U.S. farm exporters get boost from sanctions reform

WASHINGTON (Reuters) -- U.S. exporters have sold about $90 million worth of U.S. farm goods to Iran, Libya and Sudan since sanctions were eased last year, offering support for lawmakers who are looking to do the same for Cuba, a government official said Thursday.

Republican leaders this week tentatively agreed to make it easier for U.S. firms to sell food and medicine to Cuba, potentially opening a market worth millions of dollars for U.S. producers.

Cuba, Iran, Libya and Sudan are among the countries on the U.S. list of state sponsors of terrorism. Their governments are not eligible for most forms of U.S. aid.

The USDA estimates sanctions against the four countries plus Iraq and North Korea cost U.S. farmers about $500 million a year in lost-sales - equivalent to about 1 percent of U.S. agricultural exports.

In August 1999, the Clinton administration eased sanctions on Iran, Libya and Sudan, allowing sales on a case-by-case basis. The countries have since purchased $75 million worth of U.S. corn, or 909,000 tons, and $25 million worth of U.S. wheat, or 127,000 tons, a U.S. Agriculture Department official told Reuters on condition of anonymity.

Iran, one of the world's largest importers of farm goods, is estimated to import 7.5 million tons wheat this year.

Farm groups said the potential market for U.S. farmers in Cuba could be similar, since it already imports millions of dollars worth of commodities from Europe and Asia.

"Cuba is closer and has already indicated they wanted to buy from us," said Dawn Forsythe, a spokeswoman for the U.S. Wheat Associates. "This is a potential million tons market for us."

Cuba imports about 1.1 million tons wheat and 400,000 tons rice annually, according to USDA figures.

Forsythe added that if Congress eases sanctions against Cuba, there would still be much work to be done since the United States hasn't participated in its market for four decades.

Farm groups said allowing U.S. farmers to access to the Cuban market would help alleviate recession-era commodity prices. The USDA estimates the lowest crop prices since the mid-1980s due to a record corn and soybean harvest this year.

However, some farm experts disagree, saying that new crop export markets would help little in raising commodity prices for U.S. producers.

According to a study by the University of Tennessee, the greatest impact on new export markets on crop prices occurs during the first year, with prices dropping by at least 35 percent in subsequent years.

"After the first year...the price impact dampens as farmers respond to changes in the price of one crop compared to the price of another by altering the mix of planted acreage," said Daryll Ray, agronomist at the University of Tennessee and co-author of the study.

The Cuba amendment is being considered on Thursday as part of House-Senate negotiations on a $75 billion agriculture funding bill and may go to a House vote on Monday.

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