In 1996, while motorcycling through Cuba, I overnighted at Bohio Don Pedro, a farm-motel near Jagüey Grande. An Israeli agronomist named Schlomo was the only other guest. His company was running the nearby state-owned citrus plantation – Cuba’s largest – with a view to raising production and quality. “How long before Cuba begins producing fruit as good as Florida?” I asked.
“They already are,” he replied. “The quantity is small as yet. About one percent of total production. The Cubans claim it’s far higher, but you can’t trust official figures. The decimal point gets ‘accidentally’ moved in annual reports so that managers can show they’ve met production quotas.”
It reminded me of a Cuban joke doing the rounds at the time explaining why it was impossible to find pork, the traditional staple, on supermarket shelves.
Fidel visits a pig farm and stops to admire a pregnant pig. “Beautiful specimen,” says Fidel. “I bet it will produce at least ten piglets.” Everyone applauds and nods in agreement. Two weeks later, the pig delivers six piglets. The farm manager fears Fidel will be furious at the lower-than-expected production, so he records in his report that the pig delivered seven piglets. His supervisor, the regional farm director, raises the number to eight and passes his report to the national farm director, who changes the figure to nine. His boss, the minister of agriculture, adds one more piglet and submits the report to Fidel. “Fabulous! Ten piglets!” says Fidel, delighted that his prediction has come true. “We’ll use 60 percent of the pigs for export, and 40 percent for domestic consumption.”
It would be funny, except “¡No hay!” is once again the shopkeepers’ mantra. “There is none!”
Given its commitment to the socialist model, however, the government has recoiled from granting actual ownership of state land to usufruct farmers, or… permitting private land to be freely purchased and sold, as with housing.
After a decade in which soaring tourism revenues enabled purchase of imported foodstuffs sufficient to fill Cuba’s shelves, the clock has come full circle back to the ‘Special Period’ of the early ‘90s following the collapse of the Soviet Union. The stores once again look like they’ve been picked clean by looters.
It’s hard to fathom at first sight.
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Cuba has indecently fertile soil. Motorcycling around the island, I was continually awed by the rich red earth and the vast potential that inspired René Dumont, the outstanding French agronomist, to say that “with proper management, Cuba could adequately feed five times its current population.” Fidel himself, in his famous 1953 “History Will Absolve Me” speech, had stated that “Cuba can support splendidly a population three times larger than it now has… The market should be flooded with produce, pantries should be full.”
What has gone wrong?
In 1996, I spent hours in perplexed rumination as I rode from one end of the isle to the other. It helped that for my Master’s degree in Latin American Studies , I specialized in agrarian reform in Colombia in the wake of the Cuban Revolution.
The problem wasn’t hard to dissect.
Notwithstanding the deleterious impact of the U.S. embargo and the collapse of the Soviet Union, it was obvious that Cuba’s management of agriculture had been dumbfoundingly inept.
To produce, we need inputs: seeds, compost, products to control pests, piping and pumps to irrigate crops, and fuel to run the farm machinery…Hirochi Robaina, owner of Cuba’s most successful private tobacco farm
Before the Revolution, Cuba couldn’t feed itself: the overwhelming majority of arable land was planted in sugarcane for export. The U.S. government maintained a preferential quota for Cuban sugar – 40 percent of sugarcane fields were U.S.-owned – in exchange for tariff concessions for U.S. goods; this tied Cuba to a one-commodity economy and bound it to U.S. foodstuffs and manufactures, which made up 80 percent of Cuban imports.
Following the Revolution, all large landholdings were seized (farmers were allowed to privately own a maximum of 67 hectares) and organized into a system of centralized state farms – accounting for about 80 percent of all agricultural land – dedicated to perpetuating what the World Bank, in 1956, had called “the diabetic dangers of the dominance of sugar in [Cuba’s] economic bloodstream.”
Castro sacrificed thoughts of self-sufficiency to feed sugar to the Soviet bear. A mere 12 percent of Cuba’s cultivated land was planted in food crops. Most of the rest was dedicated to sugarcane, supplied to the Soviet bloc in exchange for every food item imaginable, from apples to yeast. Cubans recall these as the “golden years.”
With the Soviets as benefactor, thought political satirist P.J. O’Rourke, “The Cubans got the luxury of running their economy along the lines of a Berkeley commune, and like California hippies wheedling their parents for cash, someone else paid the tab.”
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The result was a freewheeling license for chaos.
Che Guevara apparently loved to tell a joke about how he was put in charge of Cuba’s land reform…
After the Revolution, at an early meeting of his cabinet, Fidel asks who among them is an economist. Che raises his hand and is sworn in as Minister of Industries and head of INCORA (the newly formed National Institute of Agrarian Reform).
Afterwards, Castro says: “Che, I didn’t know you were an economist.”
Che replies, “I’m not!”
Fidel asks, “Then why did you raise your hand when I said I needed an economist?”
“An economist?,” exclaims Che. “I thought you asked for a Communist!”
Skilled managers were replaced by loyal cadres with diddly economic experience. Monetary work incentives were replaced by “moral” inducements. The state, bucking the law of supply and demand, set artificially low prices and got diminishing results in return. Moreover, the state’s acopio (distribution system) became dictated by Havana bureaucrats, preventing store managers from purchasing items themselves (all private shops and businesses had been nationalized by 1967). By some accounts, 20 percent of acopio (gathering) produce simply perishes in limbo-like transit; another 40 percent is filched for the black market. That, as much as the fuel shortages, explained why tomatoes were left rotting in the fields, and why, government statistics can never be trusted.
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Fidel briefly flirted with free farmer’s markets (agropecuarios) in the mid-1980s, prompting the reappearance of garlic and other items that had by then vanished from kitchen tables. But the capitalist experiment proved so successful that Castro swiftly closed the markets, railing infamously against “millionaire garlic growers.”
Following the collapse of the Soviet Bloc, however, Fidel’s brother Raúl became a driving force pushing for the expansion of urban and organic agriculture and urgently-needed reforms. In 1993, therefore, the state granted long-term usufruct rights (essentially free leases) of state land to farmers to produce food cooperatively in Basic Units of Cooperative Production (UBPCs). Farmers are required to sell 80 percent of what they produce to the state at prices set by the inefficient Acopio. They can sell the balance at private agropecuarios, which were permitted again in 1993, where prices rise (mostly) and fall (sometimes) with supply and demand.
In 2008, after Raúl Castro became president, anyone willing to farm idle state-owned land was entitled to a ten-year (later 25-year) usufruct lease independent of UBPCs, although farmers must agree to raise certain livestock or cultivate certain crops to meet state quotas. Recipients can pass the lease along to their children and build a home on the land. More than 1.5 million hectares – approximately 15 percent of the nation’s farmland – have been granted to date. (However, only 23 percent of usufruct grantees have prior farming experience. And their task is daunting, not least because much of the former sugarcane land has become overgrown with marabú – an invasive and tenacious acacia.)
The years 2012-2013 brought further reforms, including higher state payments to farmers for products. And small farmers were also allowed to sell excess produce directly to hotels and restaurants without state interference.
Nonetheless, agricultural production across the spectrum has remained stalled at levels far below domestic demand. Overall farm output rose from 7.1 million tonnes in 2008 to only 8.2 million tonnes in 2016, according to Reuters. Thus, Cuba food imports have held steady at a budget-busting US$2 billion annually (including US$157 million in chicken, soybean, and corn from the USA in 2020 under an exemption to the embargo), accounting for about 60 percent of all food sold in Cuba.
Then COVID-19 hit. Airports closed. Tourists stayed home.
In 2020, the economy shrank a staggering 11 percent. As a result, imports plummeted around 40 percent, simply because the state lacked the money to buy foodstuffs (not least, the U.S. embargo makes it difficult for Cuba to receive international credit).
Hence, jokes that I haven’t heard in two decades are once again doing the rounds…
“You know, my wife thinks she’s going blind. Every time she opens the refrigerator, she doesn’t see anything!”
And the classic chestnut: “What are the three biggest failures of the Revolution? Breakfast, lunch and dinner.“
No wonder many Cubans took to the streets on July 11, 2021, to protest the dire shortages.
In April 2021, the government had announced further reforms to stimulate productivity and raise standards of living. For example, decades-old laws that prohibited farmers from slaughtering their own cattle or selling milk and beef without state permission were rescinded. (Cubans can no longer quip that you can get more prison time for killing a cow than a human being.)
“¡Es muy poco, muy tarde! We need more substantive reforms,” exclaims farmer Fernando Martínez Tamayo.
The government took the first major step in February 2019 when a new constitution was approved that included formal recognition of, and guarantees for, private land ownership – a fundamental lynchpin for economic growth the world over. (Private owners currently utilize about 20 percent of Cuba’s 6.7 million hectares of cultivable land but account for about 70 percent of all produce.)
“Private property provides incentives for owners to invest in their property and make it more productive and valuable. The incentive to invest in property is what leads to economic growth,” claims Renee Monzon in Introducing Private-Property Rights to Cuba: How Cuba’s New Constitution Paves the Way for Economic Growth.
Given its commitment to the socialist model, however, the government has recoiled from granting actual ownership of state land to usufruct farmers, or – heaven forbid! – permitting private land to be freely purchased and sold, as with housing. Revolutionary stalwarts see the latter as the thin edge of the wedge that would expose small farmers to displacement in a free-market system, returning Cuba to the inequalities that it eradicated following the Revolution, and spelling the end of state control. (Selling state-owned land to Cuban farmers also opens a Pandora’s box for future litigation vis-a-vis U.S. claimants.)
Far more far-reaching reforms are needed if farmers are to be incentivized to invest in and develop their land in a manner that stimulates significant growth.
“We’re held back by having to sell most of our production to the government at low prices,” says Martínez.
The Cuban government, which has always warned that the reforms to a more market-oriented economy will entail a painful transition, is caught between a rock and a hard place. Not least, the state’s ability to guarantee every citizen a minimal subsidized food package (including rice, beans, eggs, and milk for young children) through the libreta – the ration book – is an entrenched revolutionary tenet, protecting the estimated 40 percent of the population reliant on low state wages and pensions or who don’t have access to tourist revenues or remittances from relatives abroad. It’s a core reason that farmers are required to sell the bulk of their produce to the state at far below market rates.
While the limited market liberalization to date has led to an increase in production by private farms, it has also fostered public discontent with high prices in private markets (28 percent inflation for foodstuffs in 2014 alone). Production has since plateaued while inflation continues, despite price controls meant to quash “excess profiteering.”
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Outside the agropecuarios and ability to sell direct to paladares (private restaurants) and tourist facilities, the market remains a heavily-distorted monopoly run by government-owned commercial corporations (most of them divisions of GAESA, the Cuban military-controlled umbrella enterprise that controls more than 50 percent of the Cuban economy). There’s no Sysco equivalent. Nor Walmart. Nor other private national retail or wholesale food distribution chain outside the inept state acopio system and GAESA’s stores and supermarkets monopoly, and its Almacenes Universales wholesale shipping group.
Private distribution is ad hoc and local, and reliant on a relatively tiny fleet of privately-owned Eisenhower-era trucks. FAR (the Cuban armed forces) isn’t about to cede space to private competition any time soon.
Thirdly, excepting organipónicos (small-scale private and cooperative organic farms, which produce about half of all vegetables sold in Cuba), the backward agricultural sector needs massive capitalization.
Making it easier to buy land and sell produce freely won’t change things if farmers can’t buy or obtain inputs, says Hirochi Robaina, owner of Cuba’s most successful private tobacco farm. “To produce, we need inputs: seeds, compost, products to control pests, piping and pumps to irrigate crops, and fuel to run the farm machinery,” he says, pointing to two idle and time-worn Soviet tractors.
The Ministry of Agriculture’s Gelma agricultural supplies division sells inputs from machetes to Belarus 82.1 tractors (US$27,000), in foreign currency, at 16 stores nationwide. In May 2021, Villa Clara farmer Herminio Martínez Gens, for example, paid cash for a Belarus tractor, financed through a Credit and Services Cooperative of private farmers working together to share machinery and achieve economies of scale in marketing and obtaining credit.
Martínez is one of the lucky few. The need far outstrips supply. And very few farmers can afford such a sum, never mind in US dollars (designed to soak up foreign currency from the informal economy, where farmers exchange their Cuban pesos for dollars at inflated rates).
Plus, there are no private banks in Cuba. Farmers can’t use their land as collateral for loans. And bureaucracy remains a tangled and inflexible web. Thus, the availability of credit plus technical assistance and other inputs remains severely constrained. And with it the ability to accumulate sufficient capital to invest, or pay workers.
The 7/11 demonstrations were a wake-up call that the government’s economic reforms to date have been woefully insufficient. The stakes of dallying have now been significantly raised.
Immediately following the street protests, president Miguel Díaz-Canel announced the formalization of small and medium-sized private enterprises as incorporated businesses, permitting up to 100 freely hired employees, access to state financing, and even direct sale to GAESA’s supply chain. Such businesses – including farmers – will not be allowed to export directly nor attract foreign investment, however.
A large infusion of foreign investment was a major boon in the creation of tourist-oriented paladares (private restaurants) and casas particulares (bed and breakfasts) in the past decade. Much of it was by Cuban-Americans (and foreigners) partnering off-the-books with family members in Cuba. It’s likely that a similar scenario will play out as Cuban entrepreneurs take advantage of the new opportunities in farming.
The question remains as to whether the combination of reforms to date is anywhere near enough to resolve the food production shortfall.
Monzon claims that Cuba’s cautious incremental approach is an impediment: “Former Soviet countries that transitioned rapidly have grown richer and more democratic, while experiencing less impoverishment and a smaller increase in income inequality,” adds Monzon. Those that adopted a more gradual approach “have all performed worse economically, socially, and democratically.”
Only time will tell if the Cuban government can achieve its goals without losing its soul. The clock is ticking.
Meanwhile, my friend Lázaro recently wrote to me on Messenger: “Do you know what we call a refrigerator here in Cuba?” he asked. “A coco (coconut). Know why? Because it has a hard shell on the outside and nothing but water on the inside.”
I didn’t laugh. The image pained me too deeply.