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Seeds of Economic Reform on Cuba's Farms

Author: Stephanie Hanson
September 12, 2008

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A recent spate of hurricanes and tropical storms has drenched Cuba's farmland and ruined many of its crops (Bloomberg). The storms were a significant blow to Cuba's farmers and could mean an economic pinch for a country that was already expected to import nearly $2.5 billion worth of food this year (NYT). Cuba is in the midst of significant changes in its agriculture industry, however, as President Raul Castro presses a series of reforms aimed at boosting crop production. It's too early to see the results of these efforts, but analysts say their long-term impact could be substantial, and might herald further economic changes to come.

The reforms of the younger Castro, who officially took charge from his ailing brother Fidel in February, shift control of Cuban agriculture from Havana to nearly one hundred local councils. This decentralization aims to increase food production and decrease the country's dependence on imports. "This is the first substantial reform to Cuba's economic model carried out by Raul," Jorge Pinon, a researcher of the University of Miami's Institute for Cuba and Cuban-American studies, told Bloomberg.  Farmers can now use any farm equipment they can afford, and they also have the right to cultivate up to ninety-nine acres of unused government land for ten years. Some economists, including  Oscar Espinosa Chepe, argue that it would be preferable (PDF) to turn over the land as property, instead of on a ten-year lease. This, he writes, would give young people a stronger incentive to farm.

It's unclear how much latitude farmers will have under the new laws to sell their produce on the open market. Philip Peters of the Lexington Institute, whose CubanTriangle blog is a good source of expert analysis on the island, writes that in some cases producers might not have contracts that require them to sell their crops to the state. Currently, big agricultural producers sell 80 percent of their output to the state at set prices. Small urban farms, or organoponicos, can legally sell directly to the public and keep their profits (FT). Organic farmers from around the world have praised (Harper's) these small farms for their efficient method of farming. "Cuba has a chance to be a real role model for Latin America, as the region tries to figure out how to survive the coming global economic transition from high waste to high efficiency," writes Patrick Doherty of the New America Foundation. But he cautions that "economic change has to come faster than Raul is presently orchestrating."

More changes might also be on the horizon. In an August interview with the Financial Times, Alfredo Jam, head of macroeconomic analysis in Cuba's economy ministry, expressed dissatisfaction with the country's social welfare system and concern about labor shortages in the agriculture, construction, and manufacturing industries. "We can't give people so much security with their income that it affects their willingness to work," he said. Though Raul Castro has indicated in speeches that he is reconsidering the state's principle of income equality, most Cuba analysts warn that change is unlikely to come quickly.

Meanwhile, U. S. policy toward Cuba remains frozen, though some experts say change could come with a new U.S. president. CFR Senior Fellow Julie E. Sweig says a new U.S. administration offers an opportunity for Cuba and the United States to "get on better footing." An exception to the U.S. trade embargo with Cuba means that several U.S. states, including Texas and Nebraska, have brokered agriculture deals with Cuba in recent years. A thaw in the relationship could increase trade between the two countries significantly, Gen. James T. Hill, former commander of U.S. Southern Command, told CFR.org in May 2008.

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