helps them on their storage to warehousing industry should. senator roberts: mr. kaner?
>> they need access to more of our products, such as farm equipment. we have had limitations on what we could ship. we took two gifts of wrenches, some of the professionals were not sure if that was a good gift. when we took it to their farmers, they had tears in their eyes. they showed us all of the fence s built with our tools because we understood their needs. as we get some efficiencies and are shipping, and bring our farmer to farmer interaction, we will improve their productivity, which will increase the demand for u.s. goods. senator roberts: doug, do you have any thing to add? doug: i think our biggest restriction might be us, not them.
i think as far as what i saw their entrepreneurship stood out. i think they will make anything we do work. senator roberts: senator kavanaugh? senator kavanaugh: they are positive they have created cooperatives. there is more to do as you say. it was interesting to me as you are talking about what they are interested in in terms of equipment and tools.
we talked a lot about farm equipment and tractors. the fact that there is the new decision, to allow farm equipment. in fact they had cooperatives, most of them did not have one tractor. they were making decisions as to who got the tractor, and how many. there is a lot of opportunities for us to be able to expand. i'm glad to hear your testimony. i am wondering, because you've been to cuba so much and have had the opportunity to really navigate both from agriculture but looking also at cuba upon economy from a broader trading relationship, beyond exports in terms of commodities, when you think about how to more fully the develop the farm equipment
in cuba, what would you suggest? what products or services are we leaving out of the conversation? what should we be focused on? >> when we went on the first trip in 2002, the nutrient compendium was old. things have changed from their time of closeness with the soviet union, their professionals are all willing to get u.s. technology and get access to the internet. we took in, when we took grains down, they are a grass rate -- grass-based economy. in a drought, one farmer lost
two thirds of his livestock. the quote from the paper was he reached in a bag and scooped up nor gold, he said without this product he would've lost all his cattle. we are providing technology to get farm equipment. we are giving them access to modern milking equipment. it will only help our u.s. products as we improved production and efficiency for their farmers. there is a lot of poverty in cuba. we didn't see a lot of hunger, but they are looking to increase their supply of food for their families.
senator: we talked about the fact that the small group of a products we are exporting now, we are going to do more and we need more diversity. how do you see the president's new rules governing trade and financing between the u.s. and cuba and creating more opportunities for the underrepresented cuban market. what more could we be doing? i know ultimately it is lifting the embargo. we hope they will do that. what more could we be doing? >> the encouraging thing is the allowance for remittances to quadruple. 80% of it ends up in the hands of cuban consumers or small businesses. those remittances represent about 60% of the households.
they can be quite important in in terms of stimulating consumption. part of that consumption would be food products from this country. they can also be used for other business. in private business ventures the cuban people are entrepreneurial. remittances play a critically important role. if those could be expanded, i think that would be positive. senator: thank you. senator roberts: senator? senator: there has been concern by some members of congress in terms of what would happen, who would be obligated if the cuban buying organization failed to pay.
some have concerns that perhaps the united states government would be on the hook. the question is for you and the others, the cuban buying organization fails to pay for a shipment, would you expect the u.s. government to compensate for the shipment? >> in my opinion, no. that is my job with the company it is risk management. we assess that every day. we assume, as we take that risk. >> i would expect, it would be the same requirements for any other country and business.
as a business owner, it is a transaction between buyer and seller. as we mentioned, that is the risk we take, we have to analyze our business as we do it as producers. we are asking for less government interaction, not more. senator: i agree totally. i think there has been a misconception and want to clarify that. your testimony was excellent. the bottom line is, has the recent administrative changes regarding trade, are they going to help your business with what is going on right now? mr. harris? mr. harris: i can respond on
behalf of -- food, no. it is a small step. after the announcement, i contacted alan port and they think me for the call, but had no interest in purchasing u.s. rice. i think they are looking for an illumination of the embargo so they have the ability to create foreign exchange by selling their rum and cigars, and citrus to the u.s. and the tourism that they need so badly. i really think that small incremental moves are not swaying them to try to work closer with us. senator: would you all agree that that is the major barrier? what is the major barrier? >> i agree. as a wheat farmer from kansas, i am looking at june for my crop. if the embargo is lifted, we could be selling in july.
this is what is holding it
up. senator: dr. rossen? dr. rossen: there was a lot of optimism early on that we were going to change the rules, of course that has not happened. i think in about 2011, 2012, they came to the realization that the carrots they had been offering in terms of purchasing products from 38 different states in the u.s., they began to diversify to other countries. in our perception, this is a strong signal, in their minds it may not be strong enough. i believe they are still waiting to see what we will do.
senator: thank you all again for
being here. i do appreciate your testimony. it is helpful. you are all on the ground floor and no one understands it better. thank you very much. senator roberts: in my view it is access to credit. in my view it is whether or not the bank in question and the customers of those banks have an appetite for risk. that is to be seen. i want to assure you all that this committee stand firmly behind our efforts to see if we cannot clear up obstacles that you have talked about. thank you so much for coming.
this will conclude the second panel of our hearing. thanks to each of our witnesses for being part of government in action. that is two words. [laughter] to my fellow members who are not present earlier, we would asked any questions being submitted to the committee clerk. thank you so much. the committee is adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]
announcer: today and thursday, the house is voting on a cyber security bill. it would provide company's liability protection. the other would designate how the homeland security department should handle cyber threat information from those companies. votes on the first bill expected later in the day. see the house as members gavel in at 10:00 eastern. announcer: she was considered modern for her time and was outspoken about her views on slavery and women's right. she provides a unique window into colonial america and her personal life. abigail adams, sunday night.
examining the public and private lives of the women who filled the position of first lady. sundays at 8:00 p.m. eastern. as a complement to the series, c-span's new book is available first lady. providing lively stories of the women, creating an entertaining and inspiring read. it is available as hardcover or an e-book. tune in for more about our nation's first ladies. carl cannon, edna medford and k irssah thompson.
announcer: during this month c-span is pleased to announce the winners of the student cam competition. students were asked to create their documentary based on a theme to demonstrate how policy, law, or action has affected them or their community. one entry focuses on the supplemental nutrition assistance program. >> president lyndon b. johnson signed the food stamp act to help families with their food cost. today, the program known as
snap provides nutrition assistance to low income households. >> it is nutrition assistance in the form of a benefit that people can use grocery stores. >> the federal government pays the full cost of the program. in maryland, is called the sfp. the united states department of agriculture says that one in seven americans received snap benefits in august 2014. it is the biggest federal program that assists low income families. almost any household with low income is eligible to receive snap.
>> most of the people are children, the elderly, or the disabled. >> it is responsive to the economy. it is based on how much income a household has. it will be available when the economy gets worse. >> the government launched the american recovery and reinvestment act to help struggling americans during the recession. and helped millions of americans through the recession.
>> it boosted benefits to everyone on snap. it was done to inject money into the economy. >> the positive effects are clear. a study found that after, low income households spend more on food in their food insecurity dropped. >> it was designed to be temporary. in september of last year, all of the households who it had enjoyed a benefit -- >> it dramatically -- the repercussions are felt throughout the nation. households of one person
received an $11 cut. two persons, a $20 cut and a three persons, a $29 cut per month. for a four person household, a cut of $36 per month. >> you cannot live on food stamps alone. >> we did it for one week. we had to live on $24. extraordinarily difficult. >> the farm bill, passed every five years renewed snap. the farm bill includes cuts to snap. these cuts hurt the citizens enrolled in the program. they were the results of an effort i opponents of snap.
some members of congress argue it is a wasteful program and that funding hurts the economy. >> it has created lots of problems. in 2001, there were 2.3 million total nonworking foodstamp households. >> the program stimulates the economy as more snap dollars are used. >> you stimulate the economy in a lot of ways. >> another misconception is that people are freeloading because they do not want to work. snap is the last program one could accuse of being inefficient. >> there are so many who want to
say there is fraud in the program. it has the lowest error rates of any federal program. 3.8%. the denigration and humiliation of people who find themselves in difficult straits, some who never thought they would have to apply for food stamps, that we would say no. it is not what we are about. >> we can solve the problem. i think we could be a good example for the rest of the world. >> there was a speech several months ago. they talked about the right to food and that it was our obligation, a moral obligation.
>> america is one of the richest countries in the world, but millions of americans cannot afford to eat. hunger is a real problem in america. >> we can if -- we cannot afford not to. >> is a question of who we are as a nation. >> it is your moral obligation to prevent hunger. snap to it. >> watch all of the winning videos on c-span.org. tell us what you think about the issue these students addressed.
announcer: coming up, votes on the first of two cyber security bills. it would provide companies liability protection. follow the house live when members gavel back in at 10:00 eastern. of next "washington journal." we will look at the number of foreign-policy challenges, including the nuclear deal with iran. our guest is reid ribble. then michael capuano. after that, our spotlight on magazine series continues with
michael farrell. those conversations plus your comments, tweets, and e-mails. ♪ ♪ host: good morning, everyone. senate leaders have reached a by artists in deal on anti-human trafficking will highlight clearing the path for the reddit lent to get a vote in the coming days for attorney general fe. it was to delay at any attorney general nominee and decade spirit a new poll out yesterday find americans ours it on their support for the affordable care act. whether