– This is the script of CNBC's news report for China's CCTV on March 21, Monday.
Welcome to CNBC Business Daily, I'm Qian Chen.
President Barack Obama's historic trip to Cuba on Sunday could be a game changer for U.S. agribusiness to recapture lost market share. Other industries like tourism also stand to benefit from warmer ties with the island nation.
Currently, Cuba imports around 80 percent of its food, representing a market opportunity of approximately $2 billion annually. The value of U.S. exports was around $700 million in 2008 after several hurricanes impacted Cuba, and last year total sales fell below $200 million, according to the U.S. Census Bureau's Foreign Trade program.
The U.S. ag share of the Cuban market peaked at 42 percent in 2009 and by 2014 was down to only 16 percent, according to U.S. government data. The fall in U.S. share is due to credit restrictions imposed on U.S. exporters. Current U.S. law bars American exporters from offering terms of credit, so food or ag products sold to Cuba must be bought on a cash-in-advance basis or through third-party guarantees from foreign banks.
"We certainly have a logistical advantage - I mean we're right here and not a very long sail from ports in Florida or all over the Gulf," said David Salmonsen, senior director of congressional relations for the American Farm Bureau Federation. "There certainly is potential for selling more ag and food products to Cuba. But we really don't have the trade relationships we'd like, especially direct banking relationships so you can offer letters of credit which is the way trade is normally done."
The U.S. once was the leading supplier of bulk commodities, such as rice, wheat and corn, to Cuba. Today, Vietnam is Cuba's largest rice supplier and wheat comes primarily from Canada and the EU. Argentina and Brazil are the largest suppliers of corn to Cuba. In fact, most of Cuba's large ag trading partners, including Canada and France, have provided export credits over the years to Cuba's Alimport, the agency that oversees most food and agribusiness deals.
U.S. agricultural exports to Cuba could reach $1.2 billion annually if financial restrictions and other barriers are eased, according to Texas A&M University economist Parr Rosson, who provided the estimate in testimony before the Senate Agriculture Committee last year. Experts also see opportunity down the road for Cuba to ship its own agricultural products to the U.S., including honey, coffee, organic sugar and cigars.
Cuba's tourism can get a boost as well.
Starwood Hotels & Resorts Worldwide on Saturday became the first U.S. hotel company to sign a deal with Cuba since the 1959 revolution, announcing a multimillion-dollar investment a day before U.S. President Barack Obama was due to visit Havana.
Such deals would normally be prohibited under the U.S. economic embargo of Cuba, but Starwood received special permission from the U.S. Treasury Department last week.
Cuba's tourism industry has boomed since the December 2014 rapprochement with the United States. International visitors rose 17 percent to a record 3.5 million in 2015, including a 77 percent increase in American visitors to 161,000.
Cuba expects a similar increase in American visitors this year when scheduled airline service will resume despite a continued ban on tourism. Americans are allowed to travel to Cuba for 12 authorized purposes.
CNBC's Qian Chen, reporting from Singapore.