Posted August 11, 2004 by publisher in Cuba Business.
By Carol J. Williams | Los Angeles Times
Despite U.S. efforts to strangle the flow of dollars to Cuba and fresh exchanges of acrimony between Presidents George Bush and Fidel Castro, the cash-strapped Cuban government intends to make record U.S. food purchases this year, according to its chief international shopper.
“By the end of August, Cuba will have purchased in eight months as much as it did in the whole previous year,” said Pedro Alvarez, head of Alimport, the government’s food procurement enterprise.
Cash purchases of U.S. food have grown exponentially since November 2001, when hurricane-ravaged Cuba began taking advantage of the first breach of a trade embargo imposed in 1960 and maintained through 10 successive U.S. presidencies. Cuban purchases from what is now its biggest food supplier, already nearing the $300 million mark by the end of July, are set to exceed $440 million this year, Alvarez said.
That would represent at least a 45 percent increase over last year’s purchases from U.S. producers. More significantly, argue analysts, the expanding food trade represents broader spending by the Cuban government on staples for the monthly food ration on which most in this country of 11.2 million depend. More than 95 percent of Havana’s purchases have been for such commodities as wheat, corn, poultry and soybeans, said John Kavulich of the private U.S.-Cuba Trade and Economic Council.
Kavulich, whose council evaluates commercial activity between the countries, said he is skeptical of the upward purchasing trend. “The Cuban government has one remaining tool with which to lobby in the United States, and that is its food and agricultural purchases,” he said, arguing that the commercial environment has been “unnecessarily and excessively politicized.”
Cuba’s continuing dependence on the U.S. market also might reflect a greater degree of pragmatism among Cuban officials and those from predominantly Republican U.S. farm states than has lately been evident at the highest levels of their countries, where bitter rhetoric loudly emanates.
During a campaign visit to Florida last month, Bush accused Castro of turning Cuba into “a major destination for sex tourism,” an apparent attempt at besmirching the country’s 13 percent boost in tourist revenues last year. Castro, branding Bush “a sinister character that keeps threatening, insulting and slandering us,” fired back during his speech last week on the 51st anniversary of the start of Castro’s revolution. He contended that Bush suffers mental disorders from two decades of excessive drinking.
The communist government’s commitment to U.S. food purchases is likely driven less by politics than need. A three-year drought has steadily eroded domestic food supplies, especially meat and dairy products, exacerbating shortages U.S. analysts blame on the inefficiencies of a centrally planned economy. The government has concentrated its dollar spending on the most cost-effective and highest-quality markets—those in the United States—to obtain staples for the public food rations, Alvarez said.
Officials of the ministries for foreign affairs and foreign economic relations declined to specify how many dollars they will lose as a consequence of new U.S. regulations limiting remittances and family visits. The measures, which took effect July 1, could cut $200 million out of the country’s budget for dollar purchases, some U.S. economists have estimated. But government spending plans for food will be unaffected, officials here said.
What has been hurt, they noted, is the individual Cuban family’s spending power, as prices in state-run dollar stores have been increased as much as 30 percent in response to the Bush administration’s new measures. Goods at the state-run dollar stores were already marked up 240 percent over cost, suggesting the price increases will force those with access to dollars to spend more for the same goods so that the government earnings remain stable.
Torrential rains swept much of Cuba over the past weekend, but the effects of a prolonged drought have been little alleviated, said Leandro Bermudez of the National Institute of Hydrological Resources in Holguin, one of the most water-starved provinces.
“The rain is good but it doesn’t reverse the damage from three years of rainfall deficits. We’re still suffering a drought of historic proportions,” Bermudez said, adding that more than 12,000 head of cattle have died from lack of water and desiccated fodder.
Cuba has purchased $20 million worth of powdered milk from U.S. commodities brokers, according to Alimport figures, but it is too little to fill the void created by a 20 percent drop in domestic production. Vegetables and the once-widespread sugar-cane cultivation have also suffered from the drought.
The government’s food ration of rice, beans, cooking oil and some canned goods lasts less than two weeks for most families, leaving those without dollars no choice but to reduce their already meager portions. Elderly Cubans on pensions worth about $4 a month have turned to begging to supplement their incomes, as have those with no other pay than the average $10 a month earned at state enterprises.
Even those with dollars—either from remittances or the small and heavily regulated private sector—will be tightening their belts under the dual pressures of failing crops and diminishing dollars, not the communist government, as the White House intended.
“All I want to know is why do we the people have to pay for these measures?” asked retired teacher George Conasa as he perused the depleted shelves of the Harris Brothers dollar store, where he bought a box of raisins.
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