- DTN Headline News
The Cuban Question
Tuesday, November 29, 2016 2:16PM CST

By Jim Patrico
Progressive Farmer Senior Editor

Fidel Castro's death Nov. 25 set off a round of speculation about Cuba's future, which could have implications for American farmers eager to trade with the island country.

Fidel's brother Raul has been running the family business for the last eight years while Fidel's health faded. During that time, Cubans and the rest of the world didn't know for certain if Fidel was pulling strings in the background.

They watched as Raul allowed more free enterprise; he encouraged more Cubans to farm; he opened doors for the United States to do more business in Cuba. Now that his brother -- the dictator with the cigar and military fatigues -- is gone, will Cuba continue on the liberalization path Raul Castro began?

That's a key question for Cuba and the U.S. Adding to the uncertainty is the change of administrations in the U.S.

President Barack Obama shook Raul's hand last March and for two years has used executive orders to begin ending a nearly 60-year-old embargo. President-elect Donald Trump, meanwhile, has said he wants more concessions from the Cubans before relations can move forward. USA Today quoted Trump's vice president Mike Pence telling a Miami audience just before the election: "Let me make you a promise. When Donald Trump is president of the United States, we will repeal Obama's executive orders on Cuba."

What will replace those executive orders and what engagement will the Trump administration make with Cuba? The answers are of interest to U.S. farmers and companies wanting to sell sugar, meat and farm inputs to Cuba.

DTN/The Progressive Farmer last fall visited Cuba to assess where Cuban and American agricultural interests might connect. In some ways it seems, Cuban farming is stuck in a time capsule.

One day near the village of Melena del Sur just south of Havana, a 50-year-old rusted Russian-made tractor chugged and popped as it struggled to navigate a farm lane. Rain came the previous night, and the lane was a line of ruts filled with water and red clay. Its tires slipped and slid, but the tractor stubbornly kept going. In a pasture to the side of the lane were three teams of grazing oxen. If the tractor couldn't make it go on its own, farmer Yomar Baez Gonzalez would use them to get it unstuck.

That old Russian tractor and the oxen backup are indicative of how far behind the times is most farm equipment in Cuba. On the other hand, in nearby Havana scientists are working on breakthrough vaccines to prevent tick-borne diseases in cattle, transgenic soybeans that are resistant to Asian Rust and compounds that help build orange trees' defenses against citrus greening.

Old and new contrast here in part because of a half-century-old embargo by the United States. The Cubans refer to it as the "blockade" because it has been so effective at cutting off Cuba from trade and credit with much of the world. But the Cubans also can blame the socialist system, which even Fidel Castro admitted has failed the people.

Meanwhile, Cubans improvise. They keep old tractors and old cars running while also looking for modern solutions to longstanding problems.

Things are changing. Two years ago, President Obama and President Raul Castro announced a resumption of diplomatic relations between the two countries. Although Congress holds the key to unlocking the embargo, some liberalization of U.S. policy through Obama's executive actions -- now subject to President-elect's Trump's policies -- has given a glimpse at a post-embargo world. Americans can now more easily travel to Cuba. Farm commodity groups, for instance, have sent dozens of trade missions to begin planning for a day when the embargo ends. They are eager to trade with a country that now imports 70% of its food.

At the same time, the Castro regime has loosened some of the socialist bindings on the Cuban economy. The government now encourages certain types of entrepreneurial ventures. It also has sought to make it easier for Cubans to farm new land and for farmers to one day own it. The government actually seeks urban dwellers to move to the countryside and farm.

But like Gonzalez's tractor, progress is slow.

A FAMILY FARM

The Gonzalez family has farmed for three generations outside Melena del. It owns about 54 acres, which makes the family unusual in Cuba where the government owns 70-80% of the nation's farmland. Some private landowners -- like the Gonzalez family -- retained control of their land after the Revolution in 1959 turned Cuba into first into a socialist country, then into a communist regime.

Yomar Gonzalez and his father Miguel Angel Baez grow tomatoes, rice, black beans, yucca, tubers of various sorts, peppers and fruits. A 40-something man with a wife and two teenaged boys, Gonzalez has a solid house on the edge of town. It has a front porch, two bedrooms, a large living room/dining room and a 24-inch TV that is on constantly, mostly showing music videos. He seems at ease with his life, if resigned to some of its limitations.

He knows, for instance, that every year he can make his own decisions about what to plant. But the government will dictate how he markets his crops. Most likely he will have to sell through a centralized system at a price the government sets. In some years, he will have extra crops to sell on the open market for extra income. But those years are infrequent.

Gonzalez's lack of resources means he is wedded to that 1967 Russian tractor. When asked if he has plans to replace it one day, he shook his head. "We just have to keep it going," he said through a translator.

Would the end of the embargo affect him? Gonzalez is circumspect. This is a communist country, after all, and the interpreter works for the government. "Only after the blockade is ended will there be a possibility that we can learn and share [farming] technologies [with the U.S.]," Gonzalez said.

INDEPENDENCE

The Cuban government encourages talk of U.S. ag imports, but its long-term goal is to make the nation more food independent. Opening up agriculture to farmer cooperatives is a government-approved way to increase overall food production.

Drive a few miles from the center of Havana to Mayabeque province and an organic cooperative. Farm president Miguel Angel Salcines Lopez is in charge here. A tall, distinguished man with grey hair, twinkling brown eyes and a fashionably floppy hat, Lopez oozes charm and a successful manager's confidence. The cooperative has about 62 acres under cultivation here. Its 120 employees grow more than 300 species of ornamentals and vegetables, which wind up in Havana markets. The farm is a showcase to which the government brings foreign visitors.

Lopez is as proud of his workers as he is of the crops. About 40 are women, and he has a small smile when he said through an interpreter, "They are more intelligent and reliable than men." Another large percentage of workers is older men. "They have an accumulated culture and spirit" that is not found in younger men, Lopez said. These men are retired but work for extra money and the diversion farm work provides.

Lopez is also proud to tell you that the land used to be a garbage dump. Over the past few years, the cooperative resurrected it and has fed it with animal manure, no chemical fertilizers. In fact, Lopez said, the operation is organic: "We had to go organic or die."

Oxen pull plows to work the red soil. Workers bend to hand weed between the rows. They occasionally spray biological products to control insects. Lopez said the large number of crops here creates a biodiversity that is important to controlling pests of all sorts. Some of the ornaments are there only to distract insects from crops.

Wide swaths of suspended netting moderate the brutal tropical sun. Drip and small sprinkler irrigation provide moisture insurance. Microorganisms stimulate growth and increase yields, Lopez said.

A lot here is modern.

Lopez recently flew to California to attend an organic farming conference, something he might not have been able to do before Obama and Castro shook hands. He found that his farm was as advanced as many others at the conference. "But we don't have Home Depot," he joked. "If we reach an agreement with Home Depot, we will be as advanced as any American farmers."

The end of the embargo might not bring Home Depot to Havana, but it could bring American farming technology and production equipment.

FRUITS AND TOURISTS

A 1958 Ferguson tractor is the first thing Elevterio Cordoba shows visitors to his fruit farm. The 30-hp tractor wore red paint when it was made in the U.S. almost 60 years ago. But Cordoba has painted it baby blue to foil rust and to give it some personality. He also has doctored it over the years to keep it running, doing what Cubans do: improvise. For instance, the tractor's ignition switch gave out a long time ago, so Cordoba replaced it with a single-pole light switch that has "Made in U.S.A." stamped into it.

Cordoba is lucky. His family has owned this 50-acre farm in the town of Remedio since before the Revolution. As a result, they were allowed to keep the land. They have been able to thrive even when the rest of the country went through the "Special Time," which is how Cubans describe the economic disaster that resulted from the Soviet withdrawal.

Cordoba is lucky, too that his town, which is about four hours east of Havana, is near the coast. That is important, because the beaches on the coast draw tourists like honey bees to fruit trees. Cordoba's bananas, guavas, papaya, mamey fruit and oranges are hugely popular with tourists from cold climes where tropical fruits never taste so fresh and sweet.

Finally, Cordoba is lucky because, unlike the Gonzalez family in Melena del Sur, he does not have to market his products through the government. By a quirk in the rules, he is able to sell much of his crop directly to tourist hotels. He can negotiate price based on the hotels' demand. Canadian and European tourists have feasted on Cordoba's fruit for years. He hopes Americans will soon join them and boost both demand and his profits.

Meanwhile, he will keep his old Ferguson running however he can.

**

SIDEBAR

How It Happened

By Jim Patrico
Progressive Farmer Senior Editor

Cuba has had a long line of sugar daddies. Spain, which conquered the island in the 15th century, was first to provide Cuba with infrastructure. In exchange, the island shipped minerals, sugar and other agricultural goods.

After the Spanish American war in 1898, a freed Cuba became an unofficial ward of the U.S. Corrupt strongmen helped create Fidel Castro's 1959 revolution, which pushed Cuba into the arms of the Soviet Union. The communists supplied Cuba with ugly buildings, machinery, fertilizer and oil. They also bought Cuban sugar for inflated prices to help the island's economy. In return, Cuba offered the Soviets its fealty and a strategic location on the doorstep of the American Cold War enemy.

When the USSR collapsed in 1989, Cuba was devastated. Its economy was tied tightly to the Soviets, and now it was untethered and without prospects. Oil-rich Venezuela helped stabilize the economy for a few years. In exchange, Cuba sent medical expertise and doctors. But when petroleum markets dried up, so did Venezuela's assistance.

Which brings us to today.

Raul Castro succeeded his brother Fidel in 2008 and had to begin cleaning up the mess extreme socialism had made of the economy. He said that Cuba will not abandon socialism, but it has taken steps toward a freer economy. Raul relaxed restrictions on privately owned businesses, instituted land reforms and sought foreign investors. Some say Fidel still played a role in Raul's rule, perhaps holding back a transition to a freer economy. Now that Fidel has died, Raul has total control. But he has announced he will step down in two years. Plans for his successor are unclear.

In the meantime, Raul is unlikely to lead Cuba into another sugar daddy situation. Instead, he is reaching out to several potential partners. Europeans, especially Spanish companies, are building resorts, and Brazil has helped with new port facilities. In September, the president of Iran visited Havana, and observers speculate that the oil-rich Middle East country is shopping oil. China also sent a delegation to Cuba in the fall. If they follow a pattern they have established in other developing regions, the Chinese will invest in Cuba's infrastructure to help build another market for its manufactured goods.

Meanwhile, the U.S. waits for the next president and Congress to act. Cuban officials frankly admit that buying agricultural goods from Americans would be a first option because of the proximity of American ports and the volume U.S. farmers could supply.

For instance, Cuba buys rice from Vietnam and China. Shipments from the other side of the international dateline take five weeks or more to arrive, and they tie up large storage facilities. Meanwhile ships from the Port of New Orleans are less than a week from Havana. Smaller, more frequent shipments would be cost effective and require less Cuban storage space.

Under the embargo, U.S. companies can sell food to Cuba, but only for cash. Since Cuba cannot trade directly with American banks for U.S. dollars, it purchases Euros and converts them to dollars. That increases the cost of American goods for Cuba. The U.S. now sells only about $150 million in food products to Cuba, which buys $2 billion in foreign food annually. A healthier share of the market could directly benefit, for instance, Louisiana rice producers, Georgia poultry growers and North Carolina pork producers.

In addition, agricultural input suppliers could find markets in Cuba, and farm machinery manufacturers would love to help replace some of Cuba's ancient tractors.

Jim Patrico can be reached at jim.patrico@dtn.com

(ES)


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Monday, November 28, 2016 11:01AM CST
Wednesday, November 23, 2016 11:18AM CST
Wednesday, November 23, 2016 11:18AM CST
Technically Speaking
Darin Newsom
DTN Senior Analyst
Thursday, December 1, 2016 5:08AM CST
Thursday, December 1, 2016 5:06AM CST
Thursday, December 1, 2016 5:04AM CST
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Thursday, December 1, 2016 10:13AM CST
Wednesday, November 30, 2016 11:08AM CST
Wednesday, November 23, 2016 10:09AM CST
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Friday, December 2, 2016 1:51PM CST
Wednesday, November 30, 2016 9:47AM CST
Tuesday, November 29, 2016 4:04PM CST
Minding Ag's Business
Marcia Taylor
DTN Executive Editor
Friday, December 2, 2016 3:36PM CST
Tuesday, November 8, 2016 9:38AM CST
Thursday, November 3, 2016 3:13PM CST
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Thursday, December 1, 2016 2:10PM CST
Wednesday, November 30, 2016 2:11PM CST
Monday, November 21, 2016 10:07AM CST
Thursday, December 1, 2016 3:56PM CST
Thursday, December 1, 2016 1:21PM CST
Thursday, December 1, 2016 9:00AM CST
DTN Production Blog
Pam Smith
Crops Technology Editor
Friday, November 4, 2016 10:59AM CST
Friday, October 14, 2016 3:27PM CST
Tuesday, October 11, 2016 1:43PM CST
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Friday, December 2, 2016 3:33PM CST
Wednesday, November 23, 2016 1:10PM CST
Monday, November 21, 2016 11:21AM CST
South America Calling
Alastair Stewart
South America Correspondent
Monday, November 14, 2016 3:53PM CST
Monday, November 7, 2016 1:16PM CST
Friday, October 28, 2016 1:57PM CST
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Thursday, December 1, 2016 11:05AM CST
Monday, November 21, 2016 6:18PM CST
Tuesday, November 15, 2016 7:44AM CST
Machinery Chatter
Jim Patrico
Progressive Farmer Senior Editor
Wednesday, November 30, 2016 4:20PM CST
Monday, November 21, 2016 12:21PM CST
Wednesday, November 16, 2016 5:06PM CST
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Friday, December 2, 2016 2:18PM CST
Thursday, December 1, 2016 4:18PM CST
Wednesday, November 30, 2016 5:06PM CST
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Monday, November 21, 2016 4:29PM CST
Tuesday, November 8, 2016 9:46AM CST
Monday, October 3, 2016 4:25PM CST
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN