The Cuban State Does Not Have Hard Currency to Pay its Debt to Milk Producers

The production of cow’s milk throughout the Island in 2020 was just 455,300 tons, a total collapse compared to 1,120,000 in 1989. (Invasor)

14ymedio bigger14ymedio, Havana, 10 June 2022 — The dairy company of Ciego de Ávila already owes 60,000 in freely convertible currency (MLC) to ranchers in the province, who are producing well above what was contracted to access the stimulus that was promised to them for it. However, the Cuban State affirms that it does not have enough funds in foreign currency to fulfill its promise.

Rubén Pina Ángel Bello, the director of production at the Dairy Company, tells the newspaper Invasor that the ranchers are doing their part and more, but the efforts are null because there is no foreign exchange. “Many are over-fulfilling, on average, about 800 [liters] each month and our contracts are with 2,309 ranchers, which should continue to increase; but even when the company reaches 110% over-fulfillment of the milk plan, the destination of our productions does not generate all the convertible currency we need,” he explains.

According to the text, Ciego de Ávila farmers are delivering 21,900 more liters of milk each day this year compared last year. But the dairy sector received approximately 70 tons of powdered milk per year which, added to fresh milk, served to complete part of its productions and routes.

To cover that import, which the note does not mention whether it has completely disappeared and the reasons, the farmers would have to add about 19,000 liters of milk per day and, in addition, an unspecified surplus for derivatives, such as ice cream, yogurt, butter or cheese that can be sold in MLC. From there the income would be obtained to pay what was promised to the ranchers, who have had to produce in conditions in which that currency is essential.

Pina explains that for this year the total expected volume is more than 16 million liters, one million more than in 2021, but he calculates that they will remain at 12 million. According to the official, the debt has accumulated since February “without being able to do anything there” because the fault, as can be deduced from the rest of the text, lies with those who do not produce or those who choose to sell “on the left,” either because they know they are not going to receive payment from the State or because they are going to get more out of the informal market.

“Given the logical debt of the dairy sector with the overachievers (and perhaps precisely for this reason), others have applied theirs: they produce their derivatives and sell them, or they go to the informal market where a liter can reach 50 pesos and the value of an MLC can reach 110.00. They apply the convertibility that the State does not apply and deduce that by selling ’outside’ they earn more than with over-compliance, for which they receive 20 pesos, plus 10 cents from the MLC. Those cents, at the informal rate, represent about 11 pesos. In other words, the overachieved liter leaves them with 31 pesos, below the liter on the street,” reads the note.

The Ciego de Ávila industry needs, according to the text, 44,000 liters per day, of which 38,000 go for the ’basic market basket’, which does not produce any of the foreign currency that the State desperately seeks.

The Government included as a key measure among the 63 issued to stimulate production, the payment for surplus milk in freely convertible currency. The idea was to motivate the rancher to produce more and, in turn, be able to meet the costs of imports and other expenses that are increasingly presented in hard currency. But complaints about non-payment have appeared almost from the beginning and the devaluation of the currency in the official market does not attract the farmer who, in fact, can get much more if he sells the milk on the parallel market.

The production of cow’s milk throughout the Island was in 2020 just 455,300 tons, a total collapse compared to 1,120,000 in 1989.


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