For Cuba, receiving payment terms for milk powder traveling 16,445 nautical miles and taking more than a month to arrive from New Zealand is considered a better financial decision than using cash to import from the United States.

The distance average to Cuba of ports for its current three-largest sources of milk powder is 9,449 nautical miles with delivery average of 34.3 days to 10.8 days.

The greatest distance from Cuba of ports in the United States from which milk powder could be delivered is 1,465 nautical miles; average delivery from six primary ports is 2.0 days.

Since 2020, Container Shipping Costs From Asia Have Increased As Much As 500%.

Might Cuba Give To Current New York State Governor Kathy Hochul What It Did Not Give To Then New York State Governor Andrew Cuomo?

At present, the less credit available to the Republic of Cuba inversely increases the value of sourcing exports from the United States despite the Republic of Cuba’s distain of laws, regulations, and policies of the United States. The current landscape is for United States companies neither viable nor preferred for the long term.

Using 20 Knots Speed
Port of Wellington, New Zealand- 16,445 nautical miles, 34.3 days at sea
Port of Montevideo, Uruguay- 6,695 nautical miles; 13.9 days at sea
Port of Antwerp, Belgium- 5,208 nautical miles; 10.8 days at sea

Using 20 Knots Speed
Port of NY/NJ- 1,465 nautical miles; 3.1 days at sea
Port of Norfolk, Virginia- 1,165 nautical miles; 2.4 days at sea
Port of Houston, Texas- 1,097 nautical miles; 2.3 days at sea
Port of New Orleans, Louisiana- 826 nautical miles; 1.7 days at sea
Port of Mobile, Alabama- 731 nautical miles; 1.5 days at sea
Port of Jacksonville, Florida- 560 nautical miles; 1.2 days at sea

The Republic of Cuba reported production of 455 million kilograms (116,697,363 gallons) of fresh milk in 2020. According to the Montevideo, Uruguay-based Pan American Dairy Federation, each person should have access to 150 liters (39.6 gallons) of milk per year. For the Republic of Cuba’s 11.3 million residents, that would be 450,870,000 gallons.

In 2019, the Republic of Cuba was reported to have imported approximately US$136 million in Concentrated Milk, the country’s fifth-largest import; the Republic of Cuba was the 36th largest global importer of Concentrated Milk. The primary reported country sources were: New Zealand (US$47.2 million), Uruguay (US$33.5 million), The Netherlands (US$14.6 million), Belgium (US$13.4 million), Mexico (US$9.08 million), Germany (US$4.22 million).

In 2020, the Republic of Cuba was reported to have imported powdered milk primarily from three countries- New Zealand (18,470 metric tons valued at US$62,594,000.00), Belgium (6,628 metric tons valued at US$19,913,000.00), Germany (reported US$8,560,000.00 and US$15,812,000.00), and Uruguay (3,695 metric tons valued at US$13,334,000.00) according to Geneva, Switzerland-based Trade Map.

In 2021, the average price of United States-sourced whole milk powder exports was US$3,110.00 per metric ton compared to US$2,981.00 per metric ton in 2020. In 2021, the average price of United States-sourced skim milk powder exports was US$2,768.00 per metric ton compared to US$2,475.00 per metric ton in 2020.

In November 2021, the average export price for Nonfat Dried Milk and Skim Milk Powder (NFDM/SMP) was US$3,075.00 per metric ton and Whole Milk Powder (WMP) was US$3,199.00 per metric ton. For shipping (with inland freight cost unknown), given container price inflation, perhaps US$1,000.00 per container (less than United States West Coast to China) which would equate to average approximately US$80.00 per metric ton (US$3.5 cents per pound).

From Statistics New Zealand (9 February 2022)

0402100002 Dairy produce; milk and cream, concentrated or containing added sugar or other sweetening matter, skimmed milk powder, spray process, fat content not over 1.5%. Kilograms:

2018: US$2,167,840.00 (1,008,000 Kilograms)
2019: US$3,050,040.00 (1,410,500 Kilograms)
2020: None
2021: None
2022: Not Yet Reported

0402210019 Dairy produce; whole milk powder, concentrated, not containing added sugar or other sweetening matter, of a fat content exceeding 1.5% (by weight), n.e.c. in item no. 0402.21. Kilograms:

2018: US$16,925,161.00 (5,516,125 Kilograms; 5,516 Metric Tons)
2019: US$44,660,178.00 (13,893,675 Kilograms; 13,893 Metric Tons)
2020: US$65,931,561.00 (18,223,875 Kilograms; 18,224 Metric Tons)
2021: US$22,063,547.00 (6,297,400 Kilograms; 6,297 Metric Tons)
2022: Not Yet Reported

Trade Sanctions Reform And Export Enhancement Act Of 2000 (TSREEA)

The TSREEA re-authorized the direct commercial (on a cash basis only) export of food products (including branded food products) and agricultural commodities from the United States to the Republic of Cuba, irrespective of purpose. Since December 2001 when the first purchases were delivered using provisions of the TSREEA, more than US$6,572,910,533.00 in agricultural commodities and food products have been delivered directly from the United States to the Republic of Cuba.

Powdered Milk Highest Year Exports From The United States To The Republic Of Cuba

Total milk exports from the United States to the Republic of Cuba since 2001 are approximately US$109 million.

Milk & Cream CNTD W/N SWT POWDER GRAN/SLDS 1.5% (highest years)
2008- US$13,304,622.00 (4.08% of total 2008 exports to Cuba)
2006- US$12,568,170.00 (3.69% of total 2006 exports to Cuba)
2005- US$29,584,712.00 (8.44% of total 2005 exports to Cuba)
2004- US$25,691,962.00 (6.55% of total 2004 exports to Cuba)

HS Code (0402100000): Dairy produce; milk and cream, not concentrated, no containing added sugar or other sweetening matter, of a fat content, by weight, exceeding 1% but not exceeding 6%.

A very small quantity of MILK AND CREAM CNTD W/N SWT POWDER GRAN/SLDS 1.5% was exported to the Republic of Cuba since 2004.

HS Code (0401100000): Dairy produce; milk and cream, not concentrated, no containing added sugar or other sweetening matter, of a fat content, by weight, not exceeding 1%.

2021- US$19,163.00 (.006% of total 2021 exports to Cuba)

HS Code (0401500000): Milk & Cream, Not Concntrd/swtn, Fat Contnt Ov 10% (l)
HS Code (0402990000): Milk/Cream, Whthr/not Concentrated, Sweetnd, Nesoi (kg)

The Governor Of New York Debacle

From 20/21 April 2015, then Governor of the State of New York, The Honorable Andrew Cuomo (D), embarked on a twenty-seven (27) hour quixotic journey to the Republic of Cuba. To date, there have been no published reports of exports of products to the Republic of Cuba from the seven (7) participating companies. The Governor and his staff (more than fifteen participated including seven focused upon media) embraced the “planting seeds” analogy… There are few seeds that do not create something within seven years. Governor Cuomo neither included a representative of the New York State Department of Agriculture & Markets nor a representative of the Albany, New York-based New York Farm Bureau. He included two companies that produce agricultural products (yogurt and dairy); neither obtained orders. One of the companies was New Berlin, New York-based Chobani Global Holdings, LLC.

A member of the delegation was Mr. Kevin Ellis, Chief Executive Officer of Auburn, New York-based Cayuga Milk Ingredients which processes approximately one billion gallons annually of milk. Mr. Ellis, despite efforts to follow-up directly with Republic of Cuba government-operated entities and obtain directly assistance from Governor Cuomo, reported receiving neither responses nor orders.

In 2020, the average cost per metric ton of milk powder from Auburn, New York, to Port Mariel, Republic of Cuba, was US$2,385.00 with shipping from the Port of New York/New Jersey (NY/NJ) adding US$185.00 per metric ton. From the Port of NY/NJ to Port Mariel is 1,465 nautical miles taking approximately 3.1 days at sea.

U.S. Exporters Have An Inverted Advantage

Given the Republic of Cuba's chronic shortage of foreign exchange, inability to remain current on sovereign debt, and routinely unable to pay as per contracted terms commercial debt owed by Republic of Cuba government-operated companies, there are an increasingly decreasing number of sources for credit.

As a result, the Republic of Cuba has been forced to increase the percentage of purchases made with cash.

Imports of agricultural commodities and food products from the United States are required by United States law to be paid for in cash; and shipping from the United States to the Republic of Cuba is from one to three days.

For the Republic of Cuba, no longer is paying more for commodities solely due to the receipt of extended payment terms always a viable option- because the option is increasingly not available.

LINK TO COMPLETE ANALYSIS IN PDF FORMAT

Links To Related Analyses

January 2022 Economic Eye On Cuba Monthly U.S. Export Report

Coffee & Charcoal Have Been Imported From Cuba; U.S. Companies Want More. Agricultural Commodities/Food Products/Healthcare Products Have Been Exported To Cuba; U.S. Companies Want More. October 02, 2021

AFP
Paris, France
3 February 2022

In the early days of communism in Cuba, Fidel Castro had pledged that every child under seven would have a liter of subsidized milk every day. For some time, they did -- but today, many go without. To circumvent the US embargo against Cuba and lagging domestic production, milk has to come from the other side of the world in an obstacle race that deprives many on the island of the staple.

Regla Caridad Zayas, a 59-year-old diabetic, said the milk powder that the Cuban state supplies monthly to her and others with special dietary needs dried up months ago. She is supposed to get a kilo of powder, which makes 10 liters (2.6 gallons) of milk, every month. Sitting at a rickety table from which she sells coffee outside her house, Zayas said the bodegas, or subsidized food stores, no longer carry the commodity. In the supermarket, it is also nigh impossible to find: milk has become the latest casualty in a long history of chronic food shortages in Cuba, which on Monday marks six decades of US sanctions. And it will continue to be in short supply in Havana and four other provinces, due to a lack of "financing, boats and suppliers," Internal Trade Minister Betsy Diaz said in October.

To find milk powder, Cuba looks all the way to New Zealand -- its main supplier with 18,470 tons in 2020 -- as well as Belgium (6,628 tons) and Uruguay (3,695 tons), according to specialized export and import data site Trade Map. Official Cuban data shows that the island produced 455 million kilograms of fresh milk in 2020, far short of what it needs. According to the PanAmerican Dairy Federation, each person should have access to 150 liters of milk per year -- some 1.6 billion liters, and about the same in kilograms, for Cuba's 11.2 million inhabitants.

The cheapest and easiest would be to get the milk from the United States -- one of the world's largest exporters and less than 200 kilometers (124 miles) from Cuba's coastline. Since 2000, food products have been excluded from the US embargo on trade with Havana. But Cuba must pay cash and in advance -- onerous conditions for a country in deep economic crisis, with little foreign exchange and no access to loans. Getting products from the other side of the planet is not easy, either: more than 10,000 containers of food and other products were stuck last month in ports around the world due to pandemic supply chain issues, the government said.

For decades, revolutionary leader-turned-president Fidel Castro made a point of supplying cheap, subsidized milk to all children under the age of seven and people with chronic diseases. His brother and successor Raul proposed in 2007 to go even further by "producing milk so that all those who want to drink a glass of milk can do it." But today, even the guaranteed monthly ration of three kilos of powdered milk for children is running out. For other recipients such as Zayas, there is none. “Truly, everything is disappearing," said Claudia Coronado, a 29-year-old mother of two children aged three and seven, while standing in one of Havana's ubiquitous food queues. "We were used to not having chicken for a month, but milk, that was always sacrosanct.” "I have a daughter of eight, she's no longer getting milk," said Jenny Mora, 29, who said she often has no choice but to turn to the black market and pay exorbitant prices.

The store outside of which the two women are queuing only accepts foreign currency -- itself also only available on the parallel market. A sachet of one kilogram (two pounds) of milk powder costs $6.30 -- a fortune in a country where the average monthly salary is $163. Economist Omar Everleny Perez said that without government help, it was more profitable for farmers to sell their product on the black market. Farmer Domingo Diaz, 79, blames the US embargo for "about 90 percent" of the milk shortage. He blames the communist government for the rest. Though it raised the purchase price to help producers, the government did nothing to secure access to cow feed, he said. undernourished, the animals produce very little. "The milk problem affects everyone, it drives me mad, too," said Diaz, as he tried to squeeze milk from a lean beast.