Cuba has been experiencing a difficult economic situation since approximately November 2018. Its citizens have suffered the scarcity of basic goods during this new “period,” including foodstuffs such as bread, oil, chicken, eggs and processed meats. Pork has also become increasingly scarce due to a fall in production and increase in demand, stemming from the lack of similar products.
The explanation for all this is linked to lower levels of imports of goods and raw materials for the production of animal feed. Import difficulties and scarcity are nothing new in Cuba. What has set alarm bells ringing on this occasion is the magnitude of the current situation, as we have always lived with fluctuating availability of different products. This time it has been argued that external financial issues (associated with the Venezuelan crisis and U.S. sanctions) and the “import mentality” are to blame. It should also be noted that relations with Brazil have diminished to their lowest level in decades, a nation that was a key food supplier to Cuba.
The issue of the “import mentality” is striking. Among the solutions in progress is the negotiation of projects with foreign capital, for the production of pork and chicken meat on the island. It is worth recalling that the decision to cease poultry farming was made by the Cuban government at the beginning of the 2000s. It was argued that it cost more to produce this meat here than to import it. Meanwhile, pork production took off as association schemes with private producers were created, in which a part of the feed is provided by the state, which buys the meat at a price that reflects the balance between costs and expected returns.
Now there is talk of foreign investment. Once and again, repeated is the same pattern of seeking solutions abroad for problems which are relatively simple to solve, such as pork or chicken production.
In Cuba there is sufficient agricultural and livestock knowledge to drive forward the substitution of imported feed for domestic raw materials, to a high degree. There is also the initial capital to expand production in both fields. What doesn’t exist is the policy framework to allow private producers to prosper. Of course, to do so requires starting and sustaining the accumulation cycle in an environment of adequate pricing, which takes into account real production costs and demand, alongside fair recognition of the efforts undertaken by producers.
As production volumes increase, and the most efficient producers are rewarded, accumulation will allow for the adoption of new technologies, in line with the conditions and requirements of the Cuban market. In this system, if the state wants to guarantee the presence of a product at a lower than market rate, it can make bulk purchases to moderate this, or act as an intermediary to sell to certain sectors at a subsidized price. As it is, today huge amounts of resources are spent on imports, which only benefit foreign producers.
The foreign investment option appeals to many officials. At first glance it allows for a leap forward in the acquisition of technology, the availability of initial capital, and supposedly in productive results. The problems come later.
As part of this production is sold in the domestic market, the dividends for the foreign party must be paid in hard currency, which results in a permanent strain on the balance of payments. If this is solved by exporting a substantial part of the production, the domestic offer is considerably reduced. All this stems from the fact that there exists the notion that the domestic private sector is of a lower quality, and unable to offer a productive solution to meet needs. In the end, whether through imports or foreign capital, the equation remains much the same.