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HavanaJournal.com: Cuba Business

Castro says Cuba was losing money on sugar

Posted November 08, 2003 by publisher in Cuba Business.
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Associated Press

Cuba, a nation once synonymous with sugar, has been losing money on the crop, President Fidel Castro says. His government is turning sugar plantations into farmland and is negotiating a possible purchase of U.S. sugar.

Speaking late Friday at the close of Havana’s annual trade fair, Castro said falling sugar prices and rising prices for the oil needed to produce the crop made it a money-loser.

“Imagine how much we would save cutting a smaller quantity of sugar,” Castro said. “I’d prefer to cut a million and a half (tons) than 2 million because with that million and a half we could have a reasonable profit.”
The statements appeared to be Castro’s strongest direct explanation for its decision last year to close 70 of its nearly 160 sugar mills, transferring tens of thousands of workers to other tasks.

That decision was not easy in a nation long obsessed with the size of its annual sugar crop, even if tourism has easily surpassed sugar as an earner of foreign exchange in recent years.

Castro quoted a famed Cuban saying: “Without sugar, there is no country.”

But he noted that competition from other cane-producing nations, as well as the growth in corn-based sweeteners, have kept sugar prices low.

“Why are we going to produce sugar, for example, if the prices are on the floor?” he asked rhetorically.

Earlier Friday, the Communist Party daily Granma reported that Sugar Minister Ulises Rosales del Toro said that more than 1 million hectares (2.47 million acres) of sugar cane land are being turned over to production of food or to forestry.

And Cuba’s state import company, Alimport, said it was negotiating a possible purchase of U.S. sugar _ turning on its head Cuba’s historic role as a sugar supplier to the United States.

Wayne Carrick, an international trader for PS International of Chapel Hill, North Carolina, said the Cubans were talking about purchase of 5,000 to 15,000 tons of sugar, though price and some other issues remained to be settled. He said a deal might be reached within a few weeks.

In the 1960s and 1970s, Castro’s government sent hundreds of thousands of urban workers into the fields each year to help bring in the sugar harvest, which was sold to the Soviet bloc at prices above world market levels.

Production of 6 million to 7 million tons a year was common. The government tried to hard to produce 10 million tons in 1970 that it disrupted many other sectors of the economy.

But harvests have been declining over the past decade and the collapse of the Soviet Union took away the most lucrative market.

In June 2002, Cuba closed 70 mills in a drive for greater efficiency. Harvests slipped to 3.6 million tons in 2002. No figure has been given for this year, but most experts say it was less than 2 million.

Starved for investment, many Cuban mills have been using equipment installed in the early 20th century.

Other countries Mexico also have suffered from low sugar prices. Mexico’s government took over 27 sugar mills in 2001 to help workers who were not being paid.

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