Cuba looks to improve and consolidate role of cooperatives

The Cuban government is assessing the effectiveness of non-agricultural (urban) cooperatives after one year and seven months of their implementation and is considering “the positive and negative aspects of their operation, as well as the measures to consolidate their role in the Cuban economy,” the daily Granma reported Monday (June 1).

The review was discussed last Friday (May 29) during a meeting of the Council of Ministers presided by Raúl Castro and was described by Granma as “a call to an in-depth discussion of every measure and to analyze everything that has been done till now, so as to determine and correct the minor errors committed.”

Raúl Castro and Marino Murillo Jorge.
Raúl Castro and Marino Murillo Jorge.

A report on the performance of urban cooperatives until the end of 2014 was delivered by Marino Murillo Jorge, head of the Permanent Commission on the Implementation and Development of the Guidelines that control Cuba’s economy.

According to his report, the creation of 498 cooperatives has been approved, of which 347 are currently operating. Most of them (88 percent) concentrate on three sectors: commerce, gastronomy and technical and personal services (59 percent), construction (19 percent) and industry (10 percent).

Two hundred and five other cooperatives have applied for approval.

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COOPERATIVES ARE SEEN AS BENEFICIAL

According to Murillo, the cooperatives are “sources of employment that have increased the offer [of goods], and the quality of products and services.” In addition, “they deal with the market segments that do not compete with state enterprises.”

In his estimation, urban cooperatives “have good productive, economic and financial results [and] raise the levels of income through the members’ revenues.” The Granma account does not use the word “profit.”

The Granma account says that in 2014, 268 cooperatives contributed 87.7 million pesos ($3,310,453) to the nation’s economy, in taxes and Social Security deductions.

The National Office of Tax Management reports “a prevalence of fiscal discipline in these new forms of activity,” Granma notes.

When pointing out the negative aspects that have hindered the performance of urban cooperatives, Murillo said that “not everyone has correctly understood the experimental nature of this process, nor the priority in its application in sectors that have a high impact on the development of the territories.”

The latter statement may refer to the dearth of cooperatives in many provinces. More than 70 percent of the cooperatives are situated in only three provinces: Havana, Artemisa and Matanzas.

BUREAUCRACY IS AN OBSTACLE

Bureaucratic red tape is another hindrance “that generates dispersion and delays,” Murillo said.

“The start of operations has been slow, basically because of […] their legalization in Property Registries, the creation of conditions for their operation, the process of negotiation between cooperatives and the agencies that approve them, and the legal paperwork with notaries and banking institutions,” he said.

There have been “difficulties in the [cooperatives’] access to supplies” that have resulted in “increases in the prices of products and services offered by the cooperatives, especially in the farmers’ markets and the restaurant sector,” Murillo said.

Lack of access to wholesale markets has been an ongoing plaint of cooperatives. In particular, restaurant owners have to buy food and ingredients from retail stores, so they must pass on the extra cost to the customer.

bus coop

EXPANSION SHOULDN’T BE HASTY

The Council of Ministers approved several proposals to improve the performance of cooperatives and to extend their reach into the urban trades.

However, the ministers were cautioned by Castro not to create cooperatives “in massive numbers. The priority will be to consolidate the existing ones and to move ahead gradually, because otherwise we’d be generalizing the problems before us.”

Cooperatives are “of an experimental nature,” Castro said, “and although we’re advancing in their application, we have no reason to accelerate the speed. We must stay apace of events.”

Among the measures adopted:

** Cooperatives may now hire outside workers for a period of one year, rather than three months, so long as the number of hired hands does not exceed 10 percent of the number of members of the cooperative.

** A plan will be drafted on the insertion of cooperatives in the State Plan for the Economy and the Budget.

** Rules will be drafted on the management of cooperatives, and their accounting and internal control systems.

** Law/Decrees 305 and 309, on the operation of urban cooperatives, will be amended to reflect the measures adopted last week.

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