Capped Prices for Chicken and Five Other Products Take Effect This Monday in Cuba

The Cuban Government will update prices when necessary and may include other goods

Prices in the private market Flores, at Escobar and Reina, Central Havana, this Monday / 14ymedio

14ymedio bigger14ymedio, Havana/Madrid, 8 July 8, 2024 — The Cuban Government has acted to exempt from tariffs the import of six basic products whose prices will be high: chicken, powdered milk, cooking oil, sausages, pasta and detergent powder. The resolution was published in the Official Gazette on Monday, July 8 — though dated Tuesday the 9th. It will go into effect “from its publication” so beginning this Monday the products should be sold at no more than the maximum price marked.

According to the table that accompanies the Resolution, the cap on the price of chicken is 680 pesos per kilo; a liter of oil (except for olive oil) should cost 990 pesos; a kilo of milk powder 1,675 pesos; pasta, 835 pesos; sausages 1,075 pesos; and detergent 630 pesos.

“In the formation of the retail prices of these products, economic actors recognize up to thirty percent (30%) of profit margin on costs and expenses, provided that they do not exceed the defined prices,” the text says. It also specified that, if at the time of the regulations go into effect, an establishment has prices lower than the maximum allowed by the State, it “does not imply or justify an increase in the prices of these products,” although there is no prohibition either.

The measure’s purpose, the document states, is to “contain the price levels of certain products of high impact on the population, through the exemption from the payment of the Customs Tax for their imports and the central establishment of maximum retail prices.” It took center stage at the end of June, when the Government wanted to cap the prices of those six products in private stores.

If at the time of entry into force an establishment has prices lower than the maximum allowed, “it does not imply or justify an increase in the prices.”

The announcement spread like wildfire on independent and local administration networks, and July 1 was given as the date of entry into force. Although nothing had been announced about the tariff exemption, it was one of the demands made by the entrepreneurs in their meeting with the authorities. The confusion meant that most of the products with allegedly capped prices disappeared, at least between Monday and Tuesday of last week, according to 14ymedio.

On Tuesday night, the state press confirmed that the measure had not yet entered into force, but that it would do so sooner rather than later. The Deputy Minister of Finance and Prices, Lourdes Rodríguez, said on Canal Caribe that the decision was made, but they still had to “continue the exchanges with the economic actors, about the realities they face in their import, transport and marketing processes, as well as attend to the opinions of the population.”

Although no specific date was offered, people felt that the rule was imminent. In addition, on Wednesday, an audio of one of the meetings between the official and the private sector was leaked, in which the businesspeople showed their concern about the high cost of acquiring the goods and fuel for transport. The state press pointed out that when the measures became official, they would be published in the Official Gazette to inform the population, which happened on Monday.

Despite the fact that the initial impression given was that prices would be determined in each territory by the local administration, the caps are completely centralized, although the Resolution warns that they will be reviewable.

“The Ministry of Finance and Prices, in coordination with the Ministries of Foreign Trade and Investment and Internal Trade, is responsible for periodically observing the behavior of the import prices of the goods referred to in this Resolution, to determine the corresponding updates in their maximum retail prices and to include other goods,” the text says, highlighting the possible price volatility, with the corresponding uncertainty this may bring.

Imports of chicken from the United States amounted to 23.99 tons, 17.8% more than in April

In Havana, chicken had returned to the stores after two days of being “hidden” because of doubts about the price cap. According to this newspaper, the approximate price per kilo was around 630 pesos, below what it may be from now on.

The information comes on the same day that the data on chicken imports from the United States for the month of May became known, whose volume amounted to 23.99 tons (17.8% more than in April). The increase in the cost of a pound to $1.34, compared to $1.20 the previous month, caused the value to grow by 32%. The figures reflect, according to Cuban economist Pedro Monreal, “the usual oscillating trajectory of monthly exports of chicken meat from the United States to Cuba.”

The expert has observed that between January and June 2024, the purchase volume decreased by 2.6% (106,368.5 tons) compared to the same period of 2023 (111,583), although the cost increased by 15.9%; that is, fewer tons at a higher price in the first five months of 2024. “The instability in U.S. chicken exports to Cuba in a context of an upward trend in the unit value (dollars/ton) could be aggravated due to an eventual decision of fixed caps on profits and prices in Cuba,” the professor warned minutes before the Resolution was made public.

Among the businesspeople, who are afraid of this measure, last week there was a great fear of not being able to come to an agreement with their suppliers. On the street the concern is that the products will go to the black market, where they will be even more expensive. Pending the reaction of the private sector – and while the extension of the measure to state foreign exchange stores is still not announced, despite the discourse of unitary policy “for all economic actors” – the price of the dollar on the black market continues to fall and stands today at 340 pesos. In the words of an entrepreneur – before the exemptions were known – “if you sell dollars, no one here will care anymore.”

Translated by Regina Anavy


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