Without Explanation, the Established Price Caps Are Canceled for the Private Sector in Cuba

The measure was due to come into effect on Monday for chicken, sausages, oil, spaghetti, powdered milk and detergent.

A MSME in Central Havana, this Monday, sells chicken at twice the price established by some local governments / 14ymedio

14ymedio bigger14ymedio, Havana, 1 July 2024 — As of this Monday, the prices capped for micro, small and medium-sized enterprises (MSMEs) should be a reality. At least in the municipality of Plaza de la Revolución (Havana), in Jobabo (Las Tunas) and in Pinar del Río, but local administrations have backtracked after publishing the new discounted prices for six basic necessities.

The items that from July 1 would have an “officially approved” price – as the authorities now say – were chicken, sausages, oil, pasta, powdered milk and powdered detergent. The prices were the same in the three provinces, except for a liter of cooking oil, which in Plaza de la Revolución is capped at 990 pesos and in Pinar del Río at 900. A half-kilogram package of pasta is capped at 415 pesos in Havana and 350 in Pinar del Río.

A kilo of chopped chicken could not exceed 680 pesos (a pound is set at 310 and and a 20-kilogram box at 13,600); milk powder, at 1,675 (500 grams are at 840); a kilo of sausages would have a maximum price of 1,045 (500 grams at 530 pesos and 340 grams at 350); pasta at 835 pesos, and detergent powder at 630.

The figures coincided with those provided by an unknown official source through an audio that ran like wildfire through the Island’s cell phones this weekend.

In the visit this Monday to a MSME of Plaza de la Revolución, they had no news of the new prices established

On the other hand, in Plaza de la Revolución, prices for other products, such as soft drinks, cookies and even fruits and vegetables were also capped. Thus, a pound of malanga cost 150 pesos, tomatoes cost 100, plantains 70, and guava and mango were capped at 50 pesos. The Ciego Montero canned soft drinks could not cost more than 200 pesos, the Bucanero and Perla Negra malts, 260, and the “little package” of cookies, 50.

On Monday’s visit to a MSME of that same municipality in Havana, they had no news of the prices established by the Government. Ten pounds of chicken thighs cost 4,000 pesos, and a kilo of chopped chicken breast was at 2,300, even though they didn’t have those items at the moment. A kilo of powdered milk cost 2,900 pesos, far from the 1,675 established.

While it is true that the authorities of Central Havana had not communicated a list of maximum prices, the differences in those indicated for other municipalities was notable for the MSMEs in the neighborhood. In San Lázaro, one business sold 10 pounds of chicken at 4,000, and a kilo of chopped chicken breast at 1,750 pesos, more than double what was established in Plaza de la Revolución. In Infanta, chicken was even more expensive: 4,500 for 10 pounds.

The sign says ten pounds of chicken thighs cost 4,000 pesos and a kilo of chopped chicken breast cost 2,300, even though they didn’t have those items available / 14ymedio

The “officially established “prices were part of the new measures announced by the Ministry of Finance and Prices on June 27 in a resolution published in the Official Gazette. The text did not specify prices but stated that “state entities, in the process of economic contracting with non-state management forms for the acquisition of goods and services” would agree on “prices and tariffs whose maximum profit rate does not exceed thirty percent (30%) of the total costs and expenses.”

Similarly, the regulation gave power to the provincial and municipal councils to approve the maximum rates “for the goods and services they select,” taking into account” the “particularities of each territory.” Since then, rumors, confusion and improvisation have been the trend on the Island.

“What is known? Only that they have been evaluating prices for basic necessities and that some meetings were held with private economic actors (self-employed workers and representatives of MSMEs). Beyond that, there is only speculation and tension, overlapping and explicit. Nothing is clear; why? Because communication is not part, as it should be, of local government management, which should set out, explain, anticipate the facts and eradicate speculation and tension,” complained the official journalist of Las Tunas, Yaidel Miguel Rodríguez Castro.

This same Monday, the Provincial Board of Directors of Boyeros warned on its networks that today “the newly established prices” come into force – without specifying them – and left several phone numbers “to report violations of the established prices.” However, in a call made by this newspaper, neither of the two officials who responded – one of them identified as a “specialist” – was aware of any list of prices.

“The mango is local and in season, so the price is insane.”

Meanwhile, in neighborhood groups there have already been complaints. “I see that there are products that cost less by a few pesos, others that do not and some that even cost more. This is the legalization of abuse,” said a resident of Plaza de la Revolución.

“I think those prices were set by an owner of a MSME, because they can’t lose and the customers can’t win,” said another comment. And another user complained: “I can understand why the frozen chicken, which is imported, costs that much, but that mangos cost 50 pesos a pound doesn’t make sense. It’s a local product and in season, so the price is insane.”

For a fourth neighbor, “if the State is selling malanga at 150 a pound, I now feel defeated. A retiree like me isn’t able to eat a purée of malanga.”

The measure not only seemed alien to the majority of Cubans, who receive a salary in pesos and don’t have access to dollars, but also demonstrated a total lack of consciousness about the market. Entrepreneurs would not be able to sell imported products for less than what it costs them, unless they choose to lose money.

The inhabitants of Plaza de la Revolución also doubted how the measure was going to be supervised: “Who is going to ensure that this is fulfilled? Another body of inspectors? More people to pay a salary to? Everything is going to be more expensive for us as a country.”

“Who is going to ensure that this is fulfilled? Another body of inspectors? More people to pay a salary to?”

In the anonymous audio of this weekend, the official voice, with an accent from the west of the Island, assured that “groups of inspectors are going to go to each place,” referring to the MSMEs, and those that don’t have the established prices “will be exposed by the mass media.” The first thing that would happen is, according to the same source, “a wake-up call with fines” and “later, a forced sale of these products or their confiscation and donation to social institutions that need them.”

In addition, it was announced that the MSMEs would be exempt from the payment of tariffs for capped products, although it seemed more like confusion with the extension, until September 30, of free importation for private and non-commercial purposes of food, toiletries and medications.

The same official also recognized that “putting caps on these products won’t solve the problems of the population, because in the end they’re still expensive and not affordable for the majority,” even though the measure was taken “to prevent prices from continuing to rise.”

In the Central Havana MSMEs, chicken is more than double what it is in Plaza de la Revolución / 14ymedio

Thursday’s resolution was harshly criticized by economists such as Pedro Monreal, who pointed out that its impact, even if it works, would be very limited. Retail sales in the private sector account for just 4.1% of those of the country as a whole, said the specialist, and although it is not known what part might affect the state sector, the percentage is too trivial to have any kind of significant consequence.

“In addition to the fact that the savings for the State won’t be very big, by limiting the profit rate of non-state sales acquired by state entities, experience indicates that price caps are not effective in reducing inflation,” the expert said.

The Cuban economist insisted that the way to contain inflation, which has not stopped growing exponentially since the entry into force of the so-called Ordering Task* (2021), is to reduce expenses.

*Translator’s note: The Ordering Task was a collection of measures that included eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso (CUP) as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency, which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy.

Translated by Regina Anavy


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