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ASIC 2014

Cuba: A Once-Proud Coffee Industry Falls On Hard Times
(continued)

Today, Cuba’s coffee plantations are located mainly in three regions. The most important are on the slopes and valleys between 1,000 and 2,000 ft, located in the Nipe-Baracoa and Sierra Maestra mountains of eastern Cuba (in the provinces of Santiago de Cuba and Granma); the Escambray mountains near the center of the island (in the provinces of villa Clara, Cienfuegos and Sancti Spíritus); and, to a lesser extent, the Sierra del Rosario, close to the western tip of Cuba in the province of Pinar del Rio.

These locations provide a comfort zone for the coffee bean, with 55 to 70 inches of rain and moisture evenly distributed during the year, deep and rich soils, and temperatures ranging from 21 degrees Celsius in the winter up to 25 degrees Celsius in the summer.

Cuban coffees are classified as Crystal Mountain, Extraturquino, Turquino, Altura, Montana, Cumbre, Serrano superior, Serrano corriente and Caracolillo (oval-shaped). The finest of these is Crystal Mountain, which is now being sold on the Japanese market.

As if government mismanagement and low commodity prices weren’t bad enough, in 1997 and 1998 the island suffered from an unusually severe drought. Then, in September 1998, the industry took a further beating from Hurricane George, which devastated eastern Cuba, where 80% of the coffee crop grows.

Cuban sources say the coffee harvest ending in March 2000 came in at 18,000 tons, well above the 11,000 tons produced in the harvest that ended in March 1999. Of the 18,000 tons, about 16,000 tons came from eastern Cuba, where the vast majority of the coffee crop is grown. The central provinces produced around 1,500 tons, while Pinar del Rio province in the extreme west accounted for the remaining 500 tons. Coffee no longer grows in the deforested and exhausted soils in the plains and hills around Havana.

Cuba normally exports 60% to 70% of its coffee crop and imports cheaper, lower-quality beans for domestic consumption. However, in 1999 total exports came to 3,079 tons - down dramatically from the 8,080 tons exported in 1998. Recently, complaints have surfaced over the fact that the amount of chicory added to coffee sold within Cuba has risen from 40% to 60%, while the quality of imported beans has fallen.

The government owns most of the coffee plantations in Cuba, though in the 1990s it began to reverse earlier policies and allowed farmers to lease land for the first time since the revolution. This policy, as well as new efforts to improve medical services and housing for agricultural workers, has convinced some of the 80,000 farmers who abandoned the coffee-growing zones in the 1970s and 1980s to return.

However, the government has not been able to reverse the decline in the total number of coffee workers, partly because growers with leased land are still obliged to sell their production to the government at fixed prices in relatively worthless Cuban pesos. Even swap deals are forbidden, according to sources. So far, only about 3,000 families are reported to have returned to the growing zones.

Since 1996, the Castro regime has been allocating to the coffee sector a percentage of the hard-currency income generated by coffee exports to buy fertilizer and equipment.

At present, Japan and France are the top importers of Cuban coffee, accounting for roughly 5,000 and 2,500 tons respectively. Japan’s Meiwa Corp. and France’s Cafe Legal are the chief importers in those countries, buying 75-80% of Cuba’s total coffee exports. The U.S., of course, imports not a single coffee bean from Cuba and hasn’t since 1962, when the Kennedy administration imposed an economic blockade against the island. Unfortunately, Cuban Agriculture Ministry officials declined to be interviewed for this article, and neither director Wilfredo Díaz Hernández nor executive secretary Carlos Bustamante González of the Estaci imposed an economic blockade against the island. Unfortunately, Cuban Agriculture Ministry officials declined to be interviewed for this article, and neither director Wilfredo Díaz Hernández nor executive secretary Carlos Bustamente González of the Estación Central de Investigaciones de Café y Cacao in Santagio de Cuba could be reached for comment.

Gaviña doesn’t mind commenting, however. Today, the 55-year-old is chief financial officer at F. Gaviña & Sons Inc., which was founded by Gaviña’s parents, sister and three brothers. “When we had our plantation, if we had a breakdown in one of the machines, we’d get that part, whatever and wherever it was,” he said. “Now, that everything belongs to the government, people don’t care that much. The only time you pay attention is when your pocket is being hurt. When you’re picking coffee, you have to do it now. You cannot wait.”

In February 1999, a group of coffee producers and importers from 15 countries met in Havana to evaluate the Cuban coffee industry and discuss ways to boost production. At that time, the Castro government vowed to boost production to 45,360 tons per year, though it’s still unclear over what time period this is supposed to happen. Observers say the goal seems highly unlikely, considering the disastrous prices on the world coffee market this year, not to mention the enormous investments Cuba would need to achieve such an increase - and the fact that the U.S. market, the world’s largest, remains closed to Cuba.

“When we left the country in 1960, we thought we were going to go back right away because we thought the U.S. government wouldn’t allow a Communist country ninety miles from its shores,” said Gaviña. “And here we still are, forty-one years later.”

During that time, the Gaviña family has built its business into a $60 million-a-year empire, selling 22 million pounds of coffee a year to McDonald’s, Costco (formerly Price Club) and private labels. And even though he has permission to visit his homeland, Gaviña - like many Cuban exiles living in the United States - refuses to do so out of principle.

“I will never go to Cuba as long as Castro is there. We are in the U.S. because of him,” he says. “Why would I give any money to a guy who destroyed my country? We really hate his guts.”

Yet Gaviña - unlike the vast majority of his compatriots in Miami and elsewhere - concedes that Washington’s anti-Cuba policies have been utterly counterproductive.

“If it weren’t for the embargo, Castro would have been gone a long time ago,” he said. “Throughout the years, he has used his conflicts with the United States to get rid of people who might have been against him.”

That’s an argument raised frequently by opponents of current U.S. policy on Cuba, a group that has traditionally been led by liberal Democrats but which in more recent years has included Republicans from farm states in the Midwest who are eager to promote grain sales to the Cuban government. If the embargo is lifted, Cuba - which for years has built its economy around sugar, nickel and citrus exports - could one day supply Maxwell House, Folger’s and Nestle with coffee.

Even so, given the Bush administration’s recent pronouncements on the issue (and the powerful Cuban exile lobby in South Florida that helped elect him), it appears unlikely that the U.S. embargo will be lifted anytime soon, despite recent changes to U.S. policy in 2000 that allowed food and pharmaceutical sales to Cuba for the first time since the embargo was enacted in 1962.

In the agribusiness sector, at least, the exiles don’t have much to worry about for the moment. Foreign investment is limited to citrus - where Israeli, Chilean, Greek and British firms have invested more than $50 million to improve the quality of Cuban oranges and grapefruits - and, to a lesser extent, tobacco. Foreign investment has yet to make a difference for Cuba’s struggling sugar industry, which this year is bracing for its smallest crop in 50 years. Yet things could change rapidly with a warming of U.S.-Cuban ties.

“Agriculture is the key to the Cuban economy,” said William Messina, executive coordinator of the University of Florida’s International Agricultural Trade and Development Center. “Tourism is growing by leaps and bounds, but it still represents only 10% of the economy.”

One company alone, Spain’s Grupo Sol Meliá, accounts for one-third of Cuba’s 38,000 hotel rooms. Its 19 luxury hotel properties from Havana in the west to Santiago de Cuba in the east make it the largest single foreign investor in the country. This year, some two million tourists are expected to visit Cuba - up from 1.7 million in 2000 - and that puts the Meliá chain in an ideal competitive position once the U.S. embargo ends and American tourists are allowed to visit Cuba freely.

In the coffee sector, however, foreign investment is almost non-existent, and most of Cuba’s production remains in the hands of three state entities: the Cooperativa de Producción Agraria (CPA), the Cooperativa de Caña y Servicios (CCS), and the Unidades Basicas de Producción Cooperativa (UBPC). By the mid-90s about 361,000 acres of Cuban farmland were dedicated to coffee, of which state-run farms accounted for 26%, teh CPA 18%, the CCS 31% and the UBPC 25%.

On Cuba’s overall potential, Messina said, “We know the embargo won’t last forever, and there’s a very good possibility that once the embargo is lifted, it will have more of an impact on U.S. agriculture than all the nations of the Caribbean Basin Initiative.”

Even if the embargo isn’t lifted, Cuba will continue to trade with other countries.

“There is no doubt that an expansion of sales of Cuban coffee on the international market will act as a stimulus to its cultivation and production,” according to the government publication, Business Tips on Cuba. “Another incentive could be external financing of coffee production to facilitate acquisition of fertilizers, fuels, herbicides and provisions. Cuba possesses the modern technology necessary to guarantee the agricultural and industrial processing of its coffee for export.”

Asked if he’d consider investing in his homeland once Castro is gone, Gaviña - the Cuban exile who hates Fidel with a passion - doesn’t hesitate. “Of course,” he says. “We’d have to rebuild the country. And we’re eager to do that.”

Larry Luxner, a regular contributor to The Tea & Coffee Trade Journal, has visited Cuba nine times since 1985; his most recent trip was in early June. Luxner can be contacted by phone at (301) 365-1745, or via e-mail at larry@luxner.com.



Tea & Coffee - September/October 2001
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