Once the US embargo on Cuban products is dropped, Cuba will have the opportunity to emerge as a supplier of fresh fruit and vegetables to the US. Will the island nation manage to overcome teething problems and fight off the competition? Likely so, argues Douglass G. Norvell.
Go deeper with GlobalData
When Cuban products are finally permitted to enter the US, Cuban growers could play a major role in supplying fresh fruits and vegetables to markets along the Atlantic Seaboard, while Mexican growers continue to supply the West Coast and most of the Midwest. Consider the historical evidence.
After the Atlantic Seaboard Railways were built early in the 20th Century, South Florida became the winter garden for the Northeast Corridor. Vegetable growers in Homestead, Florida shipped tomatoes, cucumbers, citrus and other horticultural products north to New York, Philadelphia and other markets by rail. You can still see some old packing sheds in South Miami, now retro-fitted into cute little shops selling crafts and antiques along Highway 1.
Except for the citrus operations, virtually all of the South Florida vegetable growers were out of business by the late seventies and early eighties due to increasing labour costs, competing uses for land and environmental restrictions. Then came the Guatemalan and Dominican Republic growers as suppliers.
Exports from Guatemala and the Dominican Republic
Credit the United States Agency for International Development for jump-starting fresh produce exports from Guatemala. Dave Warren, who owns and operates Central American Produce in Pompano Beach, Florida, took a fifty-pound bag of snow pea seed to Guatemala thirty years ago, helped small farmers to crank up production in the highlands and now Guatemala is the world’s largest producer. Later, Warren helped to foment melon production in the Zacapa Valley, then moved to Florida and began importing the produce. These days, Warren is integrated all the way back to the melon fields as joint owner.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataLike most importers in Pompano Beach, Warren also imports from the Dominican Republic.
To encourage more imports, the FDA’s Centre for Food Safety and Applied Nutrition conducts training around the world on Good Agricultural Practices (GAPs) and Good Manufacturing Practices (GMPs) as part of its National Food Safety Programme.
A programme targeted specifically at Meso-America called the “Central American Training Programme on Good Agricultural Practices and Good Manufacturing Practices” was held 21 May 2001 to 2 June 2001 near Washington, DC at College Park, Maryland
Although most fresh fruit and vegetable trade statistics are heavily loaded with banana data, statistics for the Dominican Republic show that between 1995 and 2001 Dominican exports of fresh produce to the US doubled, going from US$18m to $36m. In total, the US imports just over $6bn of fresh produce each year.
Cuba’s potential as a fresh produce exporter
Cuba has a demonstrated ability to export agricultural products. After fresh fruit exports to the Soviet Block tanked in the early ’90s, falling from one million tons to just half that amount by 1995, Cuban growers broke up large inefficient agricultural cooperatives into smaller, more efficient “Basic Units of Production”. With help from Israeli experts, Cuba began exporting fruit juice to Europe, Latin America and other Caribbean countries.
However, Cuba has been unsuccessful in exporting fresh citrus to Europe, where US, Spanish and other suppliers are entrenched.
With the lifting of the embargo against shipments to the US, Cuba will have an important spatial advantage over suppliers from Central America and in particular, the Dominican Republic. Although transport costs may not differ greatly from South Florida to Cuba or other Caribbean countries (most of the transport costs are fixed), Cuba will have the important advantage of getting produce to market more quickly, reducing spoilage and in some products, improving taste.
Moreover, Cuban growers will be able to respond to urgent needs, dispatching shipments at shorter notice.
Cuba has plenty of land available for vegetable production. Recently, the government announced that seventy-two sugar mills were closing, promising that the land will be diverted to produce vianda, mostly root crops, and other uses.
Another, more subtle, advantage, is Cuba’s position as a “late mover” in fresh produce production. As such, Cuba will be able to conduct careful market analysis prior to beginning production and respond to real, rather than imagined opportunities. For example, the US market for organically grown vegetables is expanding, and Cuba can target this market. Moreover, Cuban biologists have shown promise in controlling insects through biological, rather than chemical means.
The new kid on the block
When the embargo ends, Cuba’s entry into the US market will not be easy. As with virtually all fresh produce markets in the world, US fresh produce markets run on family and business friend connections (many of the importers in Pompano Beach are Italians who formerly shipped to other Italians in the Northeast Corridor before thousands of Koreans entered the fresh produce retail business). Like Dave Warren in Pompano, many wholesalers have investments in growers’ operations. Others will be reluctant to start doing business with new suppliers, preferring to rely on tried and true trading partners.
Moreover, the Cuban government proved fickle in some large joint ventures with foreign companies, deciding to change the rules after projects were well underway, leaving their foreign partners with lower than anticipated profits. Finally, fresh produce exports require extraordinary abilities to control quality, while Cuban abilities at quality control are quite ordinary. Ask any visitor.
So while it seems likely that following the end of the embargo, Cuba will become a major supplier of fresh produce to the US market, it could be a decade before it achieves that status.
