Focus on Cuba
July 01, 2004
Cuban agriculture rebounds from 1990s nadir, but investment is needed for further expansion
Cuban agriculture has progressed greatly since its nadir in the mid-1990s, thanks to modest reforms to the command economy system and some overseas investment in joint venture operations. Nonetheless, agricultural productivity continues to lag pre-1990 levels, and most observers say further advancements in Cuba’s agricultural sector will depend on significant additional investments in inputs, new equipment and new technology.
In the early 1990s, Cuba was reeling from the loss of long-term support stemming from the collapse of its benefactor, the Soviet Union. Before its break-up in 1991, the Soviet Union provided nearly U.S.$5 billion in subsidies and economic assistance to the island nation.
With the end of those subsidies, Cuba could no longer afford fuel, fertilizers, pesticides, spare parts, animal feed and veterinary medicines. Agricultural production plummeted, dropping 54% by 1994; Cuban food consumption fell 36%; and the population’s daily per capita intake dropped to 1,863 calories, well below recommended minimums of 2,100.
In response, the Cuban government instituted the so-called "Special Program," which involved several components designed to provide production incentives.
Under the program, land that was managed by large and inefficient state farms was turned over to much smaller agricultural cooperatives. These units are required to buy supplies from and sell a portion of their output to the state, but any surplus can be sold at free-market prices.
As a result, agricultural production in the past decade has increased every year. At the same time, per capita caloric intake has climbed back to 2,600 calories.
But chronic shortages of inputs, fuel and spare parts still plague the country. Although Cuban farmers have learned to adjust, prospects for improvement in productivity are problematic, as yields remain low and investment capital is limited.
Many farmers, assisted by international "green" agencies, have taken up organic techniques. Some observers think this development could provide advantages for Cuban agriculture over the longer term, given the increasing demand for organic food.
WHEAT AND FLOUR MILLING
Cuba grows no wheat and must rely on imports. With purchases of about 1 million tonnes a year, Cuba is the largest importer of wheat and wheat products in the Caribbean.
The economic struggles caused by loss of Soviet financial assistance pushed down per capita consumption of wheat and wheat products to about 84 kg from more than 120 kilograms. But since hitting that low in 1996, per capita consumption has rebounded by nearly 30% and is expected to rise as consumers are introduced to a growing array of wheat-based foods.
Continued demand for wheat-based products should lead to steady import growth, although hard currency limitations will likely impede purchases from countries that will not or cannot provide credit. Cuba’s main wheat supplier is the E.U., which has dominated the market since 1993-94. Most imports have been financed through French COFACE credits.
ALIMPORT is the Cuban state enterprise responsible for the import of most commodities, including wheat.
The Ministry of Food Industries operates Cuba’s five wheat flour mills, with milling capacities ranging from 160 to 420 tonnes per day. To keep pace with consumer demand, construction of additional capacity reportedly is under consideration.
Most baking enterprises are owned by the MFI, while pasta plants, cookie and biscuit plants and sweet goods and confectionery enterprises are operated by another Cuban government entity, the Union Confiteria.
Bread is usually available from local bakeries, but the selection of local bread is limited and the quality of Cuban flour varies.
COARSE GRAINS, LIVESTOCK AND FEED
Cuba grows only minimal amounts of maize and traditionally has relied on imports to meet demand. Maize demand and imports plunged dramatically in the 1990s, as the Cuban livestock sector contracted along with Cuba’s overall economic declines.
For example, in marketing year 1988-89, Cuba imported 716,000 tonnes of maize, but in 1997-98, imports were a paltry 38,000 tonnes. Indications of sustained demand surfaced only in the past year, with 2003-04 and 2004-05 import estimates put 400,000 tonnes for each year.
Recovery in the livestock sector overall has been mixed. Pork is the largest domestic livestock industry, and this sector rebounded relatively quickly from the 1990s economic pressures.
The turnaround was based on privatization efforts and the adaptability of swine to local feedstuffs. That recovery, as well as the overall improved economy, spurred conservative growth in protein meal demand, which is met primarily by soybean meal, with Brazil and Argentina the sole suppliers.
The poultry sector has been slower to recover after its 40% fall in production from the 1989 peak of 100,000 tonnes.
Cuba has approximately 20 feed compound plants, with an estimated total annual production capacity of 2 million tonnes. Because 70% of compound feed goes to poultry rations, feed production fell and has been slow to rebound.
Cuba has several livestock entities, such as the Swine Research Center, Poultry Production Institute and Poultry Research Institute, that are dedicated to improving the livestock sector. This infrastructure should enable Cuba to more effectively and efficiently increase livestock production as economic conditions improve.
For protein, most Cubans rely on fish, beans and pork and to a lesser extent, poultry and beef. Cuba’s hotel and restaurant sector serving the expanding tourism trade provides a growing opportunity for meat items.
Since the mid-1990s, Cuba has needed to import as much as 72% of its rice consumption, up from 20% to 30% in the 1980s, as consumption grew while production declined.
To counter this trend, Cuba in 1996 launched a program, known as the Arroz Popular (People’s Rice Growing Movement), to improve productivity and efficiency. The goal is to achieve two harvests per year, as well as greater yields, according to Cuban Agriculture Ministry officials.
The strategy focuses on increasing the total area planted to rice and on drawing in more farmers with smaller plots.
The program also includes planting varieties with higher yields and greater resistance to pests, soil salinity and weather fluctuations. The government incorporated the System for the Intensive Cultivation of Rice (SICA), an approach used internationally to stimulate high yields and to conserve water.
Earlier this year, government statistics indicated that the program had cut Cuba’s rice production costs by more than 30% per tonne in just three years, according to local news reports. The government also said it expected to see production increase by 10% a year to reach nearly 300,000 tonnes in 2005, a level that would represent some 40% of total use.
A key issue today for the grain, flour and feed industries is Cuba’s trade relationship with the United States. In recent years, the island nation has found itself caught in a political tug-of-war between U.S. agricultural interests, who want an end to the 40-year U.S. trade embargo, and anti-Castro interests who support continuing the embargo.
Agricultural interests have made some headway. In October 2000, then-President Bill Clinton signed legislation enabling sales of U.S. agricultural products, fertilizer and medicine, for cash only. After Hurricane Michelle devastated Cuba in November 2001, the U.S. offered emergency food aid.
Cuban officials, however, rejected the aid and instead purchased U.S.$30 million in farm products, including wheat, maize, soybean meal and oil. Since then, U.S. agricultural interests have worked with Cuba to book more sales.
But the trade issue is far from resolved. In early 2002, the U.S. State Department blocked a Cuban agriculture delegation’s visit to the U.S., and the Bush administration recently tightened restrictions on the transfer of dollars between expatriates living in the U.S. and their families in Cuba.
Demography: Population 11.3 million (2004 estimate), 0.34% growth rate (2004 estimate); Spanish language; nominally 85% Roman Catholic.
Geography: Caribbean island, between the Caribbean Sea and the Atlantic Ocean; mostly flat to rolling plains, rugged hills and mountains in the southeast; tropical climate.
Government: Communist state. Chief of state and head of government is President Fidel Castro.
Official agricultural agencies: The Ministry of Agriculture under Minister Alfredo Jordan Morales; Ministry of the Food Industry under Minister Alejandro Roca Iglesias; ALIMPORT under President Pedro Alvarez Borrego.
Economy: The government continues to balance the need for economic loosening against a desire for firm political control. It has undertaken limited reforms to increase efficiency and alleviate serious shortages of food, consumer goods and services. A major feature of the economy is the dichotomy between relatively efficient export enclaves and inefficient domestic sectors. The government reluctantly allows a large dollar market sector, fueled by tourism and remittances from Cubans abroad.
G.D.P. per capita: U.S.$2,800 (purchasing power parity), 1.3% growth rate, 5% inflation (all 2003 estimates).
Currency: Cuban peso (CUP). Exchange rate nonconvertible, official rate for international transactions fixed to the U.S. dollar at 1.000. Convertible peso sold for domestic use at a rate of 27 pesos per U.S.$ by the Cuban government.
Exports: U.S.$1.47 billion f.o.b. (2003 estimate), sugar, tobacco, fish.
Imports: U.S.$4.5 billion (f.o.b., 2003 estimate), petroleum, food, machinery and equipment.
Major crops/agricultural products: Sugar, tobacco, citrus, rice.
Transportation: Highways, 60,858 km, 29,820 paved; railroads, 3,442 km, all 1.435-m gauge. Cienfuegos, Havana, Santiago and Antilla are major ports.
Internet: Country code, *.cu; internet hosts, 1,133; users, 120,000; (2002 estimates).
Data (1,000 tonnes)
Production Consumption Exports Imports
Rice 205 755 na 550
Wheat 0 1,000 na 1,000
Maize 70 470 na 400
2003-04 marketing year estimates
Source: U.S. Department of Agriculture