The New York Times reported yesterday that, for a variety of reasons, tourists are straining the food system and reducing food available for Cubans.
There are a variety of factors contributing to Cuba’s food shortage dilemma, but the following explains one of the major factors.
The U.S. Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000 launched a boom in exports from the US to Cuba that had previously been restricted since the early 1960s. U.S. exports to Cuba rose from about $7 million in 2001 to a high of $712 million in 2008, making the U.S. Cuba’s largest supplier of agricultural products for many of those years.
Cuba depends on imports for more than half its annual consumption, making it an ideal buyer for U.S. producers.
In total, Cuba purchased more than $5.2 billion in U.S. products from 2001 to 2015, largely agricultural products. Yet, since 2008, conditions have changed and U.S. suppliers now occupy a fraction of the Cuban market share they once commanded. U.S. exports to Cuba declined considerably from 2009 through 2011, rose again in 2012, and fell every year since then. Exports dropped a whopping 40% from 2014 to 2015, the lowest level since 2002. In the first quarter of 2016, U.S. exports to Cuba continued to fall, amounting to just $53 million compared to $74 million in the first quarter of 2015, a 28% decline.
Favorable credit terms offered by key competitors explains the decrease in bulk commodity exports and the overall recent decline in US market share. Under TSRA, U.S. exporters are restricted from offering terms of credit, and exports to Cuba must be purchased using cash or through third-party guarantees from foreign banks. (There is a single Cuban government import entity, Alimport.) Additionally, the U.S. Foreign Agricultural Service and other U.S. government agencies are barred from providing market development assistance – which is typically a key component of U.S. efforts to build trade capacity and boost export opportunities in other countries.
Full liberalization of trade between the U.S. and Cuba would allow U.S. agricultural exports to compete on a more level playing field by allowing use of credit facilities, export and technical assistance, and market development programs. Cuba’s $5.9 billion in total annual imports is likely to grow significantly in the near future as tourism growth drives demand for more goods including agricultural products. But, unless the rules change, those masses of new U.S. tourists won’t be eating U.S. rice, corn and wheat in Havana – and neither will Cubans.