Transcript Presentation

PROSPECTS FOR CUBAN
AGRICULTURAL TRADE
Presentation to
The S-287 Conference
May 23, 2002 – San Antonio, TX
by William A. Messina, Jr.
Department of Food and Resource Economics
Institute of Food and Agricultural Sciences
University of Florida
U.S.-CUBA RELATIONS – AN
INTERESTING POLICY MIX
 Castro
 Cooperativization
 Capitalism
???
 Cargill
 Cash
for Corn
 Credit ???
 Carter
of Agriculture
KEY POINTS REGARDING
CUBA:
 CUBA

IS A LARGE ISLAND
ABOUT THREE-QUARTERS AS LARGE AS
FLORIDA WITH A LARGE PROPORTION OF
ARABLE LAND
 HISTORICAL
IMPORTANCE OF
AGRICULTURE IN
GENERATING EXPORT EARNINGS
 FEEDING THE POPULACE
 PROVIDING EMPLOYMENT

AGRICULTURE AND THE
CUBAN ECONOMY –
1920 TO 1959


AGRICULTURAL
EXPORTS PROVIDED
OVER 90% OF CUBA’S
TOTAL EXPORT
EARNINGS
SUGAR ALONE
REPRESENTED OVER
75% OF TOTAL
EXPORT EARNINGS
AND NEARLY 85% OF
AGRICULTURAL
EXPORTS
Cuban Exports for the
period1920 to 1959
Sugar
Other Ag.
Non-Agricultural
CUBA’S TRADING PARTNERS
1958 AND 1966
United States
Other Non-Communist
USSR
Other Communist
Total Imports (million)
Total Exports (million)
1958
68%
30%
1966
-24%
1%
1%
50%
26%
$777
$734
$900
$640
BEFORE THE FALL . . .
CUBAN TRADE
(Millions of Cuban pesos)
YEAR
1990
EXPORTS
5,415
IMPORTS
7,417
1991
1992
1993
1994
1995
1996
1997
1998
1999
SOURCE: Anuario Estadistico de Cuba, various issues
TOTAL
12,832
THE DECLINE BEGINS
CUBAN TRADE
(Millions of Cuban pesos)
YEAR
EXPORTS
IMPORTS
TOTAL
1990
5,415
7,417
12,832
1991
2,979
4,234
7,213
1992
1993
1994
1995
1996
1997
1998
1999
SOURCE: Anuario Estadistico de Cuba, various issues
REACHING ROCK BOTTOM
CUBAN TRADE
(Millions of Cuban pesos)
YEAR
EXPORTS
IMPORTS
TOTAL
1990
5,415
7,417
12,832
1991
2,979
4,234
7,213
1992
1,779
2,315
4,094
1993
1,157
2,008
3,165
1994
1995
1996
1997
1998
1999
SOURCE: Anuario Estadistico de Cuba, various issues
A SLOW RECOVERY
CUBAN TRADE
(Millions of Cuban pesos)
YEAR
EXPORTS
IMPORTS
TOTAL
1990
5,415
7,417
12,832
1991
2,979
4,234
7,213
1992
1,779
2,315
4,094
1993
1,157
2,008
3,165
1994
1,331
2,017
3,348
1995
1,492
2,882
4,374
1996
1,849
3,481
5,330
1997
1,819
3,987
5,806
1998
1,512
4,181
5,693
1999
1,456
4,323
5,779
SOURCE: Anuario Estadistico de Cuba, various issues
STRUCTURAL CHANGES IN
CUBAN AGRICULTURE DURING
THE “SPECIAL PERIOD”
 Dismantling
of State Farms into
Production Cooperatives (UBPCs)
in 1993
?
?
RATION STORES
STRUCTURAL CHANGES IN
CUBAN AGRICULTURE DURING
THE “SPECIAL PERIOD”
 Dismantling
of State Farms into
Production Cooperatives (UBPCs)
in 1993
 Opening of Agricultural Markets in
1994
?
AGRICULTURAL
MARKETS
STRUCTURAL CHANGES IN
CUBAN AGRICULTURE DURING
THE “SPECIAL PERIOD”
 Dismantling
of State Farms into
Production Cooperatives (UBPCs)
in 1993
 Opening of Agricultural Markets in
1994
 Foreign Investment in Agriculture
Cuba’s agricultural sector “leading
the way” in the transition toward a
more market-oriented economy
HOWEVER:
 Policy changes ended in 1994
 Internal rigidities remain that hinder
increased foreign investment
 Labor contract system
 Limited purchasing power restricts
opportunities for domestic sales
 Future expropriations???
DEVELOPMENTS IN 2000
 October,
2000 – President Clinton
signs legislation allowing U.S.
companies to sell ag. products (and
fertilizer) and medicine to Cuba
 Cuban government responds that they
won’t purchase “one penny’s worth” of
these goods from the United States
DEVELOPMENTS IN 2001
 September,
2001 – Following the
terrorist attacks on the United States,
a dramatic decline in tourism to Cuba,
depriving the Cuban economy of much
needed revenue
 November, 2001 – Hurricane Michelle
hits Cuba doing significant damage to
Cuban agriculture
DEVELOPMENTS IN 2001
November, 2001 – Immediately following the
Hurricane, the United States offers
emergency food aid
 Cuban government responds that they don’t
need aid but they would like to be able to
buy food from the Unites States
 By the end of 2001, U.S. companies have
shipped over $30 million in food and
agricultural products to Cuba (and been
paid in cash)

DEVELOPMENTS IN 2002
 January
2002 – Cuban officials meet
with USDA representatives to discuss
sanitary/phytosanitary issues related
to food and agricultural sales
 March, 2002 – Cuban government
signs a new round of contracts to buy
$32 million of food from U.S. firms
 May 2002 – Visit of former President
Jimmy Carter
CUBA’S IMPORT PATTERNS
1989 AND 1999
(million pesos)
Ag. and Food Imports
Total Imports
Ag. & Food as % of total
1989
1,029
8,124
12.7%
Most important food imports, 1999:
RICE
FATS
& OILS
WHEAT & PRODUCTS
BEANS
OTHER GRAINS
1999
826
4,323
19.1%
THE FUTURE
 Cuban
agriculture has tremendous
productive potential
 Sugar
 Citrus
 Vegetables
and Tropical Fruit
 Marine and Seafood Products
THE FUTURE
Significant investment will be necessary
for Cuban agriculture to recover, to
purchase:
 Inputs
 Spare parts
 New equipment
 Acquire new technology!!!
 Internal ability of the Cuban government
to commit capital is limited

THE FUTURE
Under current conditions, relatively
limited additional foreign investment
may be expected in the near term
 While some recovery in agricultural
production has been experienced since
1993/94, the prospects for major
recovery and/or expansion of Cuban
agriculture are limited

THE FUTURE
Cuba is clearly a market of some
significance, with much latent demand
Limited effective demand as measured in
terms of ability to pay, both at the
consumer and government levels
Expanding Tourist sector
Decline in tourist travel since Sept. 11
? Change in policy by the Cuban government
following Hurricane Michelle – How long
will it last???
U.S. INTERESTS SECTION, HAVANA
(THE LARGEST FOREIGN
DELEGATION IN CUBA)

For additional
information on
Cuba’s agricultural
sector go to
www.cubanag.ifas.ufl.edu