Voluntary Report - public distribution

**Date:** 6/1/2004

**GAIN Report Number:** CU4001

CU4001

**Cuba**

**Market Development Reports**

**Cuba\'s Food Prices 2004**

**2004**

**Approved by:**

![](media/image1.wmf)Margie Bauer, Director

Caribbean Basin ATO

**Prepared by:**

Usha Pitts, Economic Officer, U.S. Interest Section, Havana

**Report Highlights:**

This report was prepared by the U.S. Interest Section, Havana and is
part of an ongoing series of reports on food prices & availability. A
comparison of basic food prices in January 2003 and January 2004 shows
that food process declined by nine percent. However, this leaves the
average Cuban family of four spending 90 percent of their monthly income
on food.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Miami \[C11\]

\[CU\]

**A. Summary**

A survey of Havana markets shows that prices for basic foodstuffs
dropped nine per cent compared to last year, from 563 to 513 pesos. The
fall in prices means a Cuban family living on a standard income of 524
pesos a month (20 USD) is now theoretically able to fulfill its basic
food needs. Both government policy and outside factors (such as
hurricane recovery) could have played a role in the price decrease.
Availability of food products in state markets was a continuing problem
and the lack of wage data means purchasing power is difficult to
determine. Finally, even with a decrease of two dollars a month in food
prices, our sample family still spends an impossible 90 per cent of its
income on food. This means that families are not eating well, or more
likely, securing additional income through generous relatives, jobs with
dollar tips, or elicit activities. The drop in food prices is good news
for consumers but the overall context remains grim.

**B. Comparison Between January 2003 & 2004**

In January 2003 the US Interest Section (USINT) in Havana conducted a
market survey to estimate how much a Cuban family of four must spend on
food each month in order to survive. Assuming the family\'s ration book
provides a week\'s worth of food every month and that some family
members receive subsidized lunches, we determined that the family would
need to spend 563 Cuban Pesos (CP) every month to meet its basic food
needs (22 USD). Based on a combined average salary of 524 CP for two
working adults, we determined that in 2003 our sample family fell short
of meeting these needs by 39 CP every month (1.50 USD) (Please see Gain
Report \# C13012.)

Our January 2004 follow-up survey determined that prices fell almost
across the board for a basket of basic goods. The standard family basket
could now be purchased for 513 CP, or 50 CP (1.90 USD) less than last
year. The nine per cent difference in prices means the family's combined
salary is now sufficient to cover the cost of a basic food basket, but
little else.

TABLE 1. PRICE OF BASIC FOOD BASKET FOR A CUBAN FAMILY OF FOUR,

JANUARY 2003 VS. 2004, IN CUBAN PESOS (CP)

+------------------+----------------+----------------+----------------+
| # Food Products  | **Price, Jan   | **Price, Jan   | #              |
|                  | 2003, CP**     | 2004, CP**     | Percent Change |
+------------------+----------------+----------------+----------------+
| Rice (10 lbs)    | 40             | 30             | -25            |
+------------------+----------------+----------------+----------------+
| Bread (8 loafs   | 80             | 76             | 0              |
| at 1 lb. Each)   |                |                |                |
+------------------+----------------+----------------+----------------+
| Other            | 15             | 15             | 0              |
| Seasoning/Spices |                |                |                |
+------------------+----------------+----------------+----------------+
| Pork (4 lbs.)    | 88             | 76             | -14            |
+------------------+----------------+----------------+----------------+
| Fish Sticks (80) | 24             | 40             | 67             |
+------------------+----------------+----------------+----------------+
| Subsidized Food  | 60             | 60             | 0              |
| (ration book)^1^ |                |                |                |
+------------------+----------------+----------------+----------------+
| Subsidized       | 51             | 51             | 0              |
| Lunches ^2^      |                |                |                |
+------------------+----------------+----------------+----------------+
| # Total          | **563**        | **513**        | **-9**         |
+------------------+----------------+----------------+----------------+

^1^ The ration book covers a week\'s worth of rice, beans, oil, eggs and
other items for a few cents per pound. ^2^ Lunches are provided for
workers and most school-aged children for a few cents each.

**C. Expanding The Basket**

If our family members had access to additional resources, e.g. generous
relatives abroad, a job in the tourism sector, or employment under the
table, they might expand their purchases beyond this basic food basket.
In this case, the family might buy fruit or higher quality rice and shop
at one of the farmers markets called "agromercados". Below is a price
survey of an expanded basket of goods that shows the difference in
prices between the most expensive option; farmers markets, and the
cheapest state option, markets run by a branch of the military called
the Ejercito Juvenil de Trabajo (EJT). We also included figures taken
from Tribuna de la Habana newspaper, which publishes \"Official Capped
Prices". Capped prices do not govern all products in all state markets,
but none of the state markets we visited exceeded these prices.

TABLE 2. OFFICIAL CAPPED PRICES AND MARKET PRICES IN GREATER HAVANA;
CP/lb.

+-----------------+-----------------+-----------------+-----------------+
| **Food          | **Official      | **Farmers       | **EJT ^1^       |
| Products**      | Capped Prices,  | Market, Prices, | Markets**       |
|                 | CP/lb**         | CP/lb**         |                 |
|                 |                 |                 | **Prices        |
|                 |                 |                 | CP/lb**         |
+-----------------+-----------------+-----------------+-----------------+
| Rice            | 4               | 4               | 3               |
+-----------------+-----------------+-----------------+-----------------+
| Beans           | 7               | 9               | 5               |
+-----------------+-----------------+-----------------+-----------------+
| Lard            | 15              | 15              | 13              |
+-----------------+-----------------+-----------------+-----------------+
| Plantains       | 1               | 1               | n/a             |
+-----------------+-----------------+-----------------+-----------------+
| Sweet           | 1               | 3               | n/a             |
| Potatoes/Squash |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Onions          | 5               | 10              | 4               |
+-----------------+-----------------+-----------------+-----------------+
| Garlic (bulbs)  | Not listed      | 3               | 1               |
+-----------------+-----------------+-----------------+-----------------+
| Limes           | 1               | 1               | n/a             |
+-----------------+-----------------+-----------------+-----------------+
| Tomato Sauce    | 6               | n/a             | n/a             |
| (half-liter     |                 |                 |                 |
| bottle)         |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+

  ----------------- ----------------- ----------------- -----------------
  **Luxury Items**                                      

  Pineapple         3                 13                n/a

  Papaya            1                 4                 n/a

  Oranges           1                 1                 n/a

  Yucca             1                 3                 n/a

  Malanga (Taro)    3                 4                 n/a

  Cabbage           1                 6                 1

  Carrots           2                 5                 n/a

  Beets             2                 5                 1

  Tomatoes          2                 4                 1

  Lettuce           1                 5                 1

  Cucumber          1                 2                 n/a

  Potatoes          Not listed        5 ^2^             n/a
  ----------------- ----------------- ----------------- -----------------

  ----------------- ----------------- ----------------- -----------------
  **Protein**                                           

  Eggs (each)       Not listed        2 ^2^             n/a

  Pork (lbs)        21                25                19

  Ham (lbs)         34                n/a               30

  Mutton (lbs)      20                25                n/a
  ----------------- ----------------- ----------------- -----------------

^1^ Ejercito Juvenil de Trabajos (EJT) are markets run by a branch of
the military.

^2^ Potatoes and eggs are sometimes distributed through the ration book.
Their availability in stores is spotty, but they can be purchased
illegally at markets and door-to-door. The going price for eggs is 2 CP
each.

The EJT Markets look like a great deal for our family. Without
exception, all prices at the EJT Markets were the same or cheaper than
the official capped prices. The quality of produce was mediocre compared
to the farmers markets, but acceptable.

The problem with state markets, however, is availability. As shown by
the chart above, a wide range of produce at the EJT is unavailable. The
same goes for other state outlets we visited, such as organoponicos
which are state-run urban gardens and peso stores. At one organoponico
we visited, the produce was beautiful and the prices unbeatable.
Unfortunately, there was nothing for sale but parsley, bak choy and
radishes.

At the other end of the spectrum, farmers markets are the most expensive
option. In these markets, private farmers and cooperatives sell surplus
produce after meeting their obligations to the state. Because they set
their own prices, they reflect the hidden demand for items unavailable
at state outlets. For example, the official capped price for pineapples
is 3 CP per pound (8 cents USD), but since they were not for sale at the
state outlets, cooperatives can charge 13 CP (50 cents USD) for them at
the farmers markets.

Availability improved over the past year at the farmers markets. In
fact, the only unavailable items were explicitly prohibited for sale
there; i.e., tomato sauce and ham. Given the tradeoffs between
availability, price and quality, the logical choice for families with a
higher than average standard of living would be to buy available items
at an EJT or other state outlet and then shop around at the farmers
markets.

**D. Cuban Government (GOC) Progress On Policy And Prices**

In July 2003, Vice President of the Council of State Carlos Lage
announced new strategies to reduce state market prices by cutting out
intermediaries and capping prices. Though the strategy was ill-defined
and only partially implemented, it appears the Cuban Government (GOC)
made progress towards the goal of reducing prices at state markets.

Table 3 shows lower capped prices on a mix of popular products (both
basic and luxury) compared with 2003. However, the state slashed prices
on several other luxury items such as yucca and oranges by as much as
30-50 percent, but again, we never saw those items for sale in state-run
outlets.

TABLE 3. OFFICIAL CAPPED PRICES, SELECT POPULAR ITEMS, JANUARY

2003 VS. 2004, CP/lb.

+-----------------+-----------------+-----------------+-----------------+
| **Food          | **Price Jan,    | **Price Jan,    | **Percent       |
| Product**       | 2003 CP/lb**    | 2004**          | Change**        |
|                 |                 |                 |                 |
|                 |                 | **CP/lb**       |                 |
+-----------------+-----------------+-----------------+-----------------+
| Rice            | 4               | 4               | 0               |
+-----------------+-----------------+-----------------+-----------------+
| Beans           | 8               | 7               | -13             |
+-----------------+-----------------+-----------------+-----------------+
| Plantains       | 1               | 1               | 0               |
+-----------------+-----------------+-----------------+-----------------+
| Squash/Sweet    | 1               | 1               | 0               |
| Potatoes        |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Onions          | 7               | 5               | -29             |
+-----------------+-----------------+-----------------+-----------------+
| Tomatoes        | 3               | 2               | -33             |
+-----------------+-----------------+-----------------+-----------------+
| Cucumber        | 1               | 1               | 0               |
+-----------------+-----------------+-----------------+-----------------+
| Pork            | 22              | 21              | -5              |
+-----------------+-----------------+-----------------+-----------------+

The downward trend in prices appears to have affected the farmers
markets as well:

TABLE 4. FARMERS MARKETS PRICES FOR SELECT POPULAR ITEMS, JANUARY

2003 VS. 2004 CP/lb.

  ----------------- ----------------- ----------------- -----------------
  **Jan Percent**   **2003**          **2004**          **Percent
                                                        Change**

  Rice              5                 4                 -20

  Beans             10                9                 -10

  Plantains         1                 1                 0

  Squash/Sweet      2                 3                 50
  Potatoes                                              

  Onions            9                 10                11

  Tomatoes          7                 4                 -43

  Cucumber          4                 2                 -50

  Pork              25                25                0
  ----------------- ----------------- ----------------- -----------------

**E.** **Comment: keeping It All In Perspective**

The fall in prices could be attributed in part to explicit government
policy. The capping of state market prices may have had a downward
effect, even if Lage\'s other strategy - elimination of the middleman -
has been generally ignored. Other factors may have been more
influential, e.g., the economy\'s generally improved performance over
2003, the agricultural sector\'s recovery from hurricane damage in 2001,
and the conversion of lands from sugar production to other uses.

It is also possible that the price decrease does not translate into
improved purchasing power. For example, the GOC has not published data
on Cuba\'s average wage since 2001. Also, the GOC tendency to cap prices
on luxury goods that never came up for sale at state markets makes the
government look good on paper without any real impact. Finally, even
with a drop of two dollars in food prices, our sample family supposedly
spends an impossible 90 per cent of its income on food. The family still
has to pay for transportation, utilities, personal care products,
clothes, etc. The conclusion is that the average Cuban family living on
a standard income is unable to fulfill its basic needs without accessing
additional resources. The drop in food prices is one piece of good news
in an otherwise grim situation.

NOTE ON SURVEY: All prices were rounded to the nearest whole number. For
a copy of the complete price survey, email <pittsue@state.gov>.

**F. For more information on food and agriculture in Cuba please visit
our website:**

**[www.cbato.fas.usda.gov](http://www.cbato.fas.usda.gov/), and click on
"Cuba"**

Caribbean Basin Agricultural Trade Office

Foreign Agricultural Service

United States Department of Agriculture

909 SE 1^st^ Ave., Suite 720

Miami, FL 33131

Phone: (305) 536-5300

Fax: (305) 536-7577

E-mail: <cbato@cbato.net>

Margie Bauer, Director

E-mail: <cbato@cbato.net>

Omar González, Deputy Director

E-mail: <omar@cbato.net>