Cuba Confronts the Crunch

By Patricia Grogg

HAVANA TIMES, June 24 (IPS) – Anxieties about making ends meet in Cuba are heightened at the start of the summer holiday season, when there is increased demand for food, transport and electricity, all of which are affected by restrictions intended to mitigate the country’s economic problems, intensified by the global recession.

“Soon I’ll have everyone at home, needing meals, wanting to go to the beach, using more electricity. It isn’t easy,” a woman waiting in line for eggs at a farmers market told IPS.

“My children go to boarding school, but in a few days they’ll come home for vacation,” she said. Her concern is shared by many in this country of 11.2 million people, which in the 1990s suffered the rigors of the “Special Period” – the government’s euphemistic term for the severe crisis that followed the collapse of the East European socialist bloc and the break-up of the Soviet Union.

Economy and Planning Minister Marino Murillo told Juventud Rebelde newspaper on Sunday that a food “consumption plan” is being designed to provide an estimated 3,100 kilocalories per person per day, greater than the recommended daily intake of 2,400 kilocalories.

“Independent of these and other guarantees, restrictions on consumption are inevitably going to be felt,” but “no one will be left unprotected,” he said. Although he did not say so, the calculation is assumed to be based on the basic food allowance that is distributed to each citizen through libretas (ration books) used to apportion certain basic commodities at subsidized prices.

The rationing system in force since 1962 makes available certain quantities of rice, sugar, beans, oil, eggs, some proteins, toothpaste and soap, among other products. Studies have found that the food ration only provides 36 percent of the daily calorie requirement per person, covering about 12 days a month.

Protein-rich foods in the rations – chicken, fish or ground beef mixed with soy – last no more than 10 days, and fats last nine days, according to research by economists. Additional supplements are provided for vulnerable groups with extra needs, such as children, pregnant and lactating women and people who for medical reasons need special diets.

For the rest of their food needs, consumers have to go to the farmers markets, where a variety of high quality food is sold, but prices (in pesos) are set by supply and demand. The other alternative is the government chain of shops that sell food and other products not otherwise available, but which only accept hard currency (only accessible to a portion of the population).

As part of a government austerity plan, extra grain supplies, regularly distributed to consumers in the capital and eastern provinces since 2004, have been cancelled as of this month. An electricity saving plan is under way, and some investments and imports have been postponed.

According to official sources, the global credit crunch due to the financial crisis has made it more difficult for Cuba to obtain loans. In addition, revenue from tourism and nickel exports alone could drop by more than one billion dollars this year.

“We have had to readjust the national growth plan, which means cutting consumption of, for example, electricity and therefore, fuel. The country cannot spend more than it takes in,” said Deputy Economy and Planning Minister Julio Vazquez Roque.

Cuba Must Lower Food Imports

Experts say it is essential to prioritize strategic investments such as those that have the potential to reduce the need for imports, such as spending on agriculture, which requires irrigation systems, fertilizers and other inputs.

Cuba imported some 2.5 billion dollars in food in 2008, due in part to the low productivity of Cuban farming, and to emergency purchases to mitigate the impact of the three hurricanes that devastated the country last year, causing losses officially estimated at around 10 billion dollars.

The country hosted 1.2 million tourists from January to May 2009, 2.1 percent more than in the same period last year, but the visitors spent less money. Official reports indicate that foreign exchange earnings from tourism were down by 13.7 percent over the first quarter of the year.

The collapse of international nickel prices alone, which plunged from US $33,000 a ton in 2007 to just over $15,000 today, means Cuba will take in 720 million dollars less in 2009 than it did in 2008. Exports of tobacco, lobster and prawn are also down.

Approximately 50 percent of the island’s fuel imports are used to generate electricity, and the government of President Raul Castro imposed drastic electricity savings on the state sector. Officials argued that, in the absence of such a measure, the country would be unable to afford to buy food and medicines.

Cuba’s farmers, challenged to produce more in order to cut back on food imports, had an uneven first four months in 2009. The potato and tomato harvests are up from last year, but production of other food staples such as pork and eggs is down.

In August the authorities hope to set in motion a system to prevent losses in agricultural production due to a variety of failures and shortcomings in state purchasing from producers, and subsequent sales to consumers. These transactions will be moved from the Agriculture Ministry to the Ministry of Domestic Trade, but the restructuring is drawing criticism even before it has been implemented.

“Seeing is believing, but I don’t think they’ll get rid of the red tape. As for me, if I’m forced to sell my produce to the state instead of coming here and selling it directly, I’ll quit working. I’m 63, I can rest now,” a small farmer from the outskirts of Havana who comes to an urban market every day with a variety of top-quality fresh vegetables that he sells at higher-than-average prices, told IPS.

Experts fear that the crisis may adversely affect the reforms that need to be made in agriculture, from administrative decentralization and strengthening municipal organizing and decision-making capabilities, to the leasing of idle land to farmers.

Deputy Agriculture Minister Alcides Lopez estimates that to date, 100,000 applications for land to farm have been “received and processed,” and 38 percent of the idle land available has been leased. Twenty percent of this is already producing crops or has been sown. The question now is whether the resources will be available for these new farmers to actually produce.