support for moving ahead on trade agreement. to me it's common sense when 95% of the people live outside the united states and we're an exporting nation that whatever we can do to get our product sbooss into other countries and countries that have higher trade barriers than what we have and most countries do that leveling the playing field and that's a word we use around this hill so many times. it gets overuse edd. it creates jobs.

to do what they can to level it will playing field. for american exporters and the jobs connected with that. i yield. >> let me say i want to thank my colleagues for their participation today. i have great for respect for

both of you. i've known you for a long time. i want everyone to know that i recognize there are passionately held views on both side of these issues and these debates. i wish we could report a tpa bill you nanunanimously. it's clear we're not going to be able to do that. we create a product and a process on this legislation that's bipartisan. so far i think we really have been successful. i think most people would agree with that. i really want to thank senator widen for his help on this effort. it's been a very difficult one

for him as it has been for many of my colleagues on the democrat side. i think it's very important that we move forward and let the committee function properly. i'm looking forward to even more lively discussion and debate tomorrow. i have tremendous respect for both you have. mr. donohue, you've been around here a long time. you're no shrinking violet. you handle yourself very well and you represent the business

community. mr. trumka, you're a tough guy. you're a smart guy. even though we disagree on this bill i've been paying pretty strict attention to you too. this is basically your administration that is doing this. i'm trying to help the president on this bill. i personally think they're right in pushing it the way they have. i still have the obligation to just tell you how much i respect and appreciate you as well. i look forward to everything. i think we got to find some things to work on together. i'm going to count on you to help me understand that. with that we'll recess until further notice.

>> thank you.

in terms of the enforced bill that's part of the senate version authorization that's meant resistance in the house with a like protect for the same issue to fight evasion of duties. do you see compromise there or think you will go within force tomorrow? >> i think we'll go within force. we have worked this out for years. between both houses and both parties. it's a sensitive thing that we've got to get through. i'm not going to be very enamorred with most of it. >> do you expect the house floor

to be first before the senate floor for the tpa bill? >> no we expect the senate floor to be first and we'll get this over to the house. we have to do our job here for congressman ryan and his committee. >> you don't know which is germane or not? >> well i'm not going to rule here. >> have you spoken about the senate vote, the full senate vote? >> of course. >> when do you expect that? >> i've got to go. i've got a whole chamber.

>> how many -- >> it's a hot bill. there's some pile. >> do you think you'll get a good amount of democratic support? >> we'll have to wait and see. i've got ideas on that. we're pretty much on top of it. >> this hearing was supposed to be a run up to the senate's mark up. the committee came in briefly this morning but have been in recess since about 11:30. a senator had objected to proceeding forward.

the hill identifies budget ranking member berny sanders and reports he's trying to block the finance committee to consider a fast track trade bill. we're seeing a delay in that duration of that legislation. not only is there massive opposition to this tpp agreement but there's a lot of concern that the american people have not been involved in the process and there's not a lot of transparency. that's the hill newspaper quoting bernie sanders. all this objection will require us to recess after the votes on tracking because we're going to finish the bill in the finance committee today.

we'll have live coverage right here on c-span3. our live coverage takes place on c-span2. next hearing on agricultural trade with cuba. following president obama's announcement to normalize relations. a senate bill that would lift the cuban trade embargo allowing u.s. companies to export products.

>> >> good morning. the committee will come to order. i was hoping trade would be one area we could work across the aisle to find agreement. i still maintain that hope. we hope that's the case. we're working very hard in finance committee to make that happen as well as this committee.

tpa is good for agriculture. i look forward to getting it passed. international trade is critical to the nation and the nation's economy and farmers and ranchers. i've long fought to eliminate barriers to trade and i believe we should continue to work toward new market access opportunities for our agriculture products. that's what we're to talk about here as of today. the united states and cuba certainly have a long history full of contention and instability. there's no shortage of opinions from members of congress about the relation of our two countries both present and future. some are concerned about human

rights, rightfully so, others about socioeconomic ideology. today we're here to discuss the role of agriculture, opportunities and challenges in cuba. for over 50 years agriculture basic exports have seen ups and downs. this is not an issue we'll be able to fix overnight. it will take effort, hard work in addition to bills and congress to normalize trade with cuba. it's my hope the president will work with congress.

foreign policy does happen in a vacuum. we have tworko work out a step by step plan towards lifting the embargo. today we'll hear from an impress impressive panel of experts. i understand many of our witnesses have traveled to cuba to see first hand what challenges and opportunities do exist. i look forward to hearing about what we might be able to achieve with more trade with cuba but we also need to hear about the difficulties that lie ahead. if we want to be successful in creating a new system of engagement with cuba we're going to have to really put in the work. it's my hope that cuba will

embrace the practices of free trade, enterprise and commerce so both countries will gain from increased relations. i ask that it be entered into the record without objection. >> thank you very much. i appreciate this opportunity. we thank those who are with us. the officials and representatives testifying today for your part in the process. we look forward to hearing from you. improving trade with cuba not only represents a great opportunity for american farmers

and ranchers and manufacturers but a meaningful way to help rebuild trust between our two countries. it's time for a new policy in cuba. we visited just days after the president eased trade restrictions. this is the second time i had the opportunity to be in cuba. it was very different the second time. cubans were coming up to us and very eager to develop a new relationship. it was a very different tenor.

america's farmers and ranchers are uniquely positioned to lead the way. cuba's own import agency estimates it will receive approximately 2.2 billion in u.s. dollars in food and agriculture this year. it deserves a chance to succeed. it's one reason why groups have come together to increase the

engagement. many on the committee have taken the opportunity to go to cuba.t4w we appreciate your leadership and your efforts. the commitment to democratic ideas and human rights we share as americans are best realized through engagement. last week's actions are a step forward in normalizing the relationship. even while we're making significant progress and rebuilding our relationship the policies governing trade between our countries are not yet designed to allow a steady flow of goods and services. i look forward to working with

you and others on the committee to find a path for financial institutions to work with cuban purchasers including extending the lines of credit to look for broader range of goods and services and supplies that we can export to cuba. these measures are not only good for business but they will help cuba's agriculture capacity and make the island a better trading partner in the long run. i know working together we can write the next chapter in(éé hw u.s.-cuban relationship. thank you. >> thank you madame chairwoman. for brief remarks, sir, so you

can manage a bill on the floor in your very snappy attire. >> thank you. i like being with a chairman who knows how to comb his hair. >> i appreciate that so much that you said that. just let it go. >> i can't do as well as you do on the tones on your phone but i commend you for holding this, all seriousness. this is an important hearing. here is cuba 90 miles from our shores. the ability to gain control of their own but also expand american farmers selling their product. remember cuba's economy is a shambles and people are

suffering. she went and spent time with agriculture community there in our last trip. you see american flags on these tax cease and had flags in different countries. never seen american flags and now we saw them. we're not going to have an immediate commercial wind fall for american agriculture. now we have a chance to create a more efficient and less

burdensome opportunity for cuba. things we produced they're bringing in from new zealand and we're 90 miles away. i say all that to applaud you for doing this. i think we can all learn by this. i look forward to my next trip down there. >> thank you. i know you have to manage a bill on the floor. that's something we're doing differently this year. we're actually managing bills.

good luck in that respect. nice to go back the old way. welcome to our first panel of witnesses before the committee this morning. welcome. i look forward to your testimony. >> chairman roberts, ranking member i'm pleased to come before you today to discuss agricultural trade with cuba. as you know in december president obama announced policy and regulatory changes to chart a new course in u.s. relations with cuba. the measures also seek to expand opportunities for america's farmers and ranchers to sell

goods in cuba. 15 years ago congress lifted a decade's old wanban on export of agriculture to cuba. u.s. government agency including usda remained prohibited from providing assistance and credit guarantees for exports to cuba. he can't use a single dollar for trade promotion funding where trade with cuba. these restrictions apply to usda's very successful market development programs.

bills have been introduced. usda stands ready to provide technical assistance to congress as it considers further openings with cuba. cuba imports about 80% of its food which means the potential for our producers here is significant. the united states has potentially huge advantages in exporting to cuba. chief among them is location. we're less than 100 miles away as been pointed out meaning lower shipping cost in transit times especially compared to our

current top competitors, brazil and the members of the eu. fiscal year 2008, u.s. agriculture exports to cuba reached $658 million. by the end of last fiscal year they had fallen to 300 million. global exports to cuba has doubled over the past decade to approximately $2 billion. right now the largest u.s. agriculture exports are poultry followed by soybean meal and soybean and corn.

the policy changes towards cuba are just one example of opportunities to help farmers and ranchers build on their record agriculture exports. in fiscal year 2014 agriculture exports reached a record. $152.5 billion and supported nearly 1 million person jobs. it's critically important that congress consider and pass bipartisan trade promotion authority legislation introduced last week. tpa will help ensure that america's farmers ranchers and food processers receive the greatest benefit from trade agreements currently being negotiated.

it's served as a bridge to foster cooperation understanding and the exchange of ideas among people. i have no doubt that agriculture will play an important role as we expand our relationship with the cuban people. thank you, mr. chairman and members of the committee. >> we thank you, sir. in his position he's responsible for implementing the bureau of industry and security controls. the export of items for national security foreign policy nonproliferation and supply reasons. welcome. i look forward to your testimony.

most senators can read, all staffers can read, feel free to summarize your statements. >> thank you. it's a pleasure to be here. i'll address the role of department of commerce with regard to agriculture trade to cuba. in terms of the cuba embargo congress department is regulating items. as you know on december 17th 2014, the president announced changes to cuban policy. they are intended to create more opportunities for the american and cuban people by increasing commerce, travel and the free flow of information.

we expanded the license exceptions for communication devices. we created a new license exception for cuban people. in our system it means as long as the exporter complies with the conditions of the license exception set out in regulations they don't have to come into commerce and submit a license application and wait for the government to say yes or no and give them a license. the principal focus of the license exception support for cuban people is getting times into the hands of the private sector in cuba. under that license exception u.s. persons are now able to export building materials for

private sector building activity in cuba. they're able to export items going to the private agriculture sector in cuba. the license exception also authorizes the export of item to the internet infrastructure in cuba to facilitate communication among the cuban people and between the cubans and the outside world. you'll notice in all of that i mentioned there's a little bit of focus on agriculture. we did not change our primary regulatory process for agriculture exports to cuba. the reason we didn't is that's pretty well governed by the trade sanctions. we have an expedited process this place where a u.s. company

that wants to make an agriculture export comes into commerce. we refer it to the state department. we get a position and we give them an answer in 12 days. under that process exporters get an online application. we also screen the end users of the license, agriculture exports to make sure they're not involved in terrorists or proliferation activities. the last riermts is those exports that are licensed must be made within one year of the license, within the year of the license.

as you heard the actual dollar value is far less than that in roughly 290 million dollars. you can see u.s. exporters see a tremendous market in cuba by the authorization they seek from us even though they only export a small fraction of that. as you also heard the exports go through import which is the cuban import agency. there's really no changes in our regulations specifically on agriculture export because that's limited by the trade sanctions. thank you mr. chairman. >> thank you for your statement. our next witness johnny smith acting director, office of foreign control. he serves as the acting department of the department of treasuries department foreign assets control or ofac.

that's his basicacronym for which he works. he served as an expert to taliban committee. welcome to your new job. thank you for joining us mr. smith. i look forward to hearing from you, sir. >> thank you for the opportunity to appear before you today to discuss our recent amendments to the cuban asset control regulations. to implement the policy changes treasure office of foreign assets control or ofac amended

the cuban assets control regulations and our colleagues at the department of commerce amended the export regulations on january 16th. these amendments ease sanctions related to cuba in a number of key areas including trade, financial services, travel and remittances. these changes are intended to enhance commerce and communications between the united states and cuba and help the cuban people to freely determine their own future. ofac broadened the abilities of u.s. financial institutions to provide services and payments for exporters authorized to

engage in trade with cuba. offer more reliable and potentially cheaper travel with far less paper work to cuba. finally, ofac permitted certainly humanitarian projects in cuba including those related to agriculture and rule development that promote independent activity. previously ofac determined the statutory term to mean the u.s. exporter had to receive payment from the cuban importer prior to the goods leaving american

shores. payment from the cuban purchaser is required now prior to transfer of title 2 in control of the goods. this change should provide for more efficient, less expensive means for cuban importers to purchase american produced agriculture, medical and other authorized products. u.s. exporters continue to face barriers including that all u.s. agriculture goods are importedka[÷ via allen port, a cuban state run monopoly.

to improve the speed, efficiency and oversight of authorized payments. the change is intended to ease the flow of authorized payments which should benefit u.s. exporters to cuba. with respect to the third key regulatory change it's important to note that ofac cuba sanctions program is the only such program that restricts travel to a country. without the need for a specific license from ofac. this means that exporters and other travelers who satisfy the criteria in our regulations may

travel to cuba and conduct travel related transactions there without requesting or receiving individual authorization for bofac. including those related to agricultural and rural development. increased remittances with increased financial resources to purchase american produced agricultural goods. thank you and i look forward to answering any questions. >> thank you for taking the time to share your professional experiences and opportunities and the challenges we face on opening up trade with cuba. what was the administration's process in preparing for this

major policy shift in the united states relationship with cuba? what was the involvement of the stake holders in determining what changes could be made and how have you worked with industry during the amendment process. big question. hopefully a short answer. i apologize for that. >> we've been working with the cooperators for quite some time. it's been ef dent now for a number of years that our state holders have wanted cuba opened up for the markets that for the products that our farmers and ranchers produce in this country. we have been at a very dig disadvantage because of the restrictions in place. our stake holders have made it

known for career thatlear that this is a country they want to do business in. when you look at, i'll give an example, not because betsy ward is sitting behind me but rice. half the rice is imported. it's coming from vietnam. it's not coming from the united states and itbuh we look forward to get that on a level playing field. >> to identify ways to facilitate trade to the private sector in cuba within the bounds of the existing embargo. that's how we came from individual license requirement to license exceptions. since the announcements of our regulations we have probably

done several dozen outreach events from washington and across the country where we explain the changes and answer questions. we estimate we probably individually talked to or as part of the events well over 3,000 people. we continue to solicit feedback from those who want to understand what the regulations are. >> i appreciate that. mr. smith. >> we work very closely within the executive branch to utilize some of the comments we received from industry and members of congress over the years about how we can better change our regulations and we have worked with commerce and other agencies since that time to actively promote our regulatory changes so people know what the new rules are. >> i've traveled to cuba as many

people have. for 18 hours discovered the world according to fidel castro and with a group trying to establish trade. three very limited situations all of a sudden you come up against the state owned enterprise and that's where it ended. all of the talk and everything happened and nothing really happened. do you envision the reestablishment of diplomatic relations should be helpful to agriculture trade? are there any concerns regarding this renewed relationship, the

process to establish these ties and interaction within cuba? >> i think normalizing relations and opening up trade will have a tremendous impact on agriculture. the united states is the only country, to my knowledge, that has to go through the state owned corporation of allen port to get its products in there. hopefully with the normalization of relations and opening a trade that reinstruction would be lifted. number two, there's been a study done by texas a&m as well as the american farm bureau that said relations that are normalized and trade is open up there will be a significant increase in the purchase of products by cuba.

>> this is for all the panel. i apologize to my colleagues for going just a tad over time. all of you made reference to allen port. this state run monopoly through which all imports are channelled. what commitments if any have been made by the cuban government to provide the same abilities to trade with other organizations? any on the panel. >> that's a question i'd largely defer to the state department. that's something we would expect as part of a normal sooigsizationnormalization.

i don't know of any commitments made but i'd have to refer that to the state department. >> we have an ongoing series of discussions with cuban government officials. i expect this would be one of those topics that will come up in those sector specific discussions. >> i defer to the answer to my colleagues. >> thank you very much. >> i had the same conversation about allen port and the process for them. they were indicating about 80% of the farm land the steel is owned by the government.

there's a loltt of change that needs to occur. i know we'll hear from the second panel. we have tremendous opportunities. we're a whole lot closer in potatoes and beans and a whole range of things that are available. i said we can give you christmas every day. i think that's really true on trade showing up and also our abilities to market and so you mentioned the market access program and the other tools at department of agriculture. i wonder if you might speak more

to what while they're not currently authorized in cuba, how would you envision the usda's map program going forward and creating opportunities and tools for american agriculture? >> if we were allowed to use our marketing programs such as our market access program it's an area where we work with our coop ray tors to go in and look at ways to develop markets and what the actual needs are through the market assistance program, help our producers, help the different commodity groups make end roads into establishing markets in that country. the farm market development program was where we worked with the cooperators to do studies. if we were allowed to use these

products as well as do a trade mission to cuba, i think it would go a long way in getting back much of the in the past. but the lack of the ability to use these programs as well as our inability to extend credit is the main issue why we've lost our market share since 2008. the economists at florida -- university of florida did a study and what their study showed was that the biggest loss or the reason for the most loss in our market share there was our inability to extend credit as our competitors, the eu and brazil and others are doing. so the playing field right now is not level, senator. a level playing field they're going to buy the best products from the united states. >> well, we heard that over and over again as well when i spoke to the secretary -- the minister

of agriculture in cuba. we heard over and over again same thing with the foreign minister -- foreign relations talking about the lack of credit. when we look at how we get through that -- you've all spoken to it, but i wonder if anyone wants to comment further on the specifics of what we need to do to make sure that process is open. the president has taken the first step taking out the intermediary, being able to allow payment not before the shipment leaves but at a later point when it is in process and arrives. but we all know that the issue of credit, whether it is using usda, credit opportunities, other credit opportunities is a serious issue for us. what do we need to do to be able to make that happen? is this all about lifting the embargo completely or are there other things that we should be doing? >> i could start out an answer. at least one provision that's at issue is the provision of the

statute that prohibits any financing of good, agricultural goods and others, to go to cuba other than third country financing or payment by cash in advance. so we're not allowed to offer any kind of payment deals payment terms other than going through a third country to receive that financing or to pay the cuban importer in advance of the goods being turned over. i think that that's what my colleague has indicated is necessary to be able to extend credit. we would need to remove that statutory prohibition. >> i would also add that clarity on the provision that appears to require an individual license for any ag export to cuba, to change that or make it clear that we could allow by license exception would also really facilitate ag exports to cuba. that's what we've heard from u.s. agricultural exporters. >> right. and those two things specifically, or is there anything else from the usda

standpoint that we need to be changing to create opportunities for you to fully provide assistance? >> again, i think those are the biggest changes that we need to be -- have made so that we could use again our marketing money. as well as the commodity groups where they're check-off funds. they're not allowed to use their check-off funds for promotion in cuba either. so those changes would allow us to do marketing in cuba, as well as give us the ability to extend credit, again to put us on a level playing field with our competitors. >> thank you. mr. chairman, as you know, there is a hearing going on in finance. i'm going to step over there for a moment and come back. so be on your best behavior while i'm gone. >> i will try to do that. would urge you to do the same on behalf of a good trade bill. thank you. >> thank you, mr. chairman.

thank you all for holding this very, very important hearing. he believe that the way that you change the world is through personal relationships. if we're serious about really bringing real change to cuba we need to expose the cuban people to america. we're not only trading our products, but we're trading our democratic ideals. cuba represents a remarkable opportunity for american farmers but it's also an opportunity for cubans to gain access to safe, affordable and high-quality agricultural products from the united states. i'm encouraged by recent steps to reform the u.s.-cuba relationship boosting our commercial ties will have significant benefits for both of our economies. my studies estimated easing finance and travel restrictions with cuba will result in an increase of over $35 million in agriculture exports from arkansas annually. let's talk again a little bit

about what percentage of the food that cuba consumes is actually grown in cuba? >> according to the world program -- world food program 80% of their food is imported. >> what -- what countries -- you mentioned vietnam i believe -- >> vietnam is supplying half the rice. if you look at corn corn's coming from brazil and argentina. if you look at wheat, wheat's coming from the european union and canada. our sales from the united states to cuba currently, 50% of our sales are poultry products. 25% of our sales are made up of soybean meal and soybeans. so that makes up three-quarters of the sales from the united states. >> what about the quality of like a vietnam rice compared to an american rice? well, senator, i'm real partial to u.s. products.

i said earlier i think our farmers and ranchers produce the very best products to be found anywhere in the world and i'm going to stick to that. >> said very well. >> exactly. and again, but i do think that is important in the sense that it's not only an opportunity, but it is an opportunity for the cuban people. you've talked a lot about easing financing and things like that. out of the things that we're doing, what's the most important thing that we need to be doing? >> well i think when you started out you talked about travel between the american people and cubans. i think that is right that as the president said -- and i think you've said -- is that the best ambassadors for america can be ordinary americans going to travel embodying our ideals. so i think we have generally licensed or authorized travel within the 12 categories that we

have. congress has prohibited any further opening for tourist travel under the statutory prohibition. we also have a statutory prohibition with respect to not only private assistance to cuba for exports for agricultural exports, but also for u.s. government exports. >> do you agree with that, mr. gore man? >> there's also a prohibition on u.s. government effectively export promotion for trade with cuba. so that really limits the commerce department's ability to carry out the trade promotion/analysis work it does in virtually every other country in the world. >> again, you guys did jump in, but even with the changes that we made, is it fair to say that the majority of the restrictions regarding trade are still in place? >> it is correct that most trade, most imports most exports, most other transactions

remain prohibited. >> so you got a good step in the right direction but we've got a long way to go. we've talked about financing. are you aware of any other countries that go through the financing scheme that americans have to go through? >> you mean -- >> restrictions. >> i'm not aware of any other country that has those type of restrictions. senator, we do trade in approximately 200 countries around the world. >> so america is unique in that regard. very good. in dealing with the cubans, how does cuba differ from other major export markets in terms of how normal commercial operations

work? >> well again, i pointed out earlier, we're restricted to dealing with one state and corporation allenport for our export of u.s. products. so that's unique and it does present its own problems. >> my understanding is for virtually all imports regardless of the product category into cuba they have to go through some cuban government import agency. >> the other difference is the financing terms. as we've talked about and in most other contexts the exporter could get financing of some kind either from the u.s. or from the importer that can occur here. >> thank you, mr. chairman. thank you all very much for being here. senator donnelly. >> thank you, mr. chairman. i'd like to thank all the witnesses. i'm a big supporter of increasing american exports to world markets and am intrigued by the possibility of opening

the cuban market, not only for hoosiers but for all of our country to export the things we build and produce. but the concern is i want to make sure that the cuban people actually benefit from it. and what can we do from a policy perspective to better ensure that the benefits of trade reach the cuban people? as opposed to all the products going into one agency and then they be divvied out? what do you see as keys to making sure the cuban people actually benefit from this? >> senator, i think that by normalizing relations by breaking down the restrictions that we currently have for trade, the cuban people are going to benefit from this right away. if you look at just the cost in transportation, again, rice coming from vietnam. you look at the cost of that. corn coming from argentina. wheat coming from the european

union. we have a tremendous advantage until logistics and being able to supply them top quality products at what i would believe would be a more reasonable price than what they're currently paying for products shipping from those countries all over the world. so i think that there would be an immediate benefit. could there be additional benefits if in fact we are treated like other countries and don't have to go through one state-owned corporation for our products, which i believe and hope would happen, then i think there would be additional benefits. >> one of my concerns is just what you referred to which is having to go through allen port, the state agency there. we talk about the higher quality. i have been to my friend senator boseman's home state the extraordinary rice they produce there. the pork products produced in my home state and all of us. we talk about the benefits of lower price, easier transportation, all of those

things. and the question is how do we make sure that that lower price actually gets passed on so they're not paying -- the cuban people are not paying the same and that this group who will set it in effect, if you know what i mean. >> yeah. i understand the concerns. but again hopefully once relations are normalized and trade is liberalized again i would hope that we would be treated like the other countries that are currently trading with cuba so they don't have to go through one state-owned corporation for those products. >> this would be for any of you. when canadian products are sent to cuba, how are they entered into the country? who are they distributed through? do you know? >> i don't know. >> do they have to go through allen port? >> to the best of my knowledge no. it is the united states has to go through allen port.

>> so that's one of the points i'd like to make, is as you talk to state as you move forward with this, one of my concerns -- i know a lot of my colleagues' concerns -- is that we be treated the same as everybody else. that's the way the cuban people benefit, is that our products are able to go directly to the cuban people that we're treated the same. and i think that much of what we look at as we move forward will be dependent on that being incorporated into any agreement that comes through. thank you, mr. chairman. >> we thank you senator. senator hoeven. >> thank you, mr. chairman. i actually want to pick up on a point that senator donnelly's making, and that is i think there has to be a carrot and a stick to what we're doing here. we want to expand ag trade. that's good for our farmers hopefully that's good for the cuban people. but at the same time we want to put more pressure on the cuban government to change its

policies on human rights. so what can we do as we work here on ag trade to make sure that we're doing that. how do we get these products down to the small businesses and the entrepreneurs that are actually trying to make something happen in terms of free enterprise in cuba, and how do we at the same time create some pressure on the -- on the cuban government on the castro regime to change and to particularly change in regard to human rights. i'd like to hear from each one of you on that. >> senators, you well know coming from the big ag states that you're from, agriculture throughout history has been a way to break down some of the barriers that we have faced. if we can open up trade with cuba and if -- because they're

only supplying 20% of what they currently consume but the demand is certainly there. there is a way to help build the agricultural sector in that country which would create jobs, which would create income, which would create more demand. and as that happens, i think you're going to see an awareness. just opening up the country and normalizing relations, there will be an awareness of the people that i don't believe that currently exist. so i think this is a really good first step in to helping the cuban people. our policies over the last 50 years have not been one that has provided that openness that transparency and the education that -- about the united states that i think normalizing relations and opening up trade will.

>> mr. borman, you and i talked specifically before the meeting about how do we make sure these restaurants and other small businesses that people in cuba are trying to get going how do we support that effort as we do this? >> several ways. one is of course the folks who make the exports from the united states know who they're intended for and they typically know those individuals because they're often relatives running the bed and breakfast or the auto repair shop. if the items don't get to them they'll hear about that. we have a good working relationship with a lot of our exporters on the enforcement side to make sure our items going where they're supposed to go. >> that's right on the mark. now you're talking about helping people with entrepreneurship, bips ent business enterprise, hopefully things to incentivize these businesses to get going. other thing is payment. how wu are you going to make sure that people get paid for products that they ship in to

that market. >> right. so far we have not heard any complaints of u.s. exporters not getting paid. i'm sure we would -- >> that's because the policy was cash in advance. >> but remember it is still cash on delivery. >> cash when you change title. >> delivery of the products are delivered. which limits your ability to get it. >> if that happens, we'll find about that quickly. >> you can go back to getting it to those small businesses. how do you enforce that? >> again, first part is we make sure the folks want to make the exports understand what the small businesses are and what the limits are. then, too, remember the cuban people are very aware of these changes. if over time they don't see any significant changes that's going to create more pressure on the government internally. but that's something -- we have seen already exports made say to the private sector agricultural co-ops in cuba. we've seen that in the trade data. >> i think we can continue to focus on the cuban people as we

make our changes. i think the recent round of changes that we made were very much focused on the ability of the cuban people and to strengthen the cuban people. we increase their ability to communications, for internet, for other things so that they can better understand the changes that are being made. we also increased the limits that can be given on remittances, the financial amounts that u.s. citizens can give to cubans. we increased those amounts for support for the cuban people, mountain projects and other things that would help agricultural development as well including microfinancing activities so those are very much focused on the individual cubans, the small cuban development businesses that might want to grow. that's -- was the focus of our change. >> and i think it is very important that you are focused on that area, including putting information in to that market every way you can. because as we provide people with more information, i think that also helps with their efforts to try to force change from the inside as we try to

force change from the outside. final question for mr. -- where -- what food products farm products do you particularly see as opportunity, areas you said three-fourths of our exports now are poultry and soybeans. what else do you see as good opportunities? >> i think we've got a great opportunity to export -- to increase our exports of corn. there's no reason why european union and canada have the wheat market. that market should also be ours. i think there's a great opportunity for us to have the rice business in cuba. and as i think i pointed out earlier in this meeting, there is a great opportunity for dairy and dairy products. >> thank you. >> i thank the senator for his most pertinent comments. thank the panel for responding. >> thank you, mr. chairman. thank you for holding this meeting. we've asked you probably three four times now about al import.

y'all said you hope that we will see this restriction lifted. i think i can remind you hope's not a strategy and we're hopeful that you all -- hopeful -- that you all will take the concern that is being expressed today about al import back to your smaller groups as you discuss opportunities going forward. we've long been concerned about the extension of credit for ag transactions and trade. hopefully i think tomorrow we're going to try and take a move in the right direction. i think you guys have highlighted the number one thing that we think we can deal with which is 908. i personally support lifting the embargo entirely. however, that may be a bridge too far for this congress. so we've got to take these baby steps. with that, i have a couple specific questions for you under secretary.

to date the federal check-off dollars have not been used with promotion for trade with cuba. . loose reasoning, i think almost an assumption is that this is due to the language of tsra which precludes the use of any united states assistance including united states export aas soon as tans. of course the check-off dollars are not taxpayer dollars, they're producer dollars. the federal check-off program is set so that farmers elect a board who appears to decide how those check-off dollars are used. it is not tax money. and as a result, does usda recognize the difference between your government assistance programs like map and fd -- fmd and producer raised and controlled check-off funds and can producers utilize their own check-off dollars for promotion for activities in cuba, and if not, why not. >> my understanding, senator, is that the federal check-off funds cannot be used for trade

promotion in cuba. now if it's -- >> i'm asking you why. >> because my understanding is it's because of the law -- current law that's in place. >> i'm suggesting that maybe the current law is being broadly interpreted and you might want to go back and take a look to see if we can make that change without legislative changes. >> okay. we'll do that. but it's also my understanding that if there is state check-off money, that can be treated differently. but the federal dollars, the federal check-off money cannot be used. but again, we will go back and take a look at just what the law says and if it can be used. >> yeah. i think just to reexamine that policy. mr. smith, i'm out of time but i want to go back to the cash in advance original definition and other changes you are making to facilitate a more efficient and

affordable exports to cuba. at this time do you feel like the administration has gone as far as legally possible? and in terms of the definition to open up opportunities. and were there other things on the table as you discussed the changes that you did make that maybe you said well, maybe we can't do that. are there other kinds of policy thangs this things that were abandoned that maybe we should re-examine? >> in terms of the restrishgsctions on financing the definition was the definition that had been in appropriations bills from congress that had been as far reaching as i had heard regarding transfer of title and control. it's hard to imagine you can interpret cash in advance far beyond transfer of title because it is largely the last step before you actually turn over the goods. so there has been no other definition that i have heard that could meaningfully interpret that statutory term. >> so you mean cash in advance means cash in advance. >> that's what i mean.

>> finally i know that you don't have any boots on the ground in cuba, but do you have -- you do have folks in d.c. who follow exports and our competitors closely. we believe we grow the highest quality products with the nearest market. cuba obviously is a huge opportunity for my state and the states that are represented in the ag committee. given that export assistance funding is prohibited by tsra, are you still allowed to place someone within the havana embassy that could make those contacts and begin to do that groundwork without crossing the boundary? and are you intending to do that at usda? >> correct me if i'm wrong, i don't believe we have an embassy just yet. >> well we're hopeful. >> okay. so am i. we can put individuals in there on a short-time basis for

whatever assistance may need to be needed to look at different projects or to help them with different regulations that we may need. but that's only short-term. long-term, i would hope that when the it day comes that we have an embassy there, that we would work with the state department and we would be able to put staff in that embassy to help us facilitate trade and to move american products into cuba. >> how many staff do you have currently in cuba? >> to best of my knowledge, we don't have any at usda. >> and do you believe that you're prohibited from having staff in cuba right now? >> you know i don't know, could be quite honest with you. again, to have full-time staff in cuba i don't believe that we would have the need right now to have any full-time staff until trade is actually opened. >> i think you get my intention which is, we think that this is

going to happen probably sooner rather than later. so we want to hit the ground running and we would appreciate it if you guys would take a look at what kind of opportunities you could avail yourself of today that would in fact once we get things lined up can in fact facilitate further trade. >> senator, i believe that when that day comes we'll be able to act very quickly. >> senator klobuchar. >> thank you very much. it is great to see you, under secretary. we love you in minnesota because you were willing to come out to a forum i held on cuba in february. that means a lot to us in minnesota and north dakota. as you know, we discussed at that forum -- you did a great job by the way for the potential for the u.s. to export products to a country that's just 90 miles off our shores, 11 million people. when i went there a few months

ago with senator warner and mccaskill i was able to see the new port that's being built which is a very big port. and it's going to replace the port of havana which will be used for tourism. when i saw that port, i thought if they're going to bring in goods and sell things here in cuba, we want them to be american goods. as you know i'm carrying the bill to lift the embargo and i appreciate the support of senator enzi and flake and stabenow, durbin, leahy and paul. there are other senators. we're adding to our numbers. we know it is going to take a while to get done but that is truly the way we think you would agree to have some trade with cuba and actually sell our goods not only being done on a humanitarian basis, but could you talk about the effect it could have if we were to actually lift the embargo? >> it will have i believe a tremendous impact on our ability to sell products and greatly increase the amount of products

that we're currently selling to cuba. again right now you are looking at about $300 million worth. again, the study by texas a&m and american farm bureau believe that formalized relations and lifting of the trade restriction restrictions restrictions, that number could be in excess of $1 million. what this would also mean to the cuban people with the ability to purchase agricultural inputs fertilizer seed, chemicals, and equipment, i think it would give them also the ability to have agricultural businesses produce more of what their actual demands are in the country. and create revenue throughout to the countryside and help the cuban people especially that live in the rural areas. i think it is a win for both of us, in my opinion. >> mr. under secretary, some have argued while cuba is a small market and certainly has a lot of poverty, so why would

this still be such a benefit? are there other reasons outside of just selling to cuba that this could be a ben if it to american agriculture? >> i think again it is not just selling commodities but it is selling agricultural commitment. i think it's not just about the sales, it is about the jobs that will also be created here in the united states. when you look at our exports currently at $152.5 billion supporting almost 1 million american jobs, any increase that we're going to be having in sales, that's an increase in american jobs. but again i think it is also a win for the cuban people. supplying them with the very best products to be found anywhere that can be purchased and then opportunity to also create jobs there as well. >> another argument which you don't need to get into but that i've heard raised is that it is often thrown in our country's face and other countries in lass continue america, our situation with cuba, and there is some belief it could help open up

some markets with our agriculture and other products as well. i want to ask about foreign competition. when i was there we met with a number of ambassadors from places like brazil and spain and other places. as you know the investment, they don't have embargoes but their investment's been slow. however, i detected that they might start picking up as they see the potential for the u.s. coming in. do you think other countries are going to continue to expand their market share? i'll never forget being at the port and saying well, they said they got their computers from china because they weren't able to use u.s. computer companies like most ports do across the world. but you want to discuss that briefly? >> well again there's opportunities there. but, yes, we are going to face competition from those countries that are currently doing business there. if you go back and again look at the business -- the trade that we had in 2008, $658 million down to $300 million last year

look at the reason why. other countries were able to extend credit and we were not. so main result of that was a substantial loss in the cuban market for u.s. products. so i think we're going to face continued competition from countries like brazil, argentina, canada and the eu. >> just one last question. mr. borman or mr. smith, what do you see as the biggest obstacleshe cuban side to increasing american agriculture exports. we clearly have issues there are human rights. it is our hope as negotiations go forward this will clearly be part of the negotiations. but when i was there i saw the double currency issue and some of the other things. what do you see as some of the obstacles to the trade? >> i think in addition to the al import issue the cuban government historically has not

freely let goods come into the country. there that's putting it mildly. >> and also the development of private business. that's something that we're trying to encourage here to encourage that there is more money for individuals and more money for private businesses to be able to import. >> exactly. as you know, i think there's something like 600,000 entrepreneurs now this has loosened up recently. they have their own currency but they are still a long way to go. i will say ending that i just saw a spirit of entrepreneurship there with the people and that the people are a bit ahead of the government. again putting it mildly. so i want to thank the chairman for holding this hearing and really being willing to hold such a hearing as we know this can be a controversial issue on both sides of the aisle. i really appreciate you doing it. thank you. >> thank you, senator. senator brown. >> mr. chairman, i echo -- >> senator brown you might want to put yourc sign up. everybody knows you. >> i have a leahy.

>> what on erlsarth happened to mr. brown. >> senator brown's sign is missing. >> that's okay. >> senator brown. >> i lost my trachbin of thought. but thank tu for holding this hearing. one question, mr. secretary. talk to me about what this means, what trade restrictions mean to a state like ohio in terms ofwoízu agriculture exports. >> for a stitate like ohio, what current restrictions mean, it means that it's difficult to get agriculture products into -- from a state into cuba. we're at a tremendous disadvantage. the playing field's not level. because we're not allowed to do marketing programs like other countries do. we're not allowed to extend credit like other countries do. so the playing field is not level and it creates a great

deal of difficulty for us to compete against those countries. >> tell me what it will mean as we ease them. >> well again, i think that as we ease the restrictions it is going to be easier for us to get products in there. again, i went through the list. right now the corn's coming from brazil and argentina. i think that we should be the number one supplier for corn. if you look at wheat, wheat's coming from the european union and canada. again there is no reason why that shouldn't come from the united states. 50% of the rice is coming from vietnam. we should be the ones supplying the rice to cuba. again, i think there's opportunities for us to ship dairy and dairy products to cuba. so when these current restrictions are going i think there's a lot of opportunities for those products as well as a lot of others. our fruits. apples would be a very -- another good example of a

product that there's a demand for that we could ship down there. i think there's a lot of opportunity but we need to get the current restrictions lifted. we need to be able to use our marketing programs and we need to be able to extend credit. >> thank you. mr. smith in light of the treasury's policy changes has there been much interest shown by u.s. banks willing to do this type of trade, and have there been issues, problems with establishing correspondent accounts with cuban banks if you could kind of give me your assessment about what's happening and what you think will happen. >> sure. there's been tremendous interest from u.s. financial institutions in terms of the engagement that may be allowed in cuba. as far as i am aware, no u.s. financial institutions have yet opened correspondent accounts there. a number of u.s. financial institutions have decided to begin engagement on the credit card and debit card front that we have allowed. many of the financial institutions have talked about concerns over the state sponsor

of terrorism designation that still exists with respect to cuba that may be changed. >> would that be sort of the "on" switch for correspondent accounts once that's lifted or once that's changed? >> it could be. we've authorized it but it is up to an individual financial institution's risk appetite and whether they're concerned, whether their concerns will be removed by the removal of the state sponsor of terrorism. it remains to be seen. >> is treasury -- one of the things that's changed in today's banking system from particularly ten years ago but that began to change five years ago with the financial crisis as banks increasingly, even smaller banks instead of it $20 billion, $30 billion, $40 billion some even smaller than that, have elevated their risk officer to make sure that they sit at the table to be part of decision making on is this too risky for our bank to

engage in. in the past that question wasn't asked often enough and look what happened. is treasury talking to risk officers about this issue of risk sort of injecting that in the conversation and board rooms at least in the largest banks in the country to help them think through the issues of risk? >> yes. almost on a virtually daily basis we're talking about the financial institutions and particularly the risk officers, compliance officers, to make sure that they understand the changes that we are making, that what our policies are and what our requirements are, so that they have a chance to dialogue with us. we've had a number of open outreach events where we've had financial institutions present but we've also had one-on-one conversations with many financial institutions. >> cool. thank you. thanks, mr. chairman. >> i'm going to ask one quick question before we ask the second panel to come up. with all due respect to my colleagues. director smith, in view of the

questions asked by senator brown, and -- i like that term "risk appetite." where did you come up with that? that's probably the first question. but to date, have any u.s. financial institutions set up correspondence accounts with the financial institutions in cuba. how many businesses do you expect utilize this type of account through their bank? so i'm not sure where i came up with risk appetite. i'm sure i heard it somewhere. >> well chew on that a little bit while. >> i will indeed. as far as i am aware, no u.s. fsn institutions yet have opened correspondent accounts. i think what we do is we authorize certain activities but we don't require financial institutions to engage in any certain activities. >> obviously. well, if that were the case how many u.s. businesses would you expect to utilize this type of account through their bank? do they have the risk appetite

to do that? >> i think the more u.s. industry wants to trade with cuba, the higher of trade goes with cuba, the more demand there will be on the banks from their clients to say we need you to be in there servicing us. so i think the trade increases the more we would expect pressure on the banks to go in. >> i appreciate your answer. this will conclude the first portion of our hearing this morning. thanks to each of our witnesses especially for taking time out of your very busy schedule to share your perspectives and insights about the opportunities and challenges we face in expanding agriculture trade with cuba. to my fellow members i would ask that any additional questions you may have for the record be submitted to the committee clerk five busy days from today or by 5:00 p.m. april 28. we now invite the second panel of witnesses to come to the table. thank you very much, gentlemen. >> thank you very much, mr. chairman.

i'd like to welcome our second panel of witnesses before the committee. first mr. michael beale, president and ceo of national cooperative business association. mr. beale joins us today on behalf of the national cooperative business association where he serves as the president.

and ceo. before joining ncba, he serves as president and ceo of the missouri credit union association and president and ceo of the maryland district of columbia credit union association. he initially held positions at the world council of credit unions and the north carolina credit union league. anybody need any credit in the audience, you ought to see mr. beale. welcome, mr. beale. i look forward to hearing from you. we'll wait to introduce the second panelist after you conclude, sir. please feel free to summarize your comments. >> good morning chairman roberts. you've introduced me ncba works to provide educational, technical, expertise and advocacy that helps cooperatives thrive and survive in today's economy. my remarks today will focus on the new day in u.s.-cuba relations and some ways forward to foster better more productive and positive relationships between the two countries, notably through

agricultural trade. as a preface, i want to convey two thoughts regarding u.s.-cuban cooperative development. first, the u.s. should view cuban cooperatives as a fundamental to building market-based economy in cuba. one that incorporates a proven business model and economic empowerment for member owners, for consumers. cooperatives are functioning, successful businesses that provide tangible economic ownership an benefit consumers wherever they are found. ncba is optimistic that cuban cooperatives will be no exception to this rule. second, u.s. cooperatives here are ready to assist right now. we've already begun to build ties with cuban cooperatives and we can hit the ground running whenever the law is discussed in the first panel permit. the message here is simple -- put u.s. cooperatives to work with cuban cooperatives. by way of background, there are 29,000 member-owned cooperatives in the us employing 2 million folks. 1 in 3 american consumers does

business with a cooperative. consumers and producers benefit greatly from cooperatives in areas like agriculture in particular but also in housing rural electric and telecommunication and credit union. co-ops work for consumers. . cooperative form of business where the members own the enterprise is particularly well suited for the cuban people and especially in this period of transition. cooperative ownership combined with cooperative business practices that use the profits for the benefit of the members and the form of governance where each member gets one vote are all features that are going to have special appeal as they grow in cuba. our understanding is that cuba has begin to change its cooperative laws starting in 2011 making lots of businesses become cooperatives and changing the ownership structure. this is a welcome departure from the other types of government or state-owned enterprises. ncba and our work we've been

told by cuban coopive officials there are 5,200 agriculture cooperatives currently operating in cuba that contribute 80% of all fruits and vegetables consumed by consumers. by all appearances this cuban ag sector is the foundation for their economic stability and growth. ncba has taken preliminary steps to initiate strong e ties with cuban co-ops. last year we established the u.s.-cuba cooperative working group to explore opportunities, to engage with cuba on cooperative development. we sponsored a trip last year of co-op leaders establishing connections and actually we're hosting a group of co-op ag leaders the first week of may. in terms of some of what i've seen in travel to co-ops there are challenges. there's lots of focus on the 1950s era cars. but in a co-op farms we visited the ag equipment is from that era as well. and it would be considered vintage. one of the other main concerns

that i would say that i saw is that none of the cooperatives for us produced financial statements. so we're not able to verify how profitable are these cooperatives, what are the expenses that they're taking on. perhaps most importantly, what is the treatment of the state-owned equipment that's being delivered over to co-ops. what's the treatment on the balance sheet of the land that cooperatives are operating on. so as ncba as cooperatives build relationship with cuban cooperatives, this is really where we want to see progress this is where we want to see proof, if you will, that the cooperatives are independent and able to manage these assets and not with interference from the cuban government. i do return very opt nis tick about the future of u.s.-cuban and cooperative endeavors. furthermore, the challenges facing cooperatives there are technical, they're accounting. educational obstacles are the exact kinds of issues that can

be addressed and addressed well by americans and american co-ops. we stand with u.s. co-ops ready to provide this as soon as the league on governmentary issues between of two countries are resolved. u.s. co-ops are a compatible development tool that can make a difference in developing healthy and vibrant cooperatives in cuba and cooperatives that can, over time, become valuable to both the american and the cuban consumer. the legal and governmental issues we talked about this morning are real and are something for us to look to policymakers like you to resolve. ncba is a business group focused on consumer empowerment and economic results, we're leaving diplomacy to the diplomats. as the new u.s.-cuban relationship takes shape, ncba wants to respectfully but force forcefully remind congress we're here. cooperatives are an ideal democratic structure and form of operation that can produce results on the ground.

cooperatives are going to help the cuban people develop financially viable member-owned businesses that assist in the economic empowerment of cuban entrepreneurs and doing so we provide cuban consumers with marketplace choices and perhaps, most importantly, further u.s. interest by demonstrating the benefit of democracy and financial independence that ownership confers. >> thank you mr. beale. >> thank you, chairman roberts. ranking member stabenow. i'm very pleased to welcome jerry harris to testify before our committee. thank you for extending an invitation to this distinguished witness. mr. harris has worked for ricen foods since 1975. currently he is senior vice president for plashthmarketing and risk management. mr. harris has traveled to cuba more than 20 times and he has a wealth of knowledge on the practical chal los angeles thatlenges that america's farmers and ranchers

face in trading with cuba. mr. harris lives and works in stuttgart, arkansas which is the rice and duck capital of the world. i look forward to hearing mr. harris' testimony. thank you for being here. >> thank you, senator boseman. mr. chairman, thank you for the opportunity to appear before this committee today. ricin is a family farm-owned cooperative formed in 1941 to market rice. today we service approximately 6,000 farmer members in arkansas missouri, rice, so i beans and wheat. the cooperative market is one-third of the rice grown in the southern united states and 25% of the national production. rice comes primarily as a direct exporter selling directly to buyers and importing countries. as a result of this direct approach our staff is well schooled in the details of every day management logistics and finance related to the export business. we are also proud to be a maemember of the rice federation. rice is grown in seven states

including arkansas, california, louisiana, texas mississippi, missouri and florida. nearly half of the u.s. crop is grown in eastern arkansas. the industry markets rice in all 50 states and to 125 countries worldwide. usa rice is a founding member of the u.s. agriculture coalition for cuba a broad-based u.s. food and ag organizations. my objective today is to sus past and potential trade relationships between the u.s. and cuba. united states exports about half of the rice produced annually so maintaining existing markets as well as developing new markets are key components to the industry's success. therefore the u.s. rice industry wholeheartedly supports the opportunity to move to normal commercial relations with cuba. prior to the u.s. embargo in cuba more than 50 years ago, the island was the number one

destination for u.s. rice. annual rice shipments reached a quarter million metric tons in the 1950s. prospects brighten with passage of the trade sanctions reform act of 2000 when food exports to cuba were granted or what many of us believed at the time to be a broad exemption from the embargo. in november 2001 i had the opportunity to make the first sale of u.s. rice to cuba since the embargo was imposed. it was incredibly intense and interesting negotiation as we developed contract terms and quality specifications for a country which at that time had not purchased goods from the u.s. in more than 40 years. i found the leadership of the cuban buying organization informed, shrewd and very professional. i was also in cuba to witness the first shipment of u.s. rice when it arrived in the port of havana. it was an unforgettable experience for me to see how excited they were with the quality of rice that they had been able to purchase for the people of cuba. i saw what can happen when

barriers are removed and people are allowed to meet and find common ground for cooperation and trade. the success of rice and other u.s. agriculture products in cuba was seriously curtailed in large part following a change by the office of foreign assets control and the definition of cash in advance in 2005. u.s. rice exports to cuba dropped to zero following this regulatory change. currently most of cuba's rice imports come from vietnam with a port in new orleans located less than 700 miles from havana, the u.s. is in a better position to serve the rice needs of cuban people in terms of transit time and cost of freight. by lifting the embargo and restoring trade and travel we estimate the u.s. can gain 20% to 30% of the cuban rice business within two years or an estimated 90,000 to 135,000 metric tons of rice based on usda's estimate of cuba's annual import needs. we expect the cuban share of

this market will exceed 50% within five years and 75% or more in ten years. on january 15, 2015, ofac made changes to the regulations on trade with cuba that allowed for the definition of cash in advance to revert to the pre-2005 wording. we applaud this measure as well as other actions by the obama administration to facilitate trade. however, there is still obstacles could conducting normal trade with cuba. i stated earlier we're seeking normal commercial relations with cuba. this means allowing u.s. citizens to travel and spend money in cuba without restrictions as well as allowing cuba to export their goods to the u.s. as they do in most countries around the world so they can gain resources and increase demand to import u.s. food and ag products. it also means per fitting the full range of commercial banking and financial relationships to facilitate trade based on individual exporter assessments of the risk of doing business. the u.s. rice industry is committed to building the cuba

market for our product. our company has made numerous trips ton cuba. u.s. rice has spent just over $900,000 in rice industry promotion funds since 2003 to promote the high quality and efficiency of u.s. rice in the cuban market. we intend to continue those activities. to give u.s. rice a chance to be in cuba the u.s. seeks the ultimate lifting of the embargo and lifting of all restrictions on cuba. >> thank you, mr. chairman. i'm very pleased today to introduce introduce mr. rolf kayler. he has a unique perspective of someone who both understands how modernizing our country's relationship with cuba impacts farmers here at home and also understands how it could impact cuba's culture and people.

in february he was one of the panelists on the -- at the cuba forum i referred to that undersecretary came out for and it is good to see him here today. i look forward to hearing his testimony. we're really excited to have a minnesotan on the panel. thank you. >> thank you. chairman roberts ranking member stabenow senator klobuchar and all the members of the committee, thank you for holding this panel on ag trade with cuba. >> mr. kaehler, i understand you have two boys, chase and colby two girls opal and chelsea. >> i got two boys and one daughter-in-law to be. so we started out right. >> i have two daughters and one. >> these are the trick questions we were telling you about, mr. kaehler! we prepared for. you did well. you did well. you didn't agree.

>> i think the whole world knows i have grandchildren and i want to let it go. >> we're both -- >> please proceed sir. >> feel free to summarize your comments after my intemperate remarks. >> no problem. i guess we're on. so, yeah, well, my two sons are the fifth generation to be operating our family farm in st. charles which sits in the southeastern part of the state. our farm produces traditional crops, canning crops and livestock. we're a nationally recognized beef breeding livestock producer whose claim to fame include exporting the first livestock to cuba in 2002 since the enactment of the trade embargo. our youngest son seth, is going to be married in november. he's active live involved in the cattle operation and will be taking over the export activities. my oldest son, cliff recently returned home from wall street to start a solar energy company

and we're pretty e sited to bring a kid back from wall street into rural minnesota. our initial exposure to cuba was as an exhibitser in the first u.s.-cuba food and agriculture exposition in 2002 through an invitation of governor ventura. of over 180 exhibiters from over 30 states the kaehler farm family display was the only one with live animals afexfectionately known as the cubanard. the display was intended to exhibit the diversity of u.s. livestock producers and introduce cuba to what we considered was a typical farm family. returned home from that exposition motivated to do more. since then we've led over 10 trade delegations to cuba. these missions have included producers from over seven states

and a bipartisan mix of state lawmakers and officials. to date, some of the most successful exports to cuba that we initiated include the shipments of the first livestock, the first dry distiller's grains, the first letter of irn tent for powdered milk, the first animal milk replacer and the first texturized calf feed which was made by a local farmer-owned co-op. given the opportunity, u.s. farmers do well in cuba. we have a significant advantage of shorter shipping over europe south america, asia and other major exporters. in addition, cuba can take advantage of our u.s. railcon container service and sizing options which give benefits to small family-owned businesses like ours. on top of this u.s. producers offer a wide variety of afford affordable and safe food products for cubans.

unfortunately, some of the policies currently in place diminish the natural advantages american agriculture enjoys over its competitors. for instance, requirements using third country banks for financing. that's a lot of paperwork time and personalities to every transaction. coupled with restrictive cash in advance policy which i know the president helped improve in recent months there's a very small margin of error before a shipper faces demureage fees. as a family operation trying to build our business through exports, this self-inflicted inefficiency can be really difficult to manage. what i do hope to see for farmers in the national cuba debate, first i hope farmers can work with congress to improve the trade financing rules for cuba. the inefficiencies gained by doing this would be immediately beneficial. it would make shipping cheaper for producers and food less expensive for cubans, both of which can only be a good thing

for our trade relationship. second i have to mention the importance of usda to ag exporters. large companies have plenty of of resources without this promotion and technical assistance, but small firms like ours do not have the luxury of extra available cash or shareholder offsets. we need marketing support and assistance to help support our companies and figure out exactly what's going on in the markets abroad. i hope to see these resources available day soon for our small and medium size producers to help us work selling our products to cuba. finally i hope that congress will expand the universe of people involved in u.s.-cuba trade by allowing a greater variety of goods and services to be traded. i don't know much about politics but i spent a lot of time in cuba and built strong relationships with farmer and their families.

our farm has weathered many ups and downs. we made progress over time and have never been short changed by our customers. i can only imagine having more interactions like these farmer to farmer will help build a better understanding between these two countries and build a better quality of life on both sides. i look forward to answering any questions. thank you for this opportunity. >> thank you. i apologize for the congressional oversight in regards to you adopting mr. kealing's family. >> my folks can't get our name right half the time either. no problem. >> doug keesling is representing the kansas wheat commission where he has served since 2005. doug and his wife grow wheat corn soybeans alfalfa on their

fifth generation farm. now chase and c.j. do have two boys, chase and colby, two girls, the whole point is i would like to take a moment to wish elsie a very happy 1 week birthday. you better get back home as soon as you can. mr. keesling. >> good morning. thank for the opportunity to testify today about the opportunities for agricultural trade with cuba. in particular i would like to thank chairman roberts for his kind invitation and decades of service to kansas and her farmers. my name is doug keesling. i'm a fifth generation farmer. i recently returned from cuba where i was part of a delegation organized by the u.s. agriculture coalition for cuba the primary purpose for usacc is to re-establish cuba as a market

for u.s. food and agricultural exports and wheat industry fully endorses that goal. there were nearly 100 participants on trip representing a wide ranging number of organizations and companies. there was a lot of potential in cuba potential inf)n its own ag sector and potential as a market for u.s. exports. as a kansas wheat farmer that potential was obvious every time a meal included bread. cubans eat a lot of it and is the largest wheat importer in the caribbean. that's 10% of all the wheat grown in kansas going to this one island. cuba is the largest country in the caribbean and largest wheat importer. that's because cubans are not only buying -- sorry. today the wheat imports from u.s. have an upward potential of 30 million bushels.

even though cuba ports are much closer to u.s. ports. when congress lifted some of the restrictions on u.s. exports early in the last decade we were excited there would be an opportunity to re-establish cuba as a consistent wheat market for american farmers. for a while that looked like that might happen as wheat exports slowly grew through the decade until they peaked in 2008. exports tanked over the next couple of years eventually dropping to zero. it has nothing to do with economics. it's particularly very difficult for cubans to import wheat grown in kansas and much easier for wheat grown in canada or france. i can put my wheat in an elevator in kansas, send it by rail down the gulf, put it on a ship that's a couple of days away from at that havana harbor. it has to be on a boat two weeks from canada or france. there's rules and laws that make

it too expensive to compete. the law is required that they receive cash. selling on credit isn't an option for them. there's also shipping restrictions that generally prohibit docking in the united states if a ship has been in the cuba port in the last six months. as a farmer i have to evaluate all the costs that go into planting wheat, seed, fertilize fertilizer, fuel. if it's too expensive i have to give up and plant a competing crop. but they are not going hungry they are buying wheat from other countries. that's what may be more expensive than mine in a free market, but is now a much better value because they aren't massive compliance costs accompanying every purchase. if someone wants to buy my wheat that i grow have to jump through hoops that they do. if cuba is to become a

successful export market for u.s. farmers these regulatory obstacles need to be repealed. we need to see the trade sanctions in their entirety lifted. cuba has potential and while it remains a communist country that hardly justifies the scale sanctions especially when trade relations with other communist countries are going deeper all the time. u.s. agriculture will never realize its full potential. we'll face an uphill battle of selling products of american soil. time for us to eliminate these barriers and see how far this free trade relationship can go. i would suggest congress carefully consider why there's a compelling reason to strict freedom of home owners to engaging commerce, especially for those just trying to sell wholesome american grown food. i sure don't see one.

inkon in conclusion i would like to see a broader kansas ag community to normalize trade relations with cuba. similar industries that support it will stand to benefit. thank you again for the invitation to testify this morning and for your attention. >> thank you, doug. say hello to elsey for me. >> thank you. >> we have a welcome to dr. rosen. >> rosen. he's joining us today from texas a&m university. dr. rosen is professor and department head of the agriculture economics department where his extension in research interests focus on international trade and international marketing. he, however, is not responsible for texas a&m leaving the big 12 and going to that other football

conference. dr. rosen received his ph.d. and manchesterers from texas a&m, served as an officer in the united states army and was a captain in the u.s. army reserve. we thank you for your service. dr. rosen i believe you're join today by your wife ellen is that correct? >> no sir, she's not here. >> okay. we'll not have her stand. let me get to some questions right quick. yes, you have your testimony. >> thank you. good afternoon, mr. chairman. ranking member stabenow and esteemed members of the committee. it's my pleasure to be here today. i want to thank you for inviting me to testify on the challenges and opportunities associated with trade with cuba. i've been studying the cuban market for about 15 years. i've been there a number of time. we continue northern what happens in cuba and how that

impacts u.s. agricultural exporters. in fact, our work at texas a&m indicates one u.s. job is created for every $76,000 in u.s. exports to cuba and we think that makes it worthwhile for to us stay engaged on this important issue. just a little bit about background. our exports averaged about 300 million annually since 2002, but they have fluctuated widely from about 140 million in 2002 up to 709 million in 2008 and that uncertainty has been a problem for our businesses. the product mix has also changed. during the first decade of our export experiences with cuba we export ad wide variety of products. along with processed foods.

so, a fairly broad array of products up until 2012 when things began to deteriorate. the more recent export categories over the last couple of years have been concentrated in three areas, and that is frozen leg quarters, soy complex and corn. in fact last year those three accounted for 96% of our exports. and in my mind that's precariously risky. we just don't have the diversity of our marketing base to with stand the kind of declines we've seen over the last few years. there's a number of things that have happened that have attributed to these declines that i would like to briefly go over those. one cuba moved away from u.s. exporters, products such as rice, wheat and higher value foods to