Cuba promises farmers equipment to back reform

By Marc Frank

HAVANA (Reuters) - Communist Cuba has begun offering private farmers equipment and other resources on credit along with more land, as President Raul Castro seeks to reform agriculture by loosening the state's grip.

Just days after a government decree authorizing land grants to farmers, they are being called to meetings and asked what machinery and other inputs they need to make the best use of it.

"They told us to present our requests immediately for what we need and that Venezuela, Iran and other countries had given credit to cover the resources," the treasurer of a private cooperative said in a telephone interview after attending a meeting this week in central Cuba.

Iran recently agreed to increase trade credits to Cuba from 200 million euros to 500 million euros and Venezuela already finances dozens of manufacturing and agricultural projects.

Hundreds of farmers were told at the meeting in central Cuba called by the Association of Small Farmers not to hold back on their requests.

"We can ask for whatever we need. Machinery, spare parts, irrigation systems, wind mills, land clearing kits, you name it," the cooperative member said.

Decision making in the sector was recently decentralized, and redundant state-run companies merged. The state, which purchases 70 percent to 80 percent of farm output, has doubled or even tripled the prices it pays.

The remaining 20 percent to 30 percent of production is sold on the open market.

Cuba's 250,000 family farmers and 1,000 private cooperatives produce as much as state farms do on just 25 percent as much land.

"We were told new farmers, state farms and state cooperatives would also get resources, but that the private sector would be treated equally and the resources granted on credit," the cooperative member said, asking that he not be identified.

NATIONAL SECURITY

Upon formally taking over for his ailing brother Fidel Castro in February, Raul Castro declared food production was a matter of national security given soaring prices in a lush, semi-tropical land that nevertheless imports most of its basic food.

Cuban officials say the Caribbean island paid $1.47 billion for food imports in 2007, and they expect that figure to rise by $1 billion this year.

Last week, the government granted farmers and agricultural cooperatives, among others, the right to work more land.

"The moves appear significant both politically and economically," international agriculture and sugar industry analyst G.B. Hagelberg said.

"Leasing of idle state lands to small independent farmers suggests that the government recognizes the key role of the private sector in solving Cuba's food problems and has junked the long-held doctrine of the superiority of large-scale collectivist agriculture," he said.

But Hagelberg, a long-time critic of Cuba's state-dominated agriculture, cautioned that only time would tell if real competition and markets would develop.

"It remains to be seen how far producers are freed from bureaucracy and top-down plans in order to unfold their initiative, guided by market signals," he said.

(Editing by Jeff Franks and Kieran Murray)