Castro's death might open up new market for Washington apple farmers

In the wake of Fidel Castro’s death, Washington apple growers are watching the political winds both here and in Cuba, a country that could potentially import more than a half million boxes a year.

While not a huge market, Cuba could provide another outlet for the state’s growing apple production.

“There is interest in seeing where ... opportunities might lie,” said Joe Bippert, international marketing program manager for the state Department of Agriculture. “There’re so many things happening right now. It’s tough to get too excited about it, until there is a clear path to it and it’s open.”

Bippert said until an embargo is lifted by Congress, Washington growers are sitting back and watching how president-elect Donald Trump and Castro’s death will change the playing field.

While President Barack Obama lifted some embargo restrictions against Cuba through executive action, Trump has tweeted he’ll overturn what he calls the Cuba “deal,” and Fidel Castro openly criticized the lifting made possible by his brother, Raul Castro.

Even though Raul Castro has had some success with building a relationship with the U.S., trade is not going to get any easier that much quicker, said Desmond O’Rourke, an apple marketing analyst and founder of Belrose Inc., based in Pullman.

“Some think that with his brother dead, things will change,” O’Rourke said. “It’s his regime. The communist party controls everything in Cuba. They are not going to open the gate.”

If they did, because of their low per capita incomes, most Cubans, except the elite and communist party officials, can’t afford Washington apples at this time, O’Rourke said.

The best opportunities would be in the tourist trade, such as hotels, restaurants, stores or other places that cater to tourists, he said.

About 16 years ago, Washington state growers packed 2.2 million pounds of apples into crates and trucked them off to a Gulf Coast port where they were then shipped to Cuba. Washington state politicians, agriculture leaders and Cuban diplomats all believed the shipment, the first of its kind in 40 years, would lead to growing trade relations between the two nations.

But that hasn’t necessarily been the case, O’Rourke said.

The lack of formalized banking relationships between Cuba and the U.S. has been the biggest hurdle in getting growers to trade, said Todd Fryhover, director of the Washington Apple Commission.

“Those things need to be worked out before anything,” Fryhover said.

That’s not to say growers aren’t interested in Cuba as a viable market, but they see it as “long-term prospective worth continued focused,” he said

In May, Lt. Gov. Brad Owen’s office asked if the Washington Apple Commission had any interest in participating in a trade delegation to Cuba in September. Fryhover’s organization declined.

“At the time there was no interest mainly due to the restrictions regarding banking transfers and trade barriers still in place from the embargo,” said Brent Pendleton, International Relations and Economic Development Coordinator for the Lt. Governor’s office. “We were told shipping is also a challenge, due to inland transportation costs.”

Pendleton said the trade delegation, which took five months to plan, morphed into a fact-finding mission on Cuba’s health care due to the lack of interest from several agricultural commissions and producers at the time.

Bippert said the timing wasn’t right to commit to a trade delegation to a country where there wasn’t open trading.

Yet, the nearly untapped apple market could demand as many as 668,000 boxes of apples a year, similar to what the Dominican Republic imports, O’Rourke said.

“Neighboring countries to Cuba, like the Dominican Republic and Panama, are good markets for Washington fruits, so a free Cuba could certainly become a good market,” he said. “Raul Castro, the current dictator continues to restrict private enterprise, and shows little sign of changing that.”

But Fryhover said Cuba doesn’t have the potential of a Mexico, which imported more than 16 million boxes of apples. By way of comparison, the state produced 176 million boxes of apples in 2016, according to a preliminary estimate by the U.S. Apple Association.

Cuba is probably too small of a market, but it could warrant some market research, such as testing varieties of apples on consumers and building a brand, Fryhover said.

If some of Cuba’s 11.3 million citizens are eating apples today, they’re not getting them from Washington state, Bippert said.

There have been no agriculture shipments to Cuba from the United States since 2010, added Robert Hamilton, Gov. Jay Inslee’s trade adviser.

Since the early 2000s, trade has really cooled due to restrictions, he said.

“If (Obama) gets rid of the embargo tomorrow, it would change the attitude,” Hamilton said. “I don’t see the sales being that big. We don’t know how big the market is. If it’s a couple of million dollars a year, that would be great.”

Growers and shippers would see Cuba as an emerging market with the potential for growth, Bippert said.

“Time would tell how much we would be able to ship there,” Bippert said. “We’re not going to ignore a newly opened market, a client base that imports all their food. It’s hard to estimate what the true potential there is until we get into the market.”