Cuba: Private Businesses Are Finishing Off their State-Run Counterparts in Sancti Spíritus

State-run food service establishments have not been able to get cooking oil, pork and other products they need to operate.

14ymedio bigger14ymedio, Havana, 30 October 2023 — Government officials in Sancti Spíritus blame small and medium-sized privately owned businesses (MSMEs) for the debacle of the province’s food-service sector. In an article published on Monday in a state media outlet, they point out that, when it comes to the competition between MSMEs and state-run establishments, there is simply no comparison. The state, they explain, has ended up helping the former at the expense of their own businesses, which have been left to languish.

Rafael Aguado Rodríguez, director of Food Services for the Retail Business Group, told the provincial newspaper Escambray that it is becoming increasingly difficult for state-run operations to get by. The differences in the ways the private and public-sectors manage their businesses have yielded enormously divergent results.

The critical factor is the way raw materials are obtained and later sold to customers as finished products. “We have to buy them on the open market at the going rate, which determines what we can sell, which is always less than what a private restaurant provides,” explains Aguado, who acknowledges it is impossible for any money-losing business to stay afloat for long.

To make matters worse, he adds, food-service workers are constantly migrating to the private sector where “they can earn as much in one week as they earned in a month at their previous jobs.” The basic monthly salary of a state-sector worker is 2,500 pesos so it stands to reason that, in a country where a carton of eggs costs 3,000 pesos, they would look for more lucrative options.

Aguado also points out that, although his company hires new Food Processing and Food Service graduates every year, they end up leaving state-run facilities sooner rather than later in search of better working conditions which, he acknowledges, they usually find in the private sector.

He claims the public sector has tried to find a solution to the employment problem but, since the establishments which are still in operation generate few if any profits, they are not in a position to offer financial incentives to the remaining workforce.

Though food-service companies have been self-managed for years, the structural problems that are contributing to the current economic crisis make it difficult for them to find suppliers. Government leaders thought that, with the emergence of MSMEs, many of which import a wide array of raw materials and food, the public sector would finally get a break. But new banking regulations soon dashed those hopes and the the surging growth of the private sector is, unfortunately, not making life any easier for them.

For example, state-owned businesses are required to pay for any transaction over 5,000 pesos digitally. As a result, paying their private vendors, who will only accept cash, has had its “complications” and they have begun to lose suppliers.

Escambray claims that the difficulties the sector is experiencing could be resolved with motivation and a “culture of detail.” As it points out, however, “for more than a year, state-run food service establishments have not been able to get cooking oil, pork and other products, without which they cannot operate.”

In fact, given the steep decline in imports, the disaster that is domestic production and the fuel crisis, it is likely that the food-service sector has reached the point of no return. On Sunday, state media announced that almost 200 food production operations in Holguín province will begin using wood-fired ovens in an effort to conserve energy.

The “energy contingency”, as the newspaper Trabajadores (Workers) describes it, has also forced the more than 2,800 employees at these facilities to stop working during peak hours to save electricity. As for the ’firewood’ needed to operate the ’refurbished’ ovens, they will have to make do with sugarcane husks and coconut shells.

Just as state-run establishments close, newly minted entrepreneurs with greater financial resources are taking over the food-service market. Every week, they open bars and restaurants in the same locations that government-run companies had previously controlled. The Havana restaurant La Carreta, which had remained closed for seven years, reopened in June under private management.

However, the press has overlooked the obstacles that private businesses frequently encounter and the government’s efforts to keep them under control. From the time a would-be business files its first application to its launch, owners must pass ideological tests required by the regime, which is looking for individuals who can relieve them of their responsibilities but without the risk of having to deal with “problematic” businesspeople. Additionally, there are the difficulties of having to pay for things with foreign currency and of managing a dollar-based business in a country where the government refuses to let the few dollars it collects circulate.

In spite of this, owners of privately run restaurants seem to be making headway on the island. But while they have gained the support of the regime’s most senior officials, they still face resentment from low-level provincial directors, who see them as invincible competition.


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