Cuban Tobacco Growers Denounce State ‘Manipulation’ of Their Prices

Cuba authorities have notified producers that they can charge for the product at the current price, without committing in any way to making a later retroactive payment. (14ymedio)

14ymedio bigger14ymedio, Havana, August 10, 2021 — The tobacco farmers of San Juan y Martínez have run out of patience. With the product picked and without news of the announced price increase, Pinar del Río farmers have sent a letter to the country’s top leaders denouncing a possible manipulation of the information provided to them in order to keep them calm and prevent them from scrapping the planned harvest.

The producers, who supply the State with threaded black tobacco and shade-grown tobacco, to be rolled into cigars and exported, explain that the rise in prices that occurred at the beginning of the year with the Ordering Task* affected the entire sector. As they have complained on numerous occasions, January 1, 2021 arrived without a price having been provided, and it was decreed without having the cost sheet (the model where the necessary data is collected to calculate the planned unit cost of a product or the provision of a service).

Production prices skyrocketed throughout the supply chain: fuel went from 2 to 14 pesos, motor oil from 3 to 55 pesos, machinery tripled in cost and, of course, the wages of hired workers increased. But tobacco only doubled, from 2,560 pesos to 5,641.

The growers explain that, in the midst of this scenario, delays in bank loans during the first quarter of the year ended up sinking them, because, in the best case, most of them had to go into debt or sell assets in order to push on.

“We took all these economic measures in order to be able to continue the harvest — despite the fact that it was easy to see the low profitability between costs and the established price — because we were already in the middle of a process that is our reason for being, and our livelihood as farmers,” they say.

But their effort was not rewarded. Although they submitted their complaints described above, the officials of the Saiz Brothers Collection and Benefit Company, the leaders of the Agriculture of San Juan y Martínez and the cooperative assemblies assured them that the State was going to create a new cost sheet to set another price more in line with the reality of the country. Producers relied on this and continued to work amid the growing difficulties.

Tobacco harvested in San Juan y Martínez this year, when it was still not known what price the State would pay for it. (Facebook)

When, in February, the increase in some stockpile prices was announced “in order to increase production,” according to the authorities at the time, the tobacco growers were asked to be patient and wait until May due to “the complexity of the sector.”

“It was reported in various places that a new cost sheet and price proposal have been prepared by the state company since June, and that this was already in the hands of the ministries that are responsible for preparing and approving the resolution,” the producers wrote in their open letter to Miguel Díaz-Canel and the Minister of Finance and Prices, Meisi Bolaños Weiss.

But August has arrived and, more than a half-year having passed, patience has reached the limit, since the new prices have not only not arrived but the authorities have notified the producers that they can charge the product at the current price, without committing themselves in any way to making a later retroactive payment.

“This creates great uncertainty and distrust among the farmers as to whether the promised price increase is a serious commitment for this campaign or was a manipulative stratagem by the institutional framework that sought to avoid a decrease in production without taking into account the damages that it would cause to the producers and their families,” they charge.

The farmers categorically reject being paid at the current price and feel they are victims of a manipulation designed to make them work and produce normally, incentivized by a profit that is now not going to be realized.

“The State has an ethical, economic, and legal obligation to the producers, and to its own process of economic reorganization, to legislate a new pricing law that responds to the commitment assumed by the state company that represents it before the farmers,” they assert.

The signers demand that at least the two final conditions they set are met. First, an official statement about their case and situation; and second, the promulgation of the promised new law on tobacco prices, which will take effect with the payments to producers for the 2020-2021 campaign.

Last May, a producer from Pinar del Río told 14ymedio about their precarious situation. In his opinion, the Ordering Task left them “to face the peak of the campaign with credit based on a previous price deficient by 70%,” which “left people without money.”

The signers of the letter include several members of the Pérez family, who for at least three generations have grown tobacco on the La Isleña farm, located in San Juan y Martínez. The municipality is internationally known as the mecca of tobacco in Cuba for the quality of its product, which in the 1950s employed more than 5% of the island’s working population.

One of the most valued cigars in the world is produced in the Hoyo de Monterrey area, although since the 1960s the decline of the industry has been slow but unstoppable. In 2020, the last year with reported results, the Spanish-Cuban company Habanos earned 507 million dollars, 4% less than in 2019.

*Translator’s note: The so-called ’Ordering Task” — Tarea ordenamiento — is a collection of measures that includes eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency which must be in the form of specially issued pre-paid debit cards, and others, including measures relating to agriculture as discussed in this article. 

Translated by Tomás A.


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