ECONOMY-CUBA: Food Still Expensive Despite Recovery

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, May 19 2000 (IPS) - The Cuban economy shows signs of reactivation, but most people still hold that their income is insufficient to meet their families’ basic nutritional needs.

The four million tonnes of sugar produced in the last harvest upheld the official forecast that the island’s gross domestic product (GDP) would grow more than the 4.5 percent authorities had originally predicted.

But the effects of economic reactivation have yet to be felt in the Cuban home when the time comes to draw up a budget that ensures breakfast in the morning at least one other meal each day.

With the year 2000 well underway, no one seems to remember the widespread complaint, “there is nothing to buy,” heard in the early 1990s, the first years of the economic crisis that hit the island after it lost foreign subsidies and major markets when the European socialist bloc crumbled.

“The issue now is that wages cannot keep up with the prices at the farmers market,” said schoolteacher María Angélica Marín, 30, who is single but takes care of her two elderly parents.

Marín recognised the virtues of the free farmers markets, created in October 1994 as part of a reform process to pull the country out of recession. But she criticised the high prices, which are governed by the law of supply and demand.

Before these markets appeared, all agriculturally produced foods were sold through state-run enterprises. They purchased the produce from agricultural co-operatives and independent farmers. Now, under the new system, the farmers freely take part in the produce markets, set their own prices and pay sales taxes.

Authorities saw this change as a strategic way out of the serious food deficit that hit after the August 1994 ‘balseros’ (rafters) crisis, in which an estimated 30,000 Cubans illegally left the island on precariously built rafts or boats, most citing economic reasons for their departure.

The farmers markets “solved a major problem when there was almost nothing to put on the table, but their prices continue to be prohibitive for most people,” Marín pointed out. “If they are high for me, imagine how it is for people who earn a half salary of 217 pesos.”

The official exchange rate puts the Cuban peso on par with the dollar, but US currency is currently fetching 21 pesos on the parallel market, which the government allows to operate through a network of exchange houses.

Marín’s father receives a 175 peso monthly pension and she earns 400 pesos teaching high school, for a 575 peso household income. “Though we try to stretch it out, it is still not enough” for adequate nutrition, she said.

These markets provide all kinds of fruits and vegetables, and pork, chicken, turkey and beef – everything that makes up a family’s basic provisions, which the Cuban government subsidises through food rationing programme.

At the farmers markets, lettuce costs 5 pesos, a kilo of onion is 44 pesos, a kilo of pork from 46 to 55 pesos, a kilo of chicken 44 pesos, a kilo of rice from 8 to 11 pesos, and a kilo of black beans runs 17.5 to 22 pesos.

One of the objectives behind the farmers markets was to encourage production. But six years later farm yields are still modest, and still not high enough to prompt a fall in prices.

Official data show that agricultural production levels at the end of 1999 were approximately 65 percent of what they were in 1990- 1991, early on in the economic crisis.

Experts agree that it would take a doubling of yields and greater competition between the state-run and independent agricultural sectors for the law of supply and demand to produce a major and rapid decline in prices.

Since late 1998, Cubans have been able to buy meat and vegetable products at state-run markets at prices that run five to 12 percent less than at the free farmers markets. But the supply at the government markets is not stable and the variety and quality do not always satisfy the consumers.

The Basic Units of Co-operative Production, created under the economic reforms of the 1990s, cover 47.6 percent of the island’s arable land, while the government owns 30.4 percent.

The remaining land is distributed among the Agricultural Production Co-operatives (10.2 percent), the Loans and Services Co- operatives (8.4 percent) and independent peasant farmers (3.4 percent).

Sources from the farm sector point out that the outdated technology still in use, the lack of full exploitation of genetic potential and the low returns on some inputs are the principal causes behind Cuba’s low agricultural production levels.

Orlando Lugo, president of the National Association of Small Farmers, which covers 160,000 peasants throughout the country, recognised the need to implement more recent technologies in order to obtain higher crop yields.

But his first suggestion to improve production and reduce prices targets the farmers themselves, whose “productive capacity” he says has not been fully exploited. Lugo also pointed to the need for new marketing methods.

In 1999, Cuban families spent an average of 66 percent of their household income on food. The year before, when prices were more accessible, they spent just 46 percent.