Voluntary Report - public distribution

**Date:** 6/22/2004

**GAIN Report Number:** C14012

C14012

**Caribbean Basin**

**Market Development Reports**

**October 2003 Survey of Havana Markets**

**2004**

**Approved by:**

![](media/image1.wmf)Margie Bauer, Director

Miami ATO

**Prepared by:**

U.S. Interest Section, Havana

**Report Highlights:**

This report was prepared by the U.S. Interest Section, Havana and is
part of an ongoing series of reports on food availability. The Cuban
government implemented new strategies in July 2003 to reduce food
prices. However, their efforts have not yet been successful and the
average Cuban is still unable to afford higher cost protein such as
meat.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Miami \[C11\]

\[C1\]

**A. Summary**

The Cuban government is once again trying, and failing, to reduce state
market prices to make basic foodstuffs affordable for the average Cuban.
On July 30, 2003, Carlos Lage announced new strategies to complement
efforts to boost agricultural production with market \"improvements,\"
beginning with the elimination of intermediaries. Lage announced that
prices in all state markets managed by the Ministry of Agriculture would
be \"capped;\" he subsequently announced that the prices of root
vegetables, grains and meat sold in markets run by the Ministry of
Domestic Trade (MINCIN) would be fixed at the same capped prices. When
MINCIN market supplies decreased, the price capping was rescinded on all
but root vegetables. Lage has publicly downplayed the poor results of
the new initiatives, saying they were intended to effect only gradual,
modest price reductions.

In October 2003, USINT conducted a survey of the various Havana markets,
the first after the implementation of the recently announced state
agricultural market price policies. The October market survey showed the
ration card (libreta) experienced no price changes and no significant
supply changes. Some prices for basic foods in the free market
\"agromercados\" fluctuated since August, but prices for those same
products in state capped markets stayed the same, or changed
insignificantly.

**B. New GOC Measures for Lowering Prices**

Prices in both private and state agricultural markets, particularly meat
products, are unaffordable for the average Cuban. At the opening of a
renovated network of 70 state farmers markets in Havana on July 30,
Carlos Lage, Vice President of the Council of State and Executive
Secretary of the Council of Ministers, announced new strategies to
reduce state market prices. Lage promised to ensure that agricultural
supplies obligated for social consumption are made readily available to
hospitals, schools, restaurants, workers\' cafeterias, and ration card
stores and that the general population has access to produce at more
affordable prices.

Lage acknowledged that current levels of production are insufficient,
but made clear that price reduction should not rely solely on larger
harvests, but also on agricultural market \"improvements,\" beginning
with the elimination of intermediaries. Under the new system, capped
markets would receive goods either directly from the state collecting
system or an independent agricultural unit such as a state farm or a
cooperative. Provincial administration councils were to set top prices
for the products in their respective territories.

According to Lage, new payment systems would be implemented within the
state market network to ensure that workers\' earnings correspond to
their sales. Lage\'s plan was to decrease prices, in turn increasing
sales and providing greater benefits to agricultural market employees.

On August 23, national newspaper Juventud Rebelde reported that as of
September, root vegetables, grains, and meat sold in the more than 1,000
produce markets run by the Ministry of Domestic Trade (MINCIN) would be
fixed equal to those of state agricultural markets operated by the
Ministry of Agriculture. The announcement maintained that prices for
these products set by the People's Administration Council, would relieve
the Cuba people and impose greater control over intermediaries.

On September 28, weekly publication Tribuna reported that the
agricultural markets operated by MINCIN would impose capped prices only
for root vegetables. This was the first publicly

Prices: October 2003 Survey of Havana Markets acknowledged setback of
the new policy.

No significant price reductions have materialized from the policy
measures Lage announced in July. The only price reductions were for
squash and sweet potato. On October 23, Lage justified the limited
success of recent attempts to lower agricultural prices. He claimed the
new measures have not been widespread because they were designed to be
gradual and modest in order to control the quantity of cash circulating
in the Cuban economy. He maintained that a sudden influx of cash might
create a disincentive to work and expand the black market.

An immediate consequence of the implementation of the announced measures
as published in Trabajadores on September 15, was the immediate
cessation of many agricultural vendors. Some 90 stands closed the first
few days after the announcement. Price ceilings in MINCIN agricultural
markets made business unprofitable and forced Lage to reconsider the
initial strategy, and limit capped prices to root vegetables alone.

**C. Market Survey/Items Surveyed**

The following items are considered the most essential foods purchased to
supplement insufficient ration card supplies: rice, beans, lard (as a
substitute for cooking oil), small cooking plantains, squash or sweet
potatoes, onions, garlic, and tomato sauce. This survey also accounts
for pork, lamb and ham, which, although generally unaffordable for the
average Cuban family, are often purchased for special occasions.

Those families with an above average salary (or with access to dollars)
will purchase a wider selection of fruit and vegetables. Of these
\"second tier\" items, the following are included in this survey:
pineapples, papayas, oranges, limes, yucca, malanga (a tuber), cabbage,
carrots, beets, eggplant, tomatoes, lettuce, and cucumbers.

**D. Food Availability and Prices in October 2003 in Comparison to
August 2003**

1\. Rationed Food

There were no changes in the availability of rationed food between
August and October.

The distribution of U.S.-bought chicken leg quarters continues on a
fairly regular basis for 0.7 Cuban pesos (CP)/lb, equivalent to less
than 0.03 USD/pound.

2\. Agromercados - Free Farmers\' Markets

The October survey showed that in comparison with August, the only basic
product that increased in price was red beans, from 12.0 CP to 12.0-15.0
CP, while prices for black beans decreased from 10.0 CP to 8.0 CP, lamb
and pork ribs from 21.0 CP to 15.0 CP, and 23.0 CP to 20.0 CP,
respectively (a hyphen indicates a range of prices). No price changes
were noted for the other basic products.

From the \"second tier\" list, no significant changes were noted except
for carrots offered under the table in one market by a single vendor
with a 100% price increase, from 10.0 CP/lb to 20.0 CP/lb. A wide range
of prices for some products, such as pineapple, tomato and pepper were
based on quality, but were kept within the August price ranges. Cabbage
and okra, not available in August, were now available at 6.0-8.0 CP for
cabbage, and 6.0 CP/lb for okra. These markets have the fruits and
vegetables.

**E. Prices: October 2003 Survey of Havana Markets**

1\. State Capped Markets

Prices of these markets are published monthly in the GOC \"Tribuna de La
Habana\" newspaper. The only price changes since August 2003, were sweet
potato, from 0.7 CP/lb to 0.5 CP/lb and squash, from 0.5 CP/lb to 0.3
CP/lb.

Other products maintained the same prices as reported in August: rice
(steady at 3.5 CP), lard (15.0 CP), cooking plantains (0.6 CP), tomato
sauce (4.0-6.0 CP), lamb (20.0 CP), viking ham (34.0 CP), oranges (0.6
CP), malanga (2.5 CP), cabbage (1.0 CP), beets (1.0 CP), and cucumber
(1.0 CP).

Despite the list of prices published in Tribuna, many products \--
particularly green vegetables and fruit \-- were not available,
including onion, pineapple, orange, yucca, cabbage, carrot, beet,
eggplant, tomato, lettuce, and cucumber.

2\. MINCIN Agricultural Markets

According to an article published in Tribuna on September 28, MINCIN
operated agricultural markets would apply capped prices only for root
vegetables. All other products were to be sold at market prices with a 5
percent tax (in comparison to the 2.5 percent tax for capped products).
In fact, only the prices of squash (0.8 CP), oranges (1.0 CP) and papaya
(2.3-2.5 CP) exceeded capped prices. Other products available included
peanuts (8.0 CP/lb), chickpea (12.0 CP/lb), sesame seed (5.0 CP/lb),
vinegar (4.5-5.0 CP/lb), and dry cooking wine (4.5

CP/lb).

3\. EJT (Ejercito Juvenil del Trabajo) Markets

The EJT market in the Vedado neighborhood had the lowest prices of all
markets. Basic products offered were rice for 3.3 CP, six percent lower
than in the capped market; red beans for 5.5 CP, 22 percent lower; white
beans for 5.0 CP, 29 percent lower; viking ham for 31.0 CP, 9 percent
lower; small cooking plantains for 0.4 CP, 56 percent lower; and sweet
potato for 0.3 CP, 40 percent lower.

Second tier products were mostly unavailable. The only fruit available
was guava at 2.0-2.25 CP/lb. No green vegetables were available.
However, in addition to pork, lamb, and elaborated meat products,
chicken was available at 19.0 CP/lb.

The quality of the products offered at the EJT market is generally good,
and it is always the first purchasing option for any household. These
markets are crowded enough during the week, but lines become unbearable
on the weekends. Availability of products decreased in comparison with
April, but remained almost the same as August.

4\. Organoponics

An organoponic in Nuevo Vedado offered good prices and quality for an
extremely limited selection of fresh green vegetables. No basic products
were available. The only products for sale were spinach (1.5 CP/lb),
radish (1.0 CP/lb), chives (1.0 CP), and oregano (1.0 CP/lb). This kind
of market can supplement a typical Cuban family's demand for some fresh
green vegetables and spices, but is not often the first choice.
Availability of fresh products decreased from 13 in April to eight in
August, and four in October.

5\. Fish Shops

The fish shop at J and 9th St., Vedado, was offering grunt at 6.0 CP/lb,
whole triggerfish at

8.0 CP/lb and whole shrimp at 50.0 CP/lb. The other surveyed fish shop,
also in Vedado, had whole grunt, whole shad, whole carbine, all at 6.0
CP/lb, whole porgy at 8.0 CP/lb, and ground fish at 8.0 CP/lb. Fish
croquettes, generally the fish product of highest demand, usually at 0.5
CP each, was unavailable.

**F. Prices: October 2003 Survey of Havana Markets**

1\. Imagenes/Ideal Variety Shops

Prices are fixed in all Imagenes/Ideal variety shops. A survey of two,
one in Vedado and another in Centro Havana found the Vedado shop had
less variety, and very few of the products in the basic market basket.
We found only imported rice for 3.5 CP/lb and 4.0 CP/lb, according to
quality. Several additional items were available which cannot be found
in the markets mentioned above. Eggs were available for 2.0 CP each, as
were vegetable protein hamburgers (2.0 CP each), Spanish sausage (24.0
CP/lb), leg ham (34.0 CP/lb), and pork chops (27.7 CP/lb). In Centro
Havana, imported rice was available for 3.5 CP/lb, along with black
beans for

7.0 CP/lb. There was a slightly larger variety of non-basic items
including spaghetti (20.0 CP/lb), bread (6.0 CP), eggs (2 CP each),
Spanish ham (24.0 CP), minced chicken (15.0 CP), and other elaborated
pork meat such as smoked loin (28.0 CP), salami (32.0 CP), Spanish
sausage (24.0 CP), bacon (28.0 CP), and leg ham (34.0 CP).

Prices for rice and beans at these variety stores are more expensive
than in the EJT, but the same as state agromercados. As noted, these
stores offer foodstuffs not available in the above- mentioned markets,
such as eggs, and elaborated meat products. Bread is a little bit more
expensive than in the non-rationed Cadenas del Pan, but the quality is
better (Imagenes stores sell soft loaves, while the Cadenas del Pan sell
hard baguettes). Overall, the availability of products in the
Imagenes/Ideal chain decreased in comparison to August.

**G. Comment**

The measures to reduce prices in state markets and make produce more
accessible to the population remain ill defined. There is no clear
causation between Lage\'s agricultural marketing \"improvements,\" which
largely consist of eliminating intermediaries, and a new payment system
leading to lower prices. Previous attempts of this nature have only led
to scarcity in state agricultural markets, mainly due to the GOC\'s
inability to effectively assume the intermediary role. In the past, lack
of an organized transportation network and personnel experienced with
working with farmers have resulted in higher prices, not lower ones.
Many products became unavailable in state markets at prices farmers
considered too low and were sold only in private markets at higher
prices.

Lage\'s policy seems to be little more than a repetition of previous
attempts to reform Cuba's agricultural markets that have consistently
failed to make produce affordable for the average Cuban family.
Subsequent surveys will reflect the results of the new policy, but no
major changes are expected.

**H. For more information on food and agriculture in Cuba please visit
our website:**

**[www.cbato.fas.usda.gov](http://www.cbato.fas.usda.gov/), and click on
"Cuba"**

Caribbean Basin Agricultural Trade Office

Foreign Agricultural Service

United States Department of Agriculture

909 SE 1^st^ Ave., Suite 720

Miami, FL 33131

Phone: (305) 536-5300

Fax: (305) 536-7577 E-mail: <cbato@cbato.net>