Texans hoping to turn U.S.-Cuba thaw into cold cash

When a delegation from Texas lands in Havana on Sunday, it will become the first business group from the Lone Star State to seek potential deals in the communist nation since the U.S. and Cuba agreed to restore diplomatic relations — a political milestone that the Texas group hopes to capitalize on economically.

“I’d rather stay out of the political conversation,” said Ben Scholz, a wheat farmer from the Dallas suburb of Lavon. “I just want to focus on selling wheat, and this is a great opportunity to do that.”

Scholz and two dozen other business leaders — half of them from North Texas — will be traveling to Havana for a four-day visit that ends Wednesday. They arrive with ambitions that revolve around the most significant easing of tensions between the United States and Cuba in 50 years, although hurdles remain.

A new era

The delegation will meet with Cuban officials from Alimport, Cuba’s import agency, and with businesses. The delegation hopes that the visit will pave the way for increased trade and the restoration of closer ties between Texas and Cuba, ties that go back generations.

Since trade sanctions were relaxed in 2000 to allow the sale of agricultural products, U.S. sales to Cuba grew from $4 million in 2001 to well over $300 million in recent years.

Texas farmers believe improved ties between Texas and Cuba could usher in a post-embargo era of trade that could translate into U.S. farm sales alone of more than $1 billion, said Dwight Roberts, president and CEO of the U.S. Rice Producers Association.

Cynthia Thomas, president of Dallas-based TriDimension Strategies, a consulting firm that helps clients interested in doing business in Cuba, will lead the delegation. She said Texas industries with potential for expanded trade include agriculture, airlines, oil, technology and tourism. The current Texas delegation hopes to sell everything from rice, livestock, beans and cotton to powdered milk.

“The last visits were about making introductions, getting to know one another, finding the right comfort zone,” said Thomas. “This time there’s a different environment all around. We understand the Cubans are more excited about doing business. We are too.”

Texans have been courting Cuba for years. In the spring of 2008, then-Texas Agriculture Commissioner Todd Staples led a delegation of 24 Texans to Havana for a four-day agricultural trade mission. At the time, Texas was selling about $25 million a year in agricultural goods to Cuba under a waiver to the U.S. trade embargo allowing the sale of food and medicine. But delegation members have said the bureaucratic process was cumbersome, with payments having to be made through third parties and with cash payments required up front, making it difficult for both sides, Roberts and Thomas said.

Remaining hurdle

The recent thaw in relations began in December, when President Barack Obama announced plans to restore diplomatic relations with Cuba, followed by a historic handshake with Cuban President Raúl Castro at the recent Summit of the Americas and Obama’s decision to remove Cuba from the U.S. government’s list of nations that sponsor terrorism. That move is significant because it will allow U.S. banks to operate in Cuba. Big-name U.S. companies, including Netflix and Amazon, quickly announced plans to do business in Cuba.

Opening the door for banks to operate in Cuba “means that our products will be much more competitive, [making it] easier to do business with the United States,” Thomas said. The move will also give the island nation access to multilateral loans.

Yet for U.S. companies hoping to export cars or computers or to open that first McDonald’s or a high-rise hotel, a major hurdle remains — the U.S. trade embargo.

“We see light at the end of the tunnel,” Roberts said. “But we just don’t know how long the tunnel is.”

To overcome those hurdles, Congress would have to repeal the trade embargo with Cuba. The two countries are also probably years away from deciding what shape their relationship will take, and with a U.S. presidential campaign in progress — with Florida and its powerful Cuban-American lobbying group in the limelight — the rhetoric in the months ahead is expected to get meaner and messier.

Looking forward

The U.S. government has maintained a broad trade embargo against Cuba since 1962, following the Cuban missile crisis, when the installation of Soviet missiles in Cuba brought the nations to the brink of war.

Cuba has 11.3 million residents, with the average person making about $250 a year — not exactly a paradise for investors. Long-term, however, Texans see Cuba as a natural fit, along with the rest of Latin America. Texas has products that Cubans are looking for, including beef, poultry and rice. For example, Cubans consume about 900,000 tons of rice a year, or about 160 pounds per person per year, compared with about 16 pounds consumed by Mexicans, Roberts said.

“That’s a lot of rice,” he said. “Rice is central to the Cuban diet. … I cannot help but be optimistic.”

Whatever the future brings for relations with Cuba, a big advantage for the Texans is this: Unlike the complex political and cultural dynamics of a state like Florida, home to the volatile exile community, Texas has no such political baggage.

“We’re looking to the future, not the past,” Sholz said.

(From: The Dallas Morning News)