The Cuban State pays 15,000 pesos for an animal, processes it and sells it for 60,000 pesos, denounce the producers.
IPS* (via 14ymedio), Havana, 18 September 2024 — Producers in Cuba’s agricultural sector consider that when it comes to producing and marketing food products such as milk and meat, Resolution 275/2024 of the Ministry of Agriculture is increasingly distant from the urgent needs of the country and even more so from the Cuban countryside.
“The fact that a state-owned company pays 38 pesos for a liter of milk does not take into account the costs of producing it or the prices of supplies,” comments farmer Armando Zamora on the regulation that obliges him to sell most of his products to state-owned companies at pre-established prices.
In this regard, he gives the following example: “A roll of wire costs between 30,000 and 36,000 Cuban pesos (CUP), about 100 or 120 U.S. dollars, depending on the exchange rate in the informal market, where the value of 1 dollar is around 300 CUP.
“The resolution says that the priority is the state order, but the price they [state-owned companies] pay, compared to the 100 CUP paid in the informal market for the same liter, makes the pocket decide, not the conscience,” he adds.
“The price they [state-owned companies] pay, compared to the 100 CUP paid in the informal market for the same liter, makes the pocket decide, not the conscience”
After insisting that he sees no prospects for 2025, the worker linked to livestock farming for 19 years reflects: “Whoever sets those prices has never gotten up at two in the morning to milk a cow”.
Another long-standing unresolved problem is the difference between what the state-owned company pays the producer for beef and what the industry earns.
According to Zamora, the state companies “pay 15,000 pesos for an animal and when they process and sell it, they get 60,000 pesos. The one who spent years raising it, planting feed and taking care of it so that it would not be stolen is the one who earns the least… Without incentives, there will be no greater production”.
Amid a severe production crisis, dependence on imports and high food prices, most of the opinions warn of the negative aspects of the new resolution of the Ministry of Agriculture, published in the Official Gazette on September 4.
Designed to organize and control the marketing of agricultural, forestry and tobacco goods by 2025, it proposes to “increase supply to all destinations through the state channels and link production with the marketing process.
It applies to all actors in the productive structure of the agricultural system: agricultural cooperatives, grassroots enterprises and business units, micro-, small and medium-sized enterprises (state-owned, private and mixed), landowners and other legitimate owners of land and agricultural and forestry producers.
The Resolution calls for “increasing the supply to all destinations through the state channel, as well as linking production with the commercialization process”
In the contracting process – the signing of contracts made by state entities to purchase agricultural products – not only are new economic actors engaged in productive activities incorporated, but also entities that process or market agricultural, forestry and tobacco products.
More than 79% of Cuba’s agricultural land is state-owned, however only 32.2% is exploited, with low production levels in most crops: rice (22.7%), vegetables (16.8%), corn (16.3%), root crops (9.8%), beans (9.2%), fruit trees (8.3%), according to data from the National Statistics and Information Office (Oficina Nacional de Estadística e Información).
Conversely, private, individual farmers or cooperative members produce more than 75% of the food sold on the island.
The Credit and Service Cooperatives, which operate 36.3% of the agricultural area, account for the majority of private production (except for rice) of fruit trees (83.4%), beans (79.4%), root crops (76.7%) and vegetables (75.5%).
According to the report presented to the Cuban parliament in July of this year about the inspection of the Ministry of the Food Industry, there are breaches in the contracts with 9,100 food producers.
According to the Minister of Economy and Planning, Joaquín Alonso, most agricultural production is affected due to causes such as shortages of fertilizers, pesticides, fungicides, fuels and animal feed.
According to the report presented to the Cuban parliament in July of this year about the inspection of the Ministry of the Food Industry, there are breaches in the contracts with 9,100 food producers
Amid this scenario, the new measures reinforce the priority in the contracting that state enterprises make with the different actors of the agro-productive system, aimed at satisfying state demand, and supporting the plan of the economy and the national production balances.
“What kind of contracting for 2025 are we going to talk about if the 2024 contract still has not been paid,” says a management member of a local agricultural business unit in Havana, who prefers to remain anonymous.
As on previous occasions, the publication of measures regulating the operation of both the state and the private sector has given rise to comments from the economic point of view.
“The new resolution of the Ministry of Agriculture could be the worst economic policy blunder in Cuba since the reorganization. It is based on the erroneous diagnosis that inadequate contracting is a significant cause of the weak supply response capacity of the agricultural sector”, says economist Pedro Monreal in his account on X.
The new resolution of the Ministry of Agriculture could be the worst blunder in Cuba’s economic policy since the reorganization
For this analyst, it “inverts the dynamics of the connection between production and distribution. In reality, it is the supply failure derived from the lack of supplies and infrastructure, low investment levels and dysfunctional markets that originate contracting problems”.
The new rule “expresses the arrogant notion that centralized planning is more effective than the market in ensuring economic calculation (rational distribution of resources). The rule is a variant of forced contracting,” he argues.
Monreal also notes: “In their state-based fabulation, the planners may be increasing uncertainty in Cuba’s largest segment of private activity, which is not only crucial for food security but also the country’s largest employer”.
* Editor’s note: This press release is part of IPS Cuba Special coverage of New economic actors and local development in Cuba (2023-2025).
Translated by LAR
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