Two organizations representing America's dairy farmers and processors have expressed concern that a recent decision by the Treasury Department to impose an unusually strict payment policy for food purchased by Cuba could derail U.S. dairy product sales there.

The Treasury's Office of Foreign Assets Controls (OFAC) recently changed the meaning of the term "cash in advance" that has governed payments for U.S. agricultural sales to Cuba since 2000. OFAC's new interpretation of the existing policy requires that cash payment be provided before goods are shipped from the U.S., significantly complicating food sales to Cuba, according to the groups.

"Cuba both needs and wants more U.S.-produced dairy products, and that market represents a growth opportunity for our industry," said Tom Suber, president of the U.S. Dairy Export Council. "OFAC's ruling introduces significantly greater costs and risk into our trading relationship with Cuba, putting at jeopardy our ability to keep supplying this market."

One of USDEC's member organizations, a consortium of milk powder exporters called DairyAmerica, has a contract to provide 8,000 metric tons (17.6 million pounds) of skim milk powder to Cuba by Sept. 30th, 2005. Under OFAC's new policy, DairyAmerica can only continue shipping powder under the existing payment terms through March 24. After that date, if the current OFAC ruling remains unchanged, agricultural exporters would need to explore the possibility of using other more costly and complicated payment arrangements.

Source: Association Release