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PROSPECTS FOR CUBAN AGRICULTURAL TRADE

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.

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PROSPECTS FOR CUBAN AGRICULTURAL TRADE

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  1. 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

  2. U.S.-CUBA RELATIONS – AN INTERESTING POLICY MIX • Castro • Cooperativization of Agriculture • Capitalism ??? • Cargill • Cash for Corn • Credit ??? • Carter

  3. 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

  4. AGRICULTURE AND THE CUBAN ECONOMY –1920 TO 1959 Cuban Exports for the period1920 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

  5. United States Other Non-Communist USSR Other Communist Total Imports (million) Total Exports (million) 1958 1966 68% -- 30% 24% 1% 50% 1% 26% $777 $900 $734 $640 CUBA’S TRADING PARTNERS1958 AND 1966

  6. BEFORE THE FALL . . .CUBAN TRADE(Millions of Cuban pesos)

  7. THE DECLINE BEGINSCUBAN TRADE(Millions of Cuban pesos)

  8. REACHING ROCK BOTTOMCUBAN TRADE(Millions of Cuban pesos)

  9. A SLOW RECOVERYCUBAN TRADE (Millions of Cuban pesos)

  10. STRUCTURAL CHANGES IN CUBAN AGRICULTURE DURING THE “SPECIAL PERIOD” • Dismantling of State Farms into Production Cooperatives (UBPCs) in 1993 • ? • ?

  11. RATION STORES

  12. 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 • ?

  13. AGRICULTURAL MARKETS

  14. 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

  15. 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???

  16. 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

  17. 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

  18. 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)

  19. 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

  20. Ag. and Food Imports Total Imports Ag. & Food as % of total 1989 1999 1,029 826 8,124 4,323 12.7% 19.1% CUBA’S IMPORT PATTERNS1989 AND 1999(million pesos) • Most important food imports, 1999: • RICE • FATS & OILS • WHEAT & PRODUCTS • BEANS • OTHER GRAINS

  21. THE FUTURE • Cuban agriculture has tremendous productive potential • Sugar • Citrus • Vegetables and Tropical Fruit • Marine and Seafood Products

  22. 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

  23. 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

  24. 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??? THE FUTURE

  25. 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

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