Wholesale Market Opens Amid Private Sector Uncertainty

The Cuban government has opened its first wholesale food market in Havana. The new market is intended to sell staple items to private-sector cooperatives.

By opening the Mercabal wholesale market, the government hopes to address concerns from the private-sector food industry that they had no alternative but to buy supplies from retail stores. This not only meant they were paying high prices, but it has also led to shortages in those stores for ordinary consumers.

Mercabal will sell a limited array of the products most in demand in cafes and bars. These staples include sugar, salt, beans, beer, chicken, and hamburgers. Products are sold at prices between 20 and 30 percent less than in retail stores.

The official state newspaper, Granma, said the opening of the market fulfills “one of the most repeated demands of those who exercise the new non-state forms of management in the country.”

Initially at least, self-employed entrepreneurs will not have access to the store. It is currently only open to 35 worker-owned cooperatives in Havana. These cooperatives were formerly state-owned enterprises; in 2014, the workers took ownership of the cooperatives with the blessing of the government.

Unlike other forms of private enterprise in Cuba, these cooperatives are seen by some as a means of opening up the country to the private sector without compromising the cooperative ideals of the 1959 revolution. In these private cooperatives, workers manage their businesses, but the state retains ownership of the buildings.

Minister for Internal Trade Mary Blanca Ortega described the opening of Mercabal as an experiment. If it is a success, further wholesale markets will be gradually opened across the country “once this initial proposal is in optimal operation and depending on the places where more self-employed workers exist,” she said.

This development comes at a time of uncertainty in the Cuban private sector. About 12% of the Cuban workforce, almost 600,000 people, is self employed, and that number has tripled since 2010 when Raul Castro began reforms. However, since the end of 2017, the government has suspended issuing licenses for cooperatives and entrepreneurs.

Although the government announced this suspension as temporary, they have yet to resume issuing licenses. Speaking last July, Raul Castro reiterated his commitment to economic change: “We are not renouncing the development of the self-employed sector,” he said. “However, it is necessary to… resolutely confront the illegalities and other deviations from the established policy.”

This backtracking on licenses may hint at discomfort by some in the Cuban Communist Party that private-sector reforms have gone too far. Head of the Communist Party’s reform committee, Marino Murillo, has said that income levels for cooperative leaders will now be capped at three times the income of cooperative members.

This unease about increasing income inequality resulting from private-sector growth is set against a backdrop where a B & B owner can earn $30 for a night’s stay, a sum equivalent to the average monthly state wage.

The Cuban government has said it will begin reissuing licenses again once it has addressed issues including tax evasion and the purchase of stolen goods by private enterprises.

Sources

3.18.2018 Cuba Economic Reforms Bring First Wholesale Food Market

3.17.2018 Cuba Opens a Wholesale Market for Private Food Service Cooperatives

12.21.2017 Cuba Tightens Regulations on Nascent Private Sector