In July 2013 the first 99 non-agricultural cooperatives engaged in the marketing of agricultural products began operating in Havana, Artemisa and Mayabeque provinces.
The managers of the updating of the Cuban economic model with this measure are seeking to minimize the presence of intermediaries between the plantations and the selling places, and promote decentralized management business through this type of economic organizations. Although still there are not official public statistics about the behavior of prices in this period, researcher and economist Armando Nova has been able to notice in recent months that the prices of some products also in these new markets continue to increase.
For Nova this is one of the reasons that warrant a systemic approach to the transformations that the agricultural sector has been undergoing, even before the appearance of the Guidelines in April 2011.
That is precisely the focus of his essay “A new model of Cuban agricultural management” for which he received the 2013 Temas Award in the Social Sciences category, and encouraged this dialogue with Progreso Semanal, which OnCuba now reproduces.
Milena Recio: Why a measure of decentralization, long awaited and advised by various analysts, does not yield the expected results? The end consumer is still waiting for solutions that will fill its table.
Armando Nova: The creation of non-agricultural cooperatives in the State Market (MAE) was an important and necessary step, which together with the implementation of the recent Decree Law 318, clearly favors the process of decentralization of marketing, as expected. But in the way we have proceeded (Decree Law 305-309) is open to criticism and I mean the markets turned into cooperatives by state decision, without consultation with workers.
Once that is approved by the Council of Ministers is to be communicated to employees, which is violating the important principle of voluntariness. At the program that was made at the Round Table, in July, it was explained that it gives the employee the option to accept or not to, but it was going to be a decision.
The new cooperative members of the agricultural market were formerly employees of the State Agricultural Markets (MAE) who expected the state collection company to supply them the products. Now they go to buy the products or a third party brings them to them. Some people are going to look for the wholesale market of 114th street. There part of the vendors goes as well. And there are also brokers who will buy them and then distribute and sell to vendors in different areas of Havana and cooperative markets themselves. The intermediate layer is therefore maintained.
Before all this distribution to MAE ( now converted into cooperatives) , was made for the collection company and management of the market was done by the municipal companies , which some subsidy (I mean that the transportation costs , packaging costs, electricity , water, telephone , etc. , were assumed by the collecting company and the state entity operating the MAE) .
The disappearance of this form of subsidy, dominates the relationship of supply and demand in the market and then prices have undoubtedly had an upward adjustment. To this must be added that prices have a tendency to grow in Cuba and around the world due to the rising price of all raw materials or inputs.
MR : Having broken the monopoly of the Collection company in the marketing chain should have a positive effect on prices …
AN: We have advocated diversifying marketer process, but always reiterating that the problem is not in circulation, but in production. Cuba requires facilitation measures for the development of the productive forces in agriculture that are still held back. You have to enable the producer to make his own decisions, and this in a context in which economic actors are diversified: there are forms of cooperatives, individual producers, the new beneficial owner (who is an individual producer benefited by Decree-Law 300) and there is the private farmer and also the state-owned producer.
Until September, about 70 % of the country’s land is in the hands of non- state forms, producing over 80% of total food production. Among them the Credit and Services Cooperatives, and private farmers, with about 24% of agricultural land in the country produce more than 57% of foods of plant and animal origin. I mean, there are efficiencies demonstrated in certain production methods within that diversity of economic factors that make up the new model.
MR: You’ve just won an award from the Temas magazine precisely with a job that proposes a new Cuban agricultural management and the agricultural sector. Do you have common ground with the vision leading the government’s measures?
AN: I think there are many points of agreement in this regard, which we have been advocating for. But I approach it not as a simple change or modification of the previous agricultural economic management model, to modify or improve it, but as something new based on three basic principles or objectives. The first is the realization of the property.
I refer mainly to the ability of the producer to decide where to purchase inputs, at what point buy, at what prices, who he sells his produce to, at what price he sells, what to produce, what his choices are taking into account the conditions demand, market and social requirements, etc.. The second principle is the complementary relationship between the market and planning. That is an issue that really is not solved yet. And another thing I noted is the systemic nature of the measures.
MR: April of 2014 will mark three years of the adoption of the Guidelines, how these three principles are manifested in the updating policy for agriculture, specifically?
AN: The measures in agriculture began to be adopted in 2007. Payments to producers of certain products were improved: milk, beef, agricultural products, a number of measures was taken also, to decentralize a bit some levels of marketing, very dim in the first stage. They were then accompanied by other post- Guidelines measures, such as the issue of decentralization of direct sales to the resorts, the possibility of hiring workforce, agricultural credit, etc. . . What happens is that these measures were being adopted or implemented with this specific character that you noted above…
MR: No systemic…
AN: They didn’t have a systemic approach. There can be many reasons, I don’t have them all clear. The same issue of land, the distribution of idle land … First the 259 and 282, possibly the most important measure taken in 2008. But as we have said many times, the land distribution is a necessary but not sufficient condition because you have to create a major change in the environment. This we said, for example, where the producer comes to buy his seeds? Where producers go to buy their supplies? To whom and at what price it will sell? What can be sold or will continue with high delivery commitments, 70 and 75 % to the Collection Company? That is, there are a number of systemic measures that should have accompanied these decisions.
MR: How do you explain the lack of such systemic approach?
AN : I think the complexity of the decisions in the economy is not yet understood. When you pass the 259 and 282 laws you realize that something is missing. Well and where is the farmer’s credit? The credit was defined, if I remember correctly, around December 2011. It’s when they start to talk about the credit for new land tenants. Where is the technical assistance that I have to give to the farmer? That producer, whom and how will he sell? I will go back a little to 2007. When making the decision to increase the price of milk, we all said, “Perfect, we must encourage the producer”, we all applauded. But this has to have a systemic approach. I refer to the wholesale payment to the producer, who can sell direct to the public or the plant or milk collector for the production plant. But what impact will this have from the point of view of the producer and from the social point of view?
MR: these interrelationships were not anticipated…
AN: I was also agreed to increase the price of milk because you have to stimulate the producer. Because as I increase the price of milk , undisputedly our Cuban farmer, knows how to handle his business and technologically , has experience transferred from generation to generation , and it is an honest person who likes to work in conditions of legality … When they increase the price of milk, he made his calculations immediately and , of course , the price he was getting was good based on a kind of analysis that if he used , let’s say, that liter of milk for the production of cheese for the black market or if he were to sell it as it was in the same market, he still had a good margin of profit. The Cuban farmer likes being legal and prefers to sell through legal mechanisms.
What happened? In the black market the offer of cheese, milk or yogurt decreased. And as there is a lack of milk production there was an increase in the price of milk in the black market, and cheese’s as well. There is a law, the supply and demand relationship.
On the other hand, this also affected many who were able to attend hard currency markets because there demand increased; the price of the one-kilogram of powder milk went up. But then again, as an important part of selling milk was done directly and not going through the pasteurization plant, utilization of industrial capacity was affected. Hence derive affectations in obtaining whey, butter, etc… And then we had to import these products. It seems that the social cost (cost-benefit ratio) was not calculated, bearing in mind that there were savings in transportation costs.
MR: Speaking of milk, what part of the Cuban GDP is dedicated to the import of milk powder?
AN: Cuba spends over two billion dollars on food imports and within it is milk, which can be around 160 to 170 million. Of course, this is relative, because the price of whole milk powder in the world market, this last year, went up 42%. So you may be spending more money on imports of milk and getting less physical products imported, because it really is amazing the rising price of milk powder. So this issue of milk is best to work it into considerations of whole foods, because the weight is significant. The country cannot continue from the point of view of the economy, maintaining these high levels of food imports that come to constitute between 15 and 19% of total imports of the country. Many of these products we can produce them in advantageous competitive conditions. Cuba can produce them.
MR: Is there resistance to foreign investment in agriculture?
AN: Giving space to foreign investment does not necessarily imply that I sell my property and, of course, sells sovereignty. Quite the contrary. All can have its regulations and make attractive foreign participation beyond what has been done in the past investment.
MR: If you were part of the Commission for the Implementation Guidelines and were asked to set foot on the accelerator, where would you start?
AN: For where they began the transformation is where you should start: the Cuban agricultural sector due to the multiplier effect of that sector. It is important role in food production, import substitution, the generation of renewable energy as an important supplier of raw materials, generating exportable goods, etc. . . . Furthermore, this sector employs 20 % of the economically active population. About 4 million Cubans depend on their income levels in this sector and we are 11 million Cubans.
I believe that agriculture requires the implementation of measures, systemic, based on a higher speed, the recent adoption of Decree Law 318 (decentralization of marketing) , shows a more systemic approach, this can be an important signal about the application of the ecosystem approach to measures , and certainly help unlock the productive forces, but the problem , as I said, is not in circulation, but in addition to this production and decentralization measures in marketing would be appropriate to eliminate obstacles in the starting point , which is the production and encompassing for the entire cycle : production-distribution- exchange and consumption. 2014 looks to be a year of major changes, in a possible framework of difficult economic conditions (within it the incidence of the US blockade), which would deepen and make measures faster to implement in the Cuban agricultural sector.
