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Posted July 08, 2003 by publisher in Business In Cuba

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By Marc Frank | Reuters

HAVANA - A year after Cuba began a major revamping of its state-run sugar industry, the poorest crop in 70 years and vast tracts of uncultivated land make clear it will be years before the blueprint becomes a reality.

The reorganization aimed to make the industry more efficient and competitive on the world market by closing the Caribbean island’s oldest mills, turning over cane plantations to other crops and decentralizing and diversifying production.

“We had to act or face ruin. This restructuring means we will save $200 million and earn $100 million during the next harvest,” President Fidel Castro said at the time.

The plan called for closing 70 of 156 mills and aimed to produce 4 million tonnes a year with about one-third of the land then dedicated to cane, by raising output to 54 tonnes per hectare from a little over 30 tonnes per hectare.

But sugar industry officials now believe it will be 2007 or later before Cuba, once the world’s largest sugar exporter, meets the target.

A recent article in the ruling Communist Party daily, Granma, seemed to confirm there is a way to go yet.

“The fundamental objective is to produce more than 54 tonnes per hectare by 2007, for which a sustained effort is needed, as today the province’s yield is only 32.7 tonnes per hectare,” Granma said of central Ciego de Avila province, a major sugar producer.

Cuba’s output peaked at 8.1 million tonnes in 1988/1989, and then declined rapidly with the loss of Soviet subsidies and markets.

The Sugar Ministry planned to produce 2.7 million tonnes of raw sugar this year, compared with 3.6 million in 2002. Local analysts believe the crop weighed in at around 2.1 million tonnes, the lowest since 1933, when output was 2.05 million tonnes. The ministry has not provided final harvest tonnage.

STILL OPERATING AT A LOSS?

What was to be an efficient 90-day harvest, with 71 mills operating at 80 percent capacity, turned into an 180-day affair, with 79 mills operating well below 70 percent capacity and yields the lowest in a number of years, official media reported.

None of Cuba’s 13 sugar-producing provinces met production or cost targets.

Local analysts believe Cuba will have to import hundreds of thousands of tonnes of sugar if it is to meet foreign supply contracts and domestic consumption of 700,000 tonnes per year.

Sugar Minister Ulises Rosales del Toro blamed “a lack of financing, lack of cohesion and understanding of the changes caused by the restructuring and excessive rain,” Communist youth paper, Juventud Rebelde, said on Sunday.

The sugar industry is Cuba’s largest, with more than 400,000 workers and farmers and 2 million of the country’s 11 million people dependent on it, most living in small sugar towns across the island.

A Cuban economist doubted 2004 output would be any better.

“The short crop means there will be less financing and resources. No one wants to work due to low wages and poor working conditions. Organizational problems persist and the ministry has too much to do,” he said, asking not to be identified.

Under the restructuring, more than 100,000 workers are being retrained and former cane plantations are being turned over to forestry, livestock and milk production, and fruit and vegetable farming.

But western diplomats say it will cost hundreds of millions of dollars to upgrade mills, diversify production and develop former plantations. “Cuba is broke. They need massive foreign investment for the plan to work, which I doubt will be forthcoming any time soon,” a European diplomat said.

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