Financing national security

Cuban banks are reviewing their credit activity for state and non-state agricultural and livestock producers.

The destination of the loans of the Credit and Commerce Bank (Bandec) are concentrated in five fundamental agricultural and livestock productions: grains, tobacco, sugarcane, meat and milk.

Cuban banking ratified its objective of consolidating or expanding offers to the agricultural and livestock sector, where the non-state sector of the economy is concentrated, the one with which it has negotiated the best until now. The principal banking institutions are promoting attractive interest rates and other options to expand the credit activity and back food production in the country, defined by the government as a matter of national security.

The Credit and Commerce Bank (Bandec) has set itself the goal of expanding its ties with agricultural and livestock producers, of cooperatives as well as private farmers, according to recent statements to the country’s pressby its executives. The agricultural and livestock banking operations of Bandec, the leading institution in the financing of this sector, has some 52,000 clients between state entities, cooperatives, private land owners and producers with state lands in usufruct.

 

The director of the Bandec Agricultural and Livestock Operations, Manuel TejadaDíaz, reported to the dailies Juventud Rebelde and Granma and other media that its credits benefit the production of grains, meat and milk, three food lines that farmers are currently prioritizing and that the authorities are backing with better prices for producers and spending in technical resources.

 

This bank’s credits also have a traditional destination in two of the productions on the Cuban list of exports: tobacco and sugarcane.

 

The loans to sustain these five products form part of 81 per cent of Bandec’s total agricultural and livestock portfolio.

 

With more than 200 branches throughout Cuba, Bandec applies annual interest rates of 5 per cent to the credits for working capital, and 7 per cent in the loans for investments. In both cases it foresees the possibility of 2 per cent discounts in response to the price increase of some inputs, including fuel.

The state and non-state agricultural producers usually use the Cuban banking credit offer.

The state and non-state agricultural producers usually use the Cuban banking credit offer.

 

This bank offers even lower interest rates, 3 per cent, to producers who have received lands in usufruct, a policy promoted by the country since 2008 to use idle state lands. After the first two years of the contracting of these lands, the bank applies the interest rates for the rest of farmer and cooperative sector, though if the client signs the initial credit for five years, Bandec maintains the 3 per cent interest rate.

 

While Bandec has traditionally been more reluctant to report the total amount of its loans to agricultural and livestock producers, another bank with an active participation in the financing of farmers and agricultural cooperatives, the People’s Savings Bank (BPA) reported that up to October it had a line of 1.429 billion pesos for this, an amount that represents 23 per cent of its total portfolio.

 

As an indicator of that activity’s expansion, the director of the BPA Corporate Banking, Martha Gómez, said to the press that in 2014 the financing for agricultural and livestock producers only mobilised 506 million Cuban pesos in one year. The comparison with the amount executed until last October indicates a 280 per cent growth, Gómez said.

 

The BPA’s principal clients in the agricultural and livestock sector include the Victoria de Girón Citrus Enterprise, the Ceballos Agribusiness Enterprise, the Enterprise for the Protection of Flora and Fauna and the Agriculture Logistics Business Group (Gelma), in addition to several cattle-raising enterprises.

 

These banks have started developing new alternatives to take their services closer to clients, like the opening of other branches, and facilitating swipe cards associated to current accounts for the payment in input markets.

 

Clients for decades, the cooperatives and farmers have traditionally reacted with greater interest than the emerging non-agricultural private sector to the credits offered by Cuban banks. (2015)

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