Markets, Farms, and Communism

By Frank Muraca

One of the byproducts of the Green Revolution was the creation of commercial markets in the world agricultural industry. Developing nations moved from subsistence farming to large commercial production. This effect begs the question, did the technology in the Green Revolution create commercial markets, or were they made possible by the institutions of the individual countries. In this paper, I will use Cuba as a case example to help introduce an answer. Cuba’s unique agricultural industry during the 20th century reveal that the Green Revolution was not enough to sustain crop production after the fall of the Soviet Union, of which Cuba was highly reliant on for fertilizer. This conclusion implies that technology was not the primary factor in producing sustainable agricultural markets.

While the Green Revolution is most often associated with saving millions from starvation in India during the mid-20th century, the changes had measurable impacts across the globe. The introduction of new fertilizers, irrigation technology, and seed variety had a profound effect on the crop yields, especially in developing countries. In 1950, wheat yields remained steady just over 500 kg/Ha. By the 1990s, they were well above 2500 kg/Ha.

The uniqueness the Green Revolution is not just its universal impact, but also its impact on seemingly incomparable countries, including those who are either staunchly socialistic or capitalistic. Cuba, a country with rich history rooted in agriculture, showed definitive signs of yield improvements over the 20th century, for many of the same reasons as other countries impacted by the Green Revolution. From 1966 to 1986, rice production in Cuba jumped from 36 megatons per year to 371 megatons per year. It appeared that Cuba was benefiting from many of the same technological advancements as other developing nations. It would, however, be an exaggeration to say that the Green Revolution had precisely the same impact on agricultural yields in Cuba as it did in other countries. While a major crop, like rice, jumped in production, other key crops like soybean meal, wheat, and sugar did not show the same exponential pattern.

Measuring the impact of the Green Revolution on Cuba’s overall agricultural output poses a unique set of problems because of intense international involvement by other countries. Up until the 1959 revolution, the United States imported 33 percent of its total sugar from Cuba. On the other end, sugar accounted for 88 percent of the total value of Cuba’s exports, and accounted for a third of the national income, playing a direct role in fluctuations of economic activity. (Kay 1988) After the political fallout from the revolution, Cuban sugar production dropped from 7,588 mt/year to 4,149 mt/year. At the same time, the political realignment from the United States to the Soviet Union merely replaced the subsidies that propped up Cuba’s agriculture. Some researchers believe that the subsidy-dependent farming markets in Cuba barred them from creating a self-sufficient agricultural sector.  As one researcher writes, in the mid-20th century Cuba was “an agricultural country, without agricultural development” (Rodriguez 1987).

Despite simply producing more agriculture, the Green Revolution was considered a turning point in commercial production altogether. All of a sudden, businesses were being developed to produce food beyond subsistence need (Pretty 1995). Though there is a strong correlation between adoption of new technology and the creation of these markets, researchers have not conducted an in-depth study of whether the technology facilitated the markets, or if the national institutions were ultimately responsible for their creation. In addition, this study is further complicated by the possibility that effective institutions instituted stronger, more permanent technologies, rather than temporary fertilizers or grains.

Cuba’s unique situation begs the question whether or not the Green Revolution truly allowed for the commercial production of crops, as it did in India, or if they merely provided the tools to make it possible. What role did governmental institutions play in the formation of commercial markets? For the sake of simplicity, this paper will analyze the effects of the agrarian reform laws passed between 1959 and 1963 on the agricultural sector, and whether they facilitated or impeded the Green Revolution.

Cuba’s Green Revolution primarily involved using more advanced technology in the agriculture production process and importation of “intermediate goods” (Warwick 2001). Whether than allowing for businesses to be developed from the more productive farms that were taking advantage of new technology, the Cuban government effectively squashed any possibility of farm consolidation or ownership of large amounts of land.

When Fidel Castro came to power in 1959, Che Guevera was named head of the Instituto Nacional de Reforma Agraria, which was in charge of implementing post-revolutionary agricultural reforms. Between 1959 and 1963, a series of reforms were passed to reallocate wealth from the upper class to the middle and lower class. The May 1959 reform law eliminated what were called latifundios, which is translated to “large estate.” Latifundios were large commercial estates, and dominated the Cuban agricultural industry prior to the 1959 revolution. The law put limits on the number of hectares that could be owned by a single individual.

The reforms focused not only on shaking up the existing property structure, by breaking up the latifundios, and supporting more medium and small-sized farms, but also were intended to establish a genuine agricultural market. The goal was to break up the sugar monoculture, use import substitutions to support a national food strategy, and supporting ways of turning raw materials into consumable products (Rodrigo 1987).

Castro’s economic policies involved reforming its agricultural policies and to reduce dependence on the United States. Ironically, practices to reduce dependence on the United States were eventually replaced by economic dependence on the Soviet Union. By the 1980s, agriculture was the biggest economic sector in Cuba, and was the most mechanized in Latin America. However, some researchers believe that the Green Revolution did not even begin until as late as 1984, when the Soviet Union contributed to Cuban agricultural production, by encouraging the expansion of farm land, by establishing intense monocrop cultivation, and creating a dependence on imported fertilizer (Febeles-Gonzales, et. al 2010). It remains unclear whether or not the Cuban leadership could be credited for many of its agricultural policies, or if the dependence on soviet trade was largely driven by political intervention by the Kremlin. Even more broadly, the Green Revolution is even more largely interrelated with the spread of communism in the world, as written by Alexander Cottle. Cold War foreign policy played a role in how large nations influenced developing nations, as was the case between Cuba and the USSR. It’s unsurprising that the USSR created such firm trade relations with Cuba, as the geopolitics of the area would only become more important as the Cold War went on.

While politically, reforms were meant to fulfill promises of property redistribution, the new government also made investments in agricultural infrastructure. Between 1960 and 1985, 26.1 percent of national revenue was put into irrigation technology, and other production technologies (Rodrigo 1987). Though investments in permanent technologies, such as irrigation, should have sustained the Green Revolution in Cuba, the commercial infrastructure that efficiently allocated those resources were never allowed to develop. In fact, the reforms that were introduced in 1967, continued to suppress any effort a private allocation of resources and increased state dominance in the agricultural sector.

Access by state farm workers to small land plots was reduced, if not eliminated, and the government launched a campaign to persuade private farmers to sell their land to the state. Between 1967 and the early 1970s the state purchased about 30,000 peasant farms, in some cases compulsorily. After 1970, farm sales slowed down considerably. Farm prices were lowered, resulting in an expansion of black market activity. As monetary calculations were downgraded, state enterprises neglected production costs. Interest charges were eliminated as well as the remaining taxes which farmers used to pay. Wages on state farms were no longer tied to productivity as time-rate instead of piece-rate payments were the order of the day. Wage differentials were also reduced, for the goal was egalitarianism. (Kay 1988)

Under the Castro system, agricultural policies were effective at redistributing the wealth from the rich to the poor. Field systems were broken up and large landowners were forced to give up their assets. At the same time, the Cuban trade system was heavily reliant on a foreign communist power that wanted to retain influence in that region of the world. Under the trade agreements, Cuba was able to increase agricultural yields, as many developing countries were able to during the time. However, we have yet to determine if the agricultural policies limited the sustainability of the Green Revolution after liquid imports became less abundant.

Findings

Though Cuba had the technology necessary to experience its own Green Revolution, many of the gains from yield growth were lost after the fall of the USSR. Overall, this is evidence that Cuba never developed its own markets to sustain the innovations of the Green Revolution.

…The nonexistence of a national agricultural extension system that could motivate producers to innovate, no training system able to counteract the lack of grower awareness with which to assimilate the new technologies, and inadequately multiplying and spreading results, among other things, were some other difficulties that limited adoption of new technologies in Cuban farming (Febeles-Gonzales, et. al 2010).

Some researchers dispute this conclusion, citing evidence that despite the economic fallout from the collapse of the Soviet Union, Cuba was able to maintain high yield rates in some sectors of its agricultural industry. (Alvarez 1994)

“…As the state intervention decreases over agricultural production units, the quantity and quality of output increases despite a decreasing access to factors of production and other resources.” (Alvarez 1994)

Despite his conclusion, Alvarez finds that Cuban farms had varying access to vital production factors. State-run farms were often restricted in their use of fertilizers or certain types of crops, whereas more private farms had more freedom to innovate and experiment. As a result, private farms produced at near pre-collapse levels even into the 1990s. Interpreted a different way, this conclusion only reinforces the hypothesis made in this paper. Private farms, as an institution, were better able to utilize the technological improvements of the Green Revolution. If this were true, then specific policies that restricted private farming would have hurt the permanency of the Green Revolution. Through limitations of ownership and resource allocation, entrepreneurial farmers were unable to effectively utilize the technology of the Green Revolution – and thus sustain its permanent success.

Since the There is competing evidence from recent studies that show increase in commercial farming after more decentralized policies were introduced in the late 1990s. (Altieri 2012) In some ways, these policies helped Cuba to return to an agricultural institution before involvement in the USSR. Though Cuba continues to struggle in some aspects of its crop output, it has seen a marked improvement since after the collapse of the USSR.

While Cuba is one example, it displays the importance of institutions in creating commercial agricultural markets. The Green Revolution is often credited with allowing developing countries to break out of subsistence farming, but this conclusion is only half the story. Agricultural industries in more democratic nations were able to utilize the technology in a way that would permanently increase their yields. In the case of Cuba, we can see that technology from the Green Revolution alone did not lead to the kind of market-based agricultural growth that is so often associated with the time period. Cuba’s reliance on foreign inputs to sustain its growth is testament to this claim.

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