Cuba cuts back on rationed products

Cuba cuts back on rationed products
By PAUL HAVEN
MORE FROM BUSINESSWEEK
HAVANA

Cuba has cut two staple foods from the monthly ration books that most
islanders depend on, edging closer to a risky full elimination of the
decades-old subsidies.

Potatoes and peas were dropped from the list of rationed foods this
week, meaning Cubans can buy as much of the products as they want -- as
long as they are willing to pay as much as 20 times more than they used to.

The move comes amid efforts by Raul Castro's government to scale back
Cuba's subsidy-rich, cash-poor economy. Nearly free lunches were
eliminated from some state-cafeterias in September. In October, the
Communist Party's Granma newspaper published a full-page editorial
saying the time had come to do away with the ration books altogether.

Authorities say their goal is to encourage more productivity and free
the state from a crushing economic burden. Critics -- including some on
the streets of Havana -- argue that the moves break with what had been a
sacred covenant of the revolution Fidel Castro led in 1959: that
socialism would not make people rich, but would provide all Cubans with
at least the basics.

Even with the changes, the state pays for or heavily subsidizes nearly
everything, from education to health care, housing to transportation.
But many Cubans see the ration book -- or "libreta" in Spanish-- as a
flawed but fundamental right, and shoppers on Friday bristled at the new
changes

"This is crazy. They should be adding products to the ration book, not
taking away from it," said Roberto Rodriguez, a 55-year-old delivery man
buying rice, sugar and coffee at an official store in Havana's Vedado
neighborhood. "If they don't produce enough, people will start to hoard
products and things will get even worse."

He said he worried that Cubans with access to money sent by relatives
abroad would buy up all the potatoes and peas they could, leaving
ordinary people in the lurch if there are shortages.

Previously, Cubans were entitled to buy up to four pounds of potatoes
and 10 ounces of peas a month, with the price set at about a penny per
pound for potatoes and just under a penny per pound for peas. Both were
available only in state-owned ration stores or on the black market.

Now, official buying limits are gone, but Cubans must pay 5 cents a
pound for potatoes and 17 cents a pound for peas at the same ration shops.

That may not sound like much, but it's significant in a country where
the average salary is about $20 a month.

"I would prefer that the ration system continue. It assures people that
they will have food," said retiree Juana Rodriguez, 78, who was also
shopping at the Vedado shop but was no relation of Roberto. "There are
many poor people who simply can't afford to buy food on the open market."

Cuba's ration system began in 1962 as a temporary way to guarantee basic
food in the face of Washington's new embargo. Today, however, Cuba
spends more than $2 billion on imported food, nearly all of which goes
to the ration system, assuring subsidized rice, legumes, bread, eggs and
tiny amounts of meat. The government estimates the ration provides a
third of what the average Cuban consumes.

Phil Peters, a Cuba expert at the Washington-area think tank the
Lexington Institute, said the move is part of a well-publicized if
slow-moving effort to overhaul Cuba's economy.

"They've been very clear that they want to move away from the libreta
and from subsidies in general," he said. "They are doing it piecemeal."

Peters said the government is also trying to dramatically increase the
amount it pays farmers for their crops in an effort to spur more
productivity. As a result, it must cut or reduce the subsidies to consumers.

He said dropping the subsidy on potatoes and peas was a good way to test
the waters before making a more aggressive move because neither is
central to the Cuban diet.

"If they did it with rice and beans and the supplies disappeared," he
said, "people would go crazy."

Cuba cuts back on rationed products - BusinessWeek (6 November 2009)
http://www.businessweek.com/ap/financialnews/D9BQ6VNG0.htm