COMMODITIES-CUBA: Greater Efficiency, Fewer Sugar Mills

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Jun 6 2002 (IPS) - Cuba’s goal to boost sugar industry efficiency is likely to mean the closing of many of the island’s more than 150 sugar refineries, just 104 of which were up and running during this year’s harvest.

“It is an old decision, but its implementation may have been postponed until now because of the social and political impacts a measure of this nature has,” a Cuban economist, who spoke on condition of anonymity, told IPS.

A half-million people are directly employed by the sugar agro- industry, and another two million workers are indirectly linked to the sector, out of a population of 11.2 million on this socialist- run island.

The economist said the precise number of sugar mills targeted for closing during the coming months is not yet known, but that the decision has led to a great deal of speculation and debate among sugar workers.

“For the workers at the mills that are to be shut down, there are alternatives, such as further study for the younger ones, and relocation to other sectors of the economy,” said the source.

“Surplus” workers, those who lose their jobs as a result of the government’s rationalisation measures, generally receive 60 to 100 percent of their regular wages until they find new employment.

The 104 sugar mills that operated during the Cuban harvest this year produced 3.6 million tons of sugar, 80,000 more than in 2001.

But revenues from sugar exports fell 120 million dollars as a result of declining international prices, according to a recent report in Granma newspaper, voice of the governing Communist Party.

The reality of the global market for Cuba’s main export commodity is forcing change to ensure that production costs do not surpass prices, say experts.

The situation “calls for all workers in this agro-industry to take part in a profound transformation,” a need arising from the current market circumstances, says the Granma report.

These “profound and essential” changes must produce a low-cost sugar industry that is highly competitive, makes maximum use of land and “uncovers the infinite possibilities of sugarcane derivatives,” commented Juan Varela, the newspaper’s sugar expert.

Cuban production of this sweet commodity has fallen in recent years, with 4.4 million tons recorded in 1996 and 3.1 million in 1998, the lowest mark in half a century. These volumes stand in stark contrast to the annual yields of seven or eight million tons achieved in the early 1990s.

The Economic Commission for Latin America and the Caribbean (ECLAC), a regional United Nations agency, predicted two years ago that the island’s sugar mills which failed to achieve an adequate level of efficiency would stop operating.

The ECLAC report stated that by 2002, only 90 to 100 mills would be functioning in Cuba and 30 would be dedicated exclusively to the production of derivatives.

Cuba possesses technology for producing 21 different types of sugar, including an “ecological” version, as well as alcohols, beverages and other by-products.

Ulises Rosales del Toro, Cuba’s sugar minister, and other officials have insisted that the industry must modernise, diversify and find ways to add value to the commodity.

“The factories with excessive expenses and poor efficiency have no place in the sugar industry panorama,” Rosales del Toro stated last year.

The minister assured that “neo-liberal economic measures” would not be implemented in the industry and stressed that Cuba is open to foreign investment in expanding the production of sugar derivatives and improving sugarcane agriculture.

A dozen mixed enterprises have been set up by the Fidel Castro government and foreign companies for exploiting sugar derivatives, producing revenues reaching 60 million dollars a year.

To date, capital from Spain, Mexico, Canada, Italy and France has been invested in the production of alcohols and in boilers and other mill equipment. Other joint ventures are currently being negotiated with Germany, China and Venezuela.

Experts say that the Castro government has not ruled out joint administration of sugar mills, with foreign capital, in a profit- sharing framework.