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Posted July 19, 2006 by publisher in Business In Cuba

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Cuba hopes to take advantage of high sugar prices and the ethanol boom to revitalise its industry and greatly increase alcohol production, a senior ministry official said Tuesday.

There has been a sharp increase in worldwide ethanol demand which, Brazil, the biggest supplier may not be able to meet due to its own strong domestic demand. Cuba, which has scaled back its sugar cane industry, is now attempting to refocus the industry on ethanol production.

“Our country has begun an accelerated drive to increase alcohol production, modernising existing distilleries and installing new ones to increase by five times installed capacity,” Luis Galvez, director of the sugar ministry’s Sugar Cane Derivatives Research Institute, said.


Galvez, opening an international conference on the production and uses of ethanol, said high oil prices and increased demand for ethanol had created “perhaps the most promising moment ever” for the sugar industry.

Galvez said Cuba’s annual output was just one million hectolitres, though installed capacity was far greater.

Cuba, once the world’s biggest raw sugar exporter, has reduced acreage by more than 60 percent since 2003 and dismantled 71 of 156 mills.

Last June, 43 more mills were closed, though preserved, while this year just 11 distilleries operated, most at well below capacity for lack of cane.

Reuters estimates final output this year at just under 1.2 million tonnes of raw sugar, based on provincial media and source reports, the lowest since 1908 and less than a fifth of what was grown in the 1950s.

The Caribbean island consumes a minimum 700,000 tonnes of sugar per year and 400,000 tonnes are destined for a toll agreement with China.

With sugar and ethanol prices soaring earlier this year, the government decided to revitalise the industry, allocating money for inputs, increasing the price mills pay for cane and opening joint-venture negotiations.

Ministry officials have stated they expect at least a 15 per cent increase in output in 2007, and far more in 2008 due to a crash sowing plan, more inputs and increased rainfall so far this summer.

The harvest runs from January to May.

“I think Cuba should rethink its policy of running down sugar. I am seeing the minister this afternoon and will strongly encourage him that there is a new life line for the industry coming up,” Peter Baron, director of the International Sugar Industry, told Reuters.

Baron, like other speakers at the event, was optimistic about the world sugar industry’s future, stating high oil prices and improved technology had made ethanol an ever more attractive fuel.

“We may be at the most important moment for sugar in 100 years. Sugar is no longer just a food commodity. It has become an energy commodity,” he said.

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