The Cuban government has implemented price caps on several imported food items, despite initial indications that it might reconsider following warnings from private business owners. These entrepreneurs cautioned that the measure would force them to cease importing essential goods like chicken and powdered milk, thus exacerbating food scarcity in the nation.
According to a new regulation published in the Cuban Gazette on Monday, the price of chicken parts sold by private businesses to consumers must not exceed 680 Cuban pesos per kilogram, effective immediately. Currently, wholesale prices on the island surpass 700 pesos, and a kilogram (2.2 pounds) of chicken thighs can cost more than 900 pesos in private stores.
In addition to chicken, the official gazette listed new capped prices for powdered milk, sausages, pasta, cooking oil, and detergent sold by private businesses. Notably, the government did not impose similar price limits on food sold at state-run stores.
In a late June meeting, private business owners voiced strong opposition to the proposed caps, arguing that the government had used a ‘fictitious’ dollar exchange rate for the calculations and failed to consider the heavy taxes and fees private importers must pay. In a secret recording of the meeting obtained by the Miami Herald, entrepreneurs warned that the measure would worsen food shortages during summer, a period when public unrest historically peaks due to heat and electricity blackouts.
Due to the government’s severe financial constraints and the lack of incentives for private farmers to produce, Cubans increasingly rely on foreign aid and small private businesses for food. Despite this, the capped prices remain out of reach for most Cubans, with the average state salary around $11 or 4,000 Cuban pesos a month. Entrepreneurs have emphasized that their prices reflect the high taxes they pay and have called for the suspension of the 10% sales tax.
The new regulation includes a suspension of customs tariffs for the six capped products. However, entrepreneurs had previously stated that this concession would not significantly reduce prices. Small and medium private businesses face numerous challenges, including restrictions on using money deposited in Cuban bank accounts, the necessity to buy dollars in the informal market to pay foreign providers, and additional government fees for warehouse and port facilities use. Combined with high international food prices, these factors result in elevated local prices.
Although the measure was initially set to take effect on July 1, it was temporarily suspended to allow for further discussions about “fair prices” with the private sector. Vice Minister of Finances and Prices Lourdes Rodríguez acknowledged the high costs incurred by private businesses to import food but also accused them publicly of price speculation and fueling inflation. Most economists, however, attribute the inflation to the government’s significant fiscal deficit and low production levels.
Following Prime Minister Manuel Marrero’s vague plan to combat “economic distortions” and organize the non-state sector last December, the government has detained some private business owners for tax evasion and imposed travel restrictions on those with unpaid taxes. Recently, a new rule was introduced to limit the amount of money state companies can pay to private businesses, affecting contracts that help the government provide bread to the public with privately imported flour.
In recent meetings of the Council of Ministers and the Communist Party’s Politburo and Central Committee, Marrero and President Miguel Diaz-Canel have emphasized the need for greater control without offering a clear plan to revive the economy. They have reiterated the benefits of austerity measures and a centrally planned economy, policies that have contributed to the island’s current economic plight.
In the most recent Council of Ministers meeting, Marrero described the situation as a “war economy,” emphasizing the need for planning and control. “This is when we need planning the most, and when we need to exert control the most,” he stated.
