The Cuban regime plans to temporarily cap the prices of six basic food products for Cubans: chicken, oil, pasta, powdered milk, detergent, and sausages. This was announced by the Deputy Minister of Finance, Lourdes Rodríguez, in a recent meeting with representatives of SMEs and the General Directorate of Imports of the Ministry of Foreign Trade. The entrepreneurs were chosen through the Tax Administration. "It was a way to reach each of you," Rodríguez said.
In that conversation, which CiberCuba has had access to, the deputy minister announced that they will cap the retail price of "six items" that were chosen, according to her, through a survey in which ground beef closely followed sausages. In the end, the latter were chosen because ground beef can have different origins with large price differences between them.
In this way, the maximum retail price of chicken (thighs and drumsticks pack) would be set at 680 pesos per kilogram (310 pesos per pound); powdered milk would be marketed at a maximum of 1,675 pesos per kilogram; pasta (spaghetti, etc.) at 835 pesos per kilogram; sausages at 1,045 pesos per kilogram; powdered detergent at 630 pesos per kilogram and soybean oil at 990 pesos per kilogram. These prices, clarified the vice minister, "will be made public prior to their implementation."
The Deputy Minister of Finance ensures that these prices have been defined after analyzing the import costs declared by private importers in the second half of 2023 and the first quarter of 2024. A very controversial point for representatives of small and medium-sized enterprises, who understand that in an unstable international context, where prices fluctuate a lot, it is difficult to adjust to what the Government proposes, despite some verbalizing their willingness to do so thinking of the population. However, they raised three structural problems of the Cuban economy: the distortion of the exchange rate, the tax pressure on SMEs, and the scarcity of fuel that hinders the transportation of goods within the Island and even to remove the containers from the Mariel Port.
In any case, the deputy minister sold them the idea that these price caps, which are not new on the Island, are now being approved to contain the pace of price growth in the economy. However, Rodríguez clarified that this is a temporary measure because the price policy in the country is moving towards what she calls "decentralization of prices," which is nothing more than respecting market laws, where prices regulate themselves, depending on supply and demand.
In theory, the measure is taken to also contain inflation, which ended the month of May in Cuba at 31%; almost 10 times higher than the around 3% in Europe and the United States in the same month.
To justify that products like oil, instead of decreasing in price with the price ceilings, are being sold at a higher price, the vice-minister clarified that this is because currently "there may be inventory being carried over from purchases made at lower prices at a certain time."
Although he admitted that it is difficult to sell products at the same capped price throughout the island, regardless of transportation costs (it is not the same to transport goods from Havana to Guantanamo as it is to distribute them in the capital), he assumed that this problem does not have a solution "for tomorrow."
It was also acknowledged at that meeting that there is a shortage of products such as chicken, oil, and powdered milk, which as of today "cannot be found on the Island."
Cuban entrepreneurs are concerned about the issue of transportation, paying VAT (Value Added Tax), but they also wanted to know if stores accepting MLC would continue to compete with them, setting higher prices, as is the case with many products at present.
At the beginning of the meeting, the Deputy Minister of Finance referred to the new resolution that imposes that Small and Medium-sized Enterprises (SMEs) that are suppliers to state-owned companies cannot earn more than 30% in the commercial exchange they maintain. This rule, already published in the Official Gazette, establishes, in official jargon, a maximum profit of thirty percent (30%) in the economic contracting of state entities with non-state management forms.
Obviously, the Government does not present it as a limitation for SMEs but for state-owned companies. "Entry is not restricted to non-state entities but rather the spending of state entities," said the Deputy Minister of Finance, ensuring that in 2023, state-owned companies paid 10.000 million pesos to SMEs and by May that figure was already around 4.000 million pesos. If this trend continues, the State would end the year with 12.000 million pesos in purchases from the private sector.
This rule that limits the profits of Small and Medium Enterprises to 30% comes into effect on July 1st.
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