How much is the Cuban tobacco planter paid by the State ?

[Nino]

I read this article today on Cubanet, an independent news platform, that contains very interesting information on what the Cuban tobacco planters ( Vegueros ) get paid for their harvest by the state ( the one & only buyer for their product ) and what costs and problems they encounter today, like lacking fertilizer, petrol, anti-pests sprays and many more things.

The price they receive for a quintal ( 100 kgs ) of dried first class tobacco from the state is 2.385 Cuban pesos, that is approx. US$ 100.

A typical farmer like Camilo Chimea in Manicaragua, Villa Clara, will have ca. 30 quintales of first class tobacco a year and receives US$ 3000 for the harvest - from which he will have to pay for all expenses, the seeds from the state, staff, petrol, fertilizers and materials for the tobacco barn as well as his living costs.

Sorry, article is in Spanish only - contains a video interview with the planters as well.

https://www.cubanet.org/mas-noticias/con-cuanto-dinero-del-tabaco-se-queda-el-estado/

 

 

[NSXCIGAR]

Communists: trying to convince people profit is bad for them but good for the state since 1917. 

[Nino]

16 minutes ago, SenorPerfecto said:

1. This is really interesting.

5. But given that the Cuban equivalent is $1/kg, I think it is easy to see that if and when Cuban farmers can (legally or not) start selling their wares on the open market and not to the State owned monopoly... we are in for some CC sticker shock the likes of which we have never heard of. In short, Habanos cannot afford to ever let farmers sell their tobacco elsewhere, unless they are comfortable with the idea that a box of Monte 2 is going to be priced at $2000.

1.Thank you.

5. I do not believe this is necessarily  about raising box prices but about how much of a share the state takes from the farmers.
In the article, as well as in the video interviews, box prices are mentioned ( albeit Cuban store prices ) and even those low sale prices make the farmers feel they are taken an unfair advantage of .... in other words : being robbed/abused.

 

[NSXCIGAR]

19 minutes ago, SenorPerfecto said:

1. This is really interesting.

2. I need to learn (much better) Spanish.

3. I wonder how many cigars can be fashioned from a quintal of tobacco, approximately? If we know that, and we know the "average price of a Cuban cigar," then we can roughly figure out what percentage of a production CC a farmer is paid for. Anyone have data to help?

4. And THEN we can compare that percentage to other industries, for instance grapes that are harvested from various vineyards to produce wines by big manufacturers, or even other types of vegetable, fruit and livestock farming. It would be nice to have some notion of where the Cuban vegueros fit into the worldwide economy of farmers.

5. Looking at a website that sells raw cigar tobacco leaves by weight, the least expensive leaf goes for $16.99/lb, which is roughly $3740.00 for 100 kilos. Those are of course retail prices, so let's take half: $1870USD. For the cheapest leaf available. Now, I suppose if you are in, say Nicaragua, and you are buying leaf there for your factory to roll, you're not even spending anything close to $18/kilo for filler. But given that the Cuban equivalent is $1/kg, I think it is easy to see that if and when Cuban farmers can (legally or not) start selling their wares on the open market and not to the State owned monopoly... we are in for some CC sticker shock the likes of which we have never heard of. In short, Habanos cannot afford to ever let farmers sell their tobacco elsewhere, unless they are comfortable with the idea that a box of Monte 2 is going to be priced at $2000.

That's the whole point--the farmers can never be allowed to sell raw tobacco nor is the raw tobacco exported lest they start catching on. Remember, the vast majority of Cuban tobacco was exported and rolled in the US prior to the Embargo. The market was extremely competitive. We're not necessarily paying too little for CCs right now. Even if the raw leaf were sold on the open market the cigar's final retail price might not change. It's just that now Cubatabaco is taking existing profit margin from the farmers. 

If the state could get away with paying farmers a monthly wage like the rest of the slaves they would, but you start running into classic socialist productivity and incentive problems. The communists figured this out a long time ago. The state controlling agriculture directly results in disaster and when food is involved it results in death. They must let the farmers control their own production, and then they must incentivize yields by paying by the pound. But of course the state wants to pay as little as possible. It seems that what they're currently paying may need to go up or the natives will get restless-something the state must always be wary of.

[Nino]

1 hour ago, NSXCIGAR said:

We're not necessarily paying too little for CCs right now. Even if the raw leaf were sold on the open market the cigar's final retail price might not change. It's just that now Cubatabaco is taking existing profit margin from the farmers.

Right on the ... money :-)

[El Presidente]

Thanks for the article link Nino. 

To rub salt into the wounds, the state determines the quality of the crop and will adjust the price. It will also determine when the farmer will be paid. 

[NSXCIGAR]

6 hours ago, SenorPerfecto said:

Either Cuba is making a gigantic profit that is going into the pockets of some already very rich individuals...

Yes, that is exactly what's happening. HSA is tremendously profitable. Its cigar tobacco is far more profitable than any other country's that produces premium cigar tobacco. Its annual revenue recently is around $450 million, while total cigar revenue from Nicaragua is about a third of that or about $150 million. The rough estimates from the Dominican Republic are tobacco revenues of about $30-40 million.

Now, I concede that a great deal of the state's profits are allocated towards the various goods and services the state provides. But these profits are fruits of the farmer's labor and should go to the farmers and/or the (nominal) landowners, or both. It gets complicated as I'm sure the state provides or subsidizes certain equipment or fertilizers, etc. But that's the general gist. 

[Andy04]

10 hours ago, nino said:

The price they receive for a quintal ( 100 kgs ) of dried first class tobacco from the state is 2.385 Cuban pesos, that is approx. US$ 100.

I certainly hope that "first class tobacco" is not shade grown wrapper grade leaf.

Shade grown Cuban wrapper leaf could comfortably attract over USD $200 per kg  if available on the open market.

 

[rhcolbert]

We all know where it's going, no different than any other communist country. 

[NSXCIGAR]

On 5/2/2017 at 6:26 PM, Andy04 said:

I certainly hope that "first class tobacco" is not shade grown wrapper grade leaf.

Shade grown Cuban wrapper leaf could comfortably attract over USD $200 per kg  if available on the open market.

Just happened to come across this old thread about the cigar industry in the early 20th century. According to the book Ken is quoting, top-tier Havana wrapper leaf was selling for $10-15 per pound on the world market. Adjusted for inflation, this would be $250-375 per pound today, or $550-825 per kilo. Now, at the time there was very little wrapper leaf outside of Havana that was of comparable quality. Today, there is some excellent wrapper leaf coming from many parts of the world. But even cutting that inflation-adjusted number in half, you've got Havana wrapper leaf selling for $225-400 per kilo. So I'd say your estimate is at least right on the money if not a bit conservative.