How Will Agribusiness Exports to Cuba Impact Alabama’s Economy?

Many agribusiness leaders in Alabama hope to increase exports to the Communist Caribbean nation of Cuba during the next few years. They argue increased trade would contribute positively to the state’s economy. Recent actions by the Trump Administration to emphasize the importance of human rights as a keystone for expanded ties with the United States hold the potential to impact agricultural exports to Cuba.

Additionally, the expansion of other economic sectors within Alabama may ultimately dwarf the impact of developing new agribusiness markets. Increasingly, residents of “The Heart of Dixie” owe their prosperity, not to farming, but instead to the growth of manufacturing industries. While agricultural exports do bring revenue into the state, economic planners during recent years have sought to encourage the growth of well-paid technology-based jobs.

Envisioning a Lucrative Trade

The easing of legal restrictions on trade between the USA and Cuba during the Obama Administration generated considerable enthusiasm among agricultural producers in Alabama for the development of a potentially profitable new market for exports. Cuba, a populous nation, currently imports up to 80% of all food sold on the island. Located within close proximity to the United States, Cuba since the opening of trade in 2000 became an important destination market for U.S. frozen chicken. It currently ranks as the fifth largest importer of U.S. frozen chicken in the world, in fact.

Cuba’s National Port Authority signed a Memorandum of Understanding with the Port of Mobile in early 2017. It acknowledged Alabama currently exports poultry and forest products to Cuba. Mobile has already become the fifth most important exporting city in the growing volume of trade between the United States and Cuba, reportedly processing some 47,024 tons of exports to Cuba during 2016 alone. Cuban officials hope the recently established Mariel Economic Special Development Zone in Cuba will eventually become a key trading hub in the Caribbean region. Alabama seems well positioned to benefit from the projected expansion of regional trade.

Human Rights Issues

Nevertheless, while many members of Alabama’s agribusiness community hope for increased exports to Cuba in the near future, policy tensions between the Trump Administration and the Cuban government have generated concern among some business leaders in Alabama that Cuba might purchase chicken from other export sources instead, such as Brazil. President Trump recently urged the Cuban government to free political prisoners and conduct free and fair elections. He also wants Cuba to return fugitives and convicted criminals from the U.S. who have sought to hide in the Communist nation. The Trump Administration recently issued new directives prohibiting payments to companies controlled by the Cuban military and he threatened to re-impose some travel restrictions on U.S. citizens visiting Cuba.

Alabama’s Agricultural Commissioner noted any cessation of exports of agricultural products from the United States to Cuba would result from Cuba’s response to the President’s statement. He expressed the hope the Cuban government would not choose to limit trade with U.S. trading partners. Cuba’s President Raul Castro will retire in 2018, providing a possible opportunity for Cuba to liberalize its oppressive human rights policies in accordance with President’s Trump’s suggestions in the near future.

Alabama’s Agribusiness Economy

Would changes in the extent of agribusiness exports to Cuba impact Alabama’s economy? Possibly. Agriculture has played an historically critical role in the state of slightly over 4,708,708 people. During recent years, agribusiness concerns have often outpaced family-owned and operated small farms in The Heart of Dixie:

  • Currently, total Alabama farmland comprises 9,000,000 acres;
  • The average farm encompasses 186 acres (a figure averaging in both numerous small farms and large agribusiness concerns);
  • Some 376,000 acres of Alabama farmland on 925 farms grow cotton.

Recently, agricultural production patterns in Alabama began changing markedly. Livestock production now greatly exceeds crop harvests as a source of agribusiness revenue in the state, with poultry and quail both figuring prominently in sales figures. Additionally, the majority of farmers grow corn (2,112 farms) and/or soybeans (1,502 farms).

Economic Development in Alabama

Some evidence suggests an expansion of agribusiness exports to Cuba might exert less impact on Alabama’s economy than a rise more broadly based exports. The Bureau of Labor Statistics reports agriculture still plays an important employment role in Alabama. In May, 2016, it ranked Alabama as one of the leading five states in terms of total employment in agriculture. Workers in this sector in Alabama earn an hourly mean wage of $13.14. These jobs, while numerous, remain comparatively low paying relative to agricultural employment in many other states.

During recent years economic planners in Alabama have sought to develop new, well-paid positions in high tech and manufacturing sectors with some success. The state received a 2016 Silver Shovel Award for promoting the growth of the automotive and aerospace manufacturing sectors:

Assessing The Impact of Cuban Exports

Whether current agribusiness exports to Cuba will significantly bolster Alabama’s economy in the future remains unclear at this time. Poultry producers and forest product growers have obtained a developing new market from this trade during the past 16 years, generating millions of dollars in sales. Plus, the increasing exports to Cuba also promoted shipping traffic through the Port of Mobile as a commercial center, contributing indirectly to Alabama’s economy.

Possibly expanding trade with Cuba to encompass other agricultural exports (including cotton, soybeans and corn produced by smaller agricultural concerns) might benefit many additional Alabama farmers. The export to Cuba of automotive and aeronautics products manufactured in the state could also potentially promote further economic expansion within the state.

Alabama’s refusal to support renewable energy is damaging their jobs market, leading to a declining economy.

Renewable energy is the future, and not only is it good for the planet, but it also benefits the economy. Since renewable energy is much less expensive than other forms of energy, it puts more money in consumers’ pockets. They can then spend more, benefiting their local businesses. The renewable energy industry is a huge source of jobs, and there are also plenty of tax breaks involved.

All the economic benefits are one reason why Alabama’s stone age energy policy is so jarring. Due to politics, the state has made it very difficult for solar and wind companies to operate. How has Alabama impeded renewable energy and why? Read on to find out.

The Issues with Renewable Energy in Alabama

The first thing to understand about Alabama’s renewable energy issues is that they’re entirely self-inflicted. The state has an excellent environment to harness solar and wind power. The Center for Biological Diversity found that in terms of technical potential for solar rooftop power, Alabama was number 19 among the 50 states. It has almost 200 sunny days each and every year. With its climate, it also gets plenty of wind.

Despite those natural advantages, Alabama is number 45 among the states in the Center for Biological Diversity’s rankings of installed solar capacity. For that reason and others, the center gave Alabama an “F” grade in regards to its solar policies.

There are two regions in the state and two very different utility providers handle those regions. Tennessee Valley Authority handles power in the northern third of Alabama. The company is forward thinking and has put quite a bit of money into renewable energy sources. It also provides incentives for customers who install solar panels on the rooftops of their homes or businesses.

The problem is that Alabama Power providers power to the southern two-thirds of the state, which covers its largest cities, including Birmingham and Montgomery. Alabama Power doesn’t have much in the way of solar incentives and it charges a higher amount for solar power, which means customers won’t save as much by switching. It also doesn’t pay much to customers who sell the extra solar power their panels generate back to the grid, only offering about three to four cents per kilowatt-hour. To put that into perspective, Tennessee Valley Authority pays 12 cents per kilowatt-hour.

So, most customers in the state have little reason to make the switch to solar panels because it won’t save them much money.

The situation hasn’t been any better for wind companies. Many have tried to launch wind projects in areas of Alabama, only for the county to then pass a law banning wind projects within its borders. There have also been lawsuits against companies that started planning wind projects in areas of the state.

A Hostile Political Climate

Of course, Alabama is one of many states that leans heavily to the right, and conservatives have traditionally been negative regarding renewable energy while those on the left have been more supportive of it.

Gadsden is one example of a city where politics prevented potentially helpful renewable energy projects. It was among the poorest cities in the nation in 2013 when there was the chance for new wind projects in the area. Local legislators did everything in their power to prevent these projects, with one major reason being that they were upset about the federal tax credits available for such projects.

The result was that the projects couldn’t go through due to the laws that were passed, and Gadsden lost out on a huge economic opportunity.

The Effect Alabama’s Policies Have on Its Economy

Alabama’s poor approach towards renewable energy is costing the state and its citizens money. In the aforementioned situation in Gadsden, those wind projects would have created jobs and brought in a significant amount in tax revenues, likely millions of dollars. That’s all without costing the taxpayers anything. Instead, the area stuck with its power plant, which has been funded by the taxpayers for years.

The greatest economic impact of the solar and wind industries is the number of people they employ, and part of that is the difference between how these industries and fossil fuel industries work. The fossil fuel industries use more heavy machinery. They require money and machines but not nearly as much labor so there aren’t as many jobs available.

Renewable energy requires more labor. The industries require people to manufacture solar panels and wind turbines, set up the projects, consult with customers and then handle installation.

With solar energy, net metering can earn money for those who have solar panels installed, both people and businesses, when their solar panels produce more power than they use. The economic benefits of businesses having more money are obvious. They’ll be able to put that money towards expansion and employ more people. And of course, when people have more money, it’s good for the local businesses where they shop.

To put it simply, renewable energy companies lead to more jobs and more money for everyone in the area. The states that take steps to improve their use of renewable energy see economic benefits for it. The states that obstruct renewable energy companies are damaging their own economies.

The Future of Renewable Energy in Alabama

Although Alabama has been wasting its potential as far as renewable energy is concerned for years, change could be in the air. Alabama Power has been taking steps towards more solar power.

The reality is that renewable energy isn’t going away. Solar and wind are two industries that the nation is gravitating towards, regardless of what is going on in Washington, D.C. Alabama has certainly been lagging behind, but with the obvious economic benefits and how much potential the state has for solar and wind power, at some point its citizens will demand a shift towards renewable energy.

Alabama’s Unemployment Rates Higher Than Neighboring States

Alabama, officially the Yellowhammer State but nicknamed the New Detroit, is undergoing a manufacturing renaissance. After the textile industry died, the auto manufacturing and its related auto parts suppliers’ plants were welcomed to both Alabama and neighboring Georgia and Tennessee. Despite the new manufacturing jobs, Alabama is perpetually struggling economically.

Alabama’s top employment sectors include:

  • Manufacturing
  • Health Care
  • Retail
  • Food Services
  • Education

Alabama also shares a border with Mississippi and Florida. Alabama shares more than a border with Georgia and Mississippi, all three have higher than average unemployment rates.

Unemployment Rates

While Alabama’s unemployment rate remains higher than the national average, it dropped to 4.9 percent in May 2017, which is the lowest unemployment rate the state has seen since March 2008. May’s unemployment rate ranked Alabama at number 40 in the nation in a tie with neighbors Georgia and Mississippi. Additional jobs in the hospitality, construction and manufacturing sectors contributed to the decrease.

Alabama’s Pro-Business Environment

Despite Alabama’s pro-business environment, tax and non-tax incentive packages, tax incentives and financing programs, the state lags behind its neighbors in economic development. The Economic Development Partnership of Alabama has high profile wins, yet for the billions that Alabama spent wooing automobile manufactures and other employers, the state’s unemployment rate remains higher than its neighbors do.

Alabama gave Mercedes incentives worth $258 million to $439 million twenty years ago to build a manufacturing facility in the state, neighboring Tennessee paid far less to secure a Nissan plant in 1980.

New manufacturing facilities are not always a community’s savior that politicians claim will result in significantly lower unemployment rates. In Alabama, residents with college degrees or training in trades are at a premium, therefore, new employers attracted by the incentives are looking beyond the unemployed and consider currently underemployed workers as potential employees.

Workforce Training

Every year the Center for Business and Economic Research at the University of Alabama surveys Alabama business leaders to gauge their business confidence. In 2017, the top issue facing the Yellowhammer state is education and workforce training. A better-educated workforce will eventually induce economic growth, however Alabama, along with Mississippi, has fewer jobs available for college graduates than other southern states.

Alabama’s jobs of tomorrow will require a college degree or industrial training, which is true for the nation, not only in Alabama. A damning analysis by the Business Education Alliance and the Public Affairs Research Council of Alabama says that Alabama’s workforce does not have the post secondary education to curb the higher than average unemployment rate that plagues the state.

Preparing residents for increased employment opportunities will require advising high school students to consider training in skilled trades and cooperation between the business community and education systems to determine which skill sets are in-demand. Secretary of the Alabama Department of Commerce Greg Canfield says, “This initiative, which links Alabama’s business sector and education systems in a partnership, will help to create opportunities for residents and develop the pipeline of workers the state needs to fully realize its economic potential.”

Why Alabama’s Unemployment Rates Higher Than Neighboring States?

Alabama has perpetually higher unemployment rates than her neighbors; lower tax revenues. The state’s tax revenues fund universities, new highways and other infrastructure, however, Alabama residents have few assets to tax, and those that are taxed, are taxed at a low rate. Tax incentives to businesses to relocate to the state lower Alabama’s revenues even more. Alabama’s neighbors bring in more state and local tax revenues; therefore, they can invest in infrastructure and education, which major employers look for when relocating. Alabama is the fourth poorest state in the nation, and neighboring Mississippi is the poorest.