MercoPress. South Atlantic News Agency

Cash-strapped Cuba cuts US food imports drastically

Lesser remittances from Cuban Americans and a dramatic drop in nickel prices have left Havana with less cash for imports

United States agricultural exports to Cuba declined by more than 180 million USD in 2009, down from a record 715 million USD in exports set in 2008, according to a Texas AgriLife Extension Service economist.

The decline was a result of a number of factors, including the US recession, which restricted money flowing from Cuban Americans back home, lower nickel prices, a slowdown in tourism to Cuba and restrictions on payment terms used by US exporters, said Dr Parr Rosson, AgriLife Extension economist and director of the Centre for North American Studies at Texas A&M University.

“The lack of money being sent back home to Cuba resulted in less purchasing power and a big drop off in exports to Cuba,” he said.

“As a result, the Cuban government has decided to try to revitalize production of rice and milk.”

US exports to Cuba included corn, wheat, soybeans, oil, meal and frozen broilers. Texas-grown commodities exported to Cuba included cotton, wheat and broilers, according to Dr Rosson.
“The decline is a result of a combination of factors,” Dr Rosson said.
“Weak economies across the globe and a reduction in expenditures by tourists, accounted for a 15% decline compared to 2008. The collapse in world nickel prices was also a big factor. The nickel price dropped from 24 USD per pound in the 2007-2008 to 7 USD per pound earlier this year.”

Tourism accounted for a large portion of money flowing into the Cuban economy, with Canadians among the most popular to frequent the country. Approximately 933,000 out of 2.4 million tourists visiting Cuba in 2009 were Canadian.

“The beaches are a big draw during the wintertime” Rosson said. “(From Canada) there are direct flights and all-inclusive packages at the major beach resort, Varadero.”

Agricultural commodities imported into Cuba that support the tourism industry includes beef steaks, chicken and pork, Dr Rosson said.

However, exports to Cuba could recover somewhat in the future. The country’s vegetable crops were wiped out by three hurricanes in 2008 and are struggling to recover, and US payment terms have been revised, allowing US exporters to be more competitive, Dr Rosson said.

“That’s why Cuba had such a large import bill in 2008,” he said.
“That, coupled with the decline of tourism and lower nickel prices means the government is having difficulty importing foods. As a result, US corn, wheat and soy-meal exports to Cuba were all off by at least 50% for the first two months of 2010 compared to 2009.”