Price Controls in Havana Don’t Work Says Official Press
The Communist Party website Cubadebate proposes “basic measures” that “in the long run” regulate prices “naturally”.
By Juan Diego Rodriguez (14ymedio)
HAVANA TIMES – After Cubadebate visited a market in Havana for a report published this Thursday on the price regulations established by the capital’s government just two and a half weeks ago, it reached an indisputable conclusion: the measure hasn’t worked. Very few businesses are complying.
Thus, for example, at the fair of the Palatino People’s Council in Old Havana, where, according to the text of the state media, “the value of products showed a direct relationship with inflation and with the price of the dollar on the informal market,” the prices were more expensive than those established by the authorities. Specifically, doubled: papaya at 80 pesos per pound against the 40 stipulated; squash at 50 pesos when it should be 25; and malanga at 150 when the fixed price was 75 pesos.
“No, we don’t have the chalkboard today, but there’s no charge for asking,” was the answer of one of the sellers to the reporter after she inquired about the official price list. Despite complaints from buyers, most were realistic about the measure. “Capping prices is like putting a band-aid on the wound. Nobody complies with the established price, and the inspectors are noticeable for their absence at best. At worst, the sellers buy them off with a string of onions, which is very expensive,” declared a woman identified as Monica.
The problems now are similar. “All inputs to make the land productive remain scarce and sky-high. In addition, it is increasingly difficult to find workers who accept less than 10,000 pesos ($21 USD) a month, and that makes everything more expensive. How can I sell the malanga at the price they say, if planting it alone costs a fortune?” asks Herminio, a farmer from La Salud, in Quivican, Havana.
It is impossible for all the links in the business chain to sell at the imposed rate. “The problem is that we continue to buy at the same prices. The fuel is in US dollars; how can we travel to the countryside to buy from the farmers?” reasoned Pedro, another seller. “The government lowers prices without taking those things into account.”
The situation is inescapable, despite the inspections that the official press claims have been reinforced and which, according to Cubadebate, has led to the imposition of many thousands of pesos in fines. The solution states the text, “goes beyond simple control. Although control is necessary, reports from farmers and sellers point to a structural problem: high production costs, intermediation and access to inputs.”
A comprehensive strategy, he suggests, would require “measures to tackle these root causes,” such as: “facilitating access to fertilizers and fuel at affordable prices, directly supporting producers in shortening the supply chain and promoting a stable supply that will eventually regulate prices naturally.”
The text goes so far as to state that the “divergence between the decreed price controls and the reality in the markets of Havana reveals that the current mechanism is insufficient.” The population is “caught in an impossible dilemma,” it continues: “either comply with regulations that are not fulfilled or pay abusive prices to be able to eat.”
“The resolution, well-intentioned on paper, seems to have been caught in a limbo between the decree and the land,” says the report, with a sense of reality unusual in the official press. “As long as the price of inputs and logistics continue to soar, the order to reduce retail prices seems an imposition disconnected from the root of the problem: a production that does not take off and a chain of intermediation that the resolution fails to stop.”
Translated by Regina Anavy for Translating Cuba.