Illinois Farm Bureau Market Study Tour

Producer seeks to explore Cuba's untapped potential

Dairy has become Cuba’s fastest-growing import sector, with demand rising 11 percent annually from 2000 through 2006 alone.

Martin Ross

Published: May 23, 2012

Before the Castro regime took control of Cuba in 1959, only 11 percent of rural Cuban families were regularly drinking milk, and the island was importing nearly 70 percent of its food, including dairy products, from the U.S.

Nearly a half-century later, dairy had become Cuba’s fastest-growing import sector, with demand rising 11 percent annually from 2000 through 2006 alone.

Reconstituted milk powder had become an important part of government-distributed child rations, while a major revival in Cuban tourism had spurred diversified, higher-end product demand.

Illinois Milk Producers Association President Doug Scheider, a participant in a forthcoming Illinois Farm Bureau Cuban market study tour, suggests research into the Cuba market and re-examination of U.S. Cuban trade/travel policies could help factor Midwest producers back in.

He hopes next month not only to gauge key challenges in expanding the island’s dairy diet but also to root out hidden or unexplored opportunities for Illinois sales.

“Under the current environment, are there Illinois dairy products we could be exporting to Cuba that maybe we’re just not aware of?” the Stephenson County dairyman posed.

“Is there a market for specialty cheeses? There are some smaller cheese plants in the northern part of the state which do some specialty cheeses.

“Are there products we could be sending there that we aren’t just because people may think it’s not a possibility?”

Scheider sees the possibility of expanding fluid milk as well as powder exports to Cuba, “if the market was truly open.” Although milk’s water content increases transportation costs, U.S. proximity to Cuba offers a relative freight advantage, and ultra-high temperature processing technology has helped extend the storage/shipping life of fluid product.

Fluid milk most likely would move to Cuba out of the Southeast, but even that would open domestic market share for Midwest producers, Scheider said. He notes the Midwest traditionally has shipped milk to the Southeast during the hot, humid summer months, when southern production wanes.

Scheider sees value in re-evaluating U.S. policies toward Cuba -- especially restrictions that effectively require Cuba to pay cash for U.S. goods.

In 2011, Cuba bought 27.6 million bushels of corn and 110,000 tons of distiller's dried grains from the U.S., but the U.S. Grains Council reports Cuba is buying more corn from South America because of requirements that U.S. purchases must be made in cash.

Opening travel to Cuba likely would boost Cuban hotel/restaurant demand for U.S. product, Scheider added.

The Illinois dairyman nonetheless recognizes continued debate over U.S. relations with Cuba, particularly among conflicting Cuban-American interests in Florida.

Scheider cited market gains the U.S. has enjoyed since expanding relations with Communist China, whose rising middle class has fueled a “dramatic” rise in dairy imports.

Chinese imports jumped 25 percent in March, with whey product purchases up 45 percent, amid continued fallout from the Chinese dairy sector’s melamine contamination scandal and a government focus on improved dairy nutrition.

  

http://farmweeknow.com/story.aspx/producer-seeks-explore-cubas-untapped-potential-0-59898