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Wednesday, May 21, 2008

Does the Ration Book Still Make Sense?

ECONOMY-CUBA:
Does the Ration Book Still Make Sense?
By Patricia Grogg

HAVANA, May 20 (IPS) - Criticised as one more sign of the failures of
socialism, or viewed as a right that should not be given up, the ration
book, part of Cuban life for 46 years, could disappear as a result of
the transformations needed in the country's economy.

Economists consulted by IPS said there appears to be a consensus in the
government about the need to eliminate this form of across-the-board
distribution which, while it played its part at one time, is now an
anachronism, and if anything, contributes to inequality.

However, "it can't be withdrawn abruptly, and besides, it would need to
be accompanied by a series of measures to prevent a drastic impact on
some sectors of the population," Professor Armando Nova told IPS.

"We must work towards eliminating this distribution system that gives
all of Cuba's 11.2 million people the same benefits, even though some
people don't need them," said the economy professor.

"It might be better to subsidise individuals and families rather than
products, but it must be part of a very well-thought-out, systematic
process," he said.

Debate on the topic has increased since Cuban President Raúl Castro said
the enormous subsidies, which include the products distributed under the
ration book system, are irrational and unsustainable in the country's
current economic conditions.

Official sources report that the average annual cost of basic products
that are rationed and sold at subsidised prices is one billion dollars.
But this year, total food imports will amount to 1.9 billion dollars,
due to soaring food prices on the international market.

"The ration book products don't cover the entire month, but at least the
system ensures that I can get a few things at low prices: rice, some
beans, sugar, and a bit of protein. Even so, my pension vanishes like a
vapor. If they take it away, just imagine what it'll be like," said
Digna Pérez, a 59-year-old retired teacher.

Besides the items Pérez mentioned, every person is entitled to a monthly
ration of oil, 10 eggs, toothpaste and soap, among other products. Until
the late 1980s, rationed supplies also included manufactured goods.

A document from the United Nations Development Assistance Framework
(UNDAF) in Cuba says that access to this food quota is a right
guaranteed to every citizen, and emphasises that additional supplements
are provided for vulnerable groups with extra needs, such as children,
pregnant and lactating women, and people who for medical reasons have
specific dietary requirements.

According to Nova, studies indicate that the rationed food received by
Cuban families now provides approximately 36 percent of the daily
calories needed per person, lasting about 12 days a month, whereas
proteins last 10 days, and fats cover nine days a month.

"The ration book is only a shadow of what it was in the 1960s. But while
it is not the major source of food in terms of total intake, it is not
insignificant either," said Nova, who carries out research at the
University of Havana Centre for the Study of the Cuban Economy (CEEC) at
the.

"In fact, the ration book is only a shadow of what it was in the 1960s,
nor is it a determining factor in total food intake, but neither is it
to be despised," said Nova, a researcher at the University of Havana's
Centre for the Study of the Cuban Economy (CEEC).

The rationing system was created in March 1962 to combat food shortages
caused, in part, by the stance taken by the United States, Cuba's main
supplier at the time, which cut off all ties with this country because
it objected to the direction the Cuban Revolution was taking.

Another reason given was the growth of purchasing power of the
population, which outstripped the rate of production of consumer goods
and the state's capacity to import them. Rationing meant that a minimum
quota of food and goods could be guaranteed to all the population at
subsidised prices, which were sometimes below production costs.

"It was a difficult situation that could have been explosive internally,
and the ration book fulfilled the aim of ensuring that every family had
the basic necessities. By the 1980s, thanks to this regulated
distribution and the existence of a large free market with affordable
prices, it could be said that Cuba had achieved a degree of equity
unparalleled in Latin America," said Nova.

But in the late 1980s and early 1990s, the break-up of the Soviet Union
and the disappearance of the East European socialist bloc, then Cuba's
main political and economic allies, again deprived the country of its
main markets and the economy went into free fall, with a drastic impact
on the local standards of living.

By 1993, consumption was 31 percent lower than in 1989, and gross
domestic product (GDP) had plunged by 35 percent. A package of
adjustment measures began to turn the economy around in 1993, and by
2000 total consumption had grown by 37 percent, according to experts.

In order to cover their needs, consumers must now go to the free
farmers' markets, which sell fruit, vegetables, grains, cereals, pork
and other foods of good quality in the local currency, pesos, but at
high prices.

Other essential goods such as shoes, personal hygiene items, household
appliances and furniture, as well as foods long since absent from the
ration book system, are sold in the government's hard currency shops (TRDs).

The TRDs only accept convertible Cuban pesos (CUC), the only hard
currency permitted in the country, which the state exchange bureaus
(CADECAS) will change for 25 Cuban pesos or 1.25 dollars. In the
business sector, however, the official rate is one CUC to a Cuban peso.

The domestic market, which is completely under state control, includes
shops for agricultural products with maximum prices agreed between
producers and the government; agricultural and livestock markets; sales
on-site at market gardens and hydroponic farms; and neighbourhood sales
outlets and kiosks.

At all these retail outlets, quality, assortment and stability of supply
tend to be inferior, while prices are the same or only slightly cheaper
than in the free farmers' markets and TRDs, which are references for
prices even on the black market.

In Nova's view, "efforts should be made to unify all these markets and
seek agreements to secure lower prices," as part of a recipe which
should include the elimination of "the ties that hinder the development
of productive forces."

He said this would require "changes in the relations of production" to
enable higher yields, particularly in the agricultural and livestock
sectors, and progress "towards an exchange rate in the business sector
that would complete the production circle."

Experts have indicated that among the factors that discourage food
producers are the one-to-one exchange rate for Cuban pesos and CUCs in
businesses, and the lack of an exchange market where they can buy hard
currency to purchase imported agricultural inputs and equipment to allow
them to increase production. (END/2008)

http://www.ipsnews.net/news.asp?idnews=42430

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