The Agricultural Development Development Fund Has Been a Failure

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 3 October 2022 — One of the most resounding failures of the 63 measures approved by the Cuban communist regime to increase agricultural production has been the so-called Agricultural Development Fund. One year after its creation, the balance sheet cannot be more demoralizing. The official state newspaper Granma explicitly recognizes it when it points out that “in Ciego de Ávila there could be more credits approved, because it’s a purely agricultural province,” but only 22 credits have been granted in the amount of about 230 million pesos. A trifle. For it to be useful,they have to keep in mind what they intend to do in Pinar del Río, selling construction materials at half the price to fight the destruction of Hurricane Ian. This type of measure doesn’t work.

But let’s go to the case in question. The 63 measures that sought to encourage the progress of agriculture and speed up food production haven’t worked a year later. It’s logical, since they are poorly designed and try to achieve objectives without first making structural transformations.

Far from attributing responsibilities for the failure to the banks of Credit and Commerce and Popular Savings, which are only transmission belts of a program, which, I emphasize, is poorly designed, the only ones who should respond to the failure is the regime, the ministry and even Díaz-Canel himself for relying on measures that are imprecise, poorly designed and of little social utility, such as this fund.

Why do we say that the design is incorrect?

Well, basically because of those who apply for and get the credits from the fund. These are state companies that will be supported by political and partisan criteria. Since this financial modality was launched, the banks have also approved reduced loans with a small amount, destined for state companies, such as Arnaldo Ramírez and Porcina.

Very few independent farmers benefited from the loans. Those who benefited from the Agricultural Development Credit have been state companies with a weight in food production, such as Agropecuaria La Cuba, Agroindustrial Ceballos, Agropecuaria Chambas, and integral Agropecuaria, and only three entities in the cooperative sector participated, which received 108 million pesos for the cultivation of bananas, guava, potatoes and the promotion of pasture for livestock.

On the other hand, Granma’s note reported that the Agricultural Development Bank approved 2.8 billion pesos for the planting of cane, in addition to other amounts for the production of pork, protected crops, the planting of cassava, corn, soybeans, sweet potatoes, rice, fruit trees and protein plants for animal feed. And yet, the sugar campaign was the worst since colonial times. Bandec is now in charge of managing the committed debt, but, as Granma says, the greatest responsibility lies with Agriculture and Azcuba, responsible for defining the natural and legal persons who meet the requirements to receive the loan and are in a position to increase production, as intended, and be able to repay it.

This is the question. What is the requirement to be met? It seems that we are talking about irrelevant issues, but efficient banking practice is clear about it. Property rights are a necessary, but not sufficient, condition for an effective financial policy. If this relationship is not established transparently and with the utmost legal respect, things cannot go well. And so, after a year, as Granma says, the credits approved in a purely agricultural province are scarce, and it is recognized that, “even though all the scenarios have been used to divulge the advantage of the initiative, it’s never enough, because it doesn’t always go directly to the producers.” Once again, communication, and start blaming the complex situation of the economic and social environment for failure.

Translated by Regina Anavy


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