Louisiana Builds Bridge to Cuba

In March, Louisiana Gov. Kathleen Babineaux Blanco took a trip to the Caribbean and returned with an unusual souvenir: a $15-million deal for state agricultural exports to Cuba, a small-but-growing trade partner.

Blanco, accompanied by three dozen businesspeople and port executives, was only the fourth U.S. governor to visit the communist-run island nation since the United States began restricting trade in 1960 in an attempt to oust President Fidel Castro.

Blanco’s four-day visit generated controversy, particularly after a surprise lunch with Castro at Havana’s convention center.

Another complication: The embargo has become a political litmus test for Cuban exiles, who insist it is the only effective means to force out the country’s aging leader. Castro prohibits political dissent, restricts travel of Cuban citizens and blames many of the country’s ills on the United States’ embargo.

“When you deal with Cuba you don’t deal with the Cuban people. You deal with one person: Fidel Castro,” said New Orleans lawyer George Fowler, vice president of the politically active Cuban American National Foundation, a nonprofit organization that advocates democracy in Cuba. “He heads up a country that’s known as a terrorist state by our State Department.”

Still the Democratic governor went ahead with plans for a trip this week by representatives of her office to solidify her state’s edge over southeastern competitors such as Mississippi and Florida, which also send significant shipments to Cuba through their ports.

“I don’t consider it doing business with Castro,” said Felipe Martinez, a project manager for the Louisiana Department of Economic Development who coordinated the trade mission. “It was an opportunity to help out farmers who sell grains from the Midwest and farmers who sell lentils from the Pacific Northwest.”

The increased volume of business is possible because of a 2001 amendment to the Cuban trade embargo that allows U.S. companies to make cash sales of food and agricultural products. Trade in such consumer items as furniture, entertainment equipment and clothing is still banned, and most travel is prohibited. In 1992, the Cuban Democracy Act was signed into law, authorizing U.S. vendors to export healthcare products to Cuba.

The embargo’s loosening has buoyed ports in the Southeast, especially in Louisiana, which last year accounted for $193 million of the $404 million in goods shipped by U.S. businesses to Cuba. Along the way, a thriving network has developed of exporters and shipping lines that are confident their contacts on the island nation will outlast the current political situation.

Take Oakland-based Crowley Maritime Corp., the first shipping line to return to Havana’s harbor in 2001 after a 43-year absence.

“Cuba is a very small piece of what Crowley Maritime is all about,” said Jay Brickman, a vice president at the company. “However, Crowley has a commitment to continue service to Cuba because ... U.S. policy will change little by little, and the market will begin to open up.”

From ports in Florida and Mississippi, Crowley mostly sends refrigerated cargo, including poultry and grocery products. For the last year, the company has been shipping what Brickman described as a “jazzier” item: live cattle.

Hannah Haring traveled with Blanco for Louisiana Pride Catfish, a Wisner, La., company founded by Haring’s grandfather. The visit produced no immediate deals for the catfish producer because its products are expensive by Cuban standards. But Haring said she hoped that an eventual lifting of the embargo could mean boom times if free-spending tourists return to Cuban resorts.

“I think we’d be in,” she said, thanks to business relationships she established with Cuban buyers.

Mobile, Ala., has maintained a sister-city relationship with Havana since the 1980s, and the possibility of future shipments to Cuba’s capital is one reason Alabama recently invested $80 million to transform Mobile’s harbor into a container port and has earmarked an additional $400 million for that purpose.

“We now produce about 800,000 cars in Alabama,” said Hilda Lockhart, Alabama’s director of international trade development. “We don’t ship cars out of our port, but we’re trying to change that.”

The assumption is that when the trade embargo with Cuba finally is lifted, Alabama will be perfectly situated to outfit motorists on the island who have been driving around in 1959 Fords, she said.

Trade with Cuba has been smooth, said Peter Legemaate, owner of Anpro Trading, a dairy products company based in Metairie, La. Legemaate recently sent about 350 pounds of whey powder to Cuba from Gulfport, Miss., receiving payment through his bank in New Orleans.

“We had very good communication with the Cuban officials,” he said, although recent financial restrictions imposed by the U.S. government have complicated transactions.

Initially, Cuba was required to pay for shipments by wiring money through a third-party bank before goods were received. But this year, federal officials modified the rules to prevent the U.S. from extending credit to Cuba in any form. Now, Cubans must pay for shipments prior to their departure from a U.S. port, and payment must be backed up with a letter of credit.

The new rule may be only an irritant for big companies such as Decatur, Ill.-based grain processor Archer Daniels Midland Co., but it is hurting smaller businesses.

“For the smaller farmer and shipper, when you start tagging on 2% to 6% transactional cost, that can add up,” Martinez said.

The transactional hurdles can be expensive, said Harlon Pearce, owner of a fish wholesaling business in Kenner, La., called LA Fish. Pearce has a $9-million purchase agreement with the Cubans, although he has not exported anything yet.

“The restraints the government has put on costs some of our people some money,” Pearce said. “Our guys in Kansas who send grain have to pay 2% because they had to pay a bank in France.”

Fowler, Cuban American foundation head and a Cuban exile, held a news conference this spring to denounce Blanco’s Cuba trip, calling her efforts to cultivate a commercial relationship hypocritical.

For someone like Martinez, the trade controversy hits especially hard.

Martinez was born in Cuba and came to the United States in June 1961 under a program created by the Catholic Welfare Bureau in Miami to bring Cuban children to the U.S. known as Operation Peter Pedro Pan. He returned to Cuba for the first time in 44 years last December for an initial trade mission and is on the island this week to again represent Louisiana’s trade interests. Martinez admits that says the project has become intensely personal.

“I had mixed emotions,” Martinez said. “I was not sure how I’d be received as an expatriate, but they were so warm. Whatever reservations I had the first time have certainly disappeared.”

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More trade

U.S. exports to Cuba (in millions)

2000: $7

2001: $7.2

2002: $145.9

2003: $259.1

2004: $404.1

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Source: Census Bureau