PROSPECTS FOR CUBAN AGRICULTURAL TRADE

Transcription

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 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

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

6 BEFORE THE FALL... CUBAN TRADE (Millions of Cuban pesos) YEAR EXPORTS IMPORTS TOTAL ,415 7,417 12, SOURCE: Anuario Estadistico de Cuba, various issues

7 THE DECLINE BEGINS CUBAN TRADE (Millions of Cuban pesos) YEAR EXPORTS IMPORTS TOTAL ,415 7,417 12, ,979 4,234 7, SOURCE: Anuario Estadistico de Cuba, various issues

8 REACHING ROCK BOTTOM CUBAN TRADE (Millions of Cuban pesos) YEAR EXPORTS IMPORTS TOTAL ,415 7,417 12, ,979 4,234 7, ,779 2,315 4, ,157 2,008 3, SOURCE: Anuario Estadistico de Cuba, various issues

9 A SLOW RECOVERY CUBAN TRADE (Millions of Cuban pesos) YEAR EXPORTS IMPORTS TOTAL ,415 7,417 12, ,979 4,234 7, ,779 2,315 4, ,157 2,008 3, ,331 2,017 3, ,492 2,882 4, ,849 3,481 5, ,819 3,987 5, ,512 4,181 5, ,456 4,323 5,779 SOURCE: Anuario Estadistico de Cuba, various issues

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 CUBA S IMPORT PATTERNS 1989 AND 1999 (million pesos) Ag. and Food Imports Total Imports Ag. & Food as % of total , ,124 4, % 19.1% 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 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???

25 U.S. INTERESTS SECTION, HAVANA (THE LARGEST FOREIGN DELEGATION IN CUBA) For additional information on Cuba s agricultural sector go to