Cuba to Eliminate Subsidies on Farm Inputs and Equipment

HAVANA TIMES – Inputs and equipment which are currently delivered to Cuban farmers at subsidized prices will begin to be sold “at market prices without subsidies”, said Vice President Marino Murillo Jorge before the Council  of Ministers on Friday.

According to a Granma newspaper report, Murillo said that “measures will be taken in order to avoid, where possible, the price increase affecting the general population.”

As part of the restructuring of the agricultural sector, the government will also allow producers to market their products and services according to market demand, once they meet after they fulfill their contracts for sales to the State.

The new form of marketing will begin as a pilot project in 2014 on the Isle of Youth, and may spread to the rest of the country.

12 thoughts on “Cuba to Eliminate Subsidies on Farm Inputs and Equipment

  • August 11, 2013 at 6:27 pm

    then why isn’t it working in Jamaica Trinidad British Guiana ect, that is exactly what they were told to do by the imf. The capital cost of equipment is too expensive to compete with US SUBSIDIZED IMPORTED FOODS. Their answer economy of scale (farms too small to be econoomically viable)

  • June 9, 2013 at 11:11 am

    No, that push from Fidel failed, they simply refused to hand over their lands and kept earning money legally. Also, notice that private farmers never had access to farming machinery (that was restricted to cooperatives), so they didn’t suffer a strong impact as consequence of the special period, while the prices of the produce increased tenfold.,2531183

    Transportation is a different issue, during the special period the inability of the state to provide ready transportation made thousands of tonnes of produce literally rot either in the farms or in the distribution facilities, so they were forced to legalize distribution to farmers markets.

    They point you missed is that they have little incentive to increase production. For a starters the only way to increase production at their current technology level is to farm more land, but in order to do so they need to work more (either by themselves or by hiring helping hands) while the market prices are inversely proportional to the total production. So, either they enslave themselves to produce more or pay people to do so in order to sell at a lower price.

    The government can circumvent this by giving land to more people so they can produce by themselves, but is obvious that the bulk of such people have no clue about farming and probably not even know what hard labor means. As such, their yields are going to be significantly lower than traditional farmers, with a lot of lost harvests until they learn how to go about it properly.

    Back to the millionaire farmers, no is not an exaggeration. I’ve meet quite a few in my travels. Some used to hang out in the Lenin park facilities in the outskirts of Havana, and since the ban to Cubans renting hotels was lifted you can also find some of them in resorts around the country.

    Of course, the most idiosyncratic ones live far and away from civilization, mostly in wooden cabins without even electricity. They are almost universally well known for their hospitality towards strangers and their #1 complaint is typically that they wished they could put their money to use.

  • June 6, 2013 at 9:32 am

    Thank you for you long and thoughtful discussion of the issues, free of insults and diatribes. It’s a pleasure debating with you, even when we don’t agree.

    In this case, I do agree with your analysis of the dual-currency conundrum. It was introduced to protect the Cuban people from the ravaging seduction of the US dollar, while enriching the coffers of the State. But the government has painted itself into a corner with the dual-currency which distorts the economy. If they move to quickly to eliminate it, there will be trouble. But if they wait too long to fix it, there will be even more trouble.

    I find it hard to believe there are millionaire farmers in Cuba. That report from 1984 is less than convincing and suggests a contemporary anti-kulak mood in the government at the time. Given the economic shocks of the Special Period, I can’t see how there would be even more of them today.

    Comfortable farmers, sure. But “millionaire” is an exaggeration. How can they make so much money if the transportation of food to market is in such a bad state, as you identified? If farming was so profitable, then Cuba would be growing much more food and importing less.

    Your ideas about how to establish a stable agricultural market are interesting and worthwhile. As you wrote, let’s hope “some stupid bureaucrat don’t screw it with ideology crap.”

  • June 5, 2013 at 3:14 pm

    Your last paragraph is absolutely correct, Griffin. It’s what I’ve been saying these many months. The PCC need only look at the Denmark experience, beginning in the late 1800s.

    What the PCC does not yet comprehend is that, as long as state power is in hands of the vanguard party, privately owned farms, large or small–single-family owned or cooperatively owned by those who do the work–is “socialist” in essence.

    The ideological hang-up with the PCC is that they think that only state-owned land or enterprise is socialist in essence. In fact, any sort of ownership is socialist if it does not contradict the National Plan, and if it contributes to national wealth creation.

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