Cuba's food odyssey

Los Fornos butcher shop on Neptuno Street in Havana.
Los Fornos butcher shop on Neptuno Street in Havana.

Armed with the equivalent of 24 U.S. dollars and a huge dose of patience, I focused on the task of “resolving” the issue of food in Cuba. Just what can state employees buy with that amount of money — which amounts to their average monthly salary?

Forty minutes after standing in a long line at a hard currency store without air conditioning, here's what I managed to buy in late March: four cups of yogurt, a package of hot dogs, some ground beef, a wedge of cheese, a bottle of vegetable oil, a package of chicken quarters, 1.1 pounds of peas, spaghetti, a carton of mango juice and a bag of cornflakes (made in the U.S.).

The store’s name is Maravillas (Wonders). But the purchase did not comprise a basic food basket, because the store did not have many other products. With a large number of shelves empty or filled with the same product, the shortages were evident.

Finding beef was the most difficult task. An employee at the Harris Brothers shop in Old Havana said she had not sold beef for months and recommended going to the Los Fornos butcher shop on Neptuno Street. The price for 2.2 pounds of top round steak? Just over 8.5 Cuban Convertible Pesos — known as CUCs — or about 205 pesos, nearly half the island's median monthly salary, which now stands at 460 pesos.

Hard currency stores do not sell fruit or vegetables, except in rare cases like the exclusive Palco shop. To find those items, Cubans have to go to agricultural markets. Some are state-owned, with slightly lower prices, longer lines and poorer products. In the other markets, known as “liberated,” prices are set by supply and demand.

In one of the “liberated” markets in the Cerro neighborhood, pork was selling for 40 pesos per pound — about $2. A pound of onions sold for 20 pesos, and the tuber malanga went for eight pesos per pound.

A comparison of food prices around Havana serves as a benchmark for the socioeconomic status of people, defined by their purchasing power.

Roberto Geilbert, a state employee, usually goes to a cafeteria on Neptuno Street to buy a soda for one peso. He says that's all he can afford.

Other “peso” cafeterias may have clients who can afford to pay as much as 12 pesos for a pizza. But prices go through the roof at the privately-owned restaurants, known as paladares, that attract foreign tourists and diplomats.

The sirloin steak that President Barack Obama savored at the San Cristobal paladar when he visited Havana in March costs 15 CUCs. For 20 CUCs, he could have ordered a grilled lobster.

The most expensive dish costs as much as the monthly salary of a state employee.

An agriculture that does not produce

In 2008, Cuban ruler Raúl Castro approved the long-term lease of fallow state lands to private farmers, hoping to increase agricultural production. Although the government claims to have handed over 4.52 million acres to 214,000 people, eight years later food shortages continue to be the No. 1 headache of many Cubans.

This year's potato harvest, despite some improvement, has been so trouble-plagued that the arrival of potatoes in Havana markets competed with the Rolling Stones concert on March 25 as the day's top news.

During the recently concluded VII Congress of the Cuban Communist Party (PCC), the head of the commission in charge of implementing Castro's economic reforms, Marino Murillo, admitted the island has imported nearly $2 billion in agricultural products annually for several years — even though it could grow at least half the items.

The United Nation's Food and Agricultural Organization has reported that Cuba's agricultural sector employs nearly one million workers — in an island of 11 million people — yet accounts for barely 4 percent of its Gross Domestic Product. Figures released by the Cuban government also show that agricultural production fell by 2.5 percent in 2015 compared to the previous year.

Cubans who lease state lands and other farmers were hoping the PCC Congress would approve new measures to stimulate production. Since the land leases were approved eight years ago, the government has been trying to ease some of the bureaucratic delays and absurd prohibitions. But it took four years just for the government to allow the new farmers to build homes on the land they were working.

Cuban economist Omar Everleny Pérez wrote last year that more changes were required “for real results to be achieved in agriculture, because the current changes are not enough.” Among the reforms he proposed were a new system for managing agriculture, creating wholesale markets for agricultural inputs and eliminating bottlenecks in the transportation network. He also mentioned “the urgent need to partner with foreign capital.”

But Pérez seems to have been going against the current. Just days after the PCC Congress, he was fired from the University of Havana's Center for the Study of the Cuban Economy.

Partial reforms do not work

The Congress, which brought together nearly 1,000 party members, heard only complaints about the “intermediaries” in agriculture — especially wholesalers — and a suggestion that the government could reimpose central controls on the distribution chain through the notoriously inefficient ACOPIO, the state procurement and distribution agency. An “experiment” with a decentralized distribution system in the Havana region was described as a failure.

During the Communists' gathering, Castro blasted “deviations” such as “the reappearance of speculation and hoarding” of agricultural products that increase prices. Although he acknowledged production was low, he warned that Cubans “could not simply cross their arms in the face of the unscrupulous manipulation of prices by intermediaries who want to profit more and more.”

The rhetoric brought back memories of his brother Fidel, who in the early 1980s and again in the early 1990s allowed agricultural markets where prices were set by supply and demand — only to shut them down later, accusing farmers and intermediaries of illicit enrichment.

The Ministry of Finances and Prices recently announced Tuesday the reinstatement of price controls on some agricultural products — vegetables, fruit and grains — but only when sold in state-owned markets.

Carmelo Mesa Lago, a leading expert on the Cuban economy, agreed that the prices of agricultural products increase significantly after they leave the farm, and that intermediaries account for part of the increases because they have to cover costs such as transportation. But decisions to impose price controls are “difficult to keep in place. They are not economically sustainable.”

Mesa Lago added that the low productivity and absence of strong competition among the intermediaries also drive food prices up.

Pavel Vidal, a Cuban economist at the Universidad Javeriana in Colombia, argued that the intermediaries are not the main problem.

The experiment to dismantle ACOPIO in the Havana region “was not completed because authorities established a wholesale market for the food items, but none for the required inputs, and paid no attention to the other factors that limit the productive capacity of the agricultural sector,” Vidal said.

At the same time, the increase in tourists who can pay more for their food has put added pressure on an agricultural industry that already cannot meet demand.

“Agriculture continues to be a market with limitations on its ability to increase supplies,” Vidal said. “With the increases in demand from tourists, the growing number of paladares and nominal increases in salaries, the market reacts by increasing prices. The intermediaries are not to blame.”

Apparently trying to make up for the absence of good news out of the PCC Congress, soon after the gathering ended, the Ministry of Finance and Prices announced a 20 percent cut in prices in hard currency stores as an expression “of the political commitment of the party and government leadership to do everything possible to improve the situation of the people, despite the existing limitations.”

A liter of vegetable oil now costs between 1.95 and 2.10 CUCs, compared to 2.60 CUCs before the price reductions.

Although the price reductions were well received on the island, and CUCs can now buy a little bit more, a solution to Cuba's food problem remains far away.

“The worst part is that the designers of the reforms have not been able to continue the changes in agriculture, and have yielded to the power of those who are resisting the changes and want to return to the inefficient and counterproductive state ACOPIO system,” said Vidal.

The economist predicted more food shortages in shops and markets, problems that might be compounded by the ongoing political upheavals in Venezuela that could force Caracas to trim its subsidies to Cuba.

“This will be another difficult year for Cubans,” he said, adding that the evidence from the agricultural industry “show that partial reforms do not work.”