The private sector does not have the necessary foreign currency to import fertilizers or seeds
14ymedio, Madrid, 22 November 2024 — The Government has approved two resolutions with which it intends to stimulate food production through discounts and tax exemptions on the import of raw materials and inputs. The measures, which affect both the private and state sectors, comes “at a very necessary time, due to serious agricultural effects due to recent weather events,” said the Minister of Finance and Prices, Vladimir Regueiro Ale.
It is actually one more step in the direction taken in December 2023, which was highly criticized by several experts for placing the emphasis on tariffs without taking into account the inability of private companies to obtain the necessary foreign currency to finance imports. “Cuba’s agricultural crisis will not be solved by any tariff. In the short term, it requires raw materials and intermediate goods that should be imported mainly by the State,” economist Pedro Monreal wrote at the time.
The minister’s comments to justify the new measures indicate that the Government has not taken the advice of independent experts into account. The official stressed that the decision will not only reduce import costs but will also provide the “possibility of establishing partnerships to recover production lines” and will have a “favorable impact on prices with an increase in supply, especially food.” However, there is a deadline: December 31, 2025, since the measures are “subject to the study of their real impact.”
Resolution 329 automatically exempts 191 products from the payment of import tariffs, detailed in an appendix. These are mainly pesticides, fertilizers, raw materials and inputs from production processes. Among them are grain seeds of all kinds, veterinary medicines for ranchers, chemical and mineral fertilizers, and insecticides.
Resolution 329 automatically exempts 191 products from import tariffs, detailed in an appendix
In addition, there is a multitude of tools for the field – shovels, saws, wire – and tires for agricultural machinery, and there is a large collection of items for packaging and distribution ranging from bags to cardboard, paper and pallets.
In the long list, some products for food preparation such as oils of different types and flours stand out. At the end of 2023, when the Government announced that 2024 national manufacturing would be encouraged with tariff subsidies of 50% for the import of intermediate products and 50% penalties for finished products, the ministers themselves admitted the complexity of establishing some limits. For example, flour, which could be “final” if sold to the consumer, could be “intermediate” if used in the production of breads and pastries.
Also striking is the inclusion of three groups linked to the sugar sector, such as cane and beet sugar and chemically pure sucrose in a solid state; other sugars, syrups and honey substitutes; and molasses from the extraction or refining of sugar. This section contains 20 by-products and reveals, on one hand, the dependence of Cubans on a substance the World Health Organization considers “unnecessary from a nutritional point of view” and harmful to health, in particular because of its close link to obesity and type 2 diabetes.
It also reveals what has been evident for a long time. Cuba urgently needs to import the product due to the destruction of its previously powerful sugar industry. In 2023, for the first time, more money was allocated to buying sugar abroad than was obtained by selling it.
According to Regueiro Ale, there are more than 3,000 tariff items, and for the moment, these 191 are automatically exempt, although “the economic actor receiving the goods” must present a quarterly report with the qualitative and quantitative analysis of the use of its profit, in which it must include the price reduction achieved. Ministry and Customs will have the responsibility of evaluating the result of the exemption.
“The economic actor receiving the goods” must present a quarterly report with the qualitative and quantitative analysis of the use of its profit, in which it must include the price reduction achieved”
Resolution 328, for its part, is complementary to the one described above, since it provides for a 50% bonus for items that, also intended for the production of food and agriculture, do not appear in the previous list, which means that the reduction of the tax rate is not automatic but must be requested.
In this case, the documents detailed in the resolution must be sent, which essentially include the identification and billing data of the company, the international sales contract, the quantity of merchandise, its value and the justification for what the cargo is intended for, among others. They will be reviewed and must be sent within 15 days, but the time to correct errors is also extended. In case any document is missing, the applicant is required – interrupting the processing time – to send what is needed within seven days.
Minister Regueiro Ale explained that this resolution aims to improve the previous rule, approved in January, by which tariffs were reduced by 50% on intermediate products, but without documentation and deadline specifications. To date, “the tax sacrifice,” he said, “amounts to about 25 million pesos, especially among non-state economic actors, most of whom have requested this permission.”
The automatic exemption of almost 200 by-products will allow, on the other hand, relieving the bureaucratic burden on both parties and reduce import times. However, the Government is still not considering the possibility of freely trading with the outside world without a state intermediary, one of the main demands of the sector.
Translated by Regina Anavy
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