From butter to cement: Putting numbers to the crisis

State-owned supermarket in the Carlos Tercero shopping center in Havana in the fall of 2019 (source: Author).

The economic and supply crisis in Cuba continues. As the country begun a road of cautious recover from the aftermath of Hurricane Ian last fall, a renewed fuel shortage choked off economic development this spring again. According to the Consumer Price Index, inflation remained at a high 70 percent in April. A new development, meanwhile, are privately run grocery stores, which so far have sprung up mainly in Havana, selling products that were otherwise only available for foreign currency in pesos. They were made possible by the new import opportunities for private businesses. However, the prices in the small stores are exorbitantly high (e.g. 700 pesos, about U$6, for 125g of coffee), but still an alternative to the black market, including refrigerated shelves. “It’s true that the prices are very high, but at least now there is a place where you can reliably find these products,” a Cuban YouTuber sums up her first visit to the new stores.

Assortment of a private supermarket in the old town of Havana (Source: Yoliene/Youtube)

Nevertheless, so far there is no end in sight to the current supply crisis. The extend of the dramatic situation is shown by the latest figures from the national statistics office (ONEI), which we will take a closer look at below.

One of the most informative publications is the data for the manufacturing industry published a few days ago. Here, there were slumps in almost all sectors. What is striking is that the production slumps continued in 2022 despite slight nominal growth, presumably due to the ongoing energy crisis.

For example, domestic production of vegetable oil in Cuba has virtually halved since 2019, falling from 20,800 to 10,700 tons in 2022. Here, the sharpest annual decline of 60 percent occurred from 2021 to 2022. The following table shows a selection of different products produced by the Cuban industry between 2019 and 2022. The production figures in the cell of each year are in thousand metric tons, unless otherwise indicated:

Table 1: The 2022 cell also shows the percentage change from 2019 (source: ONEI).

The slumps are quite dramatic in most cases. The decline in the production of fertilizers, dairy products and beverages is particularly striking. For other products such as soap or bread, the decline was less severe. It should be noted, however, that 2019 was already not a particularly good year for the Cuban economy. Compared to the retrospective “fat years” around 2014-17, the declines are usually even greater. The last few years, it can be noted, set Cuba back several decades in the process of industrialization.

But the output of domestic industry does not give the whole picture, because in addition, Cuban consumption is vastly made up of imported products. A closer look at the statistics of the state retail trade, which were also recently published, is helpful to get a more complete image. At first glance, sales in 2022 were up again slightly, while they were down significantly for meat products (-18.6 percent) and sugar (-25.8 percent). However, if the official inflation rate is included, the balance looks different: Economist Pedro Monreal’s calculations show declines of 62 percent in bread and baked goods sales, 63 percent in rice, 66 percent in cooking oils, 70 percent in meat and 73.5 percent in dairy products. These figures do not include sales on the black market and in private stores, which are likely to have increased.

Another problem area is the availability of rice. Monreal’s overview below shows rice imports from Vietnam (red), other countries (green) and domestic production (blue) from 2016 to 2022. The yellow line marks the annual demand of 700,000 tons. 2020 and 2021 showed a deficit of 20 and 17 percent, respectively. The 2022 (preliminary) figures point toward a deficit of around 40 percent, representing a serious collapse in carbohydrate supply. Rice is one of the three basal staples in Cuba, along with bread and beans. Most recently, the Food and Agriculture Organization (FAO) put the calorie supply in Cuba at a lush 3,346 kcal per person per day in 2020 (down slightly from previous years). The figures for 2021 and 2022 are not yet available and are likely to mark a significant drop.

Graph 1: Imports and domestic rice production in Cuba, 2016-22 (Source: Pedro Monreal/Twitter).

Finally, let’s take a look at the transport and logistics sector. The number of passengers carried in 2022 increased by around a third compared with the lockdown year of 2021, from 749 million to 1 billion, but is still well below the pre-Covid level and roughly on a par with the year 2003. Freight transport, an important indicator of the vitality of the economy, fell by three percent between 2021 and 2022, from 72.3 to 70.3 million tons, following previous sharp declines.

As can be seen from the figures, the island remained firmly in the grip of the crisis last year. Many key indicators continued to deteriorate, although there was a partial recovery in some areas. The perfect storm of Covid-related revenue declines, new U.S. sanctions, (natural) disasters and dragged-out reforms has proven to be a toxic cocktail that has crippled the Cuban economy to this day and led to a massive collapse in living standards and the purchasing power of the Cuban peso. So what to do? After opening up the private sector, Cuba’s government plans to take countermeasures this year with a macroeconomic stabilization program. Among other things, it plans to restructure state-owned enterprises (which employ about two-thirds of the workforce) and increase foreign investment, including in the agricultural and trade sectors, which have long been state monopolies. But for the reforms to have any chance of taking effect, the current fuel crisis must first be overcome. Tomorrow, new data on the state of the economy and the upcoming reform plans are to be announced at a special session of parliament. How much greater the famous light at the end of the tunnel will be remains to be seen. The recovery, if it begins steadily, will take many years – that much can already be said with certainty.

This article was first published on Cuba Heute, a German-language news portal.

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