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Sunday, January 06, 2008

Cuban Economy in Need of Nourishment

CHALLENGES 2007-2008: Cuban Economy in Need of Nourishment
By Patricia Grogg

HAVANA, Jan 4 (IPS) - Increasing food production is the main challenge
to be faced by the Cuban economy this year, to improve people's quality
of life. It was one of the recurrent themes raised at the popular
debates convened on the government's initiative in the second half of 2007.

"The agricultural sector is still a long way from satisfying the
pressing need to get more goods to market, in order to bring prices
down, cut imports, and elicit a favourable change in public opinion,"
admitted Osvaldo Martínez, chair of the commission on economic affairs
in the National Assembly of People's Power, Cuba's parliament.

According to the authorities, the shortcomings of domestic food
production are being exacerbated by the high international market prices
of staple foods. Because of the price hikes, the country spent an extra
286 million dollars in 2007, out of its total food import bill of 1.5
billion dollars.

To ensure delivery of the basic basket of foods, sold to families at
state subsidised prices, the government forecasts an expenditure of 945
million dollars in 2008. Regulated food distribution on a ration book
system guarantees some essential goods to every Cuban citizen, but the
basket covers only part of their total food needs.

"I understand that the country spends a lot on ration book provisions,
but I can't feed my children on this alone," a woman who was buying her
food for January told IPS. She carried rice, sugar, a litre of oil and
small quantities of black beans and peas in her shopping basket. "There
was nothing extra this year for New Year," she complained.

Like most Cubans, she has to buy the rest of her family's basic needs in
the free farmers' markets, and pay for goods either in national or
convertible currency. This takes the largest share of her family's
income: together with her husband, they make about 800 pesos a month.
"Everything's so expensive," she said.

Their monthly income is equivalent to 33 Cuban convertible pesos, or
CUC, the only dollar-pegged currency that is permitted to circulate in
the country. The state exchange shops (CADECAS) sell CUCs at 25 Cuban
national pesos, or 1.25 dollars.

In his Dec. 28 report to parliament on the state of the economy and his
ministry's plans for 2008, Planning Minister José Luis Rodríguez said
food intake per person had risen to 3,287 kilocalories and 89.9 grams of
protein a day, "out of which between 62 and 64 percent is available at
subsidised prices."

Among the challenges for the coming year, Rodríguez said "making
progress in substituting imported foods like rice, beans, milk, fruit
and wheat flour, as well as animal feed, with domestic production is
among the immediate priorities." He did not say by how much the
production of these items is planned to increase.

Economists and authorities appear to be in agreement that the
"structural and conceptual changes" mentioned by Cuba's acting President
Raúl Castro on Jul. 26, 2007 must begin with the agricultural and
livestock sector. In his speech, Castro said it was "imperative" to
increase production, especially of foods.

However, the last session of parliament had not yet approved the long
expected reforms in this area. Castro only repeated that "the country is
working on this vital issue with the urgency it requires, because of its
direct and daily impact on the life of the people, especially those with
the lowest incomes."

"Studies are well under way and action will continue to be taken as fast
as circumstances allow, so that land and resources are put into the
hands of those who are capable of producing efficiently, and they
receive the support, social recognition and material rewards they
deserve," he said.

Neither was a decision made concerning the recovery of the purchasing
power of wages, although in his analysis of the year's economic results
in parliament, Martínez said the average salary has grown five percent
in 2007, to 408 pesos a month.

In his view, raising wages to the level where they can satisfy workers'
needs "is one of the most important and complex of the problems that
must be solved gradually, sustainably, and without expecting overnight
or magic solutions."

The Cuban economy grew 7.5 percent in 2007, below the 10 percent
projected by the authorities, because of the fall in construction work
and agricultural production due to "climate effects throughout the
year," according to Rodríguez, who forecast gross domestic product (GDP)
growth of eight percent for 2008.

Over the last few years, the Cuban government's estimate of economic
growth has included a weighted value for the medical, educational and
sports services provided to the population, without describing the
method by which it is computed. These services are offered free at every
level to the entire population.

"We use internationally recognised statistical systems, and our country
again asserts its right to have its achievements reflected cleanly,
without being undermined or maliciously attacked," said Rodríguez,
warding off possible new criticisms on that front.

The food shortages, largely due to low productivity in rural areas, and
the inadequacy of wages, were among the main problems brought up at
popular debates convened by the government after Raúl Castro's speech on
Jul. 26, Cuba's most important national holiday, Revolution Day.

Raúl Castro has been interim president since Jul. 31, 2006, when his
brother, President Fidel Castro, had the first of several intestinal
operations, from which he is still convalescing. (END/2008)

http://www.ipsnews.net/news.asp?idnews=40680

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