A new-style Cuban cooperative hopes road to success is paved with spices

A new-style Cuban cooperative hopes road to success is paved with spices
Garlic is coveteted in Cuba and finds its way into most dishes
The spice's value can increase dramatically when not in season
Dehydrated garlic — and other spices — could be very profitable
BY MIMI WHITEFIELD
mwhitefield@MiamiHerald.com

When Carlos Fernández-Aballí and his fellow Cuban entrepreneurs were
hatching a business plan, they knew they wanted their product to be
sustainable, technology-driven and a substitute for something the island
currently imports.

To the group behind Sazón Purita, the road to riches seemed to be paved
with garlic — specifically garlic grown in Cuba and then dehydrated and
sold in small packets. Garlic finds its way into most Cuban dishes, and
the spice is so coveted that some garlic farmers have become millionaires.

"Garlic is a big business in Cuba. It is like white gold," said
Fernández-Aballí, who got a degree in engineering design from the
University of Bristol in the United Kingdom and then, after returning to
Cuba in 2006, earned a Ph.D. A head of garlic that costs 20 to 30 cents
at harvest can rise to 10 pesos by the end of the year, he said, so
dehydration made sense.

The young entrepreneurs designed the dehydrating equipment themselves,
and in 2013, Sazón Purita became Cooperativa Industrias Purita. The
enterprise is now run by 14 cooperative members.

In Cuba, there have been agricultural cooperatives for decades. Although
their numbers have been falling, there are still more than 6,000. More
recently, the government has been turning over beauty salons, barber
shops, restaurants and other service businesses to workers to run
privately as cooperatives because they're considered a drag on the
government's limited resources.

Most non-agriculture co-ops are conversions of former state enterprises,
said Ted Henken, a Baruch College sociology professor who studies Cuban
entrepreneurship. The number of cooperatives is still tiny: Only about
500 have been approved, and at mid-year, 347 were in operation.

500 estimated cooperatives that have been approved
About 23 percent of cooperatives are start-ups like Purita, Henken said.
Fifty-nine percent of non-agricultural cooperatives fall into the
commerce and food, technical and personal services categories, and about
10 percent, including Purita, are categorized as light industries, he said.

It turns out the Purita entrepreneurs were on the right track with
dehydrated spices, but they couldn't get enough garlic at certain times
of the year to make the business feasible. "Everyone wants to keep
garlic in storage" until later in the year and speculate, said
Fernández-Aballí.

Sourcing its produce from organic farms and small urban agriculture
producers, the co-op branched out last year to 14 products — including
dehydrated parsley, chives, coriander, tarragon, basil, rosemary and
oregano, and even dehydrated peanuts, bread crumbs and fruit. They also
process garlic when they can get it.

Currently, the cooperative is producing 18 tons of dried peanuts and 1.4
tons of dehydrated spices, but it has the capacity to become far larger
and produce up to 100 tons of dried garlic annually. It's in the process
of ramping up to produce 20 tons of dried fruit and spices.

The cooperative received a business loan from a Cuban bank for 985,000
Cuban pesos, the equivalent of about $41,042, and it has a small organic
farm that produces some of its spices.

Purita has been selling its spices in small cafes and cafeterias around
Havana, but in late July, it made a breakthrough: The government agreed
to stock Sazón Purita-brand products in five Mercado Ideales, peso
retail stores in Havana.

But the cooperative has even bigger plans. Eventually, it would like to
sell its 100 percent natural dehydrated products in the United States.
"We believe it's possible," said Fernández-Aballí.

Under the commercial opening to Cuba outlined by the Obama
administration, independent Cuban entrepreneurs are allowed to sell some
products in the United States, but at the moment, the list of permitted
products doesn't include prepared foods.

Fernández-Aballí said the Cuban government is preparing a packet of laws
that will help private enterprise, including making it easier for
cooperatives to link to companies abroad. "The goal is not to put the
brakes on the process," he said.

Organizing the co-op and working through the many obstacles a private
entrepreneur faces in Cuba hasn't been easy, acknowledged
Fernández-Aballí. "We just put our heads down and smiled," he said, "but
now we have friends assisting us with the process."

"He's a highly educated guy," said Henken. "He's also well connected and
perhaps well protected."

Among the problems the cooperative members have had to work through are
overestimating their capacity, which necessitated a renegotiation of
their loan. Cuba's unwieldy dual currency system where 24 Cuban pesos
equal one Cuban convertible peso has been difficult, as has finding
professional packaging for the spices. Packaging spices can be tricky,
said Fernández-Aballí. If not done properly, the spices can rehydrate.

"All this slowed us to a point where we have a cash deficit problem,"
said Fernández-Aballí. But the cooperative is slowly digging out. Next
year, he said, Purita products will be professionally packaged.

Fernández-Aballí presented the Purita case study during an Association
for the Study of the Cuban Economy meeting in Miami on July 30.
Afterward, Arch Ritter, a Carleton University economist and co-author
with Henken of the book Entrepreneurial Cuba: The Changing Policy
Landscape, said, "I'm worried about your cash deficit." But at the same
time he praised the Purita group as "confirmed entrepreneurs."

Talent and entrepreneurship are abundant in Cuba, Ritter said. There are
currently about 500,000 privately employed Cubans.

The current wave of entrepreneurship, Ritter said, began to take root in
the early 1990s during the special period, a time of economic crisis in
Cuba after the collapse of the Soviet bloc. Cubans had to begin to come
up with their own income and start small side businesses to survive.
They began selling what they didn't need or want from their ration books
or engaged in black market activities.

Fernández-Aballí, 31, missed most of that era. When he was eight, his
family left Cuba to live in Caracas, where his father held a post in
UNESCO. From there, he went to England to study engineering before
returning to Cuba in 2006. Fascinated by renewable energy technology, he
got his Ph.D. and began teaching at CUJAE, Havana's technical university.

He was always attracted to entrepreneurship and technology, he said. The
first venture Fernández-Aballí was involved in was a transnational
cooperative based in Barcelona that included Cuban, Spanish and Belgian
associates. Founded with international prize money, its goal was to
create low-cost, technologically appropriate housing with local
materials for the homeless and low-income people.

"The taxes in Spain ate us away," he said. "Thirty-thousand euros in
prize money was not enough. We didn't understand that then, but we do
now. You probably need three times that amount to start something in
Spain." Also, trying to manage a transnational concept with Cuba's poor
Internet access was too hard, he said.

Before hitting on the garlic idea, he and his associates thought about
starting a catering enterprise but realized there were too many holes in
the Cuban supply chain to make it feasible. "Garlic is everywhere," said
Fernández-Aballí. They started the business after coming up with a
prototype dehydration machine in early 2012.

The cooperative members meet once a month to make group decisions and
vote. Each has a vote regardless of their contribution to the co-op.
Profits are supposed to be shared according to the complexity, quality
and quantity of work by each individual.

"We're not pretending to be a company," Fernández-Aballí said.

Source: A new-style Cuban cooperative hopes road to success is paved
with spices | Miami Herald -
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