Why Can’t a Cuban Farmer Buy a Tractor With Cuban Pesos?

A Cuban farmer plows the land with oxen (CC)

14ymedio biggerElias Amor Bravo, Economist, 8 May 2021 — It is hard to imagine a Spanish or French agricultural producer wanting to buy a tractor and having pay for it in dollars in a store in Spain or France. I comment on this circumstance here and my interlocutors are surprised. Then comes the tentative question, can’t a Cuban farmer buy a tractor and pay for it in his country’s currency, the Cuban peso (CUP)? And I have to answer, No.

I explain that the communist regime has devised a network of stores for the agricultural sector that sell only in freely convertible currency. In these stores you can find all kinds of inputs, fertilizers or tools for agricultural production, but you have to pay in dollars. This measure of the Logistics Business Group of the Ministry of Agriculture (Gelma) has been underway for some time as another of the mechanisms devised by the regime to take possession the scarce foreign currency that circulates in the country.

They have already done it with the stores in MLC (freely convertible currency) to collect the foreign currency that reaches families in the form of remittances from abroad. Now with the Gelma stores they want to collect the resources from the agricultural sector. So when, this Friday, the first 14 tractors were moved to the shopping centers of seven provinces for sale exclusively to agricultural producers, more than one had to use a calculator to check how much they should pay for that means of production which, for some, is essential, especially for those producers who have the most land under cultivation, who are the fewest in number overall.

For this reason, the tractors to be sold are of small power, according to reports in the state newspaper Granma, of 32, 80 and 82 horsepower, with the latter even coming with air-conditioned cabins. The first units have been directed to stores in the provinces where requests have been received from producers, that is: Pinar del Río, Artemisa, Mayabeque and Villa Clara, as well as Sancti Spíritus, Santiago de Cuba and Granma.

Apparently, as the authorities have pointed out, these vehicles are the result of the negotiation of a consignment from the Central Company of Supply and Sales of Heavy Transport Equipment and its Parts (Transimport) to be marketed in Gelma stores in MLC. They will be joined by another ten that will arrive with the same purpose. The source of the tractors is international industry, so their sale will not entail any benefit to the Cuban productive sector.

In short, to be able to buy this equipment, Cuban farmers with the Cuban pesos (CUP) they generate on their farms have to have the necessary financing, in dollars, to do so (from a bank or in the case of a remittance, they will have to explain the origin of the funds).

In the current situation of the economy, there are doubts about the possibility of obtaining financing in dollars or any other currency, so the funds must have another origin (such as money from sales to the hotel sector, which is also at a minimum, as a consequence of the collapse of tourism). Most likely, the Cuban farmer who cannot pay in Cuban pesos, will have to go to the informal exchange markets to get dollars.

In fact, you can forget about the official exchange in the cadecas — the government exchanges because they do not function.  Instead, the farmers will have to accept the exchange rate offered by the operators in the informal economy, which is around 53 pesos per dollar, which will mean an unjustified increase in the price of the tractor, as the government’s plan is to not lower prices, even if the tractors go unsold.

Once the dollars have been obtained and deposited in a bank account in MLC in one of the state banks authorized to do so, the buyer will have to make the payment through the magnetic card backed by the account. Then they can take possession of the tractor. What would be easier would be to go to Gelma’s store with the value of the tractor in Cuban pesos, pay it and let Gelma be in charge of obtaining the foreign exchange.

But this is not possible, of course, because the regime wants to collect the dollars from the informal circuits, where the farmer goes to get the dollars, even if this makes what he has to pay in national currency twice as expensive. The regime doesn’t care. The farmer who needs the tractor will be the person who gets the foreign exchange for the government, as do those who buy food or cleaning products in stores that sell only in MLC.

By the way, this occurs because foreign exchange in the Cuban economy is so scarce that the regime has devised whatever ways are necessary to capture it in order to meet its needs. In Spain or France, the mechanism is as stated. The tractor is bought in euros, and if it has had to be imported, for example, from China, this has already been done by a private importer who paid in Chinese currency after having managed the euros.

Any resemblance to the Cuban reality is impossible. To make it all worse, the Cuban farmer who is going to buy a tractor must not forget to take with him his certificate from the municipal Delegate of Agriculture, which accredits him as a producer. It is the same as always, without authorization from the local communist, nothing can be accomplished. There is not even the freedom to buy a tractor.


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