The Failure Of The Dairy Sector In Cuba: From The Glass Of Milk To The ‘Master’ Cheesemaker / Elias Amor Bravo

Illustration of a cow. (14ymedio)

Elias Amor Bravo (economist), 17 July 2018 – The National Milk Group is one of those inefficient conglomerates that exist in the Cuban state economy to control corporate production, in this case in a fundamental sector such as dairy. To cite just one example, the National Office of Statistics (ONEI) reported the value of wholesale and retail trade in dairy products as 1.3 billion Cuban pesos (roughly $52 million USD) in 2016, representing 10% of total food expenditures. Almost nothing.

An article in the state newspaper Granma alludes to the increase in the investments of the State Group to increase the productive capacity of the dairy industry. The Castro brothers have starred in some unforgettable episodes. One of these was undoubtedly Raul Castro’s “glass of milk” speech.   But Fidel Castro himself, on occasion, acted as a cheese specialist before the master cheese makers of Cuba. Amazing.

One of the great failures of the Cuban economy established by the so-called Revolution has been cattle ranching and the dairy industry. The confiscations of the private cattle ranches and of the companies of the sector at the very beginning the revolutionary process left these industries, of vital importance for the country, without a strategic direction..

The regime has been trying for 60 years to increase the production of milk and derivatives, but has not been successful. Basically, because the institutional and property rights system is unable to offer products in the conditions of “variety, quality, safety and priority” that is required, and what is even more serious, of quantity. Cubans have been forced to coexist with the rationing of products in great demand. In other words, the collectivist effort has had disastrous consequences for a sector such as dairy. Let’s look at the data.

To mention some examples, the most outstanding and from the official information source, the ONEI, in 2006 the production of pasteurized milk, the highest volume type (in relation to condensed and evaporated) registered 127.8 thousand tons. In 2016, the last published data was 123.1 thousand tons. Only a year earlier it had been 104.8 thousand tons. In the years between 2012 and 2016, the average annual production of pasteurized milk was 110.78 thousand tons, 10% less than that obtained in 2006.

Another dairy product in high demand, yogurt, fell further, from 183.5 thousand tons in 2006 to 146.7 thousand in 2016, a 20% drop. It is even more serious to note that condensed milk, for example, was reduced from 0.9 thousand to 0.4 thousand in the same period, a 55% drop. But in this case, the aggravating factor is that imports of condensed milk, in the face of a limited domestic supply, has gone from 2.3 thousand tons to 2.6 thousand in the same period. The case of milk powder is also significant. Imports in 2016 amounted to 55 million tons, and according to ONEI’s statistics the product “disappeared” between 2012 and 2016, while in 2006 it had reached a total of 21.1 thousand tons. In this case, 141 million pesos are paid for imports, as a consequence of the absence of a domestic product.

These data confirm the backwardness of the industry, the inaction and the productive inability to meet basic needs. The sector calls for “the modernization of the plants with the entry of new equipment and the repair of existing ones,” although I do not believe that this is the solution, no matter how hard those responsible try to justify it.

Granma alludes to the conclusions of a “meeting held between directors, technologists, researchers and master cheesemakers from all over Cuba, recently organized by the Provincial Dairy Products Company of Camagüey.” What I find surprising is that the event still recalled “the extraordinary knowledge that Fidel Castro had” on how to recover the cheese culture in Cuba. True.

However, Castro retired in 2006 and since then, the results of cheese production are those that from before. An absolute collapse. What is more, now that neither Fidel nor his brother are there, the country is confronting the incentive of demand coming from tourism, estimated at 7 thousand tons of cheese. If Fidel really had any responsibility in the reorientation of the sector, and his words and messages meant at some point “the beginning of a new stage of transformations in the sector,” the results leave no doubt. The glass of milk will have to wait.

To recover the dairy sector in Cuba, it is necessary to make advances in the institutional transformation of the economy. This sector, which needs close ties from the milk producers to the final distribution, has numerous options for management, and none of them are state groups or companies belonging to the state.

The state is not good at milking cows, making milk powder or yogurt. This is an activity that has to be contracted out and for which private companies should be held responsible, with autonomy and a stable legal framework. The alternative is to throw money away. Even with investments in equipment (skimmers, clarifiers, presses, molds and pasteurizers, along with substantial improvements in the cooling systems), and the training of workers, the problem still would not be solved because the value chain of the sector remains broken.

The example is in milk production. In 2006, before the partial land reforms were launched, the private producers managed 344.4 thousand tons. These private producers in 2016 delivered 516.1 thousand tons, a growth of 50%. The state, which still retains a very prominent part of the final production, in the same period increased production figures by only 35%.

The answer is obvious. The private sector manages much better and produces more than the state. The solution does not admit questioning: begin by dissolving the State Groups, put the industrial sector in the hands of private entrepreneurs.

But above all, livestock management also needs to be in the hands of the private sector, as it was before 1959, and we will see how everything improves very fast. Then nobody will remember Fidel Castro’s lessons to the Cuban cheese makers, nor Raul’s “little glass of milk.” Put it to the test.