Cuba struggling to recover its flagship sugar industry

RIO DE JANEIRO, BRAZIL – Once a leader in the world sugar market, Cuba is far from recovering the fertile production volumes of former times in an industry once considered the country’s economic driver has not been able to take off since its collapse in the 1990s.

Of the 156 mills operating before 1959, 56 remain, and only 38 are milling in the 2020-2021 harvest. And the 5.6 million tons of sugar harvested in the year the Revolution triumphed, or the 7 and even 8 million in the best seasons between 1970 and 1989, have been reduced to little more than 1 million projected for the current harvest.

Cuba’s flagship sugar industry has been affected in the last 6 decades by the U.S. financial and commercial embargo, with losses of some US$125 billion, according to Havana’s estimates, and the impossibility of accessing the U.S. market.

In addition, technological obsolescence, lack of fertilizers and fuels, low financial availability, and other factors hinder the development of this sector, which is strategic because of its contribution to foreign currency through exports of sugar and alcohol (especially rum) energy and other derivatives.

This causes the frequent stoppage of production in the mills and the low quality of the raw material, essential in a long-cycle crop.

Among the mills still operating, many do so with drive, “ingenuity,” and the sense of belonging of their own workers, such as the Boris Luis Santa Coloma plant (formerly San Antonio), 53 kilometers east of Havana.

To import sugar, supplies, or parts, Cuba must circumvent the financial persecution caused by the embargo, José Carlos Santos, first vice-president of the state-owned Azcuba group, told Efe.

This is compounded by the impact of hurricanes like Irma that cut the slight growth experienced in 2011, after suffering its worst harvest in 105 years in 2010 with barely 1 million tons.

The hurricane destroyed over 430,000 hectares of sugarcane in 2017 and left some 20 mills with broken roofs and deteriorated structures.

Consequently, 700,000 tons of sugar ceased to be produced since 2017, Santos assured in a press conference.

Neither will the 1.2 million tons target be reached in the current milling started in December. The end of April should have been completed but will be extended, the executive pointed out, until the May rains allow it.

SWEET NATIONALIZATION

Sugar, brought by the Spanish conquistadors in 1493, accounted for 80% of Cuban exports in the 1950s and its main market was the U.S., which reserved a preferential quota.

In the late 1950s, there were 161 sugar mills in Cuba, of which 131 were owned by wealthy Cubans and accounted for 60% of production, compared to 37% by U.S. entrepreneurs.

When the Cuban Revolution triumphed in 1959, sugar plantations were nationalized, although at first, the mills remained in their owners’ hands. The goal was to diversify an economy focused on monoculture and end dependence on U.S. buyers.

Production in the 1959-1960 harvest reached 5.6 million tons of sugar.

In 1960, Cuba’s last sugar export to the United States amounted to 1.9 million tons. Washington suspended the preferential quota, one of its first economic sanctions against the island.

Cuba nationalized sugar mills that same year and U.S.-owned mills, and the Soviet Union pledged to buy a larger percentage of Cuba’s annual harvest through 1970.

The U.S. retaliated with the so-called Dagger Act, which authorized then-President Dwight Eisenhower to suppress the Cuban sugar quota for the remainder of that year.

That action is regarded as the origin of the U.S. policy (in force to this day) of blocking the inflow of foreign currency to stagnate the Cuban economy, dependent on sugar.

THE TEN MILLION

Faced with U.S. restrictions, the Soviet Union took over the U.S. quota for Cuban sugar at preferential prices and began exporting agricultural machinery and other supplies to the island.

In 1970, President Fidel Castro announced an ambitious plan to produce 10 million tons of sugar, appealing to national pride and world market prices.

Although the goal of the 1970-71 harvest was not reached -only 8.5 million tons- at the end of the decade, the 1980-81 harvest reached 7.4 million tons, and 10 years later, the 1988-89 harvest amounted to 8.1 million tons.

DRASTIC DROP

The disintegration of the USSR in 1991 left Cuba without its main market, which triggered the serious “special period” crisis.

Five years later, the harvest fell to 4.3 million tons. The U.S. Helms-Burton law came into force, which tightened the embargo and began to penalize third parties that invested in confiscated properties on the island, including the sugar industry.

The solution was to cut costs and production capacity and use the land for other crops when the price of sugar was plummeting worldwide.

In 2002, Fidel Castro announced a “restructuring” of the sugar industry with the closure of 70% of sugar mills, which reduced production capacity by half, and 60% of sugarcane land was allocated to other crops due to their low profitability.

This transformation included creating the sugar agroindustry business group (Azcuba), which took over from the Ministry of Sugar at the head of the sector to increase the industry’s efficiency.

However, after the rise in world market prices in 2006, the island’s top authorities implemented the strategy of “making more sugar,” recalling the period when this product was the backbone of the Cuban economy.

Source: efe