Development & Aid, Economy & Trade, Headlines, Latin America & the Caribbean

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

Patricia Grogg

HAVANA, May 20 2008 (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However, “it can’t be withdrawn abruptly, and besides, it would need to be accompanied by a series of measures to prevent a drastic impact on some sectors of the population,” Professor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.