Analysis: Soaring international prices aggravate Cuban food crisis

·3-min read

By Marc Frank

HAVANA (Reuters) - Soaring international food and shipping prices and low domestic production are further squeezing import-dependent Cuba’s ability to feed its people.

Cuba traditionally imports by sea around 70% of the food it consumes, but tough U.S. sanctions and the pandemic, which has gutted tourism, have cut deeply into foreign exchange earnings.

For more than a year Cubans have endured long waiting lines and steep price rises in their search for everything from milk, butter, chicken and beans to rice, pasta and cooking oil. They have scavenged for scant produce at the market and collected dwindling World War II-style food rations.

This month the Communist-run government announced flour availability would be cut by 30% through July.

Diorgys Hernandez, general director of the food processing ministry, said when he announced the wheat shortage that "the financial costs involved in wheat shipments to the country" were partly to blame.

That was bad news for consumers who had been buying more bread to make up for having less rice, pasta and root vegetables at the dinner table.

“People eat a lot of bread and there is concern there is going to be a shortage of bread because that is what people eat the most,” Havana pensioner and cancer survivor Clara Diaz Delgado said as she waited in a food line.

Cuba does not grow wheat due to its subtropical climate. The price of the commodity was $280 per tonne in April, compared with $220 a year earlier.

The government has also said the sugar harvest was short of the planned 1.2 million tonnes by more than 30%, coming in at less than a million tonnes for the first time in more than a century.

Cuba will have trouble making up for a shortage of domestically produced sugar as international prices are around 70% higher than a year ago.

COST OF SHIPPING

Adding to the pain, the cost of international container shipping is up as much as 50% over the last year and bulk freight more.

The U.N. Food and Agriculture Organization reported its international food price index was up 30.8% through April compared with the same month last year, and the highest since May 2014.

The Cuban state has a monopoly on foreign trade and purchases around 15% of the food it imports from the United States for cash under a 2000 exception to the trade embargo.

John Kavulich, president of the U.S.-Cuba Trade and Economic Council, which follows the trade, said sales fell 36.6% last year to $163.4 million, compared with 2019. They recovered in the first quarter, reaching $69.6 million, though that represented less food due to higher prices.

Chicken, Cuba's most important U.S. import, is badly affected. A U.S. businessman who sells chicken to Cuba said he shipped drumsticks at 24 cents a pound in January and 48 cents in April. He did not wish to be named.

“Resuming global demand, increased prices for product inputs and labor shortages suggest that commodity prices will not decrease soon,” Kavulich said.

The economy declined 11% last year and according to local economists contracted further during the first trimester of 2021 as a surge in the new coronavirus kept tourism shuttered and much of the country partially locked-down.

The government reported that foreign exchange earnings were just 55% of planned levels last year, while imports fell between 30% and 40%.

Incoming container traffic was down 20% through April, compared with last year, according to a source with access to the data, who requested anonymity.

The government has not published statistics for the notoriously inefficient and rustic agricultural sector since 2019 but scattered provincial and other reports on specific crops and livestock indicate substantial declines for rice, beans, pork, dairy and other Cuban fare.

This was confirmed by a local expert who requested anonymity and said output was down by double digits due to a lack of fuel and imported fertilizer and pesticides.

(Reporting by Marc Frank; additional reporting by Reuters TV and Nelson Acosta; editing by Estelle Shirbon)

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