Seeds of Economic Reform on Cuba's Farms

Seeds of Economic Reform on Cuba's Farms
September 12, 2008
Author:
Stephanie Hanson

Seeds of Economic Reform on Cuba's Farms

Farmers use an ox-drawn wagon along a road after Hurricane Gustav hit La
Palma, Cuba. Sept. 2, 2008. (AP/Javier Galeano)

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.

http://www.cfr.org/publication/17119/seeds_of_economic_reform_on_cubas_farms.html