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CHALLENGES 2007-2008: Cuban Economy in Need of Nourishment

Patricia Grogg

HAVANA, Jan 4 2008 (IPS) - Increasing food production is the main challenge to be faced by the Cuban economy this year, to improve people’s quality of life. It was one of the recurrent themes raised at the popular debates convened on the government’s initiative in the second half of 2007.

"The agricultural sector is still a long way from satisfying the pressing need to get more goods to market, in order to bring prices down, cut imports, and elicit a favourable change in public opinion," admitted Osvaldo Martínez, chair of the commission on economic affairs in the National Assembly of People’s Power, Cuba’s parliament.

According to the authorities, the shortcomings of domestic food production are being exacerbated by the high international market prices of staple foods. Because of the price hikes, the country spent an extra 286 million dollars in 2007, out of its total food import bill of 1.5 billion dollars.

To ensure delivery of the basic basket of foods, sold to families at state subsidised prices, the government forecasts an expenditure of 945 million dollars in 2008. Regulated food distribution on a ration book system guarantees some essential goods to every Cuban citizen, but the basket covers only part of their total food needs.

"I understand that the country spends a lot on ration book provisions, but I can’t feed my children on this alone," a woman who was buying her food for January told IPS. She carried rice, sugar, a litre of oil and small quantities of black beans and peas in her shopping basket. "There was nothing extra this year for New Year," she complained.

Like most Cubans, she has to buy the rest of her family’s basic needs in the free farmers’ markets, and pay for goods either in national or convertible currency. This takes the largest share of her family’s income: together with her husband, they make about 800 pesos a month. "Everything’s so expensive," she said.

Their monthly income is equivalent to 33 Cuban convertible pesos, or CUC, the only dollar-pegged currency that is permitted to circulate in the country. The state exchange shops (CADECAS) sell CUCs at 25 Cuban national pesos, or 1.25 dollars.

In his Dec. 28 report to parliament on the state of the economy and his ministry’s plans for 2008, Planning Minister José Luis Rodríguez said food intake per person had risen to 3,287 kilocalories and 89.9 grams of protein a day, "out of which between 62 and 64 percent is available at subsidised prices."

Among the challenges for the coming year, Rodríguez said "making progress in substituting imported foods like rice, beans, milk, fruit and wheat flour, as well as animal feed, with domestic production is among the immediate priorities." He did not say by how much the production of these items is planned to increase.

Economists and authorities appear to be in agreement that the "structural and conceptual changes" mentioned by Cuba’s acting President Raúl Castro on Jul. 26, 2007 must begin with the agricultural and livestock sector. In his speech, Castro said it was "imperative" to increase production, especially of foods.

However, the last session of parliament had not yet approved the long expected reforms in this area. Castro only repeated that "the country is working on this vital issue with the urgency it requires, because of its direct and daily impact on the life of the people, especially those with the lowest incomes."

"Studies are well under way and action will continue to be taken as fast as circumstances allow, so that land and resources are put into the hands of those who are capable of producing efficiently, and they receive the support, social recognition and material rewards they deserve," he said.

Neither was a decision made concerning the recovery of the purchasing power of wages, although in his analysis of the year’s economic results in parliament, Martínez said the average salary has grown five percent in 2007, to 408 pesos a month.

In his view, raising wages to the level where they can satisfy workers’ needs "is one of the most important and complex of the problems that must be solved gradually, sustainably, and without expecting overnight or magic solutions."

The Cuban economy grew 7.5 percent in 2007, below the 10 percent projected by the authorities, because of the fall in construction work and agricultural production due to "climate effects throughout the year," according to Rodríguez, who forecast gross domestic product (GDP) growth of eight percent for 2008.

Over the last few years, the Cuban government’s estimate of economic growth has included a weighted value for the medical, educational and sports services provided to the population, without describing the method by which it is computed. These services are offered free at every level to the entire population.

"We use internationally recognised statistical systems, and our country again asserts its right to have its achievements reflected cleanly, without being undermined or maliciously attacked," said Rodríguez, warding off possible new criticisms on that front.

The food shortages, largely due to low productivity in rural areas, and the inadequacy of wages, were among the main problems brought up at popular debates convened by the government after Raúl Castro’s speech on Jul. 26, Cuba’s most important national holiday, Revolution Day.

Raúl Castro has been interim president since Jul. 31, 2006, when his brother, President Fidel Castro, had the first of several intestinal operations, from which he is still convalescing.