Analysis of What Cuba’s Minister of Economy and Planning Said to Cuba’s Legislature  

A previous post covered the July 8th speeches to Cuba’s legislature (the National Assembly of People’s Power) by President Raúl Castro and Minister of Economy and Planning, Marino Murillo. However, that post was unable to dissect the English translation of the latter. Now Granma, Cuba’s Communist Party newspaper, has provided the following analysis of Murillo’ speech.[1]

In the last half of 2016, the Cuban government will be implementing measures that are “intended to optimize the country’s finances and emphasize the need for rational use of resources and efficiency, in order to reduce expenses and take advantage of untapped opportunities for savings.”

These measures include “plans to reduce liquid operations, which include adjustments by entities which have hard currency self-financing systems in place. Others involve suspending the assumption of short and medium term credits, as well as a cut, of approximately 28%, in planned energy consumption in the non-residential sector.”

The reductions of these expenses will mean “elimination of income” for some, but “other sectors with untapped opportunities are called upon to make an extra contribution to the economy. Tourism, for example, must generate some 25 million pesos more than initially planned.”

“In terms of energy consumption, fuel cutbacks of some 369,000 tons . . . are needed, while use of electrical energy must be reduced by 786 gigawatts. . . . However, the residential sector, which represents 60% of the country’s electricity consumption, will not be impacted.”

“Economic activities, such as tourism, which make a strategic contribution to the national economy – and consequently the country as a whole – will receive their projected supply of electricity, as will others capable of assuring export income or replacing imports with their products. Nor will the importing and production of food, or retail sales, be affected.”

“Also prioritized is the production of construction materials and indispensable inputs for agriculture, while maintaining attention to the country’s internal financial equilibrium.”

The steps to be taken in the last half of this year “are intended to address limitations with rationality, without changing the basic plan, and respond to the energy situation with precisely focused adjustments.”

There will be “strict adherence to the principle that funds allocated for salaries must be backed by production, in accordance with guiding benchmarks. Avoiding a negative impact on the average salary-productivity ratio is key to advancing along the course charted.”

“Leading the list of imperatives is stopping the importing of containers full of items that can be produced domestically, since reducing imports is crucial to balancing the budget equation.”

Encouragement was found in the increase in the “volume of milk collected by the state wholesale system . . ., implying a reduction in expenses associated with importing powdered milk, initially projected at 53,000 tons. Since dairy farmers have surpassed plans by more than seven million liters and the industry by 32 million, projected imports can be reduced.”

Another premise for these measures is “reducing expenses in hard currency to a minimum, maintaining only the indispensable associated with key economic activities.”

Also important is “avoiding the addition of inflationary pressures. Adequate levels of retail sales will be assured, and the necessity of salary expenses having productive backing is reiterated.”

“Other results thus far this year indicate the need to reprogram levels of freight transportation and, therefore, scheduled investments. It is now projected, however, that 17% of the funds originally planned for investment will not be spent. The 2016 total was estimated at 6.5 billion pesos, placing the transport sector among those with the largest investment plans in the country. Key development projects to a tune of 4.5 billion pesos will be guaranteed. The prioritized group of sectors in which strategic investments will be fully funded includes tourism, energy, the oil industry, and agricultural programs.”

The “average salary in state enterprises will be slightly lower than projected, with a reduction in the wage expenses-gross value added index.”

“In reference to the food supply, . . . planned imports of foodstuffs are assured. Fortunately, a decline in prices on the international market for some [food] products has given the state some relief in terms of funds allocated for food imports, allowing for savings of approximately 193 million U.S. dollars. Nevertheless, domestic shortfalls in projected production of food items have led to unplanned imports, costing some 50 million additional dollars.”

Recent steps have been “taken to increase the buying power of the Cuban peso, adding that efforts to stabilize their supply in retail outlets continue, to make the impact of price reductions sustainable over time. Lower prices for chicken, rice, cooking oil, powdered milk, and chickpeas have led to [recent] increased sales.”

“Throughout the report, a renewed call for increased productivity and efficiency, on the part of all, was made clear. Using resources rationally at all times, in all places, is now imperative.”

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[1] Delgado, Morales & Rodriguez, Efficiency on the economic agenda, Granma (July 14, 2016). On July 13, only five days after this speech, Murillo was replaced as Minister of Economy and Planning by Ricardo Cabrisas Ruiz, Vice President of Council of Ministers. According to the State Council, Murillo, in his capacity as Deputy Prime Minister and Head of the Permanent Commission for Implementation and Development, will now focus on updating the Cuban economic and social model, adopted by the 6th and the 7th Party congresses. However, no reasons were provided for this change. Official Note, Granma (July 13, 2016), ; Assoc. Press, Cuba Shuffles Economic Leadership Amid Fiscal Struggles, N.Y. Times (July 13, 2016).

 

U.S. Secretary of Agriculture Visits Cuba

On November 11-13, U.S. Secretary of Agriculture Tom Vilsack, a former Iowa Governor, visited Cuba.[1]

Vilsack in Cuba

In his meeting with Ricardo Cabrisas Ruiz, a Council of Ministers Vice President, they discussed international economic relations, the interest of the U.S. agriculture sector in the island and obstacles to trade between the two countries caused by the U.S. embargo (blockade). Vilsack and the U.S. delegation are on the left in the above photo; the Cuban delegation, on the right.

At a meeting with Cuban Agriculture Minister, Gustavo Rodriguez Rollero, Vilsack said the U.S. was “very anxious to establish a positive working relationship with Cuba and to work together cooperatively in a number of issues.” These included organic farming, agricultural cooperatives, the Cuban experience in biotechnology, confronting common pests and diseases and the impact of climate change. They also talked about Cuban procedures for fruit and vegetable export certification and field inspections.

The U.S. delegation also had a meeting with Cuba’s Foreign Minister, Bruno Rodriguez, and Josefina Vidal Ferreiro, the Director General of U.S. Affairs at the Foreign Ministry.

Vilsack visited an agricultural market in Havana and was impressed by the fact that the vegetables and fruits came from hundreds of farms scattered throughout the city. “Urban agriculture is something that Cuba has long practiced and the United States wants to learn,” he said.

On a visit to two cooperatives, near the city, a member of one of the coop’s board of directors expressed confidence that Cuba’s new relationship with the U.S. will make life on the farm easier. The coop director said, “We believe that this represents something that will bring us improvement in every sense: production, better equipment, new tractors.”Vilsack, in turn, observed that it “was very clear that the farmers are people who have deep love for the land and the work they do for the citizens of their country.” He noted that they expressed their concern over problems with machinery, irrigation systems and tools needed to plant and harvest and the impact of climate change. But, he said, their creativity and innovation to maintain production levels were impressive.

In a press conference at the U.S. Embassy in Havana Vilsack said that lifting trade barriers with Cuba was a matter of “common sense” and promised to look for ways to relax existing measures. “We have work to do to identify those barriers, understanding and seeing what kinds of flexibilities may be to remove them or at least minimize them.” The Secretary also complimented Cuba’s reaction to the recent U.S. problems with avian flu. “Unlike other countries which decreed a general ban on importing U.S. poultry, Cuba “faced the problem regionally, looking state by state, which is the focus of international organizations and which is based on science.”

According to Vilsack, the U.S. stands to gain a significant portion of Cuba’s agricultural import market. That market is about $2 billion annually, with the U.S. holding about 16 percent. Before sanctions were put in place, the U.S. was responsible for nearly half. “There is no reason why if barriers can be reduced and eliminated that we wouldn’t be in a very competitive circumstance,” Vilsack stated that a number of U.S. agricultural products could be attractive in Cuba, including pork, corn, soybeans and poultry.

Important in this regard, said Vilsack, was the need for the U.S. to eliminate the ban on trade credit on U.S. agricultural exports to Cuba. A bill to do just that, Vilsack mentioned, recently had been introduced in the House of Representatives by Congressman Rick Crawford (Rep., AK).[2]

“Trade is a two-way street,” Vilsack said. “Consumers in the U.S. are interested in having a variety of products throughout the year and [U.S. agricultural] imports have reached record levels in recent years. One of the challenges we have when ending the embargo [blockade] is a container that comes with products to Cuba should return to the U.S. with Cuban products. This is common sense.” Such Cuban exports would be assisted by the U.S.’ having an office in Cuba for the Agriculture Department’s Foreign Agricultural Service and Animal and Plant Health Inspection Service personnel to facilitate technical conversations and addressing any problems in Cuba’s meeting U.S. requirements.

Moreover, Vilsack noted that Cubans have embraced organic agriculture, one of the fastest-growing U.S. food segments. Cuba has a strong organic sector because it hasn’t had access to chemicals and pesticides. “They had no other alternative but to be organic.” Vilsack emphasized that this is an opportunity for Cuba because only 1 percent of America’s land mass is committed to organic production. “There is no question the demand is there.”

Vilsack was accompanied by Democratic Senator Jeff Merkley (Oregon) and three Democratic members of the House of Representatives: Kurk Schrader (Oregon), Suzan Delbene (Washington); and Terri Sewell (Alabama) as well as other representatives from the Department of Agriculture and the Chargé d’Affaires of the U.S. Embassy in Havana, Jeffrey DeLau­rentis.

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[1] Cabrisas receives U.S. secretary of agriculture, Granma (Nov. 12, 2015); Gomez, USA wants to expand trade with Cuba, but maintain restrictions, Granma (Nov. 12, 2015); US Agriculture Secretary talks with his counterpart in Havana, CubadDebate (Nov. 12, 2015); Gomez, Lifting the blockade is a matter of common sense, Granma (Nov. 12, 2015); Assoc. Press, US Agriculture Secretary Visits Cuba to Build Trade Momentum, N.Y. Times (Nov. 13, 2015); Minister of Foreign Affairs received the Secretary of Agriculture of the United States, Granma (Nov. 13, 2015); Doering, Vilsack: Cuba a great opportunity for U.S. agriculture, Des Moines Register (Nov. 13, 2015); Vilsack: Permanent USDA presence needed in Cuba, Farm Futures (Nov. 16, 2015).

[2] On October 6, 2015, Representative Rick Crawford introduced H.R. 3687, the Cuba Agricultural Exports Act, on behalf on himself and House Agriculture Committee Chairman Michael Conaway (Rep., TX) and Representative Ted Poe (Rep., TX) with 11 other Republican and 2 Democratic cosponsors. Crawford said this bill “would repeal restrictions on export financing and give producers access to Department of Agriculture marketing programs that help the US compete in foreign markets. Further, this legislation enables limited American investment in Cuban agribusinesses, as long as US regulators certify the entity is privately-owned and not controlled by the Government of Cuba, or its agents.” Crawford concluded, “ I believe that agriculture trading partnerships with Cuba will help build a foundation of goodwill and cooperation that will open the door to long-sought reforms in the same the way that American influence has brought reform to other communist states.” (Crawford, Crawford Introduces Cuba Agricultural Exports Act (Oct. 6, 2015); Poe, Cuba Agricultural Exports Act (Oct. 7, 2015).