By Nora Gámez Torres.
Miami Herald (via TNS)
In a surprising development given Cuba’s worsening economy, exports of food and other goods from the United States were up last year thanks to an explosion of trade involving private small and medium enterprises on the island.
According to trade data gathered by the New York-based U.S. Cuba-Trade and Economic Council, an organization that tracks business with Cuba, U.S. companies, many based in Miami and Hialeah, exported food and agricultural products worth $342.6 million. That’s a 12.4% increase from 2021, when private enterprises, known in Cuba as pymes, were first authorized, and exports to Cuba reached $304.7 million.
Exports in December also jumped 58% from November, to $45.2 million from $28.6 million.
The export data for 2023 “is remarkable not only by the U.S. dollar value, but the substantial increase in the number of companies, primarily located in South Florida, who are exporting products from the United States to Cuba specifically in support of the re-emerging private sector in Cuba,” said John Kavulich, the council’s president. “This data legitimizes these are real businesses, that there is commercial activity, and it is expanding.”
Cuba has been under a U.S. trade and financial embargo since the early 1960s, but there are several exceptions that allow for the export of food, agricultural products, medical supplies, humanitarian donations, and several other categories of goods if they are to be used by the private sector and not the government.
Kavulich said exports other than agricultural products, medicines and donations, which are authorized under specific licenses and policies implemented by the Obama and Biden administrations, were approximately $24 million. Those include car sales of more than $5 million, in addition to trucks, vans and motorcycles.
Private businesses buying more
Since Congress made exceptions to the trade embargo in 2002 to Cuba to authorize the sale of food and agricultural products, Cuba’s state company Alimport bought the bulk of commodities that made up much of the commercial activity between the two countries.
But a deep decline in productivity due to government mismanagement and the flaws of a centrally planned economy, combined with the effects of U.S. sanctions, the COVID-19 pandemic and a decline in tourism, plunged the country into one of its worst economic crises in decades.
As the government’s ability to pay cash in advance for U.S. imports — a U.S. requirement to sell food and agricultural products to Cuba— has notably decreased, trade was supposed to take a hit.
But the opposite happened as small and private enterprises, which were first authorized in August 2021, filled the gap and started importing supplies for their businesses as well as food and goods to sell on the island.
The Council’s latest report and additional data shared with the Herald does not show which companies are the biggest exporters overall, nor which specific transactions involved the Cuban private sector and which involved Cuban state companies.
But there are clear signs much of the trade increase may be due to a flurry of private activity. For example, in 2019, before the pandemic halted international trade and private businesses were not yet authorized in Cuba, Cuban government enterprises imported only $257.6 million from the U.S.. That’s $85 million less than last year.
The data shows that private sector activity is driving higher volumes of exports to Cuba, filling for the government’s decreased buying power and diversifying commerce between the two countries.
For years, the Council has tracked the top 10 food products and agricultural commodities exported to Cuba, which tended to be similar year over year, including chicken, soybeans, corn and pesticides, all imported by Alimport.
Last year, chicken was still the number one item exported to Cuba, but Alimport is no longer the only one buying poultry. The list now includes other items like condensed milk and coffee bought by private businesses to sell to Cubans on the island. And the top 10 products currently account for less of the total volume exported, as private businesses are buying a broader range of products, from olive oil, butter, eggs, yogurt, vegetables, pasta, orange juice and other staples found in grocery stores, to construction materials, household articles, clothing, appliances, electrical parts and even cars.
For example, last year, the top 10 products accounted for 88% of all of the food and agricultural commodities exported to the island, down from 99.6% in 2021.
The Council’s data shows that some Canadian and Spanish companies with offices in Cuba are registering companies in Florida to export to the island. And some Cuban entrepreneurs are testing the limits of the embargo by opening subsidiaries of their companies in the United States under other people’s names to be able to buy supplies and collect payments, the Herald learned.
Some companies owned by Cuban Americans based in Miami, like Katapulk or Supermarket23, have also built businesses around selling food that gets delivered on the island and can be ordered online. Who pays for that? Mostly Cubans in the U.S. and other countries who want to help their relatives on the island, though Katapulk, owned by businessman and music promoter Hugo Cancio, recently added an option to pay with a Cuban bank card.
Because Cuban entrepreneurs are also cut off from the international banking system due to the U.S. embargo, some Cuban entrepreneurs are opening their own online stores to sell food and get payments abroad so they can use that money to pay suppliers and expand their businesses.
Medicine and humanitarian aid
The Council separately tracks the exports of healthcare products to Cuba, which, despite Cuba’s propaganda claims, have been legal to export to Cuba since 1992. Unsurprisingly, given the poor state of healthcare in the country, that number took a hit last year, from $9.2 million in 2022 to $839,500.
As Cubans struggle with shortages of food and medicines, humanitarian aid increased last year from $30 million in 2022 to $36.5 million, according to the Council’s data.
But the Council acknowledged in its latest report that the data it gathers from companies, U.S. ports and government agencies might not account for the actual amount of goods and donations making it to the island, which is presumably much higher when taking into account the food, medicines and other goods U.S. travelers, mostly Cuban Americans, take for their relatives in Cuba.
©2024 Miami Herald. Visit at miamiherald.com. Distributed by Tribune Content Agency, LLC.
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Tags: Small Business
