Chicken a la Cubana
The Alabama poultry industry will be among the biggest winners in a thaw in U.S. relations with Cuba. Already, up to 10 ships a year carrying 4,000 tons of frozen poultry ship from Mobile to Havana. Lift the tourism lid and it really gets cooking.
Breakbulk poultry is loaded at the Alabama State Port Authority’s Pier A Refrigerator/Freezer terminal operated by Seaonus. Eight to ten ships a year, each laden with some 4,000 tons of poultry, leave the Docks headed for Cuba.
Photo courtesy of Alabama State Port Authority
Americans love chicken — no surprise here — especially white meat, consuming an average of more than 80 pounds per person per year. Many of those tasty birds we devour are from Alabama, the second largest broiler producer in the United States, just behind Georgia.
Ever wonder what happens to our unwanted dark meat? It ends up in Cuba and other countries, where dark meat’s richer flavor is preferred.
Though the Cuban embargo remains in place, President Barack Obama’s recent reforms make it easier to sell U.S. agricultural products to Cuba. About 10 percent — or $32 million — of Alabama’s total poultry exports of $312 million were shipped to Cuba in 2014, according to Alabama International Trade Center Director Brian Davis.
The United States began exporting Alabama poultry to Cuba in 2003, peaking at nearly $42 million in 2012.
“Cuba provides another market for Alabama poultry and helps spread the customer base around the world; the idea of not having all your eggs in one basket,” Davis explains. “This comes at an opportune time, when other foreign markets have abruptly closed, Russia and China.”
Davis points out that although poultry exports to Cuba in 2014 represented less than 1 percent of Alabama’s total exports, the state needs every foreign market and purchase from abroad it can get to maintain growth in exports above the $19 billion market, which was the total of all Alabama exports in 2014.
It’s the back half of the chicken, the leg quarters, which are mainly shipping to Cuba. Export is generally the large birds slaughtered at 8 pounds.
The United States has authorized farm exports to Cuba since the Trade Sanctions Reform and Export Enhancement Act of 2000. That’s when “a flurry of companies” started trade missions to Cuba, where the government held food shows to bring together the buyer (the Cuban government) and the sellers, recalls Toby Moore, vice president of communications for the USA Poultry and Egg Export Council in Stone Mountain, Georgia.
USA Poultry and Egg Export Council President Jim Sumner met with Fidel Castro on several of these trade missions, which included banquets where Castro would give long speeches. Says Sumner: “Castro said that Cuba was unable to competitively grow chickens, and it was in their best interest to import poultry. So they have been a major buyer since 2000.”
The U.S. Southeast poultry market is one of the strongest in the world, says Davis, and is enjoying a competitive advantage in terms of economies of scale in production, productivity improvements and proximity to key U.S. ports of exit for overseas markets. And, he says it is easier for many markets to buy from the Southern states at a competitive price, rather than “grow their own” or purchase from other supplier countries with less quality and reliability.
“Cuba is one of our biggest markets,” says Moore. “At the end of last year, it was the fifth leading market. And it’s almost totally a leg quarters market, which has been strong for the past three to four years.”
Tyson, Pilgrim’s Pride and other major chicken producers operate poultry processing plants in Alabama, where chickens are slaughtered, cut and packaged — then loaded onto refrigerated trucks. Because U.S. consumers prefer white meat, there are more leg quarters than retailers will buy, so the excess goes into cold storage.
Trading companies buy the poultry and consolidate it from a number of chicken producing states. So it’s difficult to determine where the chicken being exported to Cuba originates. Say a farm in Cullman grows chickens for Pilgrim’s Pride. After the chicken is processed, unless it is sold specifically to a retailer, such as McDonald’s, or a grocery chain like IGA or Kroger, it’s hard to track where it ends up.
Moore says poultry companies also export, but it is easier and cheaper for them to sell to a trading company than operate their own export division. The export business is complex and each country has different requirements. Cuba has different regulations than Jamaica, for example.
Transactions are cash only and cannot involve U.S. banks, a system suppliers favor because they get paid right away, notes Moore. “With the new warming of relations, this may change, with U.S. banks getting involved and credit being offered, which will add an element of risk.”
Trading companies do the lion’s share of exporting, and these are typically small, privately held companies with buyers throughout the world, working with suppliers, Moore adds.
Ray Hilburn, associate director of the Alabama Poultry and Egg Association in Montgomery, agrees that it is difficult to know exactly how much chicken going to Cuba is from Alabama, since brokers buy from a number of states.
As of 2006, a full quarter of Alabama’s agricultural revenue came from exports to Cuba, writes Jennifer Harris, a senior fellow for the Council on Foreign Relations, in “The Winners of Cuba’s ‘New’ Economy” in Fortune Jan. 14, 2015. She names the Southeastern farmers the biggest winners in the United States’ efforts to restore diplomatic relations with Cuba.
According to Harris, the Southeast’s proximity to Cuba makes its poultry and other agricultural exports especially competitive. It takes just two days to travel to Cuba from the Gulf Coast, a significant advantage for leg quarters and other highly perishable goods.
Such proximity puts the Port of Mobile at a distinct advantage. Every year, eight to 10 ships leave the Alabama State Docks and head to Cuba carrying 4,000 tons of frozen poultry per ship, according to Judith Adams, Alabama State Port Authority’s vice president of marketing.
The Alabama State Port Authority partners with Seaonus, a Jacksonville, Florida-based company that provides refrigerated warehousing. The company’s 2 million-cubic-foot facility at the state docks handles perishable imports and exports worldwide, from short jaunts to Cuba to halfway around the world to New Zealand. The on-dock facility can process 350,000 tons annually and is rail served. The terminal handles both general cargo and containerized refrigerated cargoes.
Mobile is one of the few U.S. Gulf ports with cold storage blast freeze capability. Other Gulf ports with cold storage that serve U.S. sanctioned trade to Cuba are in Fort Lauderdale, Jacksonville, New Orleans and Freeport, Texas. Adams says that brokers could also be shipping Alabama poultry from these ports.
Cuba isn’t the only destination for U.S. poultry shipping out of the Port of Mobile. Adams believes China will lift its recent embargo on importing U.S. chicken but believes Russia’s embargo may not be lifted so soon, because of the wider and deeper political conflicts between the U.S. and Russia.
In a recent survey said to be the first independent poll in Cuba in decades, most Cubans say they are optimistic about economic reform from President Barack Obama’s decision to re-establish diplomatic ties with Cuba, and 97 percent say normalizing relations with the United States is good for their country.
According to a recent Washington Post-ABC news poll, 68 percent of Americans support ending the trade embargo to Cuba, up from 57 percent who said so in 2009. And support for increased trade is strong across party lines.
If tourism from the United States opens in Cuba, the USA Poultry and Egg Export Council predicts that the poultry market will get even bigger.
Tourism is one of Cuba’s top industries generating foreign exchange — which, in turn, enables the island nation to pay for imports, Davis adds.
“To the extent the Cuban economy is deregulated and inbound tourism continues to grow, then I anticipate growth in trade in poultry from Alabama, albeit with yearly ups and downs typical with this type of an emerging market with centralized, government purchasing.”
Jessica Armstrong is a freelance writer for Business Alabama. She lives in Auburn.