Wednesday, November 14, 2007

Canada increases wheat sales to Cuba at expense of US

This is rather surprising. One would think that the strong US dollar would make it more expensive to buy from Canada. No doubt the wheat has to be shipped further as well. Probably the increased sales are a result of the obstacles the US administration has put in place that are decreasing US sales.

HAVANA, Nov 6 (Reuters) - Cuba signed a contract with the Canadian Wheat Board on Tuesday to buy 150,000 tonnes of wheat, a sign that Canada's food sales are recovering at the expense of U.S. exporters.

The president of the Cuban food import agency Alimport, Pedro Alvarez, said the wheat purchase for delivery next year was worth about $70 million.

Cuba also bought 100,000 tonnes of peas and 3,000 tonnes of powdered milk from Canadian companies at the annual Havana trade fair, deals worth another $75 million, he said.

Cuban food purchases from Canada will increase 40 percent this year due to difficulties in buying from the United States, which is requiring payment before shipment on food sales under an exception to the U.S. trade embargo against Cuba, he said.

"We are signing with the Canadian before the Americans," Alvarez said.

Canada exported 89,000 tonnes of wheat to Cuba in the 2006/07 marketing year, which ended July 31, according to Canadian Grain Commission statistics.

The previous year, Canada shipped 177,000 tonnes of wheat to Cuba -- its biggest exports to the country in the previous decade. The 10-year average is 77,500 tonnes.

Communist-run Cuba, which depends on imports to feed its population, imported 510,000 tonnes of wheat last year.

Canada is the main market for Cuba's tourist trade, with some 600,000 Canadians visiting Cuban beach resorts each year. Canada's Sherritt International (S.TO: Quote, Profile, Research) is the largest foreign investor in Cuba, mining nickel and producing oil.

U.S. food exporters edged out Canadian rivals after they were allowed to sell to Cuba seven years ago. But Cuba is forced to pay in cash and the Bush administration made things harder in 2004 by requiring prepayment. U.S. sales peaked at $392 million in 2004 to fell to $340 million last year.

"We compete with the Americans all around the world, so we are very happy about this signing," said Greg Arason, president and CEO of the Canadian Wheat Board. (Reporting by Marc Frank; Editing by Anthony Boadle and Matthew Lewis)

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