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Posted June 17, 2004 by publisher in Business In Cuba

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By MICHAEL BRAGA | .(JavaScript must be enabled to view this email address) | Herald Tribune

When Ocala rancher Leroy Baldwin visited Cuba last year, he couldn’t believe how puny the cattle looked.

“Cuba had doggone good cattle before 1960, but they’ve slid backwards due to inbreeding and lack of good pastures and feed,” Baldwin said. “It’s gotten to the point where 2-year-old animals have no more meat on their bones than a deer in this country.”

Other observers have witnessed the same sort of deterioration in other sectors of Cuba’s agricultural industry.

Sugar is a prime example.

The country produced only 2.1 million tons of sugar last year, the lowest amount since 1912, and down more than 60 percent from 1959.

Once one of the largest exporters of sugar in the world, Cuba has actually gotten to the point of having to import the sweet stuff.

“As a company we produce almost as much sugar as Cuba as a country, and that kind of blows their minds,” said Pepe Fanjul, president of West Palm Beach-based Florida Crystals. Fanjul’s sugar-producing family left Cuba after Fidel Castro took power.

Although poor management is partially responsible for the results in Cuba, much of the blame can be attributed to the demise of the Soviet Union and the abrupt termination of the nearly $5 billion in subsidies and economic assistance it once provided to the island.

Before its breakup in 1991, the Soviet Union bought sugar from Cuba at higher than world market prices and sold oil and other inputs at lower than market prices.

With the end of those subsidies, Cuba could no longer afford as much fuel, fertilizers, pesticides, spare parts, animal feed and veterinary medicines.

Its agricultural production plummeted, dropping 54 percent by 1994, according to a study published by the U.S. Department of Agriculture.

In turn, food consumption fell 36 percent and the population’s daily per-capita caloric intake dropped from 2,908 in the 1980s to 1,863 calories in 1993—well below the USDA-recommended minimum of 2,100 calories per day.

The situation prompted tens of thousands of Cubans to flee the island on makeshift rafts, creating an international humanitarian crisis.

On the upswing

“In 1993-94 things bottomed out and Cuba has seen growth every year since then,” said William A. Messina, an agricultural economist at the University of Florida’s Institute of Food and Agricultural Sciences.

Messina attributes the turnaround to economic changes made by the Castro government.

Land that used to be managed by large and inefficient state farms was turned over to much smaller agricultural cooperatives, called “UBPCs.” Those production units are required to buy supplies and sell a portion of their output to the state, but any surplus can be sold at free-market prices, providing an incentive to maximize production.

At the same time, the government legalized the establishment of farmers’ markets.

“This was a source of tremendous enthusiasm,” Messina said. “Everyone producing agricultural products had a right to sell surpluses in these markets.”

In addition, the government began establishing joint-venture partnerships with foreign companies in select sectors of the economy.

Investors from Israel and Chile sank money into citrus groves. Their counterparts from Spain, France, Brazil and Turkey invested in tobacco, while Spaniards, Canadians, Germans and Jamaicans began building hotels.

All told, 540 joint ventures have been established since 1989, and about 400 are still in business today.

As a result, agricultural production has risen rapidly, while per-capita caloric intake has climbed back to 1989 levels.

Chronic shortages of fertilizers, pesticides, fuel and spare parts still plague the country, but Cuban farmers have learned to adapt. They have substituted horses and oxen for tractors and have begun farming organically.

The bad news is that yields have fallen. The good news is that Cubans have developed techniques that might prove to be an advantage in the future given the growing demand for organic produce.

“That could be a whole new niche for them when things open up,” Messina said.

More demand

Meanwhile, Cuba’s tourist industry has exploded. The number of visitors traveling to the island increased to 1.9 million in 2003 from just 300,000 in 1989, creating more demand for food and agricultural products.

Mainly because of the successful joint ventures with foreign companies, the Cuban agricultural sector has risen to the challenge.

It’s now able to supply 65 percent of food and vegetables sold at tourist hotels and restaurants, up from just 12 percent in 1990, according to Cuban government estimates.

“One national brewery, a joint venture, supplies about 95 percent of the tourist market for beer, and another joint venture supplies almost all the bottled water,” said James E. Ross, a University of Florida agricultural . . . economist.

The Cuban government is continuing to build more hotels, and as long as tourists keep showing up in greater numbers, the demand for food will keep rising.

If restrictions on the ability of U.S citizens to visit the island are lifted, demand should skyrocket.

Parr Rosson, an agricultural economist at Texas A&M University, estimated that if 1.5 million U.S. tourists traveled to Cuba every year and spent $30 to $60 per day for a week, it would generate demand for $126 million to $252 million in U.S. agricultural exports.

Rosson said that’s not a lot for the United States, which exports $59 billion in agricultural products each year, but “any time we can open a new market it’s important.”

  1. Follow up post #1 added on June 17, 2004 by publisher with 3905 total posts

    Texas loves Cuba.

    Isn’t George Bush from Texas?

    Read all you can about the Embargo. After a while you just have to smile and wonder how George Bush can be so completely wrong about his new Cuba policy.

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