Cuba turns to the market to increase food supply

 In a bid to encourage agricultural production and offset food shortages, Cuba has announced a raft of market related reforms effectively commercialising food production. The new policy will in part enable all state and non-state farmers and others involved in food production, processing and distribution to sell surplus produce directly once government contracts have been met. 

Details of the decision, previously announced piecemeal and reported in previous months issues of Cuba Briefing, were set out on 5 November by the Minister of Agricultu²re, Gustavo Rodríguez, and the Vice Prime Minister and Minister of the Economy, Alejandro Gil, speaking on Cuba’s flagship television and radio programme, Mesa Redonda. 

During the broadcast, Rodríguez said that the new policies, which offer market related incentives to increase food production, will see the country’s entire distribution and marketing system become more flexible, and eliminate the state’s monopoly role in distribution. The decision, confirmed by the Council of Ministers of 30 October, was, he said, “a response to the opinions of producers and citizens in general to the obstacles that exist in the process of production, storage and marketing”. 

To illustrate the problems facing the country, the minister said that to guarantee the 30lbs per month of all foodstuffs consumed per inhabitant, some 154,000 tons of agricultural products were required, but on average the monthly production at present is just 100,000 tons. In a further indication of the seriousness of the situation, he said that this month Havana will have just 15,000 tons of the 29,000 tons of foodstuffs that it needs. “We have to produce more and make more product offers to meet the demand in different types of markets,” Rodríguez said. 

Suggesting that there had been a robust internal discussion on the changes being made, he explained that “many colleagues found it difficult to understand the change” and the transformation that it will entail. 

Rodríguez noted that the new measures are expected to financially benefit primary producers by linking productivity to the market and to industry. For this, to succeed, he said, an “essential requirement” is that the increase in the prices of products and the financial benefits that are received, are used in to develop new productive capacities. 

The changes, he indicated, will “recognise (benefit) all of the actors” involved in producing, picking, packaging and processing of products including self-employed workers, families, agricultural cooperatives, entities specialised in this task and wholesale marketing”. In future, they will “manage the resources, inputs, equipment and storage conditions …. necessary for the activity”. This will require the expansion of the existing network of mini- and micro-industries based on national production requirements and through international collaboration projects, Rodríguez added. 

The new policy, he said, establishes that if a marketing entity (state buyer) does not have the logistical or financial capacity to buy from a producer, the latter has the right to go directly to sell their products to any form of market that exists in the country. “It is about eliminating the intermediary and …. guaranteeing the link between the community and the producers, so that the latter can supply the population that lives around them”. 

On the subject of processing, Rodríguez said: “We have to gradually transform the market share of industrially processed products. We cannot continue to have a market only for fresh products. The mini-industry must play an important role in the agricultural market ”. 

On exports, he informed viewers that they must be promoted as a source of foreign exchange liquidity. This will, he said, involve diversification into products such as limes and avocados. 

Also speaking on Mesa Redonda, Gil said that work was underway on the implementation of greater commercialisation through distinct but interlinked measures. These were: 

  • Enabling flexibility in the hiring of the workforce by individual producers, landowners and landholders; 
  • The introduction of tax incentives to stimulate the production and marketing of food; 
  • The creation of the wholesale market denominated in MLC (freely convertible currency) for the sale of supplies and equipment to producers; 
  • Permitting the export or sale of agricultural goods including to companies and processors established in the Mariel Special Development Zone, in order to expand productive capacity, and make better use of foreign exchange presently used on imports; 
  • Transformation of the marketing system for agricultural products; and 
  • The resuscitation of the country’s bovine livestock industry. 

Gil also provided more details on a previously announced plan to establish before the end of the year a new financing mechanism for the agricultural sector with support from the State budget. Observing that a bank specialised in agricultural activity would be established, he said the concept will in the short term be developed through the existing network of the Banco de Crédito y Comercio (Bandec) and the creation of new financial products for the sector. 

Speaking about plans to grant medium or long-term loans to those involved in agriculture, he said that resources from the State Budget will be channelled through credits at lower interest rates. The new scheme would, he explained, enable financing to be granted with foreign exchange support whenever a certain export is required. 

To coordinate all of the measures, he said that an agricultural coordination committee will be created which will ensure that resources are used more efficiently and are based on the country’s priorities. 

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