Arkansas Poultry Industry Eager For Increased Trade With Cuba

While most U.S. businesses have been shut out of Cuba for 55 years, Arkansas’ poultry industry has exported broiler meat to the tiny island nation for more than a decade. In fact, frozen chicken has been the top grossing U.S. export to Cuba since 2009, according to the U.S.-Cuba Trade and Economic Council.

U.S. poultry companies including Tyson Foods have sold $63.284 million of frozen chicken to Cuba through July of this year, according to the council records. Chicken comprises 51% of the total exports to Cuba. That said, chicken exports to Cuba are down this year due to an Avian Influenza trade ban since August. U.S. officials recently confirmed that Cuba has purchased at least 30 million pounds of U.S. chicken to be delivered some time in October.

With improved government relations between the U.S. and Cuba and increased demand for poultry products there, Cuba is viewed as a growth area for U.S. chicken exports. That’s why officials from Springdale-based Tyson Foods and Siloam Springs-based Simmons Foods were part of the recent trade delegation visiting Cuba from Arkansas. Arkansas Gov. Asa Hutchinson (R) led the delegation.

“The Cubans can’t raise enough food to feed their people, and there is an opportunity for Arkansas to help in so many ways,” said Randy Veach, president for the Arkansas Farm Bureau, who also took part in the trade trip to Cuba.

“Tyson and Simmons Foods were both present in meetings with Cuban Alimport, the import-export company run by the Cuban government,” Veach said. “We also met with animal science professors and discussed their poultry research, dairy research, duck, geese and pork research. Then we met with professors doing research on rice, feed grains and soybeans. There is a great opportunity to exchange ideas on agricultural research.”

Mark Simmons, board chairman, who accompanied Gov. Hutchinson on the recent trip to Cuba, said there is still a lot of work to do. Simmons Foods does not have regular customers in Cuba and is eager to change that.

“We are certainly looking forward to the possibility of longer term business relationships,” Simmons said.

Simmons Foods’ business primarily serves food service and restaurants, along with private label chicken for retail. Tyson Foods is among the U.S. companies already selling chicken to Cuba, through the company did not disclose how much.

“We support Governor Hutchinson’s efforts to eliminate trade barriers to Cuba for Arkansas’ agricultural products, especially protein-rich chicken. Representatives from Tyson Foods were with the Governor’s group in meetings there recently. We’re hopeful those talks will soon benefit both the famers of Arkansas and the people of Cuba,” said Worth Sparkman, corporate spokesman for Tyson Foods.

FULL POTENTIAL
Arkansas poultry companies are not the only ones vying for the Cuban market. Given its 11 million residents and its close proximity to the United States. Producers and processors in Alabama and Georgia also are eager to boost chicken exports to Cuba.

Dr. H.L. Goodwin, professor and agri-economist at the University of Arkansas, said Cuba holds sizable potential for poultry exports from U.S. processors. He said, like most poultry exports, Cuba prefers dark meat and having another dark meat market so close to the U.S. could yield more sales for local companies if the required cash-only terms that now exist can be reviewed. He said if the cash-only terms required by the U.S. could be transformed into a credit program that likely would improve sales of U.S. poultry and other food commodities.

Gov. Hutchinson also has said the cash-only policy is holding back sales of Arkansas agri products because Brazil and other counties extend credit to Cuba. He said cash-only terms put U.S. and Arkansas companies at an unfair trade advantage with Cuba.

“Congress needs to work (on this issue) selling to Cuba on credit,” he said during a recent interview on Talk Business.

Cuba’s per capita consumption of U.S. chicken is about 35 pounds per year. Goodwin said Cuba’s imports of U.S. chicken have increased gradually since 2004. But as Cuba’s economy becomes more open to the U.S., and income among Cuban citizens improves, their meat consumption levels should also rise. At the full potential Goodwin estimates the U.S. poultry markets could see about a 30% jump in its chicken exports to Cuba if the per capita consumption of chicken were to reach 50 pounds per person.

He said Cuba is a tiny nation in terms of all U.S. chicken exports comprising at the very most roughly 10% of the total, or 20% of the dark meat. However, Goodwin said Cuba is an important trading partner for Arkansas. Goodwin said Arkansas poultry and other agri exports could travel down the Mississippi River through the Port of New Orleans and then travel the around 573 nautical miles to Havana.

In the short term, Hutchinson said increased commercial flights into Cuba from the U.S. should help promote tourism dollars that fuel the Cuban economy. He said the Cuban government also must win the trust and confidence of working with the private sector to spur more economic investment there. He also said there are educational sharing opportunities likely between the University of Arkansas and the University of Havana.