Cuba lifts ban on farmers buying supplies

* Reuters
* Monday March 17 2008

By Marc Frank
HAVANA, March 17 (Reuters) - Communist Cuba has partially lifted a decades-old ban on farmers buying supplies in the latest sign that new President Raul Castro is looking to individual initiative to stimulate food production.
Agricultural sources told Reuters on Monday that Cuba plans to open stores for farmers to buy tools, herbicides, boots and other supplies for the first time since the state took over all the country's shops in the 1960s.
"For the first time, all supplies are not being assigned by the central government. It's a market crack in the monopoly and centralization that it is sure to spread," a local agriculture specialist said, asking not to be named.
"It doesn't seem like much, but this is a very important first step," he said.
Raul Castro has raised hopes for economic change since becoming Cuba's first new leader in nearly half a century when he took over as president from his sick brother, Fidel Castro, on Feb. 24.
Few analysts expect a radical political departure from the one-party state but many predict Raul Castro will pursue measures to make the creaking state-run economy more efficient.
Raul Castro, 76, has said he believes Cuba must produce more food and cut imports from the United States and other countries. He vowed to lift restrictions that hinder output.
"The country's priority will be to meet the basic needs of the population," he said on taking office.
With food imports rising to almost $2 billion in 2007 and Cubans complaining about soaring prices, the younger Castro has put agriculture at the top of his agenda.
SEED AND FERTILIZER
State-run companies recently sent buyers abroad to purchase tools, hand held machinery and supplies such as fencing, seed and fertilizer, presumably to sell in their outlets across the country, a local business source said.
The farmers will be able to buy supplies in Cuba's hard currency, the CUC or convertible peso, which is worth 24 times more than the Cuban pesos that state wages are paid in.
Cuba began crediting dairy farmers two U.S. cents per liter (two pints) of milk earlier this year, which they can now use to purchase the supplies.
"They are readying a hard-currency store in the city which opens next month," said a dairy farmer by telephone from central Camaguey province.
"We'll be able to purchase hand-held tools, herbicides, boots, fencing and things like that," he said.
Milk producers in state and private cooperatives, as well as private dairy farmers, will initially gain access to the stores. It was not clear whether farmers receiving some hard currency for raising cattle or other work such as clearing land would also be able to shop at the stores.
"It's like a birthday party around here. All the members of the cooperative are very happy," the wife of a dairy farmer said in a telephone interview.
Cuban farmers complain the cumbersome state-run system does not work, leaving crops to rot and farmers without timely supplies such as animal feed, resulting in poor land use.
Cuba has around 250,000 family farms and 1,100 private cooperatives, which represent an island of individual ownership in an economy 90 percent controlled by the state.
But together they till less than one third of the land. In exchange for state-assigned supplies, they must grow certain crops or raise certain livestock to sell back to the government at fixed prices.
The remainder of the land is owned by the state, and half of that lies lies fallow.
Some Cuban economists say the state's monopoly over farm supplies and output holds back production because it does not reward better farmers and penalize unproductive ones, providing little incentive for development.
They have argued for more market mechanisms to provide farmers with timely supplies and to distribute their products.
The state has doubled or even tripled the price it pays in pesos for many farm products since Raul Castro began running Cuba on a provisional basis when his brother fell ill in 2006, in some cases adding a few cents in hard currency as a further incentive.
Individual farmers and cooperatives are also being offered more land and the government is considering opening up agriculture to foreign investment. (Writing by Anthony Boadle, Editing by Michael Christie and Kieran Murray) (For more on Cuba since Fidel Castro retired, click on http://www.reuters.com/news/globalcoverage/cuba)