Why Do Prices at Cuba’s Markets Continue to Rise?

Erasmo Calzadilla

A bunch of bananas, 2 pounds of okra, two lemons and a bundle of chard costs 38 pesos, a day and a half salary for the average worker.

HAVANA TIMES — On October 11, 2014, Cuba’s Juventud Rebelde newspaper published a long article by journalist Rene Tamayo dealing with the price of different products at agricultural and livestock markets. The columnist tells us these prices continue to rise, though less quickly than before: 4% this year, as opposed to 20% in the previous season. Such “good” news can have only one explanation: “the reform measures in the agricultural and livestock sector are starting to develop and yield positive results.”

I wonder whether journalists who write for Cuba’s official newspapers are obliged to be optimistic and speak well of government officials. I say this because there are in fact many reasons that could explain a slower rise in prices.

In fact, it was impossible for them to continue rising at the startling rate of 20% a year. Another year like that and prices would have simply become unpayable.

In this post, I would like to bring you up to date on the situation and discuss the policy being applied by government leaders to solve the problem.

My perception as a buyer is that prices continue on an upward trend. Every season, several products go up by one, two or three pesos, and no price ever drops. Organic vegetable gardens in the city have a major role in the rising prices – the notion that they are community gardens is a tall-tale for credulous tourists.

Let us try and make sense of what’s happening. Is it that the measures implemented by Cuba’s Minister of the Economy Murillo have not been successful?

According to the data quoted by the journalist, the reforms have indeed managed to incentivize our decadent agricultural production system. Last year, we witnessed 25 % growth in comparison to the previous. If they’re not inflating these figures, it is a startling feat. Let us assume it is true and continue with our analysis.

The above begs the question: how is it that such positive results aren’t being reflected in product prices?

To explain this contradictory phenomenon, the columnist advances two theses:
1. Bad weather affected the production of tomatoes and other high-demand products.
2. The demand is far too high and is still not being met by production.

The drop in tomato production was an isolated incident without significant repercussions. I believe the profound and systemic cause has more to do with the second thesis: persistent shortages.

Non-Linear Trends

If offer and demand were kept in relative balance, production and prices would maintain a healthy relationship of inverse proportionality. But Cuba’s agricultural and livestock market is anything but balanced, as the supply is always well below the demand (the journalist demonstrates this with statistics). As a result of this, prices become detached from the actual offer and remain inflexibly tethered to a limit value.

The question that comes up now is: why, despite significant investments in the sector, the new liberalizing measures and the high prices paid by consumers, does agricultural production not manage to satisfy demand?

A series of historical and economic circumstances could help explain this. The economic blockade imposed on Cuba by the United States, massive migrations from the countryside to the city and strict State control over agriculture (a combination more toxic than Agent Orange) stand out for their destructive effects.

But the worst, dear friends, is yet to come: the marabou-ridden Cuban countryside is already feeling the noxious effects of the inevitable decline in fossil fuel supplies and the advent of climate change. These faceless enemies are mercilessly destroying the technocratic dream of importing the Green Revolution to Cuba, thank god.

“Our” leaders, however, do not appear to understand the delicate situation we’re in and continue to bet on the Chinese model: prosperity, development and the freeing of productive forces and the market, under the guidance of the Party. With such formulas, they hope to revert several decades of State-imposed paralysis.

The one, tiny problem with this is that, within the context of chronic shortages, a free market inevitably turns into a captive market controlled by mafias. This is already happening: despite government efforts to supply wholesale markets without the intervention of intermediaries, products continue to arrive at consumers with monopolistic prices (Tamayo mentions this phenomenon in his article).

Conclusions and Solutions

The architects of our socialist reforms and probably many readers believe that high product prices, and the black market in general, will disappear when production manages to catch up to demand.

This would be a sound supposition, perhaps, if we were not at the very threshold of the energy crisis and suffering the effects of climate change – but we are, and setting our sights on prosperity now is a major historical mistake that we will pay dearly for.

Laxer police and social control mechanisms will facilitate the emergence of local mafias (this is already happening). In addition, “liberal” measures will bring about inequality, social disintegration, heartless and individualistic values…the last thing we need on the eve of a social crisis.

In view of the above, I would like to invite discussion on three ideas aimed at overcoming Cuba’s food problems:

1. Putting a stop to the process of privatizing the Cuban countryside, but without returning to State monopoly. The key to ensuring resilience in the countryside may be found in small, farming communities.

2. Rescuing the ration booklet as a means of distributing essential food products. Only thus will we be able to avoid massive under-stocking at large urban centers. A solution could be to raise ration booklet prices to somewhere between current ones (which are ridiculously low) and those of the “free farmer’s market,” such that neither producers nor consumers are forced to depend on State subsidies.

3. Encouraging emigration to the countryside and the ruralization of cities. If this process isn’t planned and executed with enough time, it will happen in the most chaotic and terrible of fashions. A movement known as “Transition Communities” – involving towns and cities that are actively preparing for the energy crisis and the effects of climate change – is already underway around the world. The more developed countries are its chief promoters. Communist leaders, however, have greater faith in capitalism than capitalists themselves. I think whoever discovered the dialectic deserves a warm round of applause.

Erasmo Calzadilla

Erasmo Calzadilla: I find it difficult to introduce myself in public. I've tried many times but it doesn’t flow. I’m more less how I appear in my posts, add some unpresentable qualities and stir; that should do for a first approach. If you want to dig a little deeper, ask me for an appointment and wait for a reply.

18 thoughts on “Why Do Prices at Cuba’s Markets Continue to Rise?

  • August 21, 2016 at 8:40 am

    I just want people to understand at this the Cuban government is the holding things back. Many people have failed in Cuba and will continue to fail until the Cuban goverment makes changes and these are not happening and when in Cuba stand up and fight they can end up in jail.

  • August 21, 2016 at 6:26 am

    Steve you have repeated numerous times your efforts to do business in Cuba and the obstacles you have encountered. Enough’s enough. Try and add something new to the discussion.

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