Governor Hoeven's telephone conference with Cuba reguarding the trade mission
Havana, Cuba
July 25, 2002
Governor:
Good morning, we very much appreciate all the media that's joined us for this conference call from Cuba. I'm gonna introduce the members to you, I think you've got a list of the delegation that's with us & I'm gonna introduce, we don't have the entire delegation here with us in the conference room. Are you able to pick us up, we're getting a conversation coming back on the phone?
Kathy:
We can hear you.
Governor:
Alright. Introduce the members of our delegation that are present here for you. Eric Aasmundstad, the President of the North Dakota Farm Bureau, is here, also Brian Kramer with the Farm Bureau and Ward Eichhorst. In addition, we've got Neal Fisher here with the North Dakota Wheat Commission, Tim Courneya with the North Harvest Bean Growers and also Gary Pauer and Gary's with the North Harvest Bean Growers Association as well. I'm gonna open up and just give you some thoughts and a little bit of an introduction, then I'm gonna ask Eric Aasmundstad with the Farm Bureau to talk about some of the sales arrangements that they've put in place while we've been here. Then I'm gonna ask Neal Fisher to give you some of the perspective as far as the Wheat Commission is concerned, Tim Cornyea will then talk about it from the Bean Growers aspect, we're gonna ask Ward Eichorst just to give you some thoughts on kind of a farmer to farmer aspect of the trip.
As you know we came to Cuba, this is a trade mission. North Dakota Farm Bureau really initiated the efforts through some of the research they've done. My office was pleased to help them set the trade mission up, to help them secure the approvals through the U.S. Treasury Department through the administration so that we could come here. And it is about marketing in new ways and of course finding new places to market North Dakota grown crops as well. And so I want to compliment all of our farmers for taking that initiative.
We feel it's been a very important week, not only because we've made progress in terms of sales agreements that have been put in place, which Eric will describe to you, but it's been an incredible learning experience in terms of us gaining an understanding of how farming is done in Cuba, also a better understanding of what their food processing capabilities are, whether it's billing or pasta production. Better understanding of how their businesses work, better understanding of what their needs are and also a better understanding of how to build trade relations between Cuba and the U.S. The other thing that is extremely important are the relationships that our farmers and these farm association members, and a lot of the folks on this trip represent farm associations, but they have now started to build relationships with the trade people here in Cuba and that's how of course, business is done, is you start to build relationships and move forward in terms of building volume and trade. So we think that those things are very important and in addition to that, it's a very interesting experience both in terms of our official meetings with the people in the trade ministries, with Mr. Pedro Albarez, the Chairman and CEO of Alimport. He has been our host throughout the trip and he has done a very good job making sure that we meet with all of the officials that are involved in the business process. But he has also provided opportunities for us, to not only get out to the farms, but to get out into the community, to go to family restaurants, to have our free time to go to the farmers markets and to do all the things that are helpful for us to gain a better understanding of Cuba. With that, I'll turn things over to Eric Aasmundstad, to tell you a little about the sales.
Eric Aasmundstad:
Thank you governor, this is Eric Aasumundstad with the North Dakota Farm Bureau, as the Governor said, we did come down here on trade mission to further the movement of North Dakota product in the new markets. Cuba is certainly a new market; an emerging market and a market that we haven't had access to for over forty years. And it's, we have to certainly have a bit of enthusiasm when we look at the possibility of being able to sell products from North Dakota to the people in Cuba and things that they need very badly. About a half an hour ago this morning, we were able to sign an agreement to purchase with Alimport, the importer for the Republic of Cuba, for four products. They are lentil peas, 500 metric tons of lentils, 500 metric tons of garbanzo beans, 4,000 metric tons of malting barley, and 5,000 metric tons of field peas, for a total value of just under $2.1 million. In metric measurement, it represents about 128 rail cars. That's significant, it's a
significant amount of dollars, it's also a very good start for what we hope is something that's gonna go on for a long time and expand and be a viable market, a viable future market for our farmers. We've also agreed to work towards further pricing some other products, such as edible soybeans spring wheat, durum, semolina pastas, dry edible beans and other, most any other product that the Cuban people would need as far as agricultural products and their food supply. This is, we certainly feel very, very encouraged by what we've been able to do here, we've accomplished most everything that we set out to do and look forward to carrying, finalizing everything and moving ahead into the trade show in September where possibly even more sales can be made. With that, I'll stop & take any questions after awhile.
Governor Hoeven:
Eric, John Hoeven again. Thanks Eric. And one of the things in addition to the sales agreement that we discussed at Alimport and that the Cuban trade people are very interested in, is our farmers returning to the trade show in September, they have expressed a very strong interest in that. And also a desire to work with these associations, with Eric and Neal with the Wheat Commission, the Farm Bureau and these other associations, in getting North Dakota farmers and processors to the exhibition in September.
Eric Aasmunstad:
This is Eric Aasmunstad again. Sept. 26-30, there is going to be a first ever agricultural trade show, food fair if you will, held in Nevada, for U.S. agricultural products. And the Farm Bureau along with others, North Dakota Farm Bureau is going to begin next week when we get back, trying to enlist the cooperation of processors and commodity groups or growers that are interested in coming to Cuba in late September to display their wears, if you will, to put North Dakota products on display down here, agricultural products on display. And we're trying to structure, if you will, a ND pavilion where we can put the state on display, the vast agricultural resource that we have, to people that need what we have very, very bad. And if we can put it, you know, we're going to certainly be taking, welcoming anyone in North Dakota that's related to the agricultural industry that we have up there, to join us in September for this very important trade show. Where North Dakota can certainly further our business that we do, and where Alimport, who is the exclusive importer for the Republic of Cuba, has said they are prepared to sign, to sign several millions dollars worth of contracts. And when you look at the vast array of agricultural products that we do produce in North Dakota, we certainly have to be encouraged that we have an inside tract on a lot of that. So that that's something that's coming up and something we're going to be working very hard on, we hope that we get a very good participation from the agricultural community in North Dakota to come back here in September and show them what we have.
Governor Hoeven:
Neal Fischer with the Wheat Commission, why don't you give us some of your comments.
Neal Fisher:
Thank you Governor. This is Neal Fisher with the North Dakota Wheat Commission. First off, I'd like to extend thank you's to the Governor's Office and the North Dakota Farm Bureau for making this opportunity available to me. We've long envied this our competitors in this very lucrative market here, which amounts to about 36 million bushels or one million tons of wheat business that goes on here annually. It's a close market, it's right off shore and there are competitors that have had their way in this market for, ever since it's been in place. We had an opportunity here to look at in a limited basis the analysis of the infrastructure that's available here we were able to tour a mill and a pasta plant. The samples that have arrived on this container were filled in a flour and some of the flour that arrived was actually baked into bread products that we can view.
Governor Hoeven:
Tell them, Neal tell them the story.
Neal Fisher:
Well it was, very, very evident that the bread products they were able, the flour sample impressed them greatly and we know that from that, we also gained some other information that we will be improvised some additional technical service, and of course, we had a presence through U.S. Wheat Associates in this market and in the last year or so. We thus far have been trying to push the door open and a mission like this can certainly help to do more of that. We will and have offered through the processing technologists here to Northern Crops Institute and received training there, we also have technicians and consultants that are available, they're well known in this region that can help us bring them along. Thus far, the success of U.S. wheat in this are, have been 5 ½ million bushels or $20 million worth of U.S. hard good winter wheat that will move to the area. That is already an upgrade from the French wheat that has been purchased here over the last eight or ten years and what we can do is take them further. I think the impressions that were left with the wheat that they milled and with the flour that they actually baked and processed here is that they are recognizing that they can step up further in the quality enhancement area. We like to make the analogy here and I think it's a good one, that we have the Cuban cigar of wheat available from North Dakota and I think that registered with them. We also know that in the Caribbean Basin, their neighbors, the Dominican Republic, Costa Rica, Venezuela, are in our top ten list of customers. We sell spring wheat in over 100 countries each year, these Caribbean Basin nations are in the top ten and they assured us and I'm quite sure that Cuba, once things are normalized, can join us in that top ten list. So I'm looking forward to the additional technical assistance that we can provide, and the scholarships that are available from the North Dakota Wheat Commission and U.S. Wheat Associates, I think
that this is the beginning of a very good trade relationship. Thank you Governor.
Governor Hoeven:
Thanks Neal. Eric Aasmundstad had a comment before we call on Tim Cornyea.
Eric Aasmundstad:
Well, I'd just like to comment again, on another part of the reason that brought us down here and that was that we shipped a sampler pack of products to Cuba that arrived just a day before we did. The sample contained green and yellow peas, four tons of each, four tons of barley, four tons of wheat and four tons of wheat flour. Now the wheat that they actually milled here while we were here and baked some bread samples there was a question by some of the Cuban delegation is this a show sample. It was such a high quality and looked so much better than anything they'd seen to date from anywhere else in the world they couldn't believe that it was something we didn't specially prepare. And in actuality we didn't specially prepare it, we went to an elevator in the Fargo area, drove a truck in there, dumped it in and went and had it bagged. So it, there was nothing special about it, and that's just a display, these people could not believe that we could raise something with such quality and have it available in bulk form for them.
Neal Fisher:
Eric, that's right. This is Neal Fisher again, I would like to add one more comment to that. That the, in actually looking at the analysis of the sample, and in the extensive amount of quality information that we were sharing with them, we found that this sample was actually three tenths of a point lower that the state average protein level this last year. So even if they just hit the middle, they can probably do better in some of their upcoming shipments or purchases of hard red spring wheat. We also should note that there is a brand new durum mill that is going to come on stream in October of 2002, which is timed extremely well, I think, with the show and that whole effort and efforts that we'll be making through U.S. Wheat (cuts out) like the quality of the samples we had minor and small samples we had a long (cuts out)
Reporter:
Hey Neal, you're cutting in and out.
Governor Hoeven:
Did you get the end, go ahead and finish the end of that.
Neal Fisher:
We're pretty certain that we will be able to impress them with our durum quality. We know we're going to have competition, maybe even from Mexico, but there are a lot of attributes in U.S. durum and northern grown U.S. durum that still far exceed those of other origins, and we're still hopeful that this will turn into some good durum business. And that mill opens this fall.
Governor Hoeven:
Okay, Tim Courneya with North Harvest Bean Growers is going to give a few comments next.
Tim Courneya:
I too would like to, excuse me, this is Tim, with the North Harvest Bean Growers, I too would like to compliment the Governor and the Farm Bureau for all the efforts they put together, on behalf of Northern Dry Bean Growers and the State of North Dakota and (cuts out). Again this market is a relatively mature importer of dry beans, so in that range of age, 100,000 extra tons, that class of beans that they do prefer match up very well with what (cuts out). There are two very important things that we learned on this trip that we are on...
Reporters:
Hey, you're cutting in and out there man. Speak up. Gotta get closer to a mike.
Governor Hoeven:
Okay, he'll come over to the mike so you can hear him better.
Tim Courneya:
Okay I'm here now, can you hear me?
Reporters:
We can hear you fine. Much better. Talk up.
Tim Courneya:
The two very important things that we did learn on this trip, that we never learnt on the one before, one being is the total mechanics that are involved in regards to when Cuba will actually make an inquiry. We got to learn and visit with the people that are instrumental in the contract negotiations which we never, you know, were unaware of who they were, and personally got to meet them. The second thing is we know this is going to be a very competitive market in relationship to the export business as we call it, in regards to pricing. And our competitors, you know for this last year, would've been China. One derogatory thing for the country of China in servicing this market is that it does take them approximately forty, or a month and a half or forty-two days to reach here. Therefore, Cuba does have to buy in very large volumes to meet their consumer demands and actually buy many months of beans at one time from China, and therefore, provide a lot of storage, has to
be, you know the country has to provide for these beans for a lot of storage. Whereas, in the instance or the, instances with the U.S., we can practically reach them in approximately one week's time or seven days. Therefore, in taking all that into consideration, it looks like we, based on the classes that meet to their consumer demands and then being able to reach them quickly, we may have some forms, in most years a way of being very competitive and I look at this being as, we possibly could grow this market into a number one or number two trading partner.
Governor Hoeven:
Thanks Tim. Next you are going to hear from Ward Eichhorst. Ward's a Farm Bureau member and farms up, I believe, in the Velva area. Go ahead Ward.
Ward Eichhorst:
Good morning. Thank you Governor Hoeven and your staff for helping with this trade mission and to my colleagues at North Dakota Farm Bureau. From an agricultural perspective, and as a farmer in Cole Harbor, North Dakota, we all noticed the following and that is that government officials and farmers here are very dedicated to the agriculture industry. That was quite evident, due to the facilities, the milling facilities that we saw, we saw a spring wheat facility, along with a pasta facility, where they were producing elbows and spaghetti. We also saw the cooperative farms, we saw a vast array of different produce that was at these farms, the handling of the produce that is being grown here is very good. They have some very nice quality fruits and vegetables. This is important to the Cubans, as the export of these commodities are actually being used to purchase commodities on a cash basis, either from us or other countries. We also noticed the nurturing of the soil by the farmers here, very clean, particularly their orchards. They do a very good job with the manicuring of some of the trees, they have a very deep red soil, comparable to something you might observe in the State of Oklahoma. We also saw, or were shown, the grafting of roots, for example, for papaya plants, basically, they're doing things of this nature, to increase their food supply here and become less involved with importing of things. Basically to try to meet their own needs with the limited acreage that they have here to work with. We noticed changes with the infrastructure that they have here, for example, with their grain storage and handling facilities, they are trying to upgrade in that area, again, to facilitate future trade. As Neal eluded to earlier, they have, I believe on the east end of the island, plans for a new durum facility that will, in all likelihood, be operational later this year, so they are doing things in this arena to allow more efficiency. We noted at the pasta facility that we saw, they took out three processors that were, I believe, capable of doing three tons each per day and they replaced that with one unit that is capable of processing ten to twelve tons of pasta per day, so we were, we were impressed with that. And finally, I would like to add that we were all very impressed with the Cuban delegation and the people here, with their openness, especially during conversation and dialogue, their hospitality and their genuine concern for their people. And their desire to conduct a long-term trade relations with the producers of North Dakota and Minnesota. Thank you.
Governor Hoeven:
Thank you Ward. John Nelson has joined us, he's both a farmer and a state legislator, so he's going to give you a couple of thoughts and then we'll take your questions.
John Nelson:
Thank you Governor. I think the, this has been a great trip, from my perspective, not only, in addition to the commodity groups that were displaying and negotiating on their particular products, the support staff that was here. Neal Fisher's ability to give the quality of our spring wheat was invaluable. Their, the Cuban people that are in charge of the purchasing, were just very impressed with the presentation of the quality factors of the wheat. I think that's a major, a major improvement in relations on that front. And now they're aware of some of the advantages that we have in North Dakota as far as our labs at the MCI and some of the things that we can offer some assistance to them in their baking and their milling as they move into the future. So I think it's truly opened the doors in a lot of front. I think the other thing is that I'll take back, is that this is a very beautiful country, it's, the people truly want to have better relations with the people of our country and North Dakota. We've made a great first step and I think as we move forward we will be positioned in a very good place as trade opens up between our country and Cuba, and it'll put ND in the first tier of states that are able to trade with Cuba and that will have huge implications in the commodities that we raise in North Dakota.
Governor Hoeven:
Thanks John. Again, that's John Nelson, he's a Farm Bureau member, a farmer and also one of our state legislators. So with that, we have some time for questions.
Reporter:
Governor Hoeven.
Governor Hoeven:
Yeah, whoever's asking
Jeff Alexander:
Governor Hoeven, Jeff Alexander. With cash transactions illegal between U.S. and Cuba and with Cuba's apparent non-ability to pay some of their bills, what assurances do you have that they'll pay for the products they buy from North Dakota?
Governor Hoeven:
Jeff, I'm not sure that I caught your question just right, but cash sales are legal in food and medicine and these are cash sales that our growers have put together here.
Jeff Alexander:
And there's been some speculation that they at some times don't pay their bills, what assurances do you have that they will pay?
Governor Hoeven:
Again, these are cash sales and that's allowed under the law and their structured that way and obviously the sale is based on payment of cash. Eric, did you, Eric Aasmundstad also wanted to respond to that.
Eric Aasmundstad:
Well, Jeff, what the Governor says is absolutely true. Federal law, U.S. federal law says that the only, the only sales to be made are cash sales. It is illegal for either public or private financing to flow to the Republic of Cuba from the United States for any reason.
Reporter:
When do you get the cash?
Eric Aasmundstad:
They get the cash generated through their tourism industry...
Reporter:
No, no, no, I don't care where they're getting the cash from, when are we getting it, when are you getting paid?
Eric Aasmundstad:
When a shipment is made, law requires that the cash be deposited in a U.S. bank account within 72 hours of arrival at the port. That is the criteria. It has not yet been breached, it will not be breached, because the Republic of Cuba at this time in their existence, cannot afford to alienate any company or business in the United States that they need to trade with so badly, if they reneged on one payment, there would be nobody else to do business with them and they're not going to take that chance, they can't afford to.
Janelle Cole:
Well, Eric and the Governor, I understand that there's many people, in fact some people on the delegation that may have spoken in the past in favor of going to finance sales, which I would assume means the same as credit sales. Is it true that some members of the delegation, the Farm Bureau or the Governor, are in favor of those kind of finance or credit sales?
Eric Aasmundstad:
North Dakota Farm Bureau has never made a statement saying that we favor credit sales. Three words that we live by, cash is good. Although it will happen someday, we realize that, but right now we don't worry about that because we have to operate within the parameters of federal law. And federal law says that the only sales that can be made are cash and we're not going to, we're not trying to do anything but sell goods that we produce in ND. That has to be done in cash, we work within the federal law, we move forward.
Dale Wetzel:
Do you see any potential for exporting finished goods to Cuba and not just commodities?
Eric Aasmundstad:
I would say certainly, as the Cuban economy develops and expands and their tourist industry becomes a more viable industry, and as they build that industry, they are going to need more finished goods to satisfy the pallets of people coming from other parts of the world & not just the Cuban pallets. So certainly we are going to see an expansion of processed goods.
Governor Hoeven:
That's part of the, Dale, John Hoeven, that's part of the plan for their September business exposition is that it would be not just commodities, but processed food products as well.
Dale Wetzel:
I guess where do you see as a being potential for selling North Dakota produced finished goods in Cuba?
Governor Hoeven:
Well, clearly, things like pasta, bison, what finished goods would you anticipate?
Eric Aasmunstad:
Just about anything that we produce that you can find in a U.S. supermarket. Pasta certainly has to be one of the big processed products that we're looking at. It's a growing taste for the Cuban people, and it's certainly something that we can produce in abundance and that's gotta be one of the top things.
Neal Fisher:
Neal Fisher, I couldn't help but notice as we visited with some of the Cuban folks here, that dairy products, and dairy heifers for that matter and egg products and that kind of thing, might be something to be considered as well, I don't have expertise in those areas, obviously. I think that's something that we all recognize as we go into any of these markets that there's a desire on the part of many of these countries to process their own and to generate some employment in that manner. Obviously, there is an orientation towards the raw commodities, the wheats, the durums, and we do well at that as well in a lot of the other neighboring countries here. So I think that certainly, they are interested in pasta and semolina, and yet I think our obvious advantage is maybe in the raw commodities right now, but there are, there's a list on their shopping list they have included, pasta products, which obviously we have some identity in North Dakota with that as well.
Dale Wetzel:
Can you tell me if they've done anything with the commodities that they've received thus far that were included in the shipment? I mean, have they cooked the beans, have they ground the wheat?
Governor Hoeven:
Dale, one of the, after they opened the freight of the shipment, that night, they actually took the wheat flour and baked it into bread products which when we met them next morning with some of the people that place the sales orders here in Cuba, with Alimport, they had the product baked into, or the wheat flour baked into a variety of bread products already. And I guess I'll ask the rest of the group, did they actually process any of the other products?
Neal Fisher:
This is Neal Fisher. I thought those bread products were quite impressive and they thought so also and I think that was a good testament to the quality that the producers of North Dakota provide to customers. There was also some discussion later on with some of the other folks from Alimport, that in looking at that wheat, and I'm not absolutely sure that they had milled some of the wheat sample that came in, but they, there was some discussion about having a better extraction rate, more kernel uniformity than the wheat, certainly, that they had been receiving from France. So whether those were expectations or whether they actually milled them, I can't say for sure, but they were impressed nonetheless with the samples relating to wheat and flour that they had received.
Governor Hoeven:
Also, if you look at the sales agreement, you'll see that yellow or green peas, that's about one million dollars, that was included, pea samples were included in the shipment as was malting barley.
Ward Eichhorst:
This is Ward Eichhorst. Yesterday I had an opportunity to take an individual with Business Week to the spring wheat milling facility, which is where the 5 commodities are at the present time. And we had an opportunity to preview those commodities, but as of yesterday afternoon, all 5 commodities were on pallets in a warehouse at that spring wheat facility.
Janelle Cole:
Governor, your office told me that the reason that you weren't meeting with dissidents as the Cuban/American National Foundation wants, that the reason that you weren't doing that was because you're also not meeting with Castro. But I guess yesterday you met with the Cuban Foreign Minister and I'm wondering if meeting with any member of Castro's government isn't the same as meeting with Castro himself by proxy?
Governor Hoeven:
The way that I've approached it is that this is a trade mission and that our focus is to try to open doors for our farmers to get sales agreements and so that fairly, I'm here trying to help them do that & I have to keep that in mind in terms of any of the meetings that we have.
Janelle Cole:
So you don't want to irritate Castro by meeting with the dissidents and that could screw up some sales, is that the deal?
Governor Hoeven:
Janelle, if I could finish my answer, then I'd be happy to take the next question. So, again, I'm just saying the focus here was on meetings. Now, when I was offered a meeting with President Castro, I felt that would be a political meeting and so I said no at that point, that I would agree to meet with President Castro only if I also had a meeting with the dissidents. That was the basis on which I would be willing to do it. And at that point, the Cuban officials felt no, better to just have trade meetings. And so that's what we've done.
Janelle Cole:
Alright.
Dale Wetzel:
When were you offered a meeting with Castro?
Governor Hoeven:
I mean I think I addressed your second question.
Janelle Cole:
Yes.
Dale Wetzel:
When were you offered a meeting with Castro?
Governor Hoeven:
Correct. Did I cover, Janelle did I cover the second part of that?
Dale Wetzel:
When were you offered a meeting with Castro?
Governor Hoeven:
Both the, that invitation was extended both before I came and while I was here.
Mike Tanner:
Governor Hoeven, it's Mike Tanner at WDAY. Can you hear me?
Governor Hoeven:
I can, we've got a lot of stuff going on in the background, so it's a little tough, but go ahead.
Mike Tanner:
I apologize for that. Governor, your perceived need for Cuba to import food before you got there and the reality of the situation after you've been there for a few days, what are the differences there?
Governor Hoeven:
You know, I think it really is hard to understand the situation in Cuba without coming here. We have learned a great deal in terms of how their government operates, in terms of how their economy operates. We've learned a great deal about their farmers, what products they need, what their processing capabilities are. I think we've learned a great deal in terms of a desire by the people to have a relationship with the United States and they see trade as a step in that direction. So, you know there's no question it's been a significant learning experience in that respect and we also now have a better understanding of the dynamic and the debate that's going on in the United States. And that, of course, that is, do we go ahead and normalize trade relations now or are there some conditions that should be put in place first and that's of course what we're working through in terms of U.S. trade policy right now. And we've gained a much greater understanding for that.
Dale Wetzel:
Do you think you've seen in your trip what they wanted you to see? I mean you've been talking about how, you know it's been mentioned by various speakers, about how the farmers take care of their land and you have a much more understanding of the way things work than you did before. I mean, how much of the picture are you really getting? Are you seeing what they want you to see?
Governor Hoeven:
Well, that's why you know, it was very important to us to not only have a schedule that included visits where they took us out and had various trade officials, Minister of Agriculture, Cuban farmers and so forth with us, but that they, that we also built time in the schedule to go out on our own. For example to go to a family owned and operated restaurant on our own, without any escort, to get out into the farmers market, to get into the dollar stores, so we tried to do both Dale. We worked very hard to get off on our own, as well and see things so that we could make that kind of evaluation, as well as go, you know we were free to walk around Havana on our own as well and our folks did get out and do that. Some of them here can tell you whether they got a good perspective as well.
Eric Aasmundstad:
Dale, you certainly gotta take into consideration that yeah, they showed us what they wanted us to see as far as farms, as much as we would probably do if they came there. But when you look, when you open your eyes and you watch what's going on around you and you talk to people around you and pick up on little nuances, and the, you know you watch the population and talk to people off to the side and what have you, you do get a perspective of how things actually do work here and the need for business with our country and the need to further relations, it's obvious. And the Governor is very right when he said that you really can't understand what goes on down here until you come down here, it's amazing. This is the second time I've been in here and I tell ya I thought I learned a lot the last time, I learned as much this time as I did last time and I'm sure I'll learn as much again if I'm ever able to be in here again. It is something of a, it's certainly a different system and a different way of life than we're used to, and a person, you do, you learn a lot and it's hard to describe it.
Mike Hergert:
Eric, this is Mike Hergert with the Red River Farm Network in Grand Forks. Can you give us a timetable on this $2.1 million agreement?
Eric Aasmundstad:
We have to have it completed in one month.
Dale Wetzel:
Can you talk about how much each of the commodities are worth please?
Eric Aasmundstad:
Yeah we can.
Governor Hoeven:
This is Eric Aasmundstad.
Eric Aasmundstad:
Yeah, Eric Aasmundstad of Farm Bureau. The lentils carry a value of approximately $157,500, the garbanzos or the chickpeas, carry a value of approximately $235,000, the barley valued would be approximately $592,000 and the peas would be valued at approximately $1,075,000 for a total of $2.059 million, just under $2.1 million.
Dale Wetzel:
What is the demand for malting barley in Cuba, is there a big beer industry?
Eric Aasmundstad:
There's a big beer industry in Cuba, they brew a lot of beer here, it's a market that is certainly going to be hard for the United States to access and to tell you the truth, I was kind of surprised that they wanted, that we could compete. The French are very, very hard to compete with on barley because of their export subsidies and they target, Cuba's one of the countries they target. So, it was very surprising and quite gratifying to see that they were very willing to buy 4,000 metric tons of barley from us, which amounts to, it's 192,000 bushels roughly, and, or you know, darn near $600,000 worth. So it's good to know that they're interested in that and that there is a possibility to move those things into this area.
Neal Fisher:
This is Neal Fisher. I think, you know it's important to recognize the competitive forces that will be intense in this market and it isn't going to be a rollover by any means. In fact, in the case of U.S. wheat moving into this market, it took some nine visits and nine contacts here from U.S. wheat personnel, from the Mexico City office and the Washington, DC office. And many of the trial shipments coming through the food and medicine donation program, which by the way included some spring wheat flour at that time as well and now that has resulted in some $20 plus million worth of business this year in 5.5 million bushels of U.S. wheat. So we may find ourselves moving along more slowly than we had hoped, but that's kind of the way this has been developing over time and as relations become more open, that can hopefully get better.
Eric Aasmundstad:
This is Eric Aasmundstad again. I'd like to emphasize that this sampling that we sent down of twenty tons of products, although it be small, it was not a donation. It was a cash sale and that's what we have to build here, we have to build customers, we don't want to build a cherry case, we need to build customers. And that's the constant theme that we are going to work with with these people is that they need to become our customer.
Janelle Cole:
Eric, I think you talked about the wheat that was loaded up out of a Fargo elevator and it wasn't a show sample, what Fargo area elevator was that exactly?
Eric Aasmundstad:
It came from Peterson Farm Seeds out of Prosper.
Janelle Cole:
Thank you.
Mike Hergert:
Eric, Mike Hergert again in Grand Forks. We talked yesterday morning and you indicated that the Cubans were trying to make some political statements throughout your visit. Did you get the feel that that was part of their anxiety to have you there or were they legitimately interested in building a market here?
Governor Hoeven:
This is John Hoeven, who was that question addressed to?
Mike Hergert:
Either one of you.
Governor Hoeven:
Well you started out by saying that I that somebody talked to you yesterday?
Mike Hergert:
Eric.
Governor Hoeven:
Oh, Eric.
Eric Aasmundstad:
Well Mike, they, sure you know, the Cubans were very interested in making some political statements, that's how they do business. They want to, you know they think they can have an influence through us on our political system and try to get some of these things taken care of sooner. What we've told the Cubans consistently, and Governor Hoeven has said this with great consistency all through the trip, that we're gonna, the Cubans will accomplish far more in bringing down the barriers that they want to bring down, by trading with us, by expanding the business they do with the United States and getting more people aware of what we're doing here. And the business that they are willing to do with us in the United States, importing our products and working in a business fashion is going to do far more to change things than constantly trying to do a political show. And that's something that I think the Governor was very, very successful in relaying to these people and impressing upon them and I think that today when we leave I really, truly do believe that they have a good understanding that we're right when we say that.
Dale Wetzel:
Do you know why they didn't buy any wheat?
Governor Hoeven:
That would be one for Neal Fischer. Neal you're on the spot man, why didn't they buy any wheat?
Dale Wetzel:
Neal is your wheat to lousy to buy, what's the deal here?
Neal Fisher:
The, actually the status quo here right now, is to import cheap French wheat, as we've had, as we heard in the earlier example there on the malting barley. Heavily subsidized rather low protein & extremely low priced French wheat. The upgrade that has taken place thus far is for U.S. hard red winter wheat to move in at about twelve, twelve and a half protein level, it would be another serious upgrade for us to go to the spring wheat and durum. I guess, exactly the opposite is true, we're probably priced a little high right now, but we think that with the technical systems and with the demonstrations that have gone on here already, that their eyes have been opened to this kind of quality. That's not foreign to them, because when the Russians were feeding them, Canadian wheat moved in here at that time, sponsored by the former Soviet Union. So they have some familiarity, they need to be reintroduced, it's been ten years now or so and this will, I think, eventually occur. We have people from the U.S. Wheat Associates Office in Mexico City that services the Caribbean Basin working this beat very actively. And as I said it was last May, was their ninth trip in here, that will continue to go forward, as will now the new efforts that we have offered through the Northern Crops Institute and our scholarship program there.
Dale Wetzel:
Did they explain to you why they didn't buy any wheat?
Neal Fisher:
They've already purchased $25 million of U.S. hard red winter wheat. In this case they will be looking at the prospects, much as they will some of the other commodities, I think, that we have offered from North Dakota.
Dale Wetzel:
When are the Cubans coming up to North Dakota? Did I understand you to say that there is some kind of exchange program now?
Governor Hoeven:
Dale, this is John. Discussions we had in that regard, is that as normalization of trade relations move forward and there are opportunities to exchange technical assistance, in terms of food processing and that types of thing, that we have scholarships and programs available. It is legal for North Dakotans to come down here and provide technical assistance, we discussed that, that's something that is of interest to them and I think there's also an interest in Cubans coming to North Dakota and other parts of the United States, but again that depends on continued, for the process of normalizing trade relations.
Dale Wetzel:
But there haven't been any arrangements made yet?
Governor Hoeven:
No, the main discussion right now, was what technical assistance they might be interested in and what we have available. I think that's something that will be discussed further in September, at the Agri-business show.
Dave Thompson:
Where physically are you placing this call from? Where are you right now?
Governor Hoeven:
Here at our hotel right now, in a conference room placing this call.
Dale Wetzel:
In Havana, I presume.
Governor Hoeven:
In Havana, yes.
Dale Wetzel:
When are you leaving?
Governor Hoeven:
Soon as you guys stop asking questions.
Dale Wetzel:
I mean, when are you scheduled to leave the country?
Eric Aasmundstad:
Literally, as soon as you stop asking questions.
Governor Hoeven:
We have to be, we're supposed to be at the airport at about 1:40, we'll be leaving, you know couple hours, within a couple hours.
Kathy Ibach:
Governor, you have about 10 minutes remaining on the line until they'll be closed.
Dale Wetzel:
Did they talk about the opportunity to export sugar to the U.S. and if they did, what was your response to that?
Eric Aasmundstad:
This is Eric Aasmundstad. The, actually, just the opposite was true, but, the Cubans aren't going to export sugar to the United States, not now. Could they in the future? Who knows, we don't have a crystal ball here? But what the Cubans are doing, is they're taking roughly 50 percent of their sugar, the land devoted to sugar production, out of the production of sugar, into the production of fruits and vegetables to try to feed their people. The, also, the infrastructure of their sugar industry is so dilapidated that they can't, they can't expand beyond the markets they have now. And the sugar they're producing now is dedicated to Russia in exchange for oil and any expansion of that business is going to be very, very difficult for them to do. So the sugar, I guess to really cut to the chase on this one, the beet sugar guys in North Dakota do not have to worry about competition from the Cubans now or anytime in the near future.
Governor Hoeven:
Yeah, this is John Hoeven again. They made it very clear they are not looking to export sugar and they also showed us where they're actually converting a lot of that of their agricultural area to citrus production, which is something that they are expanding export of, is citrus.
Dave Thompson:
So what you're saying to us is that they need to refine their sugar industry?
Governor Hoeven:
Well said David.
Dale Wetzel:
How would you describe their processing infrastructure? I mean you mentioned visiting mills, etc., I mean are these mills are they state of the art mills, are they in good shape or how would you describe them?
Neal Fisher:
This is Neal Fisher. I, the observation we made and the upgrades that they're doing here, I think some of the mills, based on what we saw and some of the conversations I had with the technical people need some attention, in fact there are a couple that are going to be closed down. You've heard about some of the updates in the pasta line from Ward, where they converted three older pasta lines into one more efficient. That was top grade, top drawer Pavon equipment out of Italy. And also in the milling industry, those of you who know milling, Buhler is the Cadillac or the Mercedes and that is the equipment that they're installing and I assume that will be the same, or that was what I gathered in that durum mill that's going in, will be opened in the fall, in October. So, they have some work to do, I think they are paying attention to that, by the indications we saw and we actually saw Buhler equipment, Pavon equipment in these plants, as I said, those are very reputable companies in the milling industry worldwide.
Dale Wetzel:
I don't mean this to maybe sound the way it might. But when they tell you how wonderful the flour was and how the wheat looked good etc., etc., did you think they were being sincere or were they just being nice to you?
Neal Fisher:
Well, the product we saw that they had actually baked from the flour looked very good & it's similar to what I've seen in a lot of other markets where DNS flour has been used as the blending material that it's intended for to upgrade indigenous products or those that are lower quality, lower priced from other origins. So I think we have no reason but to take them at their word. Obviously that won't be the last call, we will have a lot of other technical contact with them as U.S. Wheat Associates already has that on-going stream of information. We intend to continue to follow that line and these are, as in all markets, you're never done, you continue to be patient, to try to address new problems and to bring them along and that's what we'll try to do here.
Dale Wetzel:
What are you all bringing back with you?
Eric Aasmundstad:
Bunch of dirty clothes and some contracts. Say the one thing that we have to keep in mind here and keep our eye on, is that when we came down here, we come down here with one specific purpose and that was to further markets for agricultural products from the State of North Dakota and it's producers. We've done that; we've accomplished everything we came here to do. We're coming back with an agreement by the Cubans to buy these products from producers in the State of North Dakota and to work towards agreements to buy more and that is what we wanted to do.
Governor Hoeven:
We'll wrap it up.
