The abolition of maximum prices for food products in Cuba will be beneficial for the growth of the Cuban agricultural sector. The price ceilings imposed by the State have so far discouraged many farmers in agricultural cooperatives from producing more food.
By now allowing pricing through supply and demand, the authorities are abandoning their efforts to curb inflation. The Cuban economy suffered severe blows last year, mainly due to the collapse of tourism, which normally accounts for one-third of national income. Moreover, a significant amount of labor was lost due to illness.
After highly unusual demonstrations and protests by dissatisfied Cubans, economic "modernizations" were announced last month. Partly in response to these protests, Cuban authorities have now accelerated the pace of economic reforms.
One of the most anticipated reforms is that private small and medium-sized enterprises are now officially permitted, ending their years-long legal uncertainty about their right to exist.
The fine print of these reforms has not yet been published, so the precise impact on the agricultural sector remains to be seen. The same applies to reforms announced earlier this year, such as the creation of an agricultural bank and more opportunities to establish (small) private companies.
A significant stumbling block remains that Cuban farmers are still not allowed to independently import and export without the intervention of bureaucratic state companies. Additionally, many foreign banks remain hesitant to finance business activities in Cuba due to the ongoing US boycott against Cuba.
Nevertheless, many view the economic reforms as yet another step towards a more market-oriented economy. According to agricultural experts at the Dutch embassy in Havana, these reforms also offer new business opportunities for Dutch agrofood companies in the longer term.