Cuba's Economy--1967

Brass Tacks

It is now almost nine years since Fidel Castro seized power in Havana. Despite the hopes and efforts of the United States and Latin American to bring Cuba's economy to a grinding halt, to "prove it can't work"--despite the blockade--the renegade island's economy appears to be moving rapidly forward. Reports indicate that by next spring, Cuba's GNP will at last surpass its 1958 level.

In the first years, "the years of ignorance" as Fidel now calls them, the revolutionary government concentrated its energy and resources on industrializing the country. When the program began to falter badly three years ago, the government's view of Cuba's economic potential changed, and the present period of intensive investment in agriculture was begun.

Great emphasis is now placed on diversifying the structure of the agricultural sector. The revolutionary planners are now pushing citrus fruit production. In the last three years, Cubans have planted twice as many citrus trees on the Isle of Pines and in the wsetern province of Pinar del Rio as there are in Israel--one of the world's largest fruit exporters. These trees are now beginning to yield the first heavy crops of oranges, lemons and grapefruit.

Livestock levels, which fell drastically in the first years of the new regime, have now passed their 1958 mark, and the government launched an intensive drive for artificial insemination of cattle late this spring. Practically all of Cuba's beef is exported to gain hard currency on the international market. Each Cuban is allowed only a quarter pound of beef a week, and milk is reserved for children under seven, and the aged over 65. So the Cubans themselves still do not receive direct benefits from the strides being made by the livestock industry. Although serious diversification efforts are underway, Cuba still has the kind of economy it has always had--one inextricably based on sugar.

Government plans called for a crop of 7.5 million tons this year. When the final figures were released after the harvest ended in late June, Cuba had produced 6.1 million tons. This crop was the third largest in Cuban history, and thus did not represent a shattering set-back for the economy.


The goals were not met, however, and it looks as if the final goal of 10 million tons in 1970 will be impossible to achieve. Simply, there are basic problems with Cuban sugar production which remain to be solved. First, transportation of cut cane from the field to the mill poses great problems. Heavy trucks shipped from the Soviet Union to carry the sugar frequently break down. Cane quickly loses its sugar if not processed in short order.

Government plans to increase crop yields are based on hopes to change the type of plant harvested. At the moment, Cuba averages 40 tons of cane per acre, while Jamaica, with essentially the same climatic conditions, yields 60 tons an acre. In Hawaii, the figure is 200 tons. The Cuban economic planners are now slowly replacing old cane plants with new ones which yield much more sugar. But this is a slow process because cane lasts for 10 or 15 years and only 10 per cent of the entire crop is replanted each year.

Possibly worse for the Castro regime, the world price for sugar has fallen to a new low of about two cents a pound. Russia pays six cents for Cuban sugar under a special trade agreement. (Before the Revolution, the United States gave a similar preferential price to the Cubans.) This year Cuba is reportedly committed to send Russia 4 million tons, a commitment it will not meet. Two years ago, with a crop of 5.3 million tons, Cuba had to buy sugar from Mexico in order to fulfill its international contracts.

Only 10 per cent of the world's yearly sugar production is sold on the open market. This market, however, provides much of Cuba's hard foreign currency. By continuing to increase the acreage under cultivation, and trying to sell more on the open market, the Cubans have helped to depress the two-cent price. But government officials think that continued low prices will force competitors to cut back their production since it is not profitable, and when the price finally begins to rise, Cuba, as the world's largest producer, will be in an advantageous position.

While the internal Cuban investment in economic development is being channeled into the agricultural sector, basic industries necessary for the nation's other economic needs are being encouraged. A new electrial plant at Mariel in Havana province has just been opened. Next spring two cement plants will begin operation. The opening of these cement plants, which the Cubans say will meet all their requirements, is crucial. For when cement production rises, serious work on the appalling shortage of decent rural housing can begin in earnest.

There is no question that the American commercial blockade has hurt Cuba. It is supported by all Latin American governments (except Mexoco which maintains minimal trade relations with Castro). We have put intense pressure on Canada and Western Europen countries to cut back their commercial ties to the island. But Cuba carries on 23 per cent of her trade with non-Communist nations. This percentage is slowly rising as more Western European companies and governments become bored by the peculiarily rigid position the United States adopts toward Cuba.

The blockade has sharply reduced Cuban imports of heavy machinery and in spare parts. Practically all consumer goods in Cuba before the Revolution came from the United states, and air conditioners, automobiles, stoves, and televisions are now beginning to break down. Spare parts are almost impossible to obtain.

More important, the Cubans have been displeased with much of the heavy machinery they import from the Soviet Union. Trucks and automated cane cutters break down often in the tropical climate. This past summer, the American-built waterworks system in Havana showed signs of dangerous dilapidation for the first time. The cost of replacing it, and the risk of replacing it with unreliable Russian equipment, is only one of a series of similar problems the Cuban people will have to face in the future.

Food remains one of the most crucial problems of the present regime. Everyone on the island gets enough to eat, and according to the United Nations Havana office, there is no malnutrition. Not many, if any, other Latin American nations can say this. All foodstuffs, except bread, eggs, and specific crops in season, are rationed. Cubans, for instance, were receiving three pounds of rice per person per month this summer. There is a good deal of frank and open grumbling about food shortages, but organized opposition is impossible. Furthermore, rationing of commodities like meat and milk should be considered in the context of the 1958 situation, when, according to a Western diplomatic source in Havana, some 5 per cent of the rural population was eating meat, and only 10 per cent was drinking milk. The present situation, however, represents a drastic drop in the standard of living for those middle class citizens who have chosen to remain in Cuba.

Cuba reportedly receives some one million dollars a day in economic aid from the Soviet Union. Aside from the military expenditures which the government feels compelled to make because of its international position, this aid has been poured into serious economic development projects.

Cuban planners, however, still lack expertise in plotting out the tedious details necessary for carrying through vast development schemes. And while Cuba does plant twice as many citurs trees as Israel, she soon discovers that they were planted too close together, which means that the productivity will be slightly lower.

This problem will undoubtedly persist for several years in a society such as Cuba, marked to its core by the fervor, passion and impatience of a young revolution. But meanwhile the technicians are being trained, and the economy continues to move forward surprisingly well, considering its isolation from the rest of the Western Hemisphere.

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