Cuba could be big export market
One of Iowa’s newest overseas markets could grow to become one of its top 10 export destinations, says the director of the Iowa Export Assistance Center.
Last week, the Greater Des Moines Partnership announced it had signed a new trade agreement with Alimport, Cuba’s largest food importer, which could mean as much as $10 million in additional export sales for Iowa companies over the next year.
The partnership’s efforts in Cuba are part of a strategy to broaden Iowa’s trade with emerging markets in the Caribbean as well as Central America. Spearheading the Partnership’s trade initiatives is the Iowa Export Assistance Center.
“Our role is to get Iowa companies involved in international trade,” said Tom Rial, the center’s director. “We work with any company. The phone calls from different parts of the state are starting to pick up. At the same time, Greater Des Moines has a lot of agribusinesses.”
The trade agreement with Cuba was signed during a recent visit by an Iowa trade delegation led by the Partnership.
With the new agreement, “we’re looking at the potential for (Cuba) to buy as much as $40 million in agriculture products next year,” said Rial.
Iowa hopes to capture an increasing share of the $1 billion Cuba spends annually for imported food products. That market opened to U.S. companies three years ago when Congress passed the Trade Sanctions Reform Act, which allows cash sales of farm goods to Cuba.
With the expectation that trade relations will continue to improve, “we’re looking at not just the current potential, but at the long-term potential,” Rial said.
West Des Moines-based FC Stone Co. is already realizing the benefits. The commodity firm, owned by 750 cooperatives throughout the Midwest, has captured $33 million in trade with Cuba since late 2001.
“I’ve been down (to Cuba) five times and each time I’ve been fortunate enough to come back with an order,” said Chris Aberle, FC Stone’s director of national sales. The latest order, for 25,000 metric tons of corn and 25,000 metric tons of soybeans, is worth $8 million.
“That’s a big order for any market,” he said.
The company’s largest export markets are China and Mexico, and it’s the biggest U.S. exporter of edible beans into Japan.
In addition to soybeans and corn, FC Stone has shipped wheat to Cuba, and is eyeing the edible-beans market there. Overall, the company sees substantial growth potential for sales to Cuba.
“I would expect we could increase our business by 50 percent over this coming year, starting in January,” Aberle said.
Another Iowa company, Burke Corp. of Nevada, has begun looking into exporting its cooked meat products to Cuba. Its pork and beef products, sold for use as toppings for pizzas or other foods, are currently exported to Canada, Japan and Korea.
Pizza would be a new concept for the Cubans, “but there is interest from them,” said Doug Cooprider, Burke Corp.’s vice president of sales and marketing, who accompanied the recent trade mission. The company’s first potential customer is a distributor that supplies 58 convenience-style stores.
Burke began thinking about Cuba after meeting some representatives at a trade show in Mexico, he said. “We thought there might be an opportunity, and frankly, nobody else was doing it. … They expressed the possible need for it, and we just pursued it. A good share of our raw materials come from here in Iowa. It’s just another market to sell our product and promote our industry.”
Before it can sell its products to Cuba, however, Burke must have a Cuban veterinarian inspect one of its plants. It’s waiting on U.S. State Department approval for that visit to occur.
Cuba, which is now among the top 20 export markets for Iowa, could grow to one of the top 10 markets, but only if overall trade relations improve, Rial said.
“It will be better than the Dominican Republic, which is in the top 10,” he said. The Dominican Republic currently buys $650 million of agricultural products each year from Iowa companies.
“I think our next new long-term potential markets are going to be in Latin America, Central America and even South America,” Rial said. An Iowa trade mission to Brazil, for instance, is being discussed for next year.
Although it’s a program of the Greater Des Moines Partnership, the Iowa Export Assistance Center provides assistance to companies throughout the state in initiating or expanding their export activity.
The center receives part of its funding through a grant from the Midwest Agribusiness Trade Research and Information Center located at Iowa State University.
The Iowa Export Assistance Center assists a mix of companies both the agriculture and manufacturing sectors, and has plans to become more involved with assisting biotechnology companies in exporting genetically altered crops.
“That’s certainly a benefit to the Ames-Des Moines corridor,” said center Director Tom Rial. “Even if Iowa’s not the focus of the production of these crops, we hope it’s involved in the development of the technology.”