by William A. Messina, Jr. and Ariel Singerman,

UF/IFAS Food and Resource Economics Department

and CREC Lake Alfred.

THE CUBAN CITRUS

INDUSTRY

Presentation to the

2018 International Citrus and Beverage Conference

Clearwater, Florida, September 19, 2018

CUBA IS A LARGE ISLAND!

90 MILESHAVANA

NUEVITAS

GUANTANAMO

ISLE OF YOUTH

(ISLE OF PINES)

JAGUEY

GRANDE

A LONG HISTORY OF

CITRUS IN CUBA

• Citrus seeds from the Canary Islands were brought to Haiti during Christopher Columbus’ second voyage in 1493

• Citrus was introduced from there to Cuba and then to Mexico and Central America.

• Through the 1800s, citrus spread throughout the island

mostly in patios of country homes

shade for coffee growing

very limited commercial plantings.

EARLY 20th CENTURY – TWO

IMPORTANT INFLUENCES

1. Freezes in Florida in 1890s

2. In the late 1890s, Spanish-American War (< 4 mo.),

Cuba-Spanish-American War (> 4 years)

• U.S. tried to exert its influence in Cuba.

• Early 1900s the Cuban Land and Steamship Company began promoting land sales in Cuba for the establishment of American colonies in Cuba

• 2½ to 40 acre plantation plots

• homes and business plots

CUBAN LAND & STEAMSHIP CO.

• Launched by “some of the most successful and shrewdest business men of New York . . .”

• A colony “for Americans only, in one of the choicest, most beautiful and fertile spots on the most fertile island in the world.”

• “real estate experts are in Cuba buying choice [agricultural] land with the sole object of making all of this land worth fifty times its present value.”

• “the most gigantic and liberal colonization enterprise in the history of the world.!”

EARLY 20th CENTURY

• 1900 a ship arrived in Nuevitas (in eastern Cuba) with more than 200 Americans who were preparing to establish the first American colony in Cuba

• they arrived to undeveloped mangrove swamps

• By 1903 – 37 American colonies in Cuba

• By 1913 – 64 colonies in Cuba

• In 1920s – approximately 80 foreign colonies, mostly American but also included English, Canadian, Scandinavian & German settlers.

• Most in eastern Cuba and the Isle of Pines (now the Isle of Youth) off of Cuba’s southwestern coast

• Colonies produced vegetables and citrus

• In 1905 Cuba began to export citrus to the United States, particularly grapefruit.

• Cuban grapefruit exports to the U.S. peaked in 1922 at about 520,000 boxes.

• On the Isle of Pines (today Isle of Youth) settlers from the United States had developed:

• extensive grapefruit plantings and related facilities;

• two modern packing houses.

EARLY 20th CENTURY (continued)

• Cuban Revolution in 1959 – brought about expropriation of large and medium sized farms and consolidation into immense State Farms, but this had relatively little impact on citrus acreage or production levels.

• Lykes-Pasco had extensive groves and facilities on the Isle of Youth that were expropriated in the early 1960s.

• 1968 – National Citrus Program launched by the Cuban government (with Soviet investment) and a target market of the Soviet Union and Eastern Europe.

Fruit consumption in Soviet Union and Eastern Europe was low and Soviets offered high prices for Cuban citrus.

LATE 20th CENTURY

CUBAN GRAPEFRUIT HARVEST - 2007

CUBAN GROVES (early 2000s)

JUICE

PROCESSING

PLANT AT

JAGUEY GRANDE

GROVES AT

JAGUEY (early 2000s)

GROVES AND

HARVESTING(pre-HLB)

http://www.radio26.cu/2017/09/17/en-el-suelo-pero-con-vida/

POST-

HURRICANE

CUBAN CITRUS PRODUCTIONPeak In 1990 Cuba was the

third largest grapefruit

producer in the world

after the U.S. and Israel

CUBAN CITRUS PRODUCTIONSoviet Union collapse

CUBAN CITRUS PRODUCTIONIsraeli investment

CUBAN CITRUS PRODUCTION

Hurricanes

2008 HURRICANESMORE TYPICAL

HURRICANE PATH

HURRICANE

IKE

CUBAN CITRUS PRODUCTION

Smaller recovery

in 2009

CUBAN CITRUS PRODUCTION

HLB spreads and

soon after

Israeli investment

departs

CUBAN CITRUS PRODUCTION DECLINES,

1990 TO 2017 - BOXES, METRIC TONS & %

BOXES METRIC TONS

1990 2017 1990 2017% Decline

1990 to 2017

Oranges 14,743,016 748,402 601,854 30,552 94.9%

Grapefruit 8,640,760 1,097,923 333,157 42,332 87.3%

Lime 1,497,440 236,142 61,130 9,533 84.4%

TOTAL

CITRUS25,354,054 2,474,118 1,015,873 98,761 90.2%

CUBA’S CITRUS HARVEST SCHEDULE

Au Se Oc No De Ja Fe Ma Ap My Ju Jly

Red

Grapefruit

White

Grapefruit

Early

Oranges

Valencia

Dancy

Eureka

Lemon

Persian

Lime * * * * * * * *

Source: MINAG

* = small production

volumes

CURRENT SITUATION

• Cuba continues to seek low-tech, low-cost

ways to address HLB.

• They continue to replant trees.

• They continue to seek foreign investment in

citrus.

• But they also continue to convert land from

citrus.

FUTURE PROSPECTS?

Depend on:

• Ability to develop ways to deal with HLB?

• CAPITAL investment. (They have LAND and they

have LABOR . . . )

• Very limited ability to generate domestic sources of

capital and limited lending channels

• Foreign investment is key!

FOREIGN CAPITAL

• Some very successful foreign investments in Cuba,

typically as a joint venture with the Cuban

government as majority partner:

• Tourist hotels

• Meliá Hotels (Spanish)

• Sheraton

• Mining (nickel)

• Sherritt International (Canadian)

FOREIGN INVESTMENT in AGRICULTURE

• Largely limited to export crops (because of limited

“effective” domestic demand)

• Citrus – most foreign participation in production is

gone

• Shellfish

• Rum

• Cigars

• Greenhouse vegetables (unsuccessful)

• Sugar (recent)

IMPORTANCE OF CAPITAL

• $2 to $2.5 BILLION per year in foreign investment needed

to achieve goals for economic growth!

• Foreign investment laws are evolving but are not yet up

to international standards.

• Cuban government is promoting foreign investment.

• Opportunities for investment of $180 million in citrus

production and processing

CUBAN INVESTMENT

OPPORTUNITIES IN CITRUS

• $152 million partnership – to develop 14,600 acres of citrus

over the next 5 years for fresh and processed markets.

• $15 million joint venture – for processing of concentrate,

single strength juices, pulp and essential oils.

• $7 million joint venture – to develop 7,000 acres of citrus and

700 acres of tropical fruit trees, and a plant for processing

juice, pulp and preserves.

• $5 million partnership – to develop processing for juice,

concentrate and essential oils with organic

certification.

FUTURE PROSPECTS?

• Cuba could be a niche player in certain citrus markets.

• They have organic certification for export to EU.

• Oranges are very sweet (25+ ratio).

• A role for early season grapefruit?

• Essential oils?

• Could become an important tropical fruit supplier? But

requires investment.

• Until such time as Cuba has access to the U.S. market,

prospects for significant FDI would appear

to be limited.

THANK YOU!

Bill Messina

University of Florida/IFAS

Food and Resource Economics Dept.

Email: wamess@ufl.edu

Voice: 352 294-7656