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AGRICULTURE-CUBA: Forecast for Worst Sugar Harvest in 70 Years

Patricia Grogg

HAVANA, May 20 2003 (IPS) - Cuba could suffer 180 million dollars in lost revenues if the current sugar harvest bears out the gloomy predictions of experts, that it will be the lowest yield since the 1930s.

The harvest of Cuba’s highly symbolic crop, begun in December, will be 1.5 million tons less than in 2002, when it reached 3.6 million tons, according to agricultural experts consulted by IPS.

The forecasts suggest that the ”difficult conditions” of the sugarcane harvest will keep output under 2.1 million tons of sugar, and it is ”likely” – says one expert – that it will be even less.

Sugar was for decades the island’s main source of revenues, but the sector was surpassed in the 1990s by tourism.

If the predictions prove correct, this season’s harvest will be far smaller than those of 1935 and 1936, with 2.6 million and 2.5 million tons respectively.

”It would mean lost exports of approximately a million tons of sugar, just when international prices have increased,” commented a Cuban economist who requested anonymity.

>From January to March, sugar prices on the world market hovered at 8.49 cents on the dollar per pound (400 grams) of sugar, said the economist. ”The country would lose some 185 million dollars in revenues.”

This season’s low sugar yield is due, among other causes, to the early arrival of spring rains and the shortages of fuel, lubricants and replacement parts for farm machinery, in the opinion of the source.

Also affecting the situation is the interruption of the refining process due to equipment breakdown and electricity blackouts, as well as inefficient industrial output – and the consequent decline in sugar volumes.

At many sugar mills, the cost of production is as much as 35 percent above the maximum of the optimal range.

To date, the government of Fidel Castro has not issued any official reports on the island’s sugarcane harvest, the first since the dramatic sugar industry reforms that reduced the number of functioning sugar mills from 156 to just 71.

According to the responsible authorities, the ”adjustment” was necessary in order to improve efficiency and to stabilise output at no more than four million tons of sugar annually, based on the conditions of the global market, whose prices the Cuban government described as ”rubbish”.

Sugar prices have suffered the same fate as other raw materials and agricultural commodities, such as coffee.

International sugar prices plummeted in February 2000 to their lowest point in 14 years, according to the United Nations Food and Agriculture Organisation (FAO).

That situation improved in later months, and the price of sugar closed the year at 10 cents on the dollar per pound, with a year average of 8.18 cents per pound.

But the recovery was short-lived. Prices fell from an average of 10.32 cents per pound of sugar in January 2001 to 6.69 cents per pound in October of that year.

The Cuban government’s reforms dismantled more than 60 sugar-producing installations and cost 60,000 people their jobs. Under the socialist regime’s employment plans, the former sugar workers were moved to other positions or enrolled in work training courses.

Local economists agreed with the Castro government that the reforms could be put off no longer. But many note that it must not be ignored that Cuba’s position in regard to its international clients and creditors was backed for decades by its sugar-producing capacity. Now that backing has been dramatically reduced.

Before the sugar industry reform, Cuba had an established capacity to produce 10 million tons of sugar annually, but in the last decade the island’s harvests did not yield more than an average of four million tons.

In Cuba’s economic sphere, the sugar decline is relatively compensated by the reactivation of tourism, which saw a 19-percent increase in the first four months of this year with respect to the same period in 2002.

Last year, the Cuban tourism industry felt the impact of the sharp cutback in international air travel that came in the wake of the Sep. 11, 2001 attacks in New York and Washington.

As far as the general situation of the island’s economy, after a six-percent increase in gross domestic product (GDP) in 2000, economic activity expanded three percent in 2001 and just 1.1 percent last year. The government forecasts 1.5-percent growth this year.