A New-style Cuban Cooperative Hopes Road to Success Is Paved with Spices

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When Carlos Fernández-Aballí and his fellow Cuban entrepreneurs were hatching a business plan, they knew they wanted their product to be sustainable, technology-driven and a substitute for something the island currently imports.

To the group behind Sazón Purita, the road to riches seemed to be paved with garlic — specifically garlic grown in Cuba and then dehydrated and sold in small packets. Garlic finds its way into most Cuban dishes, and the spice is so coveted that some garlic farmers have become millionaires.

“Garlic is a big business in Cuba. It is like white gold,” said Fernández-Aballí, who got a degree in engineering design from the University of Bristol in the United Kingdom and then, after returning to Cuba in 2006, earned a Ph.D. A head of garlic that costs 20 to 30 cents at harvest can rise to 10 pesos by the end of the year, he said, so dehydration made sense.

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The young entrepreneurs designed the dehydrating equipment themselves, and in 2013, Sazón Purita became Cooperativa Industrias Purita. The enterprise is now run by 14 cooperative members.

In Cuba, there have been agricultural cooperatives for decades. Although their numbers have been falling, there are still more than 6,000. More recently, the government has been turning over beauty salons, barber shops, restaurants and other service businesses to workers to run privately as cooperatives because they’re considered a drag on the government’s limited resources.

Most non-agriculture co-ops are conversions of former state enterprises, said Ted Henken, a Baruch College sociology professor who studies Cuban entrepreneurship. The number of cooperatives is still tiny: Only about 500 have been approved, and at mid-year, 347 were in operation.

500 estimated cooperatives that have been approved

About 23 percent of cooperatives are start-ups like Purita, Henken said. Fifty-nine percent of non-agricultural cooperatives fall into the commerce and food, technical and personal services categories, and about 10 percent, including Purita, are categorized as light industries, he said.

It turns out the Purita entrepreneurs were on the right track with dehydrated spices, but they couldn’t get enough garlic at certain times of the year to make the business feasible. “Everyone wants to keep garlic in storage” until later in the year and speculate, said Fernández-Aballí.

Sourcing its produce from organic farms and small urban agriculture producers, the co-op branched out last year to 14 products — including dehydrated parsley, chives, coriander, tarragon, basil, rosemary and oregano, and even dehydrated peanuts, bread crumbs and fruit. They also process garlic when they can get it.

Currently, the cooperative is producing 18 tons of dried peanuts and 1.4 tons of dehydrated spices, but it has the capacity to become far larger and produce up to 100 tons of dried garlic annually. It’s in the process of ramping up to produce 20 tons of dried fruit and spices.

The cooperative received a business loan from a Cuban bank for 985,000 Cuban pesos, the equivalent of about $41,042, and it has a small organic farm that produces some of its spices.

Purita has been selling its spices in small cafes and cafeterias around Havana, but in late July, it made a breakthrough: The government agreed to stock Sazón Purita-brand products in five Mercado Ideales, peso retail stores in Havana.

But the cooperative has even bigger plans. Eventually, it would like to sell its 100 percent natural dehydrated products in the United States. “We believe it’s possible,” said Fernández-Aballí.

Under the commercial opening to Cuba outlined by the Obama administration, independent Cuban entrepreneurs are allowed to sell some products in the United States, but at the moment, the list of permitted products doesn’t include prepared foods.

Fernández-Aballí said the Cuban government is preparing a packet of laws that will help private enterprise, including making it easier for cooperatives to link to companies abroad. “The goal is not to put the brakes on the process,” he said.

Organizing the co-op and working through the many obstacles a private entrepreneur faces in Cuba hasn’t been easy, acknowledged Fernández-Aballí. “We just put our heads down and smiled,” he said, “but now we have friends assisting us with the process.”

“He’s a highly educated guy,” said Henken. “He’s also well connected and perhaps well protected.”

Among the problems the cooperative members have had to work through are overestimating their capacity, which necessitated a renegotiation of their loan. Cuba’s unwieldy dual currency system where 24 Cuban pesos equal one Cuban convertible peso has been difficult, as has finding professional packaging for the spices. Packaging spices can be tricky, said Fernández-Aballí. If not done properly, the spices can rehydrate.

“All this slowed us to a point where we have a cash deficit problem,” said Fernández-Aballí. But the cooperative is slowly digging out. Next year, he said, Purita products will be professionally packaged.

Fernández-Aballí presented the Purita case study during an Association for the Study of the Cuban Economy meeting in Miami on July 30. Afterward, Arch Ritter, a Carleton University economist and co-author with Henken of the book Entrepreneurial Cuba: The Changing Policy Landscape, said, “I’m worried about your cash deficit.” But at the same time he praised the Purita group as “confirmed entrepreneurs.”

Talent and entrepreneurship are abundant in Cuba, Ritter said. There are currently about 500,000 privately employed Cubans.

The current wave of entrepreneurship, Ritter said, began to take root in the early 1990s during the special period, a time of economic crisis in Cuba after the collapse of the Soviet bloc. Cubans had to begin to come up with their own income and start small side businesses to survive. They began selling what they didn’t need or want from their ration books or engaged in black market activities.

Fernández-Aballí, 31, missed most of that era. When he was eight, his family left Cuba to live in Caracas, where his father held a post in UNESCO. From there, he went to England to study engineering before returning to Cuba in 2006. Fascinated by renewable energy technology, he got his Ph.D. and began teaching at CUJAE, Havana’s technical university.

He was always attracted to entrepreneurship and technology, he said. The first venture Fernández-Aballí was involved in was a transnational cooperative based in Barcelona that included Cuban, Spanish and Belgian associates. Founded with international prize money, its goal was to create low-cost, technologically appropriate housing with local materials for the homeless and low-income people.

“The taxes in Spain ate us away,” he said. “Thirty-thousand euros in prize money was not enough. We didn’t understand that then, but we do now. You probably need three times that amount to start something in Spain.” Also, trying to manage a transnational concept with Cuba’s poor Internet access was too hard, he said.

Before hitting on the garlic idea, he and his associates thought about starting a catering enterprise but realized there were too many holes in the Cuban supply chain to make it feasible. “Garlic is everywhere,” said Fernández-Aballí. They started the business after coming up with a prototype dehydration machine in early 2012.

The cooperative members meet once a month to make group decisions and vote. Each has a vote regardless of their contribution to the co-op. Profits are supposed to be shared according to the complexity, quality and quantity of work by each individual.

“We’re not pretending to be a company,” Fernández-Aballí said.

Cuba, the Most Desired Destination for U.S. Celebrities and Politicians

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Since Obama announced the normalization of relations, the flow of Americans visiting the island has not stopped

Before leaving Lair, one of Havana’s most famous paladares, the American comedian Conan O’Brien stopped at the many photos of celebrities hanging on the walls.

Beyonce and Jay Z, Kevin Spacey, Naomi Campbell, Jack Nicholson … The list of American stars who have posed in the restaurant is long. And that data, in large part, is from long before US President Obama announced the normalization of relations with Cuba on December 17

O’Brien, a few days ago issued the first US late night recorded on the island in half a century , took a picture of himself and hung it in the middle of the photo collection.

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“I cannot wait to return to Havana,” O’Brien said. He’s not alone. Several companies have already begun, or are actively preparing for it, like increasing charter flights to the island from various parts of the US, including New York. It is also expected that commercial  airlines will soon begin to offer regular flights to Cuba.

The Cubans, the visitors say,  are excited about the policy change after half a century of tension and hope that this will improve their conditions.

“I was impressed with the overwhelmingly positive reaction among Cubans we saw, including some openly critical of the Cuban Government, the decision of President Obama to restore diplomatic relations with Cuba,” Senator  Patrick Lehay told a local newspaper.

Two months later, Nydia Velázquez also traveled to Havana along with half a dozen other Democrats, including former President of the House of Representatives Nancy Pelosi. They were received by Foreign Minister Bruno Rodriguez, and vice president Miguel Díaz-Canel, possible successor Raul Castro. But what most impressed Velazquez, like Leahy, was the popular welcome she received.

“Seeing the face of joy in Cuban, that face, that sense of welcome us with open arms was an amazing, spectacular thing,” said Velazquez, who 21 years ago introduced the first bill to end the embargo on Cuba.

Both Leahy as Velázquez are aware that, until the embargo is lifted, most Americans cannot see with their own eyes that joy. None dares to predict the end of a measure considered a “failure” by Obama but which hold more than a few congressmen, in whose hand is lifting.

While programs like O’Brien will whet your appetite for an imagined and desired by many Americans travel. The comedian was defined as part of a “first wave” of American travelers. Few doubt that sooner or later will come again.

Politics and Prose, one of the most iconic libraries Washington, is ready for it. “Cuba! Read this before you go, “reads the sign on the table dedicated to books on the island, from Hemingway to Padura. And, of course, several guidebooks.

Shooting Guantánamo in The New Cuba

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It has been more than five decades since Ivan Acosta has lived in exile, but this year, his dream of returning to his birth land and finally filming a movie is closer than ever to coming true. He will be making history, as no other Cuban-American director has ever been able to film on the island.

In 1979, Ivan Acosta became a legend with his humorous, but tenaciously raw tale “El Súper” about the emotional tragedy of an immigrant family. Since then, he has not ceased to create wonderful, compelling stories like “Amigos”, “Rosa and The Executioner of The Fiend”, “Candido Hands of Fire”, and “How to Create Rumba”. He is a playwright, a composer, a musical producer, a film and a theater director and was the founder of The Cuban Cultural Center in New York, perpetually advocating for his roots and culture.

GJS: Tell us about your new project “Guantánamo”, which has been in the making for close to thirty years.

IA: “Guántanamo” is based on real events. Thirty years ago I met this man who told me his experience swimming across Guantánamo bay with his two children tied on his back. I decided I wanted to make a film inspired by that story. In 1984 we were going to produce the film in Dominican Republic, but the amazing event of Mariel exodus was all over the news, so producer Marcelino Miyares encouraged me to write about it and I decided to draft a different screenplay, “Amigos”, about a “marielito”, which is how they called Cuban refugees during that event. On April 1980, more than 10,000 Cubans in Havana broke into the Peruvian Embassy and asked for political asylum. Fidel Castro got very angry and declared that any Cuban who wanted to leave the island could do it if their family in Florida would go to the Port of Mariel to rescue them. About 130,000 Cubans left the island on the largest refugees exodus ever in this Continent; they all came to the United States.  During the summer of 1984, we started filming, “Amigos” in Miami and New York. I put “Guantánamo” aside again, and waited all these years, till now.

 GJS: When you compare old drafts vs. new drafts of this project, how has the story evolve?

IA: Well, the first draft took place during the 70s, when Cuba was going through a lot of international activities, including the war in Africa: Angola, Ethiopia, Mozambique, Namibia, and Eritrea. The last version takes place during the “Special Period”, when the Soviet Union collapsed, and every body thought Cuban communist regime would also collapse, but it didn’t happen. It has been one of the worst periods of the 57 years of Castro’s revolutionary government. A lot of interesting stories happened during those hard years.

GJS: When and where are you planning to film in Cuba, and what is this process like?

IA: We are trying to start pre-production around December of this year. Ideally, we would like to film in the Guantánamo area, where the story takes place. The location includes the City of Guantánamo, the beautiful rural areas in Oriente, and some spots near the long fence that separates Cuban territory from the American Navy base at the entrance of Guantánamo bay. That area is covered with more than 50,000 personal explosive land mines.

In terms of the process, we are soliciting permits from the Cuban government through I.C.A.I.C. Cuban Institute of Cinematographic Industry and the Ministry of Culture. We have to be patient in dealing with Cuban bureaucracy, censorship and constant replacements of government officials. Assuming the Cuban government gives us green light to go ahead and film in the island, this would be the first time a Cuban-American film would be produced in Cuba with Cuban technicians and artists from outside Cuba and compatriots living the island.

GJS: Do you have a cast lined up yet and will local Cuban actors appear in the film?

IA: We do have a list with some actors and technicians living in Cuba and Cuban-Americans and Latinos living abroad. But nobody has been confirmed yet. We are also in contact with key personnel in Dominican Republic, in case we might have to do some filming there.

GJS: Most if not all your stories ruminate on the subject of Cuba. Can you express what it means to you to be able to go back to Cuba and film your movie?

IA: I left Cuba in 1961. I was very young then. Cuba has always been present in my life and in my creative endeavors in film, in theater, in music and in literature. To me it is a double dream. First, to be able to visit my own country after living in my beloved United States for more than 50 years now would be a dream come true and a personal realization. Second, to be able to film a movie about a real human drama based on a true story in my own land would be great for both, the Cuban government, whose message to the world now is about change and opening censorship, but also for Cubans living outside the island. It would mean for us to be able to go back and embrace our family, our friends, and our land without any fear of “reprisal” from the militant hard liners. “Guantánamo”, aside from having the potential to be a superb film, it would also mark a historical event.

GJS: Sounds like you would like to crate bridges to unite Cubans living in the island and outside. Given you are granted the green light to film in Cuba, what is next?

IA: Definitively. The real changes will come when the people of Cuba are able to walk, talk, dance and love, without any obstacle. And of course, when the two millions of Cubans living in the U.S. and several other countries, are able to return to the island without any political restrictions or fears.  I firmly believe, the film “Guantánamo” will help to create the bridge of love, respect, and freedom for all.

Your Editor Asks: Why won´t the Cuban government allow the free return of its expatriate citizens?  Whether to visit family, do tourism or make a movie? What are they afraid of in the era of Obama?

Investing In Cuba Remains ‘Very Risky,’ Panelists Say

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It was a full house at the Miami Herald and El Nuevo Herald’s CEO Roundtable titled “The Future of Cuba — Investing and Tourism,” where panelists spoke about the opportunities and risks involved in investing in Cuba on Tuesday, Oct. 6, 2015. C.M. GUERRERO CMGuerrero@elNuevoHerald.com

Exploring business potential on the Communist island has surged since December

The infrastructure is dated but so is the mindset

For now investors must get used to the state as the majority partner

Panelists at a CEO roundtable about the future of Cuba painted a mixed and ever-evolving picture of the opportunities — and risks — for businesses that want to invest in the Communist island.

“Cuba is like the Galapagos Islands,” Augusto Maxwell, chair of Akerman LLP’s Cuba practice told a standing-room only audience in the community room of the Miami Herald/El Nuevo Herald on Tuesday. He went on to describe a country in evolution, where what holds true today may not work tomorrow and where establishing a business remains a “very risky” endeavor.

But like other panelists in the morning program titled “The Future of Cuba — Investing and Tourism,” he said changes are occurring, though not as always as quickly or as efficiently as foreign investors would like. He pointed to the entry of Airbnb, the San Francisco-based company that launched its home-booking service in Cuba in April. Since it went live, Airbnb, has accumulated more than 2,000 listings, making it the fastest-growing launch in the company’s history.

But Airbnb’s entry into the island, Maxwell said, “was inconceivable a few years ago.”

Maxwell was among a group of Cuban experts — a lawyer, a bank president, an airline vice president, three travel and tourism executives and even a former U.S. senator — who debated the business potential on the island in a pair of panels that focused on investing and tourism in Cuba. Restrictions on both travel and business have eased since the Dec. 17 announcement by President Barack Obama and Cuban leader Raul Castro that the two countries would renew diplomatic ties and open embassies after half a century of frosty relations.

While the panelists steered clear of the political fireball that the recent rapprochement sparked in Miami, they all agreed on one theme: Cuba is still the great unknown. Those who venture there should be prepared to commit time, effort and capital without a clear or quick return on their investment.

Steven N. Zack, a partner with Boles, Schiller & Flexner and the first Cuban-American president of the American Bar Association, said he is often asked about the legal system in Cuba. His response? There is no legal system in Cuba because there is no due process and a businessman has to be willing to take a back seat to a government that acts as a majority owner in all enterprises.

He told the cautionary tale of a Canadian businessman who had invested on the island for almost two decades, until he was thrown in jail on corruption charges. The Canadian, Sarkis Yacoubian, spent more than two years in jail before being found guilty and expelled. His case is not unique.

“We know one thing for sure,” Zack said. “He didn’t get his business back. Raul Castro’s son-in-law did.”

He added that any time he asked a question of a Cuban lawyer during a recent law conference on the island, he never got a concrete reply. “The answer is always the same: Es muy complicado.” (It’s very complicated.)

Other panelists talked about the difficulties of dealing with an inefficient system that, even when trying its best, simply didn’t have the technology or infrastructure to meet business or tourism demand. Tessie Aral, president of ABC Charters, which has provided limited air and travel services to the island since 2000, said there aren’t enough hotel rooms to meet the surging demand. Casa particulares (or bed & breakfasts) have picked up on the demand.

But lack of rooms is only one of many obstacles, she added. Government bureaucracy is a problem, too, and any investor considering Cuba needs to “learn to work with their infrastructure but also their mindset.”

Cuba’s interest in opening itself up to the United States is all about economics. The island desperately needs about $2.6 billion a year in foreign investments. But, said former U.S. Senator Mel Martinez, opening the door “is not an invitation to business.” Martinez, who came to the U.S. as an unaccompanied minor in the Pedro Pan airlift, warned that the government rhetoric may havechanged but the rules of the game haven’t. He expressed dismay that the U.S. had made too many concessions.

“What did we give? What did we get? What should we have gotten?” he asked.

Zack compared the complicated relationship between the U.S. and Cuba — and their respective business interests — as a complicated dance in which the first step has been taken but the question remains: Do potential American investors truly have a partner in Cuba?

“My position is we should engage in the dance,” he said, “but we shouldn’t dance by ourselves.”

First published in The Miami Herald.

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