March 17, 2008 / 3:06 PM / 12 years ago

Cuba lifts ban on farmers buying supplies

HAVANA (Reuters) - Communist Cuba has lifted a ban on some farmers buying supplies in the latest sign that new President Raul Castro is looking to individual initiative to stimulate food production.

Cuba's President Raul Castro reviews an honor guard with Mozambique's President Armando Emilio Guebuza at the Revolution Palace in Havana March 3, 2008. REUTERS/Enrique De La Osa

Agricultural sources told Reuters on Monday that Cuba will soon open stores for farmers to buy tools, herbicides, boots and other supplies for the first time since the state took over all the country’s shops in the 1960s.

“It’s like a birthday party around here. All the members of the cooperative are very happy,” the wife of a dairy farmer said in a telephone interview.

Raul Castro has raised hopes for economic change since becoming Cuba’s first new leader in nearly half a century when he took over as president from his sick brother, Fidel Castro, on February 24.

Few analysts expect a radical political departure from the one-party state but many predict he will pursue measures to make the creaking state-run economy more efficient.

Cuban farmers complain the cumbersome state-run system does not work, leaving crops to rot and farmers without timely supplies such as animal feed, resulting in poor land use.

Milk producers in state and private cooperatives, as well as private dairy farmers, will initially gain access to the stores. It was not clear whether nondairy farmers would be able to do so, but they believe so and were delighted.

“It has been hard to find supplies and for cattle you need wire and a machete. Now things are changing, and I see that as very good,” said Carlos Manuel Fernandez, a 62-year-old farmer who raises cows on the Havana outskirts.

“You cannot sow fields without fences, so the new measures are a big improvement,” he said.

A local agriculture expert said that allowing farmers to buy their supplies on their own was a major step forward.

“For the first time, all supplies are not being assigned by the central government. It’s a market crack in the monopoly and centralization that it is sure to spread,” the specialist said, asking not to be named.

Raul Castro, 76, has said he believes Cuba must produce more food and cut imports from the United States and other countries. He vowed to lift restrictions that hinder output.

“The country’s priority will be to meet the basic needs of the population,” he said on taking office.

With food imports rising to almost $2 billion in 2007 and Cubans complaining about soaring prices, the younger Castro has put agriculture at the top of his agenda.

SEED AND FERTILIZER

State-run companies recently sent buyers abroad to purchase tools, hand held machinery and supplies such as fencing, seed and fertilizer, presumably to sell in their outlets across the country, a local business source said.

The farmers will be able to buy supplies in Cuba’s hard currency, the CUC or convertible peso, which is worth 24 times more than the Cuban pesos that state wages are paid in.

Cuba began crediting dairy farmers two U.S. cents per liter (two pints) of milk earlier this year, which they can now use to purchase the supplies.

“They are readying a hard-currency store in the city which opens next month,” said a dairy farmer by telephone from central Camaguey province.

“We’ll be able to purchase hand-held tools, herbicides, boots, fencing and things like that,” he said.

Cuba has around 250,000 family farms and 1,100 private cooperatives, which represent an island of individual ownership in an economy 90 percent controlled by the state.

But together they till less than one third of the land. In exchange for state-assigned supplies, they must grow certain crops or raise certain livestock to sell back to the government at fixed prices.

The remainder of the land is owned by the state, and half of that lies fallow.

Some Cuban economists say the state’s monopoly over farm supplies and output holds back production because it does not reward better farmers and penalize unproductive ones, providing little incentive for development.

They have argued for more market mechanisms to provide farmers with timely supplies and to distribute their products.

The state has doubled or even tripled the price it pays in pesos for many farm products since Raul Castro began running Cuba on a provisional basis when his brother fell ill in 2006, in some cases adding a few cents in hard currency as a further incentive.

Individual farmers and cooperatives are also being offered more land and the government is considering opening up agriculture to foreign investment.

(Writing by Anthony Boadle, Editing by Michael Christie and Kieran Murray)

For more on Cuba since Fidel Castro retired, click here

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