- April 21, 2017
- Posted by: lynxglobalintelligence
- Category: Latin America
By: Colin Gaiser, Lynx Global Intelligence
When the United States relaxed travel restrictions to Cuba in 2015, it was an exciting moment for those of us who were always drawn to the island by photos of surreal, pastel-colored buildings and streets lined with classic cars. And Cuba is indeed an exciting place to visit — yet beyond the famous old city of Havana is a lush 110,000 km2 island, where 30 percent of land is used for agricultural production.
Cuba’s climate could hardly be better for agriculture — lying just south of the Tropic of Cancer, Cuba has a tropical climate with temperatures moderated by year-round northeastern trade winds. It also has a predictable, May-October rainy season. And while Cuba is historically better known for tobacco and sugar, the island also grows ample amounts of coffee, potatoes, rice, numerous tropical fruits, and citrus (the island is actually the world’s third-largest producer of grapefruit).
Organic and Sustainable
Unfortunately, a combination of Castro regime policies, lack of access to fuel and supplies after Soviet Union’s collapse, and the island’s economic and political isolation have made agricultural production relatively inefficient. A lack of fertilizer and modern agricultural technology hampers yields. And while the government has turned land over to independent farmers to lease, it still requires most of them to grow food for the state.
However, there is an upside: This unique situation left Cuba’s agriculture largely organic, dominated by small-scale farms (many in urban areas) that rely on more natural methods of production. With many Americans willing to pay a premium more for organic, sustainably sourced products, Cuban agricultural products could be very attractive to the upscale market.
Plus, there is reason to believe more economic liberalization is not far off. Raúl Castro is scheduled to hand over power to Miguel Díaz-Canel, his younger vice-president, in February 2018. Díaz-Canel supports increasing internet access (currently very spotty) as well as more economic openness, which is strongly endorsed by public opinion in both Cuba and the United States.
Brewing a New Market
Coffee, in particular, is a likely beneficiary of more economic openness. Despite a drop in overall production since the 1990s, it is one of the first Cuban agricultural products accessible to American citizens within the United States.
Swiss-based Nespresso is the first company to make Cuban coffee available to Americans. Though not on store shelves yet, for a limited time one could order their Cafecito de Cuba coffee pods online or over the phone. While this is just a small step toward providing Americans the experience of drinking Cuban coffee, the thawing relationship between the two countries makes one optimistic about the possibilities of coffee on the luxury market.
In the meantime, the president of Nespresso USA, Guillaume Le Cunff, has stressed that Nespresso is interested in developing a long-term arrangement to ensure a steady supply of Cuban coffee for U.S. customers. This project would also work to improve living conditions for Cuba’s farmers. Such a combination of a novel, high-quality product along with real corporate responsibility could strike a chord in the U.S. premium market.
A Bright Future
While the timetable is unclear, Cuba seems destined to liberalize and become more economically open to the rest of the world — and when this occurs, the challenge will be to maintain the sustainable, organic quality of Cuban agricultural products. This will not just be attractive to American consumers, but also necessary to maintain the magnificent environment and biodiversity of Cuba. Both the economic and social returns on investment could be huge for companies that take on this challenge.