The Republic of Cuba, one of the world’s last remaining communist states, was for many years dependent on the Soviet Union. That support dried up with the collapse of the Soviet Union in 1991, and in recent years the country has struggled to feed itself.
Now, with the easing of restrictions on trade with the United States (U.S.) in agricultural products, Cuba has become an important international market for grain.
The most vital food for Cubans is rice, making the country one of the world’s biggest importers. "Cuba has the largest per capita consumption of rice in the Americas by far," Marvin Lehrer, senior advisor to the USA Rice Federation on Cuba, told World Grain. "In rough number terms, Cuba produces 150,000 tonnes of rice a year on a milled basis," he said. "Imports are maybe 650,000 tonnes of rice on a milled basis. Put them together and you’ve got around (800,000) tonnes. It is vital to their caloric intake."
Before the revolution of 1959, Cuba was a major rice importer. Since then, production has changed little while the nation’s population has risen sharply. "The population has gone way up, so imports have gone way up," Lehrer said.
Imports are handled by a government import agency called Alimport. "Whatever you want to sell to Cuba, you negotiate with Alimport," he said. "Then the vessel comes in and it goes into the distribution system. In all the cities at every street block and in rural areas they have what are called "b odegas," which are stores where basic commoodities are given to people with a ration card. "That system worked reasonably well as long as there was soomeone to pay for it, and that someone was the Soviet Union," Lehrer said. "Once the Soviet Union pulled out, things got very tight." That meant shortages in the bodegas. "It’s often, ‘Come back tomorrow, we’re out today,’" he said. "Or they’re selling greatly reduced quality."
Lehrer said the situation today is that people, through the ration system, can obtain six pounds of rice a month. Much of the rest of the rice goes to institutions like central kitchens at workplaces, schools and hospitals.
In addition, there is also a "free market," in which Cubans who have access to foreign currency can buy rice in stores that take convertible currency. "They can go to the hard currency stores and buy rice (and other things)," he said. "They are a little corner shop at best, but there is rice there."
Precise statistics are not available. "I don’t know anybody who has any figures that are reliable for how much rice goes through the hard currency stores," he said. The rice in these stores is expensive for most Cubans, said Lehrer, noting that the average Cuban makes the equivalent of $12 a month. "A pound of rice in one of these stores is maybe a dollar," he said.
He pointed out that since the government owns the hard currency stores, they enable the government to impose what is, in effect, a tax on consumption. "The price for rice is relatively low, but if you were to go in there and look at something like chicken, it’s absurdly expensive," he said.
Cuba’s main rice supplier is Vietnam. "They much prefer U.S. rice for its quality and its nearness to the market," Lehrer said. "The U.S. Gulf is right there, so close. Our people could do just-in-time deliveries, which would mean that they didn’t have to hold inventories, but we have this embargo."
From 1961 to late 2001, U.S. companies were prohibited by law from trading with Cuba. But on Oct. 28, 2000, then-U.S.
President Bill Clinton signed legislation that changed the U.S.-Cuba trade relationship by enacting certain exceptions for agricultural and medical exports.
There are certain restrictions on agricultural trade. For example, Cuba has to pay for the goods before the vessel leaves the U.S. Because there is no banking connection between the U.S. and Cuba, it must pay in cash.
Those restrictions have forced Cuba to look outside the U.S. for rice. "Exports (from the U.S. to Cuba) rose to about 175,000 tonnes in the calendar year 2004," Lehrer said. "We sold them one-third of their consumption. That has fallen away. In calendar year 2007, it was about 60,000 tonnes."
Kirby Jones, president of the U.S.-Cuba Trade Association, explained that Alimport is responsible for the import of all food products into Cuba from around the world. "It is not responsible for the import of other products," he said. "They spend a little over $1.5 billion a year on food imports."
The U.S. law that allows agricultural products to be sold to Cuba is defined widely. "The majority of it is food: wheat, corn (maize), rice, soybeans, frozen chicken," Jones said. "Also included are things like utility poles, wood products, paper."
Jones said that for the vast majority of food products Alimport signs the contract and is the distributor, because they are things like bulk grains. For other products, Alimport does sign the contract but is acting as an agent for other Cuban entities. For example, if a Cuban entity like the Ministry of Basic Industries needs utility poles, if they come from the U.S., Alimport, signs the contract. Alimport is important because it has a huge budget, Jones said. "Only with the U.S. does it have a monopoly on signing contracts."
MOVES TO SUPPORT AGRICULTURE
"Food is becoming very expensive," he said. "The price of corn has gone way up and so the price of food has gone way up," he said. "He has increased the land available to private farmers and made
sure that all the state debt to farmers was paid and up to date." Support for agriculture is handled by the Ministry of Agriculture and the Ministry of Sugar. "They closed down a lot of sugar mills and Cuba is essentially out of the sugar business," Jones said. "That land is now being turned over to other crops."
Jones is optimistic about the chances for change. "I expect to see real changes in the next few months in efforts to stimulate agricultural production in Cuba," he said. "There’s no reason why they couldn’t be a lot more self-sufficient. It’s a good country for growing things. It’s got the right climate, the right soil. What they are trying to do is have the state get out of food production. Giving more land to private farmers is one step. You (give them incentive) to produce more."
Jones noted that in the past the state has imported seed and fertilizers and made them available to private farmers in return for what they produce. "Farmers can sell the excess to farmers markets which operate in local currency, farmers markets which operate in hard currency and to the hotel and tourist market. Some farmers have done very well selling food into the hard currency market or the tourist market."
The International Grains Council (IGC) predicts total 2007-08 Cuban grain imports at 1.5 million tonnes, up from 1.3 million in the previous year. In its most recent Grain Market Report, IGC projects Cuba’s 2007-08 total wheat imports at 800,000 tonnes, up from 700,000 in 2006-07.
One of the most successful exporters of wheat to Cuba has been Canada. In November 2007, the Canadian Wheat Board (CWB) signed a deal for the supply of 150,000 tonnes of wheat during
2008. Maureen Fitzhenry, spokeswoman for the CWB, put Cuba’s wheat consumption at about 600,000 tonnes annually. "They grind 55,000 tonnes a month in primarily state-owned mills, although one is jointly owned by the state and a Mexican private enterprise," Fitzhenry told World Grain.
"They are milling for domestic demand and for tourism," she said. "The tourist market is quite significant. A lot of them are from Canada."
U.S. restrictions do create difficulties. "One of the requirements of the U.S. is that when a ship unloads in Cuba, after that it’s banned for six months from entering a U.S. port," she said. "If it’s an American boat, there are no repercussions."
Fitzhenry said the trading relationship between the two countries should remain strong for the foreseeable future. "They do value our grain and they are close geographically, which is especially important at this time of high ocean freight rates," she said.
Although Cuba is in many ways unique, Fitzhenry said trading with the communist nation does not pose any special difficulties for Canada. "Selling to Cuba is not noticeably different to selling to any central buying agency," she said. WG
Chris Lyddon is World Grain’s European editor. He may be contacted email@example.com.