Brian O'Neill: Cuban rum for Pa. cheese? Not so simple
March 5, 2017 12:00 AM
Yamil Lage/AFP/Getty Images
Cuban rum in a store of Havana, Cuba.
By Brian O'Neill / Pittsburgh Post-Gazette
When Pennsylvania legislators had the idea of trading Pennsylvania agricultural products to Cuba in exchange for rum to be sold in the state stores, I was puzzled by our end of that bargain.
Agricultural products are exempted from the 55-year-old trade embargo with Cuba. I get that. I can also accept that rum is an agricultural product. (Cheers!) It’s also easy enough to understand how Cuba could meet a sudden increased demand for its sweet spirits if the Liquor Control Board made a big order.
The rum factories, which have been in a longtime partnership with Pernod Ricard of France, could buy more sugar, molasses, bottles and whatever else was needed. They’d hire more workers and they would produce all the rum that thirsty Pennsylvanians could want.
Cuba already sells millions of cases of rum in more than 100 countries. But Pennsylvania, with about a million and a half more people than Cuba itself, would be no small addition.
It was the other half of this deal that puzzled me. How might Pennsylvania farmers gear up for a new market of 11 million people?
In the event, Pennsylvania officials put aside the idea of a straight swap of our agricultural products for rum, using the LCB as the middleman. The Cubans prefer to sell the stuff the way they do to the rest of the world, for cash. LCB lawyers are looking for a legal way to buy it, despite the trade embargo. (A story on Pennsylvania’s play for Cuban rum is on Page B-1 today.)
But I still wanted to know who might benefit if Cuba, which imports more than 70 percent of its food, suddenly had more dollars to spend. When I returned to Pittsburgh on a direct charter flight (one doesn’t often see “Havana” below “Hagerstown” on the flight board), I called James W. Dunn. He’s the go-to guy at Penn State when there’s a question on agricultural marketing.
Mr. Dunn’s long story short: Don’t expect anything grown in Pennsylvania to wind up in a Havana kitchen, but there nonetheless would be benefits to farmers if Cuba’s trade doors blow open.
“Look where we are,” Mr. Dunn, 66, said. About a quarter of the U.S. population is within a 10-hour drive of Harrisburg. “You’re not going to drive by all those people to get to Cuba.’’
But there’d be a domino effect if a big new market opened. If X amount of domestic cheese is produced each year, Pennsylvania has some slice of that. So if, say, 2 percent suddenly headed to Cuba to augment the island’s signature sandwiches, that would raise cheese prices everywhere.
“It doesn’t have to be our cheese to help the price of cheese here,” Mr. Dunn said. “Opening new markets is exceptionally important for Pennsylvania agriculture.”
Dairy is Pennsylvania’s top agricultural product, but most Pennsylvania milk doesn’t travel more than 150 to 200 miles from the farm. If more Pennsylvania milk goes into valuable products such as cheese rather than into cheap powdered milk, Mr. Dunn said, that’s good for all dairy farmers. Farmers are paid a weighted average price for the various products, so even if all the milk from one farmer goes into cheese, the dairy cooperative’s payment to him assumes the full range of products.
That’s the short version anyway. There are countless subtleties to these payments. “One person in 10 claims to understand it, and they’re lying,’’ Mr. Dunn said.
A new foreign market for cheese would be welcome because one even closer than Cuba just fell off the table. Canada was one of 11 nations that had signed the Trans-Pacific Partnership agreement along with the U.S., and Western New York dairy farmers, who are a lot closer to Toronto than they are to the Big Apple, had been champing at the bit to get their milk, cheese and yogurt to the other side of Lake Ontario.
But both major presidential candidates opposed the TPP for reasons that had nothing to do with dairy and President Donald Trump nixed the agreement on his first day in office.
Almost every trade agreement is a double-edged sword in some way. Pennsylvanian farmers wouldn’t lose much sleep if Cuban fruit or sugar started coming across the Straits of Florida, but the orange growers and sugar barons in Florida would. That’s not the only reason pro-embargo sentiment is strong in that state, but it’s one of them.
Anyway, city slickers, every deal mentioned is hypothetical at this point. Still I have new appreciation for all that goes into a short walk from the dairy to the produce aisle.
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