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Voluntary Report - public distribution Date: 10/21/2002

GAIN Report \#CU2004

**Cuba**

**Market Development Reports**

**Cuba**

**2002**

Approved by:

**Margie Bauer**

**Caribbean Basin ATO**

Prepared by:

James E. Ross & Maria A. Fernandez Mayo

> **Report Highlights:**
>
> **Cuba=s market for food sold for dollars in the retail, food service
> and food processing sectors is estimated at \$650 to 700 million per
> year in this University of Florida, International Agriculture Trade
> and Development Center Report. The complex distribution channels and
> key players, described in great detail, are evolving with every sale
> of U.S. food products to Cuba. Factors affecting the current and
> future market are also explored.**

Includes PSD changes: No

Includes Trade Matrix: No

Unscheduled Report

Miami \[C11\], CU

**Cuba: Overview of the Dollar Food Market**

**\--An Exploration of the Purchasing and Distribution System \--**

James E. Ross and Maria Antonia Fernandez Mayo[^1]

Cuba\'s purchasing and distribution system servicing the market for
dollar foods[^2] is decentralized and complex. It is composed of: 1)
retail stores trading only with dollars, 2) hotels and restaurants
catering to tourists for dollars, 3) food processing companies that sell
a portion of their production within Cuba for dollars, and 4)
institutions that receive imported food products.

System Structure

Dollar foods purchased and sold in Cuba are both produced domestically
and imported through national and foreign enterprises operating in Cuba.
Domestically produced dollar foods and beverages are grown or
manufactured by state-owned or controlled entities or by foreign
companies operating under Foreign Investment Law No. 77. Small private
farmers may also participate in the dollar food market; however, their
participation in terms of dollars is relatively insignificant.

State production entities include national food manufacturers, state
farms, and state-controlled agricultural cooperatives. A mixed
enterprise, an entity with foreign interest, generating dollar food
products may include a food manufacturer or an agricultural production
unit. A mixed enterprise producing dollar foods may take the form of a
joint-venture investment, an international economic association
contract, or a cooperated production agreement. There are no totally
foreign owned food production or manufacturing operations in Cuba.

One government agency, Alimport (Empresa Cubana Importadora de
Alimentos) is Cuba\'s main food and feedstuff importing company. Other
importing agencies of dollar foods include government-owned holding
companies that supply retail dollar stores, and government-owned
companies and mixed enterprises that own or operate tourist hotels,
resorts and restaurants. Some joint-venture hotels have agreements under
the foreign investment law to import direct, without going through a
government purchasing company. Because of the foreign company\'s
supplier contacts and expertise, government-owned hotels, at times, may
import through the joint venture or contract agreement companies. The
supply and quality of food products available through the importing
company may determine which source is used.[^3]

Foods sold or made available direct to consumers and the tourist
industry for dollars, generally, include those products classified as
consumer-oriented, but may also include products classified as
intermediate and bulk. Consumer-oriented products are imported under the
jurisdiction of the Cuban Ministry of Public Health (Ministerio de Salud
Publica\--MINSAP). Imports of intermediate and bulk agricultural
products are regulated by the Ministry of Agriculture (Ministerio de la
Agricultura\--MINAGRI). [^4]

Consumer-oriented foods may be imported through several different
agencies and companies, while some intermediate products and all bulk
commodities are imported by Alimport. Some consumer-oriented foods may
also be imported by Alimport to supply ration stores and other
institutions. Alimport also purchases imported food ingredients for the
food industry sector. In addition, dollar stores and other
government-owned companies may receive food products imported by
Alimport.

Other entities involved in the dollar food chain include in-home family
restaurants (restaurantes particulares), known generally as
Paladares.[^5] These restaurants are limited to family employment and
may serve only 12 customers at one time. They may charge their customers
in either pesos or dollars; however, most paladares request dollars for
payment. Paladares do not import food products, but purchase those
products through the retail dollar stores, state-operated agricultural
markets, semi-private agromercados, and from other sources. Economic
impact of the private restaurants on the dollar food market is
negligible.[^6]

Stores Selling Dollar Foods (TRDs)

Retail stores selling food and beverage products for dollars (ventas
minoristas en divisas) are scattered throughout the country. The stores
are owned by the Cuban government. No foreign investment in these stores
has been permitted. In all of these retail stores, known as Dollar
Stores or TRDs (Tiendas de Recuperacion en Divisas), food products that
have been imported or produced domestically are sold for dollars.

In Havana there are approximately 300 Dollar Stores, and in the entire
country roughly 1,000. Most of the Dollar Stores outside Havana are
located in the tourist areas of Varadero, Ciego de Avila, Holguin,
Santiago de Cuba, Camaguey and Pinar de Rio.

Cuba\'s dollar food market encompasses many semi-autonomous
government-owned and operated companies. The companies are incorporated
and have the Sociedad Anonima (S.A.) designation. Generally, the
companies control their own hard-currency revenues and can make
purchases on their own account. Sociedad Anonima companies must remit a
monthly payment to the government. The amount is negotiated between the
government and the company directors.[^7]

Names of the major dollar store chains and the government corporations
owning them include:

Tiendas Panamericanas (CIMEX S.A.)

Tiendas Universo (CUBANACAN S.A.)

Tiendas Caracol (HORIZONTES Hoteles S.A.)

Tiendas y Supermercados de la Sociedad Meridiano S.A.

> (CUBALSE Corporation \-- imported foodstuffs valued at \$19.7 million
> in 2001)

Tiendas TRD Caribe (GAVIOTA S.A.)

Tiendas de Habaguanex S.A. (HABAGUANEX S.A.)

Priorities for supplying the stores, whether food or non-food products,
are: first, products of national origin; second, mixed enterprises
(companies with foreign investment, either joint ventures, international
economic association contracts, or cooperative production agreements);
and third, foreign sources.

For example, products of national origin, the highest priority, could be
supplied by a state-owned company such as Frutas Selectas S.A. The
semi-autonomous company selects the best fruits and vegetables produced
by state-owned farms and state-controlled cooperatives and markets the
products to the tourist hotels and restaurants. Mixed enterprises, the
second highest priority, could include Sherritt Green or Tropiflora.
Sherritt Green is a government joint venture with Sherritt International
of Canada. Tropiflora is a joint venture with Israeli interests. Both
companies produce fruit and vegetables for sale to tourist hotels and
restaurants. The third priority would be food imports.

Prices of products sold in the Dollar Stores are normally higher than
those offered in other internal food markets. The consumer may pay a
price that is 200% or more above the imported price or the price in one
of the internal food markets.[^8] Products similar to those available in
the dollar stores may be found at lower prices in other internal
markets.

In addition to dollar stores, the Cuban retail food market includes:
ration stores (Mercado de Alimentos Racionados); agricultural or
farmers\' markets (Mercado Libre Agropecuario\--MLA); Ministry of
Agriculture markets (Mercado de Agricolas a Precios Topados);
agricultural \"fairs\" held on the last Sunday of each month (Las Ferias
Agropecuarias); urban garden markets (ventas en los huertos y
organoponicos); places of sale direct to the consumer by the CPA
(Cooperatives of Agricultural Production) and the EJT (Youth Work Army);
and the Cadena de Tiendas Imagenes\--stores selling processed foods
under the jurisdiction of the Ministry of Internal Trade\--MINCIN.[^9]

Of all of Cuba\'s official internal food markets, only the dollar stores
trade in dollars. The other internal food markets trade in pesos, but do
compete with the dollar stores. Quality of products in the dollar stores
is normally superior to those in the other internal markets.[^10]

In May 2002, the Cuban government announced that prices in the dollar
stores would be increased significantly; however, food prices were to
remain the same or decline. In fact, many food prices did fall, only
prices for chocolate products and preserved foods increased. The
increase, generally, was 10 to 15 U.S. cents above the previous price.

Tourist Hotels and Restaurants

Cuba rates its hotels on a star basis, ranging from one to five stars. A
five-star hotel is better than a four-star, etc. The rating system does
not compare facilities and services to comparable stars of hotels in
other countries, but is used only to compare quality of hotels within
Cuba. With current standards, most international tourism and the
resulting market for dollar foods, is concentrated in three, four and
five-star hotels. While two-star and one-star hotels provide a limited
market for imported dollar food products, the major source of food for
these hotels is the domestic market.

Cuba has more than 300 tourist properties with about 40,000 rooms. Less
than 100 of the tourist hotels are classified as four- and five-star
hotels. Four-star hotels account for approximately 40% of room
occupancy, while five-star and three-star hotels each account for about
20%. Annual growth in tourism in the 1990s was more than 15%, but in
2001 the number of tourists was only slightly more than the year before,
approximately 1.8 million. The slow start for tourism in 2002 could
result in even fewer tourists than recorded each of the last two years.

In the early 1990s, when tourists numbered some 300,000, only 12% of the
products and services required for the tourist industry were provided
through national production. Almost all food products needed for tourist
hotels and restaurants were imported. All of the beer and bottled water
served to tourists was imported. As a result of economic reforms in the
mid-1990s and pursuit of a policy of protectionism, the supply situation
was reversed and Cuba now supports some 65% of the tourist hotel and
restaurant needs through national production. One national brewery, a
joint venture, supplies about 95% of the tourist market for beer and
another joint venture supplies almost all of the bottled water.[^11]

The semi-autonomous companies serving the tourist industry include:
Corporacion Cubanacan, Grupo Hotelero Gran Caribe, Horizontes Hoteles,
Habaguanex, Grupo de Turismo Gaviota, Islazul, Grupo de Recreacion y
Turismo Rumbos, Compania de Marinas Puerto Sol, and the Complejo de
Convenciones. To some extent, all of the companies compete with each
other, but they concentrate on different segments of the tourist market.
No foreign investment has been introduced in the ownership of these
companies.

[Corporacion Cubanacan S.A.]{.underline} accounts for more than 40% of
the tourist market. It was formed to operate four and five star hotels,
restaurants, cafeterias, retail stores, water recreation centers,
tourist health facilities, and tourist reception and other recreation
centers. Cubanacan also produces and sells artisan handicrafts and
operates a transportation company that provides tour buses and rents
automobiles.

Many of the tourist hotels, administered as either international
economic association contracts or joint ventures, involve Cubanacan.
Joint investment arrangements under Foreign Investment Law No. 77 have
been developed by Cubanacan with Grupo Sol Melia (Spain), LTI (Germany),
Golden Tulip (Holland), and SuperClubs (Jamaica).

[Grupo Hotelero Gran Caribe S.A.]{.underline} operates more than 40
hotels classified as four and five star hotels. Gran Caribe hotels have
9,500 rooms for tourists scattered throughout the country, but are
located mainly in Havana and Varadero. In addition, the group operates
three primary tourist attractions in Havana, the Restaurant La Bodeguita
del Medio, Bar and Restaurant La Floridita and the Cabaret Tropicana.

[Horizontes Hoteles S.A.]{.underline} is a hotel chain, mostly three and
four stars, with more than 7,000 rooms. Horizontes also operates
facilities with mineral water baths, treatment for stress, etc. One spa
(centro hospitalario que atiende multiples enfermedades) treats patients
with health problems characteristic of the Caribbean.

[Grupo de Recreacion y Turismo Rumbos S.A.]{.underline}, founded in
1994, has grown approximately 20% annually. It operates facilities for
both national and international tourists in Cuba\'s major tourist cities
and rustic locations. Rumbos is diversified, and has established
businesses in: a travel agency; various types of restaurants, including
fast food (comidas rapidas, restaurantes y parrilladas); small lodges in
cities, on beaches, in the country, at golf courses, airports, and
marinas; and eco-tourism with 40 routes. Currently, Rumbos is planning
eight new golf courses to meet the standards for both international golf
amateurs and professionals.

[Compania de Marinas Puerto Sol S.A.]{.underline} was created to develop
marinas, piers, recreational boat activities, etc. The company owns 390
two star and local hotels to meet the needs of tourists and nationals.

[Grupo de Turismo Gaviota S.A.]{.underline} is a tourism company
controlled by the Revolutionary Armed Forces. It is dedicated to
operation of four and five star hotels, development of marinas,
restaurants and cafeterias, recreational water facilities, and health
facilities for tourists. It also operates a transportation company that
offers tourist buses and rental of automobiles and taxis.

[Habaguanex S.A.]{.underline} belongs to the historical office of Havana
(Oficina del Historiador de la Ciudad). It was established to develop
three and four star hotels for international tourists in the Historic
Center of Old Havana (Centro Historico de la Habana Vieja). Currently,
it is renovating various hotels and opening restaurants in the oldest
part of the city.

[Islazul S.A.]{.underline} was established to develop two and three star
hotels for international tourists seeking low-cost accommodations.

[Complejo de Convenciones]{.underline} includes operation of the Palace
of Conventions (Palacio de las Convenciones), Hotel Palco, the
restaurants, Rancho Palco and El Palenque, and Club Habana. It also
administers the Sala de Expocisiones (PABEXPO), the Mansion Residencial
(Casa de Protocol \-- House of Protocol), and the auto rental agency,
Palcocar. Basically, the complex specializes in the development of
tourist events and conventions.

A few foreign companies have negotiated contract agreements that permit
them to import food directly for their tourist facilities. Foreign
companies having arrangements under Foreign Investment Law No. 77 with
the Cuban companies often operate as hotel administrators and assume
responsibility for food and beverage services. Some have taken equity
positions in the hotels owned by the holding companies. These include,
among others: Grupo Sol Melia and Hoteles C from Spain; Accor and Club
Med from France; LTI and RIU from Germany; Delta Hotels and Resorts,
Commonwealth Hospitality Ltd., and Liesure Canada Inc. from Canada;
Viaggi di Ventaglio and Press Tours from Italy; and SuperClubs from
Jamaica. About 30% of Cuba\'s hotels involve investments with foreign
companies. There are no totally foreign owned hotels in Cuba.

Food Manufacturers

Food processors in Cuba import substantial amounts of food ingredients
for use in the manufacture of food products. About 20% of the national
production is sold for dollars, either through sales for dollars in Cuba
or by exporting.

All food manufacturers in Cuba are under the jurisdiction of the
Ministry of Food Industries (Ministerio de la Industria
Alimenticia\--MINAL), created in 1965. MINAL oversees industries
manufacturing, principally, milk and meat products, cereals,
confections, bread, biscuits and crackers, pastries, fruit and vegetable
products, alcoholic beverages, water, soft drinks, and beer. Industries
milling bulk commodities, such as wheat and rice, also are under the
jurisdiction of MINAL.

At the time of the establishment of the Ministry of Food Industries,
Cuba was importing most of the processed food consumed. In addition,
most of the primary material used by the existing national food
manufacturing industry was imported. There was little growth in food
processing until food research centers were introduced. Between 1970 and
1975, the Food and Agricultural Organization of the United Nations and
the governments of Sweden and the Netherlands provided financing for
pilot plants devoted to applied research in the lactic, meat-processing,
and vegetable and fruit-preserving branches.[^12]

International assistance from 1975 to 1990 for research and development
in Cuba\'s food industry led to substantial growth in food
manufacturing. Production increases during this period included: canned
meats, 157%; canned fruits and vegetables, 66%; cheeses, 143%; and wheat
flour, 126%. The number of production lines had grown from 57 in 1975 to
more than one thousand by 1989.

With the loss of Soviet and Eastern Block trade preferences in 1989 and
1990, there was a progressive decline in Cuban production in general
until the mid-1990s. Food industry executives were forced to introduce
products that made it possible to raise production volumes through
increased use of extenders and substitutes in products destined for the
domestic market. The imperative was to maintain nutritional values
despite a reduction in agricultural production, especially of meat
products.

Between 1989 and 1994, the worst period for the Cuban economy, the food
processing industry registered a dramatic decline of 42% in the value of
its output, along with a reduction of 74% in national raw-material
supplies from the agricultural sector, and a 34% drop in imported raw
materials.[^13]

In 1994, Cuba\'s production of manufactured food products was 45% of the
output in 1989. The output of beverages was 56%. By 2000, beverage
production had increased to 81% of the 1989 level. Food manufacturing
increased more slowly, reaching only 54%. While the food industry has
had significant growth since 1994, production remains substantially less
than the output level of more than a decade earlier.[^14]

Production lines that are growing the most include: beer, soft drinks,
mineral water, alcoholic beverages for export, powdered milk, pastas,
flour, soft cheese, ice cream, and yogurt. Wheat flour production also
showed some increase, while milled rice production decreased
substantially. In 1998 the value of production among eight \"Uniones\"
in MINAL was \$1.25 billion. About \$25 million was destined for dollar
earnings, either through the dollar stores or by exporting. Growth of
production in 1998 was 27% more than the year before. (More recent data
are not available to the authors at this time.)

Sixteen of Cuba\'s food manufacturing companies are joint ventures and
12 are Cooperated Production Agreements.[^15] Each of the 16 mixed
enterprises are associated with Coralsa (La Corporacion
Alimentaria\--CORAL S.A.), a holding company constituted within MINAL in
1996. The Ministry restructured in the mid-1990s to promote increased
support for food industry firms operating with foreign capital.
Participation of Coralsa in the 16 enterprises ranges from 40% to 50%.
Fixed assets of the companies at the time of restructuring were placed
at \$36 million. They had \$4 million in working capital and \$25.5
million in the process of investment.

Enterprises associated with Coralsa produce and market sausages, candies
and confections, products derived from wheat, instant beverages, wines,
beers, soft drinks and mineral waters, as well as technological and
refrigeration equipment for the food industry. In 1994 the mixed
enterprises had a combined value of production of \$20 million. By 2000
the value of production of the mixed enterprises had reached \$140
million.[^16]

Another area of activity in the Cuban food industries sector has been
the overseas food processing operations in which there is Cuban capital
and technology. A portion of the earnings from these industries is
returned to Cuba. Cia. De Tasajo de Uruguay, for example, was
established in Uruguay to process jerked beef and other meat products
for export to Cuba and other Latin American and African countries. A
Coralsa-owned company, Carnes del Mercosur S.A., located in Cuba,
imports and markets the products in Cuba for the internal market.

Institutions and the Role of Alimport

All dollar purchases of food for use in institutions are conducted
through Alimport, a government-owned company operating under the
auspices of the Ministry of Foreign Trade. Alimport decides who to do
business with, what quantity to buy based on end customers\' needs, and
negotiates and fixes prices. It also decides buying terms depending on:
seller, delivery terms and place, financial facilities, and freight
advantages.[^17]

For FAS and FOB operations, Alimport relies on a logistics group in
charge of chartering vessels and monitoring the whole process of
transportation from the operational standpoint. Alimport works with
Cuban flag vessels, brokers, or directly with foreign flagship owners,
and agrees on terms and operates with them as per international practice
standards.

For CFR, CIF, CPT and CIP operations, the Alimport logistics group
ensures shipping terms are in accordance with contract terms. It also
follows up on shipment and carriage of goods until delivery at port of
destination. Alimport negotiates and agrees on discharging terms with
port terminal and stevedoring companies. According to Alimport\'s
president, Alimport looks after needs of its end-customers and its
purchasing strategy is based on such needs.[^18]

In May of this year, the Cuban government designated Alimport as the
exclusive purchasing agent for U.S. based companies that want to export
food products direct from the United States to Cuba. Alimport will
purchase agricultural and branded food products from U.S. based
companies and re-sell, or transfer, the products to other Cuba-based
companies.[^19]

# Estimated Value of the Dollar Food Market

Data are not available to indicate the value of food imported or
produced domestically for each of the four major areas distributing
dollar foods and beverages dollar stores, tourist hotels and
restaurants, food manufacturers and institutions. Data and information
that are available, however, indicate food imports amount to
approximately \$650 to \$700 million, or about 14% of Cuba=s total
imports.[^20]

Approximately half of the food imported by Cuba meets the
classifications of intermediate and consumer-ready products. The
remaining half consists of bulk commodities, such as wheat, coarse
grains, pulses, and rice. Pulses and rice may enter the dollar store
market direct, as well as be provided to ration stores and institutions.
Most of the bulk and some of the intermediate products are resold to the
food manufacturing companies. A large percentage, perhaps 50%, of the
food products imported are resold through dollar stores and the tourist
hotels and restaurants.

Food products sold through the Ministry of Agriculture to the tourist
sector and dollar stores in 2001 totaled \$167.5 million, an increase of
3.46% compared to gross revenues of US\$161.7 million reported in
2000.[^21] Cuba reported gross revenues from marketing agricultural
commodities to the tourism sector of US\$59 million in 1998 and US\$70
million in 1999. Allowing for continued growth, an estimated value of
food produced under the auspices of the Minister of Agriculture and sold
for dollars this year could reach \$170 million to \$200 million.

Processed foods sold through the Ministry of Food Industries to the
tourist sector and dollar stores, assuming most of the mixed enterprise
production and some of the national company production enter the dollar
market, could range from \$200 million to \$300 million.

The value of products grown in Cuba by mixed enterprises is unknown, but
could range from \$20 to \$30 million. Food from domestic production
sold in Paladares for dollars is estimated to be relatively small.
Combining the estimated data provides a total of all foods sold in Cuba
for dollars to an estimated level ranging from \$800 million to \$1
billion.[^22] Tourists[^23] and foreign businessmen[^24], along with
Cubans who receive dollars through remittances, and various means, are
the sources of hard currency to buy the dollar foods.[^25]

The European Union and Canada provide about half of the food imports,
while Mexico, and Latin American (Argentina and Brazil for soybean
products) and Asian countries (China, Thailand and Vietnam for rice
imports) are also important sources of food imports. More than half of
Europe=s agricultural exports to Cuba, which totaled \$185 million in
1999, consisted of wheat flour, vegetable oils and consumer-ready
products, primarily dairy products and poultry meat. Wheat accounted for
about 45% of the total. Canada=s agricultural exports to Cuba, \$115
million in 1999, were largely (83%) pulses and consumer-oriented
products, such as red meat, poultry and dairy products.

Factors Affecting the Current Market

10 Cuba\'s purchasing and distribution system for dollar foods is an
intricate network of organizations authorized to import and distribute
food products in Cuba for dollars. Organizations include government
agencies, state-owned companies, mixed enterprises, associated foreign
firms and licensed private restaurants. They all purchase and/or sell
food directly or indirectly for dollars in Cuba.

20 TRDs (dollar stores) and the tourist hotels and restaurants are the
primary markets for dollar foods in Cuba. Ration stores, institutions
and food industries provide the largest market for bulk commodities, and
an important market for foods classified as intermediate and
consumer-oriented products.

30 Alimport is the country\'s largest food importing company. Food
imported by Alimport is distributed to Cuban consumers for pesos, or
sold for dollars through various channels. Distribution of food sold for
pesos is made through ration stores and government institutions. Some of
the food products and beverages imported by Alimport are sold for
dollars through dollar stores, tourist facilities, and food processors.
Government tourist hotel and restaurant holding companies, government
agencies importing for dollar stores, and mixed enterprises operating
tourist facilities are also important importers of food sold in Cuba for
dollars.

Factors Affecting the Future Market

10 The decision by the government of Cuba to make Alimport the exclusive
importing agency for food and agricultural products from the United
States raises questions regarding market strategy for U.S. exporters.
For example:

> a0 Will Alimport increase food imports from the United States to
> replenish the country\'s food reserves diminished by Hurricane
> Michelle? If so, the potential market would appear good for food
> products, such as rice, pulses, vegetable oil, dairy products, chicken
> meat, and wheat flour.
>
> b0 A large number, reportedly 50 to 100[^26], Cuba-based mixed
> enterprises,
>
> international association contract entities and government-owned
> companies have
>
> authorization from the Cuban government to import food products. Since
> November 2001, many of these companies have established contacts with
> U.S.-based companies. Will these companies be able to import the
> products they want through Alimport?
>
> c0 Also, will any of Cuba\'s authorized importing companies, other
> than Alimport, be permitted to import U.S. branded products from third
> countries, or will Alimport be the exclusive importer of these
> products?

40 Growth of Cuba\'s dollar food market, to a large extent, is
contingent on continuation of a relatively high level of remittances,
and increases in tourism and foreign investment. With elevated security
concern worldwide following events on September 11, 2001 in the United
States, and economic recession in Canada and Europe, growth of tourism
in Cuba has decreased. Foreign investment also appears to be on a
descending trend. With less tourist growth and shrinkage of disposable
income for tourists, as well as reduced foreign investment, Cuba\'s
dollar food market could be affected negatively.

50 Perhaps the greatest unknown is the future of travel restrictions for
U.S. tourists to Cuba. Lifting of the U.S. imposed restrictions on
travel could result in a large number of tourists going to Cuba. This
would create a substantial increase in demand in Cuba for dollar food
and beverage products.

**For more Reports on Cuba, please contact our office:**

**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

email: [cbato@cbato.net]{.underline}

website: [http://www.cbato.fas.usda.gov]{.underline}

Margie Bauer, Director

Email: [cbato@cbato.net]{.underline}

Courtesy Professor and Research Associate, respectively, Department of
Food and Resource Economics, Institute of Food and Agricultural
Sciences, University of Florida. Based on a paper presented at the
Annual Meeting of the Association for the Study of the Cuban Economy
held in Coral Gables, Florida, August 1-3, 2002. Contact
[jeross@ufl.edu.]{.underline}

[^1]: The authors are Courtesy Professor and Research Associate,
    respectively, Department of Food and Resource Economics, Institute
    of Food and Agricultural Sciences, University of Florida. A more
    detailed report on Cuba\'s dollar food market will be available
    later this year. For a copy, contact jeross@ufl.edu.

[^2]: As used in this paper, the term \"dollar foods\" refers to food
    and beverage products, whether imported or produced domestically,
    that are sold to consumers, either foreign or Cuban, for dollars.
    Dollar foods also include ingredients purchased with dollars or sold
    for dollars by the food processing industry.

[^3]: Caribbean Basin Agricultural Trade Office of the USDA/Foreign
    Agricultural Service in Miami. See recent reports on food laws and
    the food service sector, GAIN Reports #CU2001, 2002, and 2003.

[^4]: ibid.

[^5]: Paladar, translated means palate or taste, but the origin of the
    use for the Cuban family restaurants is said to be taken from a
    Brazilian soap opera. The main character goes to the capital and
    establishes a chain of small restaurants called Paladares.

[^6]: Henken, Ted. Tulane University. Procedings of the Tenth Annual
    Meeting of the Association for the Study of the Cuban Economy
    (ASCE), Miami, Florida, Aug. 3-5, 2000, p. 331.

[^7]: Cuba: A Guide for Canadian Businesses. Department of Foreign
    Affairs and International Trade. The Canadian Trade Commissioner
    Service, June 1999.

[^8]: Dr. Armano Nova Gonzalez, Profesor Titular Adjunto de la
    Universidad de La Habana, Cuba\--Reflexiones Sobre su Economia,
    2002, p. 193.

[^9]: ibid.

[^10]: For detailed information on the internal markets, including price
    comparisons and an explanation of why consumers buy at TRDs when the
    same product can be purchased for less at other markets, see Jose
    Alvarez\'s article on page 305 of Cuba in Transition, Volume 11,
    ASCE, Washington, D.C., 2001.

[^11]: Dr. Miguel Alejandro Figueras Perez. Cuba\--Reflexiones sobre su
    Economia, 2002 p. 111 and 112.

[^12]: Business Tips on Cuba, August 1996, p. 20.

[^13]: op. cit., p. 18.

[^14]: Anuario Estadisticas de Cuba 2000. Capitulo VIII Sector
    Industria.

[^15]: Dr. Omar Everleny Perez Villanueva. Cuba\--Reflexiones Sobre su
    Economia, 2002 p. 90.

[^16]: Perez Villanueva. op. cit., p. 90.

[^17]: Presentation by Mr. Pedro Alvarez Borrego, President of Alimport,
    Agricultural Sales Conference, Cancun, Mexico, Jan. 30-Feb. 2, 2002.

[^18]: ibid.

[^19]: On May 12, 2002, the president of Alimport reported that Alimport
    would be the exclusive agent in Cuba for U.S. based companies.
    U.S.-Cuba Trade and Economic Council.

[^20]: Estimate by authors based on USDA/FAS data showing about \$600
    million in 1999 for food imports.

[^21]: U.S.-Cuba Trade and Economic Council. March 18, 2002.

[^22]: This is a preliminary estimate by the authors. It is hoped that a
    more substantiated estimate can be included in the study underway.
    (A reminder that an estimate of value of food entering the dollar
    market in Cuba does not include food imported by Cuba that enters
    the peso and institutional markets.)

[^23]: Tourists pay for food with hard currency at tourist hotels, and
    provide tips for services. Those dollars are used, largely, to make
    food and other purchases in the dollar stores.

[^24]: Some mixed enterprises supplement workers\' income with dollars,
    either through negotiated arrangements with the Cuban government or
    through other means. The dollars are then used by the Cuban workers
    to purchase dollar foods and other dollar items.

[^25]: Remittances, money sent to Cubans by family members and other
    contributors living overseas, are generally estimated to range
    between \$600 million and \$1billion annually. These dollars, while
    the route may not always be direct, end up primarily being used in
    the dollar stores.

[^26]: Caribbean Basin Trade Office, USDA/FAS. (More than 300
    state-owned , but decentralized, enterprises had been licensed to
    import all products as of 1999 by the Ministerio del Comercio
    Exterior (MINCEX), Ministry of Foreign Trade, according to the
    Canadian Department of Foreign Affairs and International Trade.)