Capitalist ways

Cubans dabble in free-enterprise markets

SUSAN HURLICH August 21 1995

Capitalist ways

Cubans dabble in free-enterprise markets

SUSAN HURLICH August 21 1995

Capitalist ways


Cubans dabble in free-enterprise markets

Gudelia Marchand, a 40-year-old Havana mother of two, takes part in Cuba’s most visible experiment in capitalism every workday, earning her living as one of the 300 free-enterprise vendors at the city’s bustling new Cuatro Caminos (Four Roads) farmers’ market. Once or twice a month, when she can afford it, she is also a shopper, wandering among the colorful, well-stocked stalls that offer live goats and hens, sweet potatoes and onions, rice and beans, exotic tropical fruits and other produce that Cubans have not been used to seeing in such abundance. Marchand enjoys the market and says she would shop there more often if she could. But a weekly income averaging about 100 pesos from selling prepared meals at the market does not go far when pork sells for 35 pesos per pound and even rice is eight pesos a pound. (Officially pegged at par with the U.S. dollar, the peso in fact trades at a rate of 35 to 40 to

the dollar on the black market.) “And if someone is sick at home,” adds Marchand,

“we can’t afford to shop at the market at all because we have to buy medicine.”

Cuatro Caminos, located at a busy intersection where four populous Havana neighborhoods meet, is the largest of 211 agricultural markets that have sprung up around Cuba since the Castro government legalized the sale of farm produce last October.

Their emergence is a direct result of the 1991 collapse of the Soviet Union, on which Cuba’s economy relied. Until then, most Cubans would have said their system provided for their basic food needs. The state bought farmers’ crops at pre-set prices and ei-

ther exported them to friendly nations or sold them through state stores. All citizens could count on a guaranteed “food basket” of rice, sugar, eggs and other staples at heavily subsidized prices. State stores also sold a range of food items—cookies, bread, cheese, eggs, fish, milk, butter—at higher but stillsubsidized prices. People got enough to eat, and with rents low and water and electricity free, many could even afford an annual month-long holiday in the countryside.

All that started to change around the end of 1990 when, with the Soviet economy under strain, shortages began to appear in Cuban stores. By the end of 1991, with its foreign markets all but non-existent, the Cuban economy was in a tailspin. Farms were still producing food, but lack of fuel and funds shut down the distribution system, and previously well-stocked state stores quickly went almost bare. Existing government-run markets—including the huge Cuatro Caminos, which had opened as a high-priced state-run market in 1982—shut down. Food shortages soon developed in the capital and other parts of the country, and a black market flourished—expensive, unregulated and corrupt. The government responded last October, freeing entrepreneurial Cubans to get produce to market by whatever means.

Still reeling from the loss of Soviet support, Cuba has taken other steps over the past two years to try to decentralize planning, stabilize its devastated economy and get back into the world market. Those measures include legalizing the possession of foreign currency, transforming state farms into co-operatives, permitting selfemployment, introducing or raising charges for certain goods and services (among them water, gas, electricity and telephone) and encouraging foreign investment. But it is the markets that have caused the most obvious change in the daily lives of many Cubans. Less than a year after their legalization, they have redefined the Cuban food business.

The 29 markets operating in the capital,

where some 2.2 million of Cuba’s 11 million people live, account for more than half of the total value of agricultural products sold nationally. “Every day, about 22,000 to 23,000 people come here,” says Osvel Espinosa Mohena, 38, a former captain with Cuba’s fishing fleet and now the energetic administrator of Cuatro Caminos. “On average, they spend about 25 pesos per person—in all more than half a million pesos each day.” Shoppers are quick to praise the new system. “Before the market, there wasn’t anything,” says retiree Dora Arebelo, 69, looking over tomatoes, bananas and onions as she shops for her family of five. “If you buy a pig on the black market, you don’t know if it’s sick,” she continues. “Here at the market, everything is inspected and guaranteed.”

And while the new markets are expensive by most Cubans’ standards, they are an improvement over the situation just a year ago when rice, for instance, was commanding as much as 50 pesos a pound on the Havana black market, and some foods were available only for U.S. currency. The black market has since shrunk somewhat in its activities, but it is still being encouraged by a dwindling stock of other essential consumer goods, including shoes, soap, cooking oil and clothing.

The government continues to provide staples at heavy subsidies, and some other food can still be bought at subsidized state stores.

What the new markets offer is a much wider choice—at a premium. And prices are likely to remain high because of the expenses that vendors face getting the goods to market: transport from the countryside, storage, veterinary services, a five-to-15-per-cent state tax on goods sold, and rental of the market stall, all on top of the initial purchase price of the goods themselves. While the average monthly income in the government-run economy hovers around 200 pesos, onions are likely to cost a peso and a half, beans sell for up to 18 pesos a pound, and chickens are 120 pesos each. At the same time, the one commodity required for shopping at the markets—money—is becoming harder for the average Cuban to obtain as the cost of living continues to rise.

So how can Cubans afford to shop there at all? ‘We have stopped buying many things,” explains Arebelo. “We don’t go out and we don’t go to the movies. We don’t buy clothes, as I sew all we need. I come to the market and buy the things that cost the least.” But many cannot do even that. Retired schoolteacher Maria Julia Fernandes, 69, and her husband struggle to make do with the government food basket and some help from a son. We can’t af-

ford to shop at the market,” says Fernandes. “If I buy potatoes, I can’t pay for the electricity. If I buy oranges, the water bill is unpaid.”

By contrast, many Cubans are earning good incomes, some within the formal sector in areas such as tourism, where taxi drivers or waitresses, for example, can earn valuable tips in hard currency. Others try to gain more purchasing power by leaving the formal sector— where the fixed salary level is increasingly out of sync with the cost of living—and trying selfemployment, in the food markets, for instance. “Mario” (who, like many cautious Cubans is reluctant to give his real name to the media) sells live chickens, ducks, pigeons

and guinea fowl at Cuatro Caminos. A qualified electronics technician, he has turned to vending at the age of 38 because he could not feed his family of four on a monthly salary of 165 pesos. Now, Mario makes 800 pesos to 1,000 pesos per month, “but this is working 12 hours daily, every day except for Monday, and the work is not what I like to do.”

Ulysses Pulido has a similar story. Formerly a refrigeration mechanic at a Havana hospital, Pulido, 27, quit because he “had to find something else to do that paid more money.” For eight months, he and his wife have been selling pineapples, cassavas, peppers, onions, rice and bananas at Cuatro

Caminos. They bring their four-year-old daughter with them because there is no one to care for her at home. “A vendor who treats the public well can make good money selling on the market,” says Pulido, who calculates that to provide his wife and two children with enough food to eat “like people,” he needs about 1,500 pesos per month.

Some of the shoppers at Cuatro Caminos are in better straits. Living only a 20-minute walk from the market, “Marina” visits twice a week to shop for her family, spending about 100 pesos each time. A soft-spoken 58-yearold retired academic, she receives a pension of 250 pesos per month, more than the fulltime salary of most working-class Cubans. Her married daughter, an academic who earns 310 pesos per month, and her son-in-law, who “also earns a good salary,” live with her. Her other daughter, a 19year-old university student, is the only non-income-earning member in the family. With a combined monthly income of perhaps 900 pesos, they have the luxury of buying what they want.

Marina likes the new markets because, although she could afford the black market, she found it “dangerous, more expensive and more problematic.” Pulido agrees, saying: “Because of the new markets, people don’t have to involve themselves in corruption any more in order to eat.” But the state, too, benefits from the new system. In their first three months, the markets’ sales taxes contributed 35.8 million pesos to the state’s coffers, according to Granma, Cuba’s state-controlled newspaper. Rental of market stalls added another 10.7 million pesos.

Now, shoppers and the state want the cost of shopping in the markets to decrease. Prices are determined by supply and demand— “one of the elements of capitalism,” as President Fidel Castro noted in a recent speech to the Cuban Women’s Federation, “which reality has obliged us to introduce for survival, even though we don’t like it.” But to bring the prices down, agricultural production (hampered by lack of fuel, fertilizer, seeds, pesticides and other materials) will have to increase, distribution costs will have to come down and inflation will have to be brought under control. Until that time, the farmers’ markets cannot be a genuine option for the average working-class Cuban. ‘The problem,” reflects shopper Dora Arebelo as she browses through the alluring produce, “is that you have to come with a lot of money. Otherwise, you leave empty-handed.” It is a dilemma the capitalist world understands well.