Cuba: Additional agricultural agreement signed with Brazil
The Economist, 18/09/2013
Cuban officials have signed a co-operation agreement with their Brazilian counterparts, which it is hoped will reduce food imports and boost technology transfers to the benefit of Cuba's agricultural sector. The deal also underscores warming ties between the two countries.
Analysis
The co-operation agreement, which has a five-year scope, was signed by the Instituto de Investigaciones de Granos de Cuba (the Cuban grain institute) and Brazil's Instituto Rio Grandense de Arroz (IRGA, the rice institute of Rio Grande do Sur). As well as bolstering commercial ties it aims to improve co-operation through the exchange of technicians and boost productivity in Cuba's agricultural sector. Cuban officials hope that a secondary effect of this will be to improve Cuba's balance of payments by boosting domestic production of staples such as soya and corn, thereby reducing imports from Brazil.
The agreement indicates that the Cuban authorities are continuing to attempt to improve efficiency, productivity and output from the agricultural sector, which has disappointed in recent years and failed to meet official targets. It also follows an 2012 agreement between Brazilian company Odebrecht and the Cuban authorities to invest an initial US$60m in a sugar mill in the southern province of Cienfuegos. The involvement of Odebrecht, which is also involved in the US$800m construction of an industrial container port at Mariel near the capital, Havana, is expected to bring more modern equipment and management techniques to revive the industry. It is hoped the latest agreement will have a similar effect.
Impact on the forecast
The latest agreement supports our forecast for the agricultural sector to stage a moderate recovery in 2013-17. Its impact on Cuba's balance of payments is likely to be minimal in the short- to medium term and therefore does not have an impact on our forecast.
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