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Local wheat goes global

News editor

Marion County wheat could soon find its way into bakeries in Havana, Cuba, if recent efforts to lift the 53-year-old trade embargo with the island nation are successful. Paul Penner of Hillsboro hopes they are.

Penner has grown wheat since the late 1970s, and for more than a decade, he’s worked with state and national organizations to promote wheat and open new markets. Penner just completed a term as president of the National Association of Wheat Growers, which has advocated opening the Cuban market.

“Once you get past the politics of it, it’s a no-brainer,” Penner said. “For Kansas it would be a winnable thing, because they would likely import hard red winter wheat.”

Cuba had limited wheat trading with the U.S. until 2011, Penner said. A change in U.S. purchasing policy restricted Cuban credit and demanded cash payments for grain shipments, and Cuba now buys most of its wheat from Canada and the European Union.

“We could’ve dominated that market easily if we’d have agreed to more lenient credit terms,” Penner said. “They’ve always found a way to pay their bills to the suppliers they’ve purchased grain from, so that hasn’t been an issue.”

Cuba imports 500,000 metric tons of wheat, Penner said. With the island just 90 miles off the Florida coast and advantages in transporting grain to the Gulf Coast for shipping, he estimated the U.S. could corner 80 percent or more of the market.

While farmers lost buyers because of the embargo, Penner said it’s hurt the quality of life for Cuba’s citizens, too.

Another trade agreement in the works could also open more markets to Marion County grain. The Trans-Pacific Partnership would eliminate protectionist tariffs countries charge on imported wheat that artificially increase prices for buyers, Penner said.

“I think there would be growth, and especially as the population grows in size,” he said. “Most of these countries are developing countries and their populations will continue to grow.”

Penner said Japan signed on to the multi-country agreement, but has been backpedaling on reducing wheat tariffs.

“Right now we cannot export wheat into Japan without paying a tariff,” he said. “They’re using that tariff to pay subsidies to their farmers to grow wheat. We’re subsidizing those farmers to compete against us.”

Penner said increased sales from eliminating tariffs would help to offset the volatility in farm revenue that is due, in part, to the end of the farm subsidy program.

“Now that we’ve eliminated those payments, our farmers are more exposed to the ravages of the market, upward or downwards,” he said. “The only thing we have as a safety net is crop insurance, and there’s been a move to eliminate that as well. We’ve already given up more than a lot of other countries have, and it’s their turn to make it an equitable and fair playing field.”

Last modified March 12, 2015

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