Citation
Cuba's rice industry

Material Information

Title:
Cuba's rice industry potential imports from Florida
Series Title:
International working paper series ;
Creator:
Alvarez, Jose, 1940-
Messina, William A
University of Florida -- Food and Resource Economics Dept
Place of Publication:
Gainesville, Fla
Publisher:
Food and Resource Economics Dept., Institute of Food and Agricultural Sciences, University of Florida
Publication Date:
Language:
English
Physical Description:
v, 33 p. : ill. ; 28 cm.

Subjects

Subjects / Keywords:
Rice trade -- Cuba ( lcsh )
Rice -- Cuba ( lcsh )
Rice ( fast )
Rice trade ( fast )
Arroz ( qlsp )
Arroz -- Comercio ( cs )
Genre:
bibliography ( marcgt )

Notes

Bibliography:
Includes bibliographical references (p. 27-28).
General Note:
Title from cover.
General Note:
"September 1992."
Statement of Responsibility:
by Jose Alvarez and Bill Messina.

Record Information

Source Institution:
University of Florida
Holding Location:
UF Marston Science Library
Rights Management:
Copyright, Cuba. Permission granted to University of Florida to digitize and display this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Resource Identifier:
036245208 ( ALEPH )
1043357025 ( OCLC )

Full Text
IW92-27
Cuba's Rice Industry: Potential
Imports From Florida by
Jose Alvarez and Bill Messina
IW92-27 September 1992
INTERNATIONAL WORKING PAPER SERIES
V
FOOD AND RESOURCE ECONOMICS DEPARTMENT
Institute of Food and Agricultural Sciences University of Florida Gainesville, Florida 32611







CUBA'S RICE INDUSTRY:
POTENTIAL IMPORTS FROM FLORIDA
Abstract
Anticipating possible changes in U.S.-Cuba relations, this study presents basic information on the Cuban rice industry in relation to future trade with Florida. The first section includes a brief historical background on the industry, its main characteristics of agricultural production, and trends in production, imports, and consumption. The second section describes the current status and future prospects of the Florida rice industry. The last section analyzes potential Cuban imports of Florida rice by looking at historical Cuban purchases until 1959, current Cuban rice imports, and Florida's production and competitive capabilities. Although potential gross sales are estimated, future research will analyze the potential total economic impact of such trade on Florida's agricultural economy.
Key words: Cuba, rice, U.S.-Cuba relations, rice trade
LM ESITYOF FLORIDA LIORARtt




TABLE OF CONTENTS
Page
LIST OF TABLES .
LIST OF FIGURES .
PREFACE iv
THE CUBAN RICE INDUSTRY . . . . 1
Brief Historical Background . . . 1
Characteristics of Agricultural Production . 3 Production, Imports and Consumption Patterns . 8 THE FLORIDA RICE INDUSTRY . . . . 12
Brief Historical Background . . . 12
Current Status and Future Prospects . . 15 POTENTIAL CUBAN RICE IMPORTS FROM FLORIDA . . 18
Historical Cuban Purchases from the United States 18 Current Cuban Rice Imports . . . 20
Florida's Rice Production and Competitive
Capabilities 22
Potential Gross Sales 24
REFERENCES 27
APPENDIX: U.S. GOVERNMENT RICE EXPORT PROGRAMS . 29




LIST OF TABLES
Table Page
1 Area in rice production in relation to total area,
by land tenure, 1989 4
2 Area planted to rice by the State and non-State
sectors, 1970, 1975, and 1980-89 5
3 Irrigated rice plantings in the State sector, 1972,
1975, and 1980-89 6
4 Rice area harvested in the State sector, 1970,
1975, and 1980-89 7
5 Rough rice production in the State and non-State
sectors, 1970, 1975, and 1980-89 9
6 Rough rice yields in the State sector, 1975-89 10
7 Quantity and value of Cuban milled rice imports,
selected years 1958-80, and 1984-89 . . 11
8 Total Cuban milled rice production, imports, and
consumption, and relative importance of imports,
1970, 1975, 1980, and 1984-89 13
9 Cuba's share of total U.S. rice exports, by
volume and value, 1951-61 19
10 Cuban rice imports by country of origin, 1987-91 21
11 Potential amounts of Florida rice available for exporting to Cuba at current and additional levels
of acreage, and corresponding total gross sales. 23 12 Annual average prices of milled rice in Thailand, Arkansas, and Florida, 1987-88 through 1990-91 25 Al U.S. rice exports by export program, 1975-90 . 33
LIST OF FIGURES
Fiq Page
1 Cuba's rice production and imports, 1970, 1975,
1980, and 1984-89 14
iii




PREFACE
The sweeping changes that have taken place in the Eastern European countries and the former Soviet Union have worsened an already weak Cuban economy. Lack of foreign exchange, decreasing supplies from the former Soviet republics (including oil, foodstuffs, animal feed, fertilizer, and other inputs), and a declining demand for some of its exports from previous trading partners have placed Cuba at a crossroads. Political changes in Cuba may lead to a resumption of diplomatic and commercial relations with the United States. Florida's agricultural production and geographical proximity to Cuba will make her a major player once commercial ties are re-established.
When the restoration of diplomatic and commercial relations with Cuba was discussed during the Carter Administration, a heated debate on that issue (mostly based on speculations about potential costs and benefits) took place in the media throughout the state of Florida. Since that possibility may materialize in the near future, Florida producers and decision-makers need to be prepared to face both challenges and opportunities.
Given the potential for change in U.S.-Cuba trade relations, the Food and Resource Economics (FRE) Department at the University of Florida (UF) is conducting research aimed at elucidating the issues involved. The research is being coordinated through the International Agricultural Trade and Policy Center, a part of the FRE Department within the Institute of Food and Agricultural Sciences at UF.
Sugar, citrus, seafood and vegetables are likely to become
iv




Cuban exports to the United States. As a part of this research program, preliminary work has already been conducted on citrus (Behr and Albrigo, 1991) and sugar (Alvarez, 1992b; 1992c), and studies on vegetables and seafood are in progress.
Agricultural inputs (fertilizers, chemicals, animal feed and machinery), rice, other cereals (wheat grain, barley, corn grain, oats, wheat flour, and lactic and prepared cereals), and potatoes are potential Cuban imports from the United States. Preliminary work on other potential imports is in progress. This publication is the result of the first phase of those efforts on rice. It contains an objective appraisal of what may constitute some of the opportunities that Florida rice producers will face as a result of future trade with Cuba.1
The second phase of these broad research efforts will try to quantify the potential economic impact (benefits and costs) of such trade on Florida's agricultural economy. The study will include the most important potential imports and exports. Although it is obvious that the results of such study will contain a number of policy implications, the policy issues should be resolved in eventual negotiations between the two governments. our role as investigators of this sensitive issue is to provide producers and policy makers with the best available data and analyses on which they can base their decisions.
'Information about the current debate on U.S.-Cuba relations was included in Alvarez (1992b).
V




CUBA'S RICE INDUSTRY:
POTENTIAL IMPORTS FROM FLORIDA Jose Alvarez and William A. Messina, Jr.
THE CUBAN RICE INDUSTRY
Brief Historical Backgrround
Rice has always been the most important grain of the Cuban diet. Although rice had been grown in Cuba since the 16th Century, it did not become an important crop until the middle of the 20th Century. Prior to that time, most of the rice consumed was imported because of the low price of rice purchased from oriental countries. At the end of World War II, Cuba began importing rice from the United States. The tariff rate quota of
3.25 million cwt (hundred weight) that Cuba received from the
United States, when the General Agreement on Tariffs and Trade (GATT) was originally signed in Geneva in October of 1947, encouraged domestic production, which increased from 836,000 cwt of milled rice that year to 3.7 million cwt in 1956 (Sotolongo and Abreu, 1992, pp. 153-154).
The 1959 Cuban revolution changed the system of private
ownership of land. The first Agrarian Reform Law was enacted in May of that year. It proscribed the latifundia (defined as
JOSE ALVAREZ is Professor and Extension Economist, Everglades Research and Education Center, University of Florida, Belle
Glade, FL 33430. WILLIAM A. MESSINA, Jr. is Executive Coordinator, International Agricultural Trade and Policy Center, Food and Resource Economics Department, University of Florida, Gainesville, FL 32611. The authors would like to thank David Jones and Klaus Sengelmann for their valuable comments.
1




estates larger than 1,000 acres) and initially encouraged the development of cooperatives on large estates, although these were converted into State farms by 1962. A second Agrarian Reform Law was enacted in October of 1963 and expropriated the land of most farmers with more than 165 acres. In May 1971, the National Association of Small Farmers (ANAP) was formed with membership restricted to farmers with fewer-than 165 acres and larger farmers who had proven allegiance to the revolution.
Agricultural production presently takes place under two forms of land ownership. The socialist sector comprises large State farms and the Cooperatives of Agricultural Production (CPA). The private sector includes the Cooperatives of Credit and Services (CCS) and private small farmers.
The Cooperatives of Agricultural Production (CPA) are
defined as "a superior form of collective production of social property which were started after the farmers' decision to join their lands and other means of production" (Comit6 Estatal de Estadisticas, 1991, p. 178). This type of organization has the blessings of the State and was the means by which a large number of private land owners were assimilated into the socialist sector after the enactment of the Agrarian Reform Laws. On the other
hand, the Cooperatives of Credit and Services (CCS) are "primary organizations of a collective nature that allow the public use of irrigation, some facilities, services and other means, as well as the transacting of their credits, although the property of each farm, its equipment and resulting production remains private"
2




(Comit6 Estatal de Estadisticas, 1991, p. 178).
Characteristics of Agiricultural Production
Area in rice production in relation to total area, by land tenure, is shown in Table 1. There was a total of 205,800 hectares devoted to rice production in 1989. No differences are found when the percent of total land area devoted to rice is compared between the public and the private sectors. Rice accounts for 4.64% of total area in the socialist sector, while the figure for the private sector is 4.85%. However, when the comparison is made between the two rice-producing sectors, the 180,600 hectares of the State sector represent nearly 88% of the total area in rice production, while the 25,200 hectares of the
private sector account for the remaining 12% (Table 1).Time series data for area planted to rice in the State and
non-State sectors show a different picture (Table 2). While there have been some variations, in general, total rice plantings decreased by over 14% from 195,300 hectares in 1970 to 167,300 hectares in 1989. The latter figure shows a deficit of 38,500 hectares when compared with the total area of 205,800 hectares shown in Table 1.
Most of the area planted to rice in the State sector is
irrigated (Table 3) The irrigated area has always accounted f or more than 95% in this sector. No figures are available for irrigated area in the private sector.
Area harvested shows two important facts (Table 4). First, very small areas of land are abandoned since harvested area has
3




Table 1. Area in rice production in relation to total area, by
land tenure, 1989.
Socialist Sector Private Sector
Crop State CPAa Total CCSb Otherc Total Total
- - ----- -1,000 ha- ---------Rice 163.0 17.6 180.6 17.0 8.2 25.2 205.8
Other 3278.4 431.9 3710.3 356.6 137.7 494.3 4204.6
Total 3441.4 449.5 3890.9 373.6 145.9 519.5 4410.4
'Cooperatives of Agricultural Production. bCooperatives of Credit and Services. cThis category is called "dispersed" in the original source. Source: Comit6 Estatal de Estadisticas (1991, p. 186).
4




Table 2. Area planted to rice by the State and non-State sectors,
1970, 1975, and 1980-89.
Year State Non-State Total
--------- -1,000 ha- -------1970 186.9 8.4 195.3
1975 169.6 8.6 178.2
1980 135.4 12.0 147.4
1981 130.7 13.7 144.4
1982 134.7 16.0 150.7
1983 135.4 13.7 149.1
1984 144.5 16.1 160.6
1985 141.0 18.2 159.2
1986 147.4 23.2 170.6
1987 140.1 29.2 169.3
1988 145.8 26.0 171.8
1989 142.6 24.7 167.3
Source: Comit6 Estatal de Estadlsticas (1991, pp. 191-193).
5




Table 3. Irrigated rice plantings in the State sector, 1972, 1975,
and 1980-89.
Year Area Share of area planteda
1,000 ha %
1972 170.1
1975 169.3 99.8
1980 135.4 100.0
1981 128.0 97.9
1982 129.0 95.8
1983 130.6 96.5
1984 139.6 96.6
1985 136.7 96.9
1986 141.1 95.7
1987 133.5 95.3
1988 140.9 96.6
1989 136.2 95.5
aCalculated by the authors with data in Table 2.
Source: Comit6 Estatal de Estadisticas (1991, p. 194).
6




Table 4. Rice area harvested in the State sector, 1970, 1975, and
1980-89.
Area Share of area
Year harvested planted'
1,000 ha %
1970 200.1 107.1
1975 181.6 107.1
1980 137.3 101.4
1981 124.1 94.9
1982 130.4 96.8
1983 136.1 100.5
1984 137.3 95.0
1985 138.5 98.2
1986 137.3 93.1
1987 130.2 92.9
1988 132.7 91.0
1989 143.4 100.6
'Calculated by the authors with data in Table 2.
Source: Comit6 Estatal de Estadisticas (1991, p. 196).
7




been at least 91% of planted area. Second, percentages higher than 100 may represent area harvested in ration crops, an old practice of Cuban rice farmers that has received increasing attention by State managers.
Production, Imports and Consumption Patterns
Total rough rice production in the State and non-State
sectors has generally been increasing since 1970 (Table 5). Cuba has been producing over 500,000 metric tons of rough rice per year since 1982. Production in the State sector increased at a compound annual growth rate of over 1.3% per year from 1970 through 1989, while the corresponding figure for the non-State sector is 1.9% per year.
Although production increases in the non-State sector surpass those in the State sector, recall the decreases in harvested acreage in the State sector shown in Table 4. The difference may be the result of higher rates of increase in planted area in the non-State sector. Inferences about yield differences are hard to make since official statistics report yields for the State sector only (Table 6).
Since Cuba is not self-sufficient in rice production,
imports are needed to satisfy total domestic consumption (Table 7). Except for the large volume in 1965, imports have remained relatively stable during the past three decades. The amount of rice imported per year over the last 24 years (around 200,000 metric tons) has not varied significantly from the volume imported in the year preceding the 1959 revolution. However, it
8




Table 5. Rough rice production in the State and non-State sectors,
1970, 1975, and 1980-89.
Year State Non-State Total
-----------metric tons---------1970 365,848 8,675 374,523
1975 422,233 24,477 446,710
1980 442,875 34,959 477,834
1981 423,588 37,299 460,887
1982 482,179 37,573 519,752
1983 474,231 43,413 517,644
1984 504,709 50,050 554,759
1985 463,255 61,065 524,320
1986 485,416 85,101 570,517
1987 404,643 61,396 466,039
1988 427,134 61,723 488,857
1989 469,883 66,498 536,381
Source: Comit6 Estatal de Estadisticas (1991, pp. 197-199).
9




Table 6. Rough rice yields in the State sector, 1975-89.
Year Yield
metric tons/ha
1975 2.32
1976 2.82
1977 2.83
1978 3.01
1979 3.06
1980 3.23
1981 3.41
1982 3.70
1983 3.48
1984 3.68
1985 3.35
1986 3.54
1987 3.11
1988 3.22
1989 3.28
Source: Comit6 Estatal de Estadisticas (1991, p. 203).
10




Table 7. Quantity and value of Cuban milled rice imports, selected
years 1958-80, and 1984-89.
Year Quantity Valuea
metric tons Pesos
1958 192,370 39,252,000
1965 281,823 40,231,000
1970 199,042 31,746,000
1975 199,804 76,885,000
1980 229,578 71,576,000
1984 184,014 63,065,000
1985 242,358 92,658,000
1986 188,758 44,937,000
1987 221,011 49,425,000
1988 201,078 48,080,000
1989 242,163 65,386,000
8Expressed as C.I.F. (cost, insurance and freight), and converted to Cuban pesos by the Cuban National Bank based on the exchange rates and their established current methods (Comit6 Estatal de Estadisticas, 1991, p. 246). Source: Comit6 Estatal de Estadisticas (1991, pp. 274-275).
11




is necessary to point out that rice has been rationed since the early 1960s. Although the amount allocated to each person has varied slightly during those years, today each consumer is allowed to purchase only five pounds of rice per month.
Assuming no significant changes in stocks, production plus imports approximates total consumption (Table 8). Increases in domestic production have satisfied the expanding requirements of the rationing system arising from population growth because imports have remained relatively stable during the period under consideration at about 30-40% of total consumption (Figure 1).
When the consumption figure for 1989 is divided by the 10,522,796 inhabitants reported for the same year in Comit6 Estatal de Estadisticas (1991, p. 20), the result shows a per capita consumption of about 130 lb per year. Since rationing accounts for only 60 lb per year, the remaining 70 lb must disappear in seed, institutional uses (hospitals, restaurants, tourist centers, boarding schools, and the armed forces) and industrial uses.
THE FLORIDA RICE INDUSTRY
Brief Historical Background 2
Although rice had been used as a cover crop for many years in the Everglades Agricultural Area (EAA), it was not harvested for grain until 1977. There were three primary reasons for the
2 This section is based on Alvarez et al. (1989) Readers interested in a lengthy description on the establishment and
development of the Florida rice industry are referred to that source.
12




Table 8. Total Cuban milled rice production, imports, and
consumption, and relative importance of imports, 1970,
1975, 1980, and 1984-89.
Year Productiona Importsb consumption I/C
--------- metric tons------- -1970 266,346 199,042 465,388 42.8
1975 317,683 199,804 517,487 38.6
1980 339,817 229,578 569,395 40.3
1984 394,523 184,014 578,537 31.8
1985 372,876 242,358 615,234 39.4
1986 405,730 188,758 594,488 31.8
1987 331,429 221,011 552,440 40.0
1988 347,656 201,078 548,734 36.6
1989 381,453 242,163 623,616 38.8
aFrom Table 5 and coverted to milled rice. bFrom Table 7.
cCalculated by the authors. Assuming no significant changes in stocks, production plus imports equals total consumption.
13




1,000 metric tons
700600500
400 300
200- Production
1001970 1975 1980 1984 1985 1986 1987 1988 1989 Year Fig. 1. Cuba's rice production and imports, 1970, 1975, 1980, and 1984-89.




introduction of a new crop, one economic and two agronomic. Low sugar prices were the primary economic reason. The first agronomic reason was the large area of idle sugarcane and vegetable land during the summer period which allowed rice production without displacing these primary crops. The second agronomic reason was the beneficial effects that a flooded crop provides by slowing the subsidence process in organic soils.
In the ensuing years, two rice drying and milling facilities were established in the EAA, a research and extension program at the Everglades Research and Education Center helped producers with different production problems, yields were increased, and marketing channels were developed.
Current Status and Future Prospects
Since rice has played the role of a complementary crop in southern Florida, its acreage has been increasing slowly since 1977. Planted area reached 22,400 acres in 1992 with some of the growers harvesting a ration crop. One of the two existing mills has just finished an expansion of its processing capacity and additional increases in capacity are underway. In addition to the physical and economic benefits of rice production in the EAA as a complementary crop (Alvarez, 1992a), increased drying and milling capacities are justified based on acreage projections under different scenarios that would encourage additional rice production.
There were 442,088 acres devoted to sugarcane production in the EAA during the 1991-92 season. Approximately 30% of that land
15




(about 132,000 acres) was replanted, and 67% of the replanted area (88,400 acres) was successively replanted to sugarcane, with the remaining 43,560 acres in fallow (Glaz and Coale, 1992). Deducting the current 22,400 acres in rice production and about 15,000 in sweet corn, both of which are grown in rotation with sugarcane, leaves around 6,160 acres. The latest Florida rice variety census (Coale and Jones, 1992) shows that a ratoon crop was harvested in 56% of the main crop acreage, and that 2.75% of the rice acreage followed sweet corn production. Thus, adding 410 acres (15,000 x 2.75%) to the previous figure results in a total of 6,570 acres that could be planted to rice without disrupting sugarcane operations.
Area in vegetable production in the EAA amounts to
approximately 50,000 acres. Since about 15,000 of the total 25,000 acres of sweet corn are planted in the spring, the remaining 35,000 acres could be planted to rice without disrupting production of the primary vegetable crops.
The total of 41,570 acres, with a 40 cwt/acre yield in the main crop, and the 23,279 acres in the ratoon crop (56% of the main crop) with a 20 cwt/acre yield would result in 2,128,380 cwt of additional rough rice. Since one cwt of rough rice equals
0.032 metric tons of milled rice, the final figure would be about 68,000 metric tons of milled rice, or approximately 32% of Cuba's current import requirements.
Other factors may play a significant role in the future development of the Florida rice industry. First, current
16




agricultural production systems in the EAA are based on relative profitability. At current sugar and rice prices, it is more profitable to successively replant sugarcane (despite the lower yields in the plant cane crop compared to non-successively planted sugarcane) than to grow rice in a fallow period. However, relative price ratios could change in the future due to
increasing rice prices or decreasing sugar prices (or both) as the result of a lower target price in the Farm Bill or a successful agreement within the Uruguay Round of negotiations under the GATT. Second, sugar producers could face marketing allotments, as established in the 1990 Farm Bill, if domestic sugar production continues to increase. It is expected that less successive planting would be practiced and, thus, more land could become available for rice production during the fallow period. Third, some growers in the EAA are considering year-round production of rice in soils that are becoming too shallow for conventional crop production. As the organic soils subside, rice culture becomes more attractive since it is the only established crop in the EAA that requires flooding. Fourth, only the EAA has been considered as a potential rice planting area. Although rather improbable, an increasing demand from a neighboring country such as Cuba could generate interest for rice plantings in other Florida areas.
Finally, a series of Best Management Practices (BMPs) have been selected by the South Florida Water Management District after preliminary research conducted by the Everglades Research
17




and Education Center of the University of Florida. Rice has been identified as one of these BMPs in the EAA to assist in meeting the requirements of the Marjory Stoneman Douglas Act, intended to reduce phosphorus concentrations in water flowing from the EAA into the Water Conservation Areas and the Everglades National Park. Therefore, it is anticipated that sugarcane and vegetable producers will increase rice plantings to meet the goals of the Act since this BMP, as opposed to other practices, does not convey additional expenses. As a matter of fact, in addition to filtering water to meet the requirements of the law, rice fields provide numerous benefits and generate extra income when a ration crop is harvested.
POTENTIAL CUBAN RICE IMPORTS FROM FLORIDA
Potential Florida rice exports to Cuba, once the U.S.
economic embargo is lifted, are projected from historical Cuban purchases from the United States, current Cuban imports, Florida's production capabilities and the nature of competition with other U.S. rice producing areas.
Historical Cuban Purchases from the United States
In 1951, Cuba imported approximately 253,000 metric tons of rice from the United States (Table 9). That amount represented $52 million and accounted for 51% of the volume of U.S. rice exports and for 55% of their value. Although Cuba continued importing substantial amounts of U.S. rice until 1960, when the U.S. embargo was established, Cuban rice imports show a decreasing trend. The main reason for that decline is the
18




Table 9. Cuba's share of total U.S. rice exports, by volume and
value, 1951-61.
U.S. exports Cuban imports from U.S. Cuba's share8
Year Quant. Value Quant. Value Quant. Value
m tons $M m tons $M
1951 493,498 94 252,878 52 51.2 55.3
1952 800,402 157 219,282 50 27.4 31.8
1953 707,332 154 253,786 50 35.9 32.5
1954 568,862 107 162,532 38 28.6 35.5
1955 454,454 81 96,702 21 21.3 25.9
1956 824,010 132 144,826 27 17.6 20.4
1957 740,928 124 187,048 40 25.2 32.3
1958 573,856 97 187,048 40 32.6 41.2
1959 690,080 105 171,612 36 24.9 34.2
1960 893,472 130 15,890 17 1.8 13.1
1961 806,758 106 b b b b
aCalculated by the authors.
bMinimal amounts before the economic embargo was totally enforced.
Source: U.S. Department of Commerce (various issues).
19




expansion of the domestic Cuban rice industry as documented by Sotolongo and Abreu (1992).
In spite of that decrease, Cuba remained an important
purchaser of U.S. rice, accounting for about 25% of the volume of U.S. rice exports and for over 30% of their value prior to the U.S. embargo. For comparison purposes, while U.S. rice exports have increased during the last three decades, the Economic Research Service of USDA (1992, p. 50) lists Saudi Arabia as the top U.S. rice export market in fiscal year 1991 with 11% of the value of U.S. rice exports while Iraq held that position in fiscal years 1986 and 1987 with around 22%.
Current Cuban Rice Imports
Cuban rice imports during the 1984-89 period averaged
213,230 metric tons per year (Table 7). The main Cuban suppliers of rice in the past five years include China, the European Community, Pakistan, Thailand, and Viet Nam (Table 10). Although there are some discrepancies between these figures and those shown in Table 7 (especially for 1987), the figures reflect rice imports of over 200,000 metric tons for the last three years.
since rice consumption (and consequently imports) is constrained by the current rationing system, it is fair to assume that, once rationing is abolished, the increase in consumption will bring about substantial increases in imports at least for a few years. Rather than speculating about those quantities, let us concentrate on analyzing the competitive position of Florida to supply the Cuban market.
20




Table 10. Cuban rice imports by country of origin, 1987-91.
Exporting Year
country 1987 1988 1989 1990 1991
- - 1,000 metric tons -
China 50.0 9.9 25.0 138.0
European Community -- -- 6.0 -- -Pakistan 15.0 -- 20.0 -- -Thailand 41.8 112.2 159.6 144.7 80.1
Viet Nam -- -- 5.0 67.6 24.8
Total 56.8 162.2 200.5 237.3 242.9
Source: FAO (1992).
21




Florida's-Rice Production and Competitive Capabilities
Florida's potential for meeting the increased demand for rice imports by Cuba from the United States can be easily projected from its current production and land availability. The total of 41,570 acres currently available in fallow land could increase as a result of the factors described in a previous section. They include (a) changes in relative price ratios for rice and sugar; (b) the enforcement of marketing allotments for sugar; (c) year-round production of rice as the organic soils become more shallow; (d) rice plantings in other areas of Florida; and (e) the implementation of rice as a BMP. These alternatives would increase the amount of rice available for exporting to Cuba (Table 11).
Although the extra rice produced from large acreage
increases could find outlets in other areas of the United States, especially in southern Florida where local millers do not seem to be able to keep up with an increasing demand for their product, Florida's geographical proximity to Cuba would make the latter an attractive market for that rice. 3
Florida's competitive position is compared with Thailand and Arkansas as representatives of the foreign and domestic
31MpliCit in this analysis is the assumption of Cuban rice purchases from the United States being conducted through the private sector. Private buyers would be inclined to purchase high quality rice such as Florida's. Government agencies, on the other
hand, would be more likely to buy lower quality rice because of its lower price.
22




Table 11. Potential amounts of Florida rice available for exporting
to Cuba, at current and additional levels of acreage, and
corresponding total gross sales.
Acres Rough rice Milled rice Total gross salesb
- -cwt- -MT- -$ M41,570 2,128,400 68,100 22.88
60,000 3,072,000 98,300 33.03
70,000 3,584,000 114,700 38.54
80,000 4,096,000 131,100 44.05
90,000 4,608,000 147,500 49.56
100,000 5,120,000 163,800 55.04
aAssuming only 56% of the main crop acreage is ratooned with yields of 40 and 20 cwt/acre for the main and ratoon crops, respectivley.
bAt $336/metric ton or $15/cwt.
23




competition, respectively. 4 There are no doubts that Florida is in an advantageous position to compete for a large share of the Cuban rice market. First, Florida has a price advantage over those two areas (Table 12) since transportation costs have to be added to those FOB prices. Arkansas rice would cost an additional $2.20/cwt.5 Transportation costs from Bangkok would be higher. Second, Florida's geographical proximity to Cuba would work in its favor. Although nationality is not supposed to influence mercantile relations, the strong presence of Cuban Americans in the Florida rice industry will play a major role in the development of trade relationships with the island.
Potential Gross Sales
As discussed in a previous section, increases in Florida rice acreage will depend on a number of economic and environmental factors. The estimate of between 41,570 and 100,000 additional acres shown in Table 11, at the price assumed, would represent between $23 million and $55 million in gross sales. Direct and indirect economic impacts would include additional increases in gross sales, income and employment. The estimation of this total economic impact will be the objective of the next
4 Thailand is chosen for two reasons. First, Cuba has been importing most of its rice from that country. Second, Thai prices are readily available. Arkansas is chosen because of its continued
interest on the Cuban market. For a long time, legislators from this state have advocated the lifting of the economic embargo and
a study was made to show the negative economic impact of the embargo on Arkansas and the U.S. economies (Kaminarides, 1988).
5 CSX has a special railroad service to transport rice from Arkansas to a Miami warehouse and, from there, with trucks to the port of Miami. The charge is $2.20/cwt.
24




Table 12. Annual average prices of milled rice in Thailand, Arkansas, and Florida, 1987-88
through 1990-91.a
Thailand
100% 100% 5% Arkansas Florida
Year 1st. grade 2nd. grade broken Long 2 medium 2 Long 2
----------$/MT (Slcwt) --------- --------/cwt---- -- -1987-88 329 (14.93) 294 (13.34) 284 (12.89) 11.80 12.20 15.36
1988-89 356 (16.15) 317 (14.38) 307 (13.93) 20.00 17.80 14.70
1989-90 361 (16.38) 323 (14.65) 312 (14.16) 15.65 15.45 15.32
1990-91 338 (15.34) 313 (14.20) 301 (13.66) 16.10 15.75 15.18
'Thai prices are FOB Bangkok as posted by the Board of Trade (nominal price quotes are 5-10%
lower than BOT prices but complete statistics are not available), and include export premium, export tax, and cost of bags. Arkansas and Florida prices are U.S. No. 2 with broken grains not to exceed 4%.
Sources: Economic Research Service (1992, pp. 42, 44), and one Florida rice mill.




phase of this research project.
26




REFERENCES
Alvarez, Jose. Costs and Returns for Rice Production on Muck
Soils in Florida, 1992, Economic Information Report E192-2,
Food and Resource Economics Department, Institute of Food
and Agricultural Sciences, University of Florida,
Gainesville, Florida, July 1992a.
Alvarez, Jose. Cuba's Sugar Industry in the 1990s: Potential
Exports to the U.S. and World Markets, International Working
Paper IW92-2, Food and Resource Economics Department,
Institute of Food and Agricultural Sciences, University of
Florida, Gainesville, Florida, February 1992b.
Alvarez, Jose. Cuba's Sugar Industry in the 1990s: Potential
Exports to the U.S. and World Markets, (Addendum to IW92-2),
Food and Resource Economics Department, Institute of Food
and Agricultural Sciences, University of Florida,
Gainesville, Florida, April 24, 1992c.
Alvarez, J., G.H. Snyder and D.B. Jones. "The Integrated Program
Approach in the Development of the Florida Rice Industry,"
Journal of Agronomic Education 18:1 (Spring 1989), pp. 6-11.
Behr, Robert M. and.Gene Albrigo. Cuba's Citrus Industry, Working
Paper, Economic Research Department, Florida Department of
Citrus, and Food and Resource Economics Department,
Institute of Food and Agricultural Sciences, University of
Florida, Gainesville, Florida, October 23, 1991.
Coale, Frank J. and David B. Jones. "Florida's 1991 Rice Variety
Census," Agronomy Facts SS-AGR-43, Florida Cooperative
Extension Service, Institute of Food and Agricultural Sciences, University of Florida,, Gainesville, Florida,
January 17, 1992.
Comit6 Estatal de Estadisticas. Anuario Estadistico de Cuba. La
Habana: Editorial Estadistica, 1991.
Economic Research Service. Rice Situation and Outlook Report, RS63. Washington, DC: United States Department of Agriculture,
April 1992.
Food and Agriculture Organization. "Rice: Export by Destination
Selected Countries," CCP:RI 92/CRS 2, Corrigendum 1, United
Nations, Rome, Italy, March 1992.
Foreign Agricultural Service. FAS Fact Sheet: Market Promotion
Program, U.S. Department of Agriculture, Washington, DC,
February 1992.
27




Glaz, Barry and Frank J. Coale. "Florida's 1991 Sugarcane Variety
Census," Sugar y Azucar 87:1 (January 1992), pp. 31-35.
Kaminarides, John S. "The Economic Effect of the Cuban Embargo on
Selected Agricultural Commodities and on the United States
and Arkansas Economies," College of Business, Arkansas State
University, Arkansas, 1988.
Smith, Mark E. "Government Programs in World Rice Trade," Rice
Situation and Outlook Report, RS-50. Washington, DC:
Economic Research Service, United States Department of
Agriculture, September 1987, pp. 9-14.
Smith, Randell K., Eric J. Wailes and Gail L. Cramer. The Market
Structure of the U.S. Rice Industry, Bulletin 921, Arkansas
Agricultural Experiment Station, University of Arkansas,
Fayetteville, Arkansas, February 1990, pp. 62-64.
Sotolongo, Ratl and Ernestino Abreu. "El Arroz en Cuba: Presente
y Futuro," in Dario Espina Pdrez (Ed.) Desarrollo Agricola
de Cuba. Miami, FL: Colegio de Ingenieros Agr6nomos y
Azucareros, 1992, pp. 153-170.
U.S. Department of Commerce. U.S. Exports of Commodities by
Country, Schedule E, Washington, DC, various issues.
28




APPENDIX
U.S. GOVERNMENT RICE EXPORT PROGRAMS
U.S. rice is exported through two principal transactional methods: commercial cash exports and government-assisted export programs. This Appendix summarizes the current rice export programs of the U.S. government from Smith (1987), Smith et al. (1990), and Foreign Agricultural Service (1992). Its objective is to acquaint Florida rice producers with these programs.
The Food for Peace Program (P.L. 480)
originally implemented under the Agricultural Trade
Development and Assistance Act of 1954, this program serves market development, humanitarian, and other objectives, and consists of three titles. Title I provides for confessional sales with long-term credit which the recipient government uses to purchase U.S. commodities to be sold on the recipient country's domestic market. The objective is to allow the use of the recipient country's scarce foreign exchange for other imports which may further its economic development. The Food Security Act of 1985 reinstated sales of U.S. farm products for local currencies under P.L. 480 to be loaned to the private sector to generate economic growth.
Title II donates U.S. food commodities (with the help of private voluntary organizations, the World Food Program, and recipient governments) to individuals in need. These donations are generally targeted to specific groups in the recipient country.
29




Title III, the Food for Development Program, is implemented under the authority of the Administrator of the U.S. Agency for International Development (USAID). Under this program, the proceeds from the sales of P.L. 480 commodities in the importing country may be used to offset the country's Title I obligations to the United States when the government of the importing country uses the proceeds for certain development activities specified in the original contractual agreement.
The Commodity Credit Corporation's Programs
The Commodity Credit Corporation (CCC) operates several commercial export programs. Since the earliest Export Credit Sales Program, a number of these programs have been in place in the past two decades. Under all of the programs, private credit extended to importers of designated U.S. agricultural commodities is guaranteed for repayment by the CCC. The Export Credit Guarantee Program (GSM-102) is the largest program of this type and applies to sales with financing of up to three years in duration. The Intermediate Export Credit Guarantee Program (GSM103) provides similar guarantees for sales with financing of between three and 10 years in duration.
The Export Enhancement Program (EEP)
The EEP was established under the Food Security Act of 1985 and was reauthorized through 1995 by the Food, Agriculture, Conservation and Trade Act of 1990. The main objective of the program is to help U.S. exporters compete with subsidized exporters. It awards generic certificates for commodities to
30




exporters of U.S. commodities. These certificates are redeemable for commodities owned by the CCC. Since the program allows exporters to sell U.S. commodities at prices below current export rates, the generic certificates act as a subsidy to U.S. exporters.
The Market Promotion Program (MPP)
The Market Promotion Program (MPP) was authorized under the Food, Agriculture, Conservation and Trade Act of 1990, and authorizes $200 million annually for fiscal years 1991 through 1995 to help finance promotional activities "to encourage the development, maintenance, and expansion of commercial export markets for U.S. agricultural commodities" (Foreign Agricultural Service, 1992, p. 1). Under the program, funds or surplus stocks from the CCC are allocated to commodity organizations such as the U.S. Rice Council for Market Development to partially reimburse the cost of specific marketing programs for eligible products in designated foreign countries. The MPP covers a variety of marketing activities including consumer promotions, market research, trade servicing efforts and technical assistance.
While designed to replace the Targeted Export Assistance
(TEA) Program, which was established under the Food Security Act of 1985 (and repealed by the 1990 Farm Bill), the MPP is actually broader in scope. TEA program efforts were limited to commodities where U.S. exports had been negatively impacted under unfair trade practices of foreign countries. Although such commodities receive priority under the MPP, other commodity groups may also
31




participate.
Importance of the Rice Export Progrrams
Substantial amounts of rice are exported every year under these programs (Table Al). Although their share of total rice exports has experienced major shifts in some years, P.L. 480 and the various CCC credit programs now account for over 40% of total U.S. rice exports.
32




Table Al. U.S. rice exports by export program, 1975-90.
CCC Exports Exp.
CCC African Total outside Total progr.
Fiscal Sect. credit relief exp. specif. U.S. as %
year PL 480 416 progr." exp. EEPb progr. progr. exp. of TE
- - -------- 1,000 metric tons- -----------
1975 747 0 48 0 0 795 1,419 2,217 36
1976 509 0 101 0 0 610 1,340 1,953 31
1977 691 0 15 0 0 705 1,614 2,317 30
1978 530 0 50 0 0 580 1,696 2,276 25
1979 486 0 42 0 0 528 1,868 2,396 22
1980 540 0 168 0 0 708 2,247 2,955 24
1981 360 0 452 0 0 812 2,360 3,172 26
1982 374 0 14 0 0 388 2,523 2,911 13
1983 475 0 328 0 0 803 1,473 2,276 35
1984 464 0 571 49 0 1,084 1,209 2,293 47
1985 577 0 359 180 0 1,116 856 1,972 56
1986 313 0 477 0 23 813 1,569 2,382 34
1987 426 60 636 0 28 1,150 1,304 2,454 47
1988 321 29 443 0 120 913 1,220 2,173 42
1989 408 0 826 0 20 1,254 1,787 3,041 41
1990c 350 0 663 0 0 1,013 1,484 2,497 41
'Quantities shown are based on reports supplied by the export trade and may not exactly reflect exports made under these programs.
bSales calculated from Foreign Agricultural Service press releases.
CEstimated.
Source: Economic Research Service (1992, p. 49).













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