Sadia Zaheer

Coffee Production in Cuba The US imposed sanctions on Cuba have led to the country being held in an economic vice that can be taken as an ideal case study for the long term impacts of economic sanctions. Cuba has actually moved backwards in terms of economic strength and geographic relevance due to the lack of free trade with its closest and very powerful neighbor. While internal mismanagement has also had a role in the deterioration of the Cuban coffee industry, the main factors remain the lack of free trade dynamics and the free flow of technology and international skillsets for its labor in order to allow for the organic and gradual development of any industry that is seen over time in most economies. The depth of the impact will be seen in the time to come once the real dynamics of coffee trade are established. (Fetini, 2009) After the Cuban Revolution in 1959, the US-Cuban relations became rapidly sour. Resulting in decades of economic sanctions that have held the small country in traction and kept it away from technological advances that have been easily accessible to other countries. The coffee industry of Cuba has also been affected by the longstanding trade sanctions placed by the US. In addition to the overall decline in production and lack of export markets, the industry has also suffered from lack of progress in harvesting and treatment of coffee beans that have helped other coffee producing countries to improve their yields and flavors. With negligible investment in the coffee industry, there has been little development in the harvesting techniques. Lack of technological access has kept Cuban farmers from adopting cost saving measures that have allowed other countries coffee producers improve their yields and quality cost of production. Up to 2016, the industry has been nationalized and politicized, has to rely on unskilled volunteer labor as lack of opportunities and hard economic times fueled urban migration. The diplomatic relations between the two countries have started to improve since 2009 and as the US led sanctions have started to loosen up, the recent announcement in 2016 by the US to allow import of coffee will now allow Cuban producers access to the large market that the US and its allied countries make up. (Industry Week 2016) Prior to the Cuban Revolution, coffee was one of the main cash crops of the country with exports crossing the 20,000MT mark in the 1950s. After the revolution, the all-time low was when a bad harvest led to the country importing 10,000MT of coffee in 2009. There are various internal factors cited for this swing. 1. The initial decline prior and during the revolution up to the early 1960s was due to the presence of revolutionaries in the premier coffee growing area of Cuba; Sierra Maestra Mountains. 2. The subsequent nationalization and politicization of coffee farms also added to the lack of productivity. The movement of coffee production experts to better paying urban jobs, led to the farms having to rely on unskilled, part time volunteer labor for harvesting and other post-harvest tasks. 3. Bad government decisions like the allocation of key resources to lesser productive regions nearer to city areas for accessibility to labor led to significant decline. The combination of all these factors led to coffee production remaining stagnant up to the 1990s, the late 1990s saw severe droughts and hurricanes which further worsened the situation. In 2008, about 2% of cultivable land is producing coffee. (FAS/USDA;2008 Pg 50) There had been negligible investment in the coffee sector in spite of de-nationalization by the 1990s. The process of cultivation and harvesting is still done manually. The coffee beans were still dried by traditional air drying methods instead of industrial air dryers, transportation was being done by foot or traditional means instead of via trucks as per the USDA report as of 2008. At present, the majority of agricultural land is being managed by farmers cooperatives run by small land owners. The product is still sold to the government and then distributed internally or exported as per the government’s discretion. The majority of product is still bought by European importers who are now sourcing it for sale to the US importers. The current situation signifies that the inflow of new technologies, cash flows and expertise would help the Cuban producers to improve their planting, cultivation and processing techniques. Similarly, as the external forces factor is removed from the Cuban economy, we are definitely going to see improvements in all newly de sanctioned sectors of the economy. In the context of free trade dynamics, the Cuban coffee sector can be taken as an illustrative example of how the absence of normal market economy dynamics can affect the organic growth, long term progress and overall importance of any sector in an economy. The same impact can be seen in the overall economy of Cuba, but the coffee sector is more effective as an illustrator because coffee is one of the worlds more stable cash crops. One single factor has severely affected the fortunes of the industry in Cuba. This impact will be seen better over the long run once the flow of trade between the US and Cuba begins to pick up, at present only 6 months having passed since the removal of the ban on Cuban coffee. References 1. Fetini, Alyssa.Feb. 24, 2009, THE SKIMMER, Changing U.S.-Cuba Policy, Accessed on January 24, 2017 : http://content.time.com/time/nation/article/0,8599,1881353,00.html 2. Viser, Matt December 18, 2014; Double Shot:Will Americans be able to taste Cuban-grown coffee? Accessed on January 24, 2017 : https://www.bostonglobe.com/lifestyle/food-dining/2014/12/18/will-americans-able-taste-cuban-grown-coffee/GqhOEcBkfhfJgylPwUWphL/story.html 3. FAS, USDA , March 2008; Cuba’s Food & Agriculture Situation Report , Office of Global Analysis 4. Jun 20, 2016; Industry Week; Caffeine Diplomacy: Nestle to Bring Cuban Coffee to US; Accessed January 24, 2017 http://www.industryweek.com/trade/caffeine-diplomacy-nestle-bring-cuban-coffee-us