The problem of prices stems from product shortages
Eileen Sosin Martinez (Progreso Semanal)
HAVANA TIMES – David is 21 and studying economics at the University of Havana. On weekends, when he heads back home in Batabano (in the province of Mayabeque), he works as a street vendor, selling produce. “My parents earn regular salaries. Do you think that you can support someone who’s going to university with 500 pesos a month?” he says, explaining how he and his grandfather decided to pool their savings and buy a cart to sell produce.
At the close of 2015 and beginning of 2016, the prices of greens and root vegetables have risen considerably, enough to irritate the population and become one of the topics of discussion addressed at the recent National Assembly of the People’s Power session. “I spent all of New Year’s talking about that,” David tells us.
The products he sells do not appear to reach him in any expeditious manner: from the farmland, they are taken to the El Trigal wholesale market in Havana, and, from there, to the cart. “We’re the third in line, that’s quite a few people in between,” he says.
David has borne the weight of the “bad reputation” street vendors have been given. “People say we’re getting rich off this, and, ultimately, we’re the ones who earn the least. El Trigal operates like a private company, on the basis of supply and demand. They set the prices and you either take them or leave them. I buy products from them like others buy them from me. It’s the same process, but with larger quantities involved.”
How is value established, then? “It depends, prices are high there. Selling here in town isn’t the same as selling out in the countryside. If I charge 10 pesos for a bundle of carrots there, no one’s going to buy it. It depends on whether I know I can sell something or not.”
“You calculate a difference and add a small percentage on top. We don’t make as much of a profit as people think, it’s a tiny profit, but it’s enough to live on.”
This is clear to me, but there’s the widespread, almost official, view that, at some point in the delivery chain, “scoundrels” are profiting from people’s urgent needs. David makes a pause, as though about to reveal a great truth. “Look, the real problem with prices has to do with production shortages, it all stems from that.”
During the National Assembly sessions, representative Israel Perez, from Yaguajay, stated that it’s not a question of having a group of people set product prices but of establishing a price ceiling, to prevent profiteering. Cuban President Raul Castro argued that a solution must be sought “the best way possible, even if we make mistakes once again.”
“For instance,” David explains, “a pound of tomatoes now costs 25 pesos, and there are people who buy them. That is to say, supply and demand are more or less balanced, because of prices. “But, if they were to set the pound of tomatoes at 5 pesos, you won’t see a single tomato anywhere within a month’s time. They’ll run out, because everyone will have the 5 pesos to pay for them and everyone’s going to buy them.”
At university, they are now studying political economy, and David, going to the theory, concludes: “like Marx says, you need changes in production, there’s no other way.” Even if you distribute it well, a small amount of something continues to be small.
Even if the response were to establish a price ceiling, David believes he would not suffer too many consequences. “Street vendors would be the most benefitted from what they’re planning. If prices go down, I’m going to continue earning the same. The prices will be lower but I’ll sell more products.”
Nevertheless, they are cautious. “We’re selling what’s left from last year and what we manage to get back home. We have to wait, because any of these sudden measures could make us lose everything.”
“Truckers” (transporters and sellers who act as intermediaries) buy products at farms, unless farmers have their own means of transporting the goods (which is uncommon). Who are rising prices? I ask, trying to find the much-maligned “unscrupulous speculators,” the culprits of Cuba’s current situation.
David replies with a fatalistic tone: “We Cubans ‘step on’ one another. In this case, people speak of farmers, but, when this farmer goes to a store, or has to catch a cab or eat at a restaurant, everything’s also expensive for him.”
Days ago, member of parliament Adalberto Fernandez pointed out that prices will not go down by decree and that the situation has to do with the policies applied in all commercial networks. “If prices do not go down at hard currency stores, if a pair of work boots continues to cost so much, we can’t expect the price of pork or any other product the population demands to go down.”
“In my opinion, the State ought to help farmers more,” David continues. “All supplies are extremely expensive, and, if the harvest is lost, farmers lose anywhere from 30 to 50 thousand pesos,” he added for Granma newspaper.
“They want the State purchasing offices in all municipalities to offer all products in one facility. But the State doesn’t have an efficient mechanism to buy the goods and doesn’t pay as quickly as it should. I have relatives with farms who take their products to these offices and they wait six months for them to pay them. If farmers doesn’t have the money to invest, what do they do? Should they go six months without producing anything?”
“So, they prefer selling to the private buyers, who pay on delivery,” David insists, counting bills in the air. “The State takes who knows what percentage of all production and doesn’t pay on time. Can you imagine what would happen if they took the entire harvest?”
Since turning 16, David has had steady employment in this field, first hired to man a stand at a produce market. This experience allowed him to make comparisons and even predictions: “This year, I’ve seen prices higher than ever. I recall that, around this time last season, I would buy tomatoes – big ones, the most expensive out there – at 100 pesos the crate, and I’d sell them at 5 or 6 pesos the pound. Now, a box of tomatoes costs 500 pesos.”
“We also haven’t had good production, not at all. Now, its bean season and we haven’t seen much of it at all. Can you imagine what it will be like at the time of year when you normally can’t find them? If we haven’t seen many beans during the season, because plagues have ruined the crops, in four months, the pound of beans will be 20, 30 pesos. It’s going to happen, you can bet on it.”
To put it bluntly, the situation is not exactly new. According to Armando Nova, professor and researcher at the Center for the Study of the Cuban Economy, the productive forces in the produce and livestock sector are still bound hand and foot and new, more incentivizing measures are needed throughout the system, with a view to reactivating these forces.
Agriculture is the least productive sector, and this has an impact on the entire economy. At the end of the 1980s, agricultural activity accounted for less than 10 percent Cuba’s GDP, even though it employed more than 20 percent of the economically active population. In Nova’s view, this is a structural problem of the Cuban economy which is a permanent obstacle to its development.
“When you leave prices below what they could be, people still complain, because it’s still expensive,” the vendor acknowledges. “I understand, it’s the price I can sell it at. Those who rely on their State salaries are the worst off. If I had to live on a State salary after graduating, I wouldn’t even be able to buy a pound of tomatoes, because I couldn’t afford it at 10 pesos the pound.”
David is 21 and studying economics at the University of Havana. Waiting for the waters to find their level, he continues to read his textbooks, as the semester finals are nearing. On weekdays, his grandfather sells produce in town and, when he comes home on Fridays and Saturdays, he does his bit.