Cuba Applies Price Ceiling for Farm Products

By Fabian Flores  (Café Fuerte)

HAVANA TIMES — In a move to strengthen government controls over the island’s economic life, the Castro administration announced Tuesday price limits on agricultural staples from sweet potatoes and bananas to beans at the markets where most Cubans shop.

In two resolutions, the Ministry of Finance and Prices disclosed 23 products listed as meats, vegetables, fruits or grains, whose prices now have a fixed ceiling for sale to the public.

The measure takes effect on Tuesday for all types of agricultural markets, other than those called supply and demand markets, [where higher income Cubans do most of their shopping.]  In the case of the province of Havana the price ceilings also apply to the self-employed vendors, noted Granma newspaper.

“This is a protective measure for both consumers and farmers as it ensures price stability,” states the announcement, arguing the decision came as a result of the recently concluded discussions at the Seventh Congress of the Communist Party.

Brought on by Citizen Complaints

The text adds that the decision is part of a package of measures initiated on April 22, with the price decrease of dozens of products, mainly foodstuffs, at government stores, which are aimed to “gradually increase the purchasing power of Cuban peso [CUP] “.

The CUP officially exchanges at 25 for 1 convertible pesos (CUC), technically equal to the US dollar. The new prices are calculated in CUP.

“We cannot sit back with folded arms in the face of citizen complaints of unscrupulous prices set by intermediaries who only think about making greater profits,” stated the central report to the VII Party Congress.

The set of regulations issued are summarized in the following points:

-Maximum retail prices for the population of selected agricultural products.

-The maximum prices correspond with first quality products, in accordance with the regulations. With second grade products a discount of 20% applies and for third quality 40%.

-Price ceilings take into account the harvest times of each crop: the optimum period, where yields are higher; and outside this, when they are lower.

-For other agricultural products that are purchased by state companies, not on the list of centralized prices, profit margins must not exceed 40%, which the government says will favor consumers.

The move to greater controls marks a sharp about face in the reforms undertaken by President Raul Castro to ease distribution and price controls of food products allowing for a greater role of the market.

The State and Communist Party will now play a newly decisive role in economic events, as was clear from the words of Castro to the Party Congress, as well as statements disseminated in recent days by Cuban TV and the national press.

Greater State Control

The state will control, distribute and regulate prices of up to 90 percent of agricultural production this year, which implies a return to a centralized management of farming, currently stagnating.

Since late last year, sales of agricultural products were affected by increased price spirals and then empty pallets because of government attempts to establish controls on vendors.

The Communist Party conclave recognized that the primary factor in the growth of prices lies in the level of production that does not meet demand.