Thursday, October 29, 2009

Price controls at agros?

AP reports that price controls may be instituted at farmers markets, citing producers, vendors, and consumers who were told by the Communist Party – not the ministry in charge – that the new policy would take effect November 1.

Now it’s apparently postponed until January 1 due to strong adverse reaction, including from consumers who seem to understand that price controls would threaten supply.

The government would do better to put this policy in the category of those that are studied forever and don’t see the light of day.


Anonymous said...

An article in Progreso Weekly, ( by Aurelio Pedroso, hints that the sale of pork for Christmas will be handled by cooperatives, not by individuals. Presumably, cooperatives don't charge as much as individuals and have better distribution. (Or am I misreading the hint?) Here's the text:
"A private salesman authorized by the government to sell pork told a friend of mine that he has been forbidden to do it during the month of December. [...] The word is that, beginning on Dec. 1, cooperatives will go into action. Let us look forward to that development, which ranks as a national security issue, because pork for the holidays is a serious matter."

Anonymous said...

Looks like Fidel and Raul need the new Mercedez model for this upcoming Christmas. What's new? Really, what's new here, boys and girls?

leftside said...

What is the biggest problem with the Agros? Ask almost anyone and they will tell you the prices are too high (link is a relevant JR article from last year). They are out of alignment with most incomes. How dare the Government try to lower prices so everyone can buy at the agros!

The Government has said its aim is to align food prices with incomes. I am sure our host, like any good market liberal, will tell you the only solution to high prices is increasing supply. Well supplies will be expected to be dramatically increased soon, with the decline of the State cafeterias. But in the case of Cuba, the price distortions are so big that supply would have to go through the roof - a huge effort resulting in massive waste. Focusing on supply does nothing to address the waste and layers of middlemen profit that increases prices as well.

Cuba has been looking at what to do with the Agros for a while. Even with overflowing supply, the Agros have proven impossible to serve all, or even half, of Cubans. It serves those with access to hard currency, mostly. That kind of basic inequality is not what Cuban socialism was built on, nor what it stands for. Even if some production must suffer, Cuba is making up for that in other ways (more producers, more space for farmers, more help, decentralization, more land, etc.).

It is also worth nothing the "facts" in this AP report are based on speculation based on the word of some disgruntled folks standing to have their profits decline. How exactly is the profit going to be squeezed? Is the State going to take over more roles? Are the legal middlemen (allowed to make 27% profit) going to get put out of business? Are the producers or sellers going to take the bigger hit, etc., etc?

Anonymous said...

"What is the biggest problem with the Agros? Ask almost anyone and they will tell you the prices are too high..."

Correct, which is why the government is doing its best to "solve" the problem by outlawing the growth, transport and sale of food. Just another lesson for other needy nations to follow, eh?

Hey, Lefty, did you hear that in Venezuela they are beginning to ration electricity and water? Does this system sound familiar, and do you think the Venezuelans roll over and play dead?

leftside said...

by outlawing the growth, transport and sale of food.

Ummm... no. Only the high price of food is being regulated.