Tuesday, December 24, 2013

Cuban economic reforms replace muddy field with wholesale market

Cuban economic reforms replace muddy field with wholesale market

HAVANA, Cuba -- Two years ago, an ad-hoc wholesale produce market
appeared on the outskirts of Havana. Vehicles of every size and shape
from old American flatbeds to heavy-wheeled Russian hulks would converge
at nightfall on an often muddy field where they jockeyed for position.

Driver and helper would then proceed to sell onions, pineapples, papayas
and lettuce from the backs of their trucks to a varied clientele.
Pushcart vendors, vegetable stand dealers, and restaurant and cafeteria
owners would jostle their way through the crowd looking for the best
deal and then haul away their purchases by wheelbarrow, bicycle and car.
More than a few carried sacks of fresh produce over their shoulders.

Fast forward to December 2013; in the days before Christmas, both
produce sellers and buyers got an early present: a brand new wholesale
market venue, El Trigal, also on the outskirts of the capital.

Gone are the muddy field, lettuce wilting under the sun and sacks of
rice soaked by a sudden downpour.

From now on, business would be conducted in an enormous, well-lit
terminal run by ten men in bright red tee-shirts with the word
"cooperative" blazoned across the back.
El Trigal market is not just a new form of commercializing agricultural
products. The market itself is something new to have emerged from the
economic reforms being rolled out by President Raul Castro. It's one of
a still limited number of non-agricultural cooperatives approved by the
government that previously controlled all food distribution.

"This is providing a solution to the problem that farmers have been
complaining about, that when their harvests surpassed the amount
contracted by the government they didn't have anywhere to market the
excess, to sell wholesale," Claudio Sabron, one of the cooperative
members told CBS News just three nights after the market opened its doors.

Sabron and his nine equal partners, each of whom invested 1,200 Cuban
pesos to whip the building into shape, buy equipment and set the
operation in motion, also hope that it will become a profitable source
of income for their families.
The cooperative leases the premises from the State that retains
ownership of the property; but the workers run it, pay operating costs
and taxes and keep the profits. Sabron lists the cooperative's basic
expenses as including rent for the premises, taxes, electricity, wages
for three contracted workers to help run the place and fuel for the
modern forklift they've leased from the State. But he believes that cost
can be reduced by using the lift and other items efficiently and that
at the end of the year profits will be good.

"It will be a good incentive and encourage [us] to work. If a man who
is, as I said, putting in 18 hour days, is really compensated for what
he has put into this cooperative so that he can see another form, a new
form, of earning a living," said Sabron, who thinks that model will make
the market successful.

That reasoning is just what the government hopes will come out of
relinquishing State control over many establishments that were running
at a loss because workers had no interest in whether or not the ventures
were profitable.

Just over 200 small to medium-size state businesses running the gamut
from restaurants to produce markets to transportation were selected for
the experiment that got off the ground this year.

The official view is that cooperatives are a more social form of
production that private businesses and therefore will receive
preferential treatment with respect to taxes and other fees. The
government also is making credits available to cooperatives, credits
denied private business owners.

"We had to all contribute money, initial capital for this venture. It's
not a straitjacket, that is the working capital that the partners agree
to. But we each had to put in the same amount. But the State gives us
the facility to ask for a bank credit to complete the necessary capital
and get started and then the money we take in will be used to pay off
the bank loan. And once we're free of that debt we will recover our
initial investment with the profits that we begin to make," Sabron

This might all sound like Economics 101 to Americans. But it's a whole
new ball game in Cuba, where for more than half a century the State has
had a monopoly on nearly every aspect of the economy right down to shoe
repair shops and beauty parlors.

Operating independently of the government and state businesses, the
cooperatives, like El Trigal, will lease state property and equipment at
ten-year renewable intervals, operate on a market basis and divide
profits among members who would then be taxed on their income.

Sabron notes that when CBS visited the market it had only been in
operation for three days. So it was hard to evaluate just how much the
coop members would earn. But he said they would begin estimating yearly
earnings based on the monthly income.

The money will come from various sources. Vendors pay 120 Cuban pesos
(CUP) a night for the space where they display and sell their produce.
Buyers pay a 3 CUP entrance fee and can rent a large wheeled hand cart
for five CUP an hour to haul their purchases from the terminal to where
their transport is parked.

The coop can also rent space to licensed private businesses that would
provide services to both vendors and buyers. Already lined up are a
private cafeteria, restaurant, pizzeria and cane sugar juice stand that
will open shortly. Sabron points out that there is also space for a
carpenter and other workmen whose services might be needed in the 14
hours that the market is open nightly, from 6 p.m. to 8 a.m. Monday
through Friday.

"We won't earn a salary," said Sabron. "It's not a fixed salary because
one month I might earn 1,500 CUP and another month it could be up to
2,000 CUP. It will all depend on how much the cooperative takes in after
expenses and on how capable the cooperative is in providing services and
in reducing costs," he concluded.

The co-op members are hoping to attract a lot of sellers and buyers.

"The market is designed basically for selling wholesale. Everyone can
come here. No one is going to ask if buyers have a license to run a
business, if they are pushcart vendors or have a vegetable stand. Even
public health, sports and educational institutions can shop here.
Whoever wants to buy wholesale in bulk quantities can come here," he
told CBS News.

Wholesale markets serving the new private sector are still in short
supply but the opening of this market is being taken as a positive sign.
It both provides farmers with another place to market their produce and
represents another step in the State's shedding of responsibilities and
giving an opportunity to individuals, in this case in a cooperative, to
earn more than they would at a public sector job even if it means
working longer hours and working harder.

The crucial element is that the ten members of the cooperative feel they
are building something that is theirs and the more successful they make
it, the better their lives will be.

Source: "Cuban economic reforms replace muddy field with wholesale
market - CBS News" -

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