Effects of the monetary system on the productive bases of the agricultural sector
In a second moment of the Round Table, Marino Murillo Jorge, head of the Commission for Implementation and Development of the Guidelines, ratified what was said by the Minister of Finance and prices: “If even with the increase in income, someone has to face a short treatment and his admission makes it difficult, we are in a position to help him through social assistance ”.
“In a first variant, we had thought of raising wages further and removing all subsidies, but that is risky. The issue of subsidies and gratuities does not only exist in Cuba, but in the world; the problem is the magnitudes. That is why there has been talk of excessive subsidies and undue gratuities. We transfer tranquility to the population; in cases like the one we have mentioned, of short treatment, there may be a solution in this way ”.
In 2021, she said, “we have to grease the mechanisms well, abandon the practice of subsidizing products and start subsidizing people.”
Cuba has 6.3 million hectares of arable land. Turning to the issue of agriculture, Murillo Jorge pointed out that, of those 6.3 million cultivable hectares, approximately 80% is state property and the rest belongs to individual farmers, landowners. Of that 80% state-owned, roughly 70% is managed in non-state ways.
“Hence the concept defined in the Party documents and in the conceptualization of the Cuban model, on the difference between property as property and property as management. In Cuba, the State has not alienated ownership of the land. When it is given in usufruct, the State continues to be the owner.
“There are many questions about that and people question things. What we are saying is that if the State loses ownership of the land and instead of handing it over in usufruct, it sold it, the higher-income producers would buy the land from the lower-income ones and a process of concentration would gradually take place. not from production but from property, and we would go to the latifundia.
“We know that indiscipline is committed and there are people with land in usufruct who do not work it and hire others, but the legal definitions are to give the land in usufruct so that people can work it. Therefore, you can find these people fundamentally in the CSS (because almost 92% of those who received land in usufruct were linked to the CSS), and also a peasant who owns a certain amount of land and who, in addition, has another part in usufruct ”.
In describing the productive base of Cuban agriculture, he explained that the UBPCs have a large participation in the sugarcane producers sector, while in the CPAs participation has been losing in recent years. In the CSS there are peasants who own land and peasants who have land in usufruct. There is a group of non-associated individual peasants, and also purely state structures.
“Anything that is going to talk about agriculture in the Ordinance Task goes through two things: first, the stock prices, how are you going to pay for production to that productive base; second, to that productive base you sell products and provide services. The other approach is how much it is going to cost me what you are going to sell me as a producer.
“In recent years, a phenomenon has been taking place in the Cuban economy, in which we have made price increases to stimulate the productive base. But, there has also been a deficit of inputs, fertilizers, chemical products, “he said.
Prices, stimuli and the new monetary environment
He recalled that the Cuban economy operated in two circuits, one 1×1 wholesale and one 24×1 retail. “An interesting thing happens in agriculture. It is not true that current stockpile prices implicitly have an exchange rate of 1×1, because as price increases have been made to stimulate producers, and the current price does not express a change of 1×1.
“Likewise, a few years ago, in the case of agriculture, we increased imported inputs multiplied by three and it was not in both directions. So many agricultural products, because of these stock prices to stimulate producers, are not expressing a 1×1 environment.
“Today we pay 8,696 pesos for a ton of dry corn, and the cost of corn in the world market is 219 dollars. When you divide those two numbers it gives 39.7, at an exchange rate of 16×1. The maize stockpile plan was about 60,000 tons, and the price increase was aimed at stimulating producers and stockpiling about 100,000 tons.
“The problem is not only raising prices, but there are also organizational and input issues that must be reviewed. What are we saying to agricultural producers, that it is not possible, regarding these exchange rates, to now set a price that entails a devaluation of 24. We are going to review everything that is necessary to review. Obviously, the starting point is no longer 1×1, it is no longer 1×24.
We have to understand that everything is integrating in the economy and we have to see it comprehensively.
“Fairly enough, we could take all this at the exchange rate of 24, and with corn we would have to lower prices. How do you explain that to a producer? We have designed a variant where the prices of agricultural producers do not fall, but at the starting point, it is true that they will not rise at the same rate as the exchange rate of 24, because the starting point for them is not 24 ” .
In this sense, he pointed out that, under this reasoning, wet paddy rice has a price of 3,478 and will be 5,439, and rice for consumption cost 6,956 and now 10,878 will be paid.
“It is true that prices are not going to rise at the same rate as the growth of costs, it is something that the farmers are telling us. If the starting point were smaller, the magnitudes would be different. We ask the productive base for understanding on this issue. We are in the first year of the Ordering Task ”, he stated.
In agriculture, 30 products were centralized, and of them eight have to do with tobacco, in which there is a chain process, agriculture, industry, export. “In practice, the country has been left with 22 centralized products. This means that these prices are set by the Ministry of Finance or the Executive Committee of the Council of Ministers ”.
Later, he considered that “if the product is exportable, we must be very careful so that the positive effect of devaluing and multiplying the dollar by 24, basically, reaches the producer. That is an issue that is designed how it is going to be done ”.
Regarding the tax adjustments, he recalled that the annual exempt minimum when it comes to paying taxes for a farmer goes from 10,000 to 39,120 pesos. In addition, today 70% of the expense is recognized and 100% will be recognized, to justify 80%. “The tax burden continues to drop,” he said. At the same time, a tax rate of 5% is applied on personal income tax. “A progressive scale is not applied to the peasants.”
Challenges of agriculture in the face of the ordering task
In the final segment of the Round Table, the Minister of Agriculture, Gustavo Rodríguez Rollero, referred to the preparation process for the Ordering Task in this sector and the analysis of the proposals issued by the producers to the directive of that ministry, where a temporary group of specialists has been created.
In recent days, a training process for provincial leaders was concluded, and an information system was created with the training school of the sector that has monitored all the meetings held at the municipality level with the participation of representatives of the cooperatives.
To date, he reported, 4,715 cooperatives, of the around 4,800 existing in the country, and 12,368 people have participated in this process. 143 proposals have been collected, both doubts and concerns and suggestions.
The main approaches point to the preparation of cooperatives to face Zero Day. “We have about 500 cooperatives with financial and economic problems, and one of the analyzes is how we are going to treat these cooperatives.”
They also refer to the prices of products, services to producers and the prices of energy carriers.
“We are receiving opinions on the non-payments to the producers. In addition, some consider the prices of certain inputs high in relation to the increase in the price of agricultural products, and there are concerns about wholesale and retail trade margins ”.
Likewise, there have been proposals on the ways in which the CCS will face the challenges imposed by the Ordinance Task and the social security regime in the new scenario.
Rodríguez Rollero said that “we are in constant interaction regarding these issues and making some proposals that the temporal group is analyzing.”
The exchange is also carried out with a link icon and a repository on the ministry’s digital page, where you can read everything published daily on the Ordinance Task, as well as questions and answers related to the agricultural system.
There has been a constant exchange between the ministry and the Implementation Commission, “and we will have to continue to do so. There is a willingness to address all issues and concerns and respond to them within the framework of what was approved, “he said.
“In the country there are 4,800 agricultural cooperatives, 400,000 landholders and 300,000 livestock holders, more than 300 companies. Due to the magnitude of the sector, it is important to maintain exchange and communication, and that is how it will be done ”, he concluded.
AZCUBA: The Ordering Task, the most important element is to seek economic efficiency
In the final moments of the Round Table this Tuesday, Julio Andrés García Pérez, president of Azcuba, explained how the sugar business group has guided the work of the new sugarcane price within the framework of the Ordering Task.
“It is an opportunity, but also a challenge for the producers and for the system that serves them. Productivity, a sense of belonging and economic efficiency must be increased. In our case, we have identified it in three themes: agricultural yield, producers’ ability to pay in advance and the use of piecework. Elements that have been indicated and are in the resolution process ”.
“We wanted to compare the price that the sugarcane had in the last harvest, which was 175 pesos in this short stretch of the harvest that we have already started, in which there are 31 milling plants, but the price in order is 449 pesos. It grows 2.56 times.
“Some producers have told us about the increase in the price of inputs, but it is important to note that the profit margin per ton of sugarcane remains at 26 pesos. There is no alteration in the profit margin, our producers maintain the same that we had and, in addition, for the first year we form costs to sell the cane for 175 pesos and we are going to sell it for 449 pesos.
“It is a time for producers to capitalize, create reserves and manage. These are important elements that we are discussing today, because we cannot have the feeling that we are having a large monetary mass when we really have to foresee that in later moments we will be paying a difference in resources in January ”, said the manager.
“It is important that the producers appreciate that for us in the Ordering Task the most important element is to seek economic efficiency, and this is related to the increase in agricultural yield, the efficient use of the workforce and the management of the data sheet. cost for each type of activity. Let that have an expression in productivity.
“The challenge also this year is the integration with science and technology, the use of new products and a group of alternative measures that allow lower production costs. You cannot just think that the current technologies with which we have designed sugarcane production are the technologies that all producers can use, ”he said.
In this regard, he pointed out that there are producers who do not have all the technologies and must go to alternative measures. “For those, we are developing a group of productions, of aspects that in the sector we have been developing to strengthen the producer who does not have all the efficiency”.
At another time, he pointed out that there are cooperatives of ours that reach 70 tons, they may be entering more than 30,000 pesos through profit distribution. “That is, this effect of agricultural yield must be accompanied by the correct use of inputs (herbicides cannot be applied to areas with 30 tons per hectare with depopulation, because it has no impact). The Ordering Task does have restrictions on the products that producers buy, since prices are increased by having the converter ”.
Referring to the application of piece rates, he referred to the use of the advance to be paid according to work rules. “The use of advances responds to the principle of linking the man to the area and the policy of prioritizing piecework as a form of payment,” he commented.
Using a couple of examples, he pointed out that in the case of mechanized harvesting, if an operator cuts 75 tons / day he could receive an advance on the day of 99 pesos, according to the established rate plus productivity.
However, if another operator cuts 100 tons / day they will receive an advance on the day of 133 pesos; 34 pesos / day more than the first operator, due to the increase in productivity.
“The new sugarcane price system and its costs are aimed at increasing economic efficiency, labor productivity and agricultural yield. It is what we are focused on now, working with our producers.
“We will send all the producers a cost sheet manual in each cooperative. It must be borne in mind that our producers also produce agricultural production, which puts them in an advantageous position in terms of regulation ”.
Taken from Cubadebate