HAVANA , Feb 16 (Reuters) - Cuba's non-sugar agricultural production increased 8.7 percent in 2011, the government said this week, an indication reforms aimed at reversing a farm crisis and cutting food imports may be kicking in.

Produce output was up 11.5 percent and livestock and related products 6 percent, according to the report issued by the National Statistics Office on its Web Page (www.one.cu).

The upturn followed a 2.5 percent decline in 2010.

The cash-strapped country is still producing less food than in 2005 and importing 60 percent to 70 percent of what it consumes at an estimated cost of $1.5 billion to $2 billion annually.

Food prices increased 20 percent in 2011 as limited market reforms, higher prices paid by the state for agricultural products and a slight reduction in imports countered the increase in domestic output.

President Raul Castro, looking to cut imports and supply a growing food-service sector, has made increasing food production a priority since he took over for his ailing brother in 2006.

Castro has decentralized decision making, opened more space for farmers to sell directly to consumers, leased small plots of fallow state lands to 150,000 would-be tillers and raised prices the state pays for produce, but to date has stopped short of allowing market forces to take hold.

"There is no doubt increased investments in key imports such as rice and beans are now showing results," a local agricultural expert said.

"But it is too early to say reforms in general are working as the figures could simply reflect there have been no hurricanes in three years," he added, asking his name not be used due to restrictions on talking with foreign journalists.

Looking at two key imports and Cuban staples, domestic production of rice was up 43.7 percent while local output of beans rose 66.1 percent. But at the current rate, that would only account for perhaps 20 percent of the 700,000 tonnes of rice and hundreds of thousands of tonnes of beans consumed annually.

Corn, another key import, saw domestic production rise 9.1 percent. Cuba does not produce wheat and has only begun to produce soy on an experimental basis with Brazilian assistance.

Output of export crops, from sugar and coffee to tobacco, citrus and cacao remained at historic lows.

While the government still assigns farmers crops, monopolizes food distribution and the supply of critical farm inputs, the report indicated a higher percentage of produce was being sold by farmers directly to consumers.

Huge state farms and cooperatives continue to sit on fallow land and despite controlling some 60 percent of the arable land produce just 30 percent of the food.

Most Cuban farmers praise Castro's measures and promises to allow market forces to play a bigger role in the future, but complain bureaucracy and vested interests are holding back progress. (Reporting by Marc Frank; Editing by David Gregorio)

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