CUBA: Expanding Sugar Cane By-Products Sector with Foreign Investment

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Jun 12 2003 (IPS) - Cuba hopes to expand its sugar cane derivatives industry by opening it up to foreign investment and incorporating greater added value into the products it sells on the depressed international market.

The new strategy of Cuba’s socialist government included the closure of nearly half of the country’s 156 state-owned sugar mills last year, in order to bring production levels closer into line with demand.

Local authorities say Cuba’s sugar cane industry must be transformed into ”a modern, diversified enterprise with greater added value” – an undertaking that will require heavy foreign investment.

Sugar was the mainstay of the Cuban economy until it was surpassed by tourism in the late 1990s as the biggest foreign exchange-earner. Another major source of hard currency is remittances sent to their families by Cuban exiles.

Modernising the sugar industry will also boost electricity generation, as one ton of sugar cane biomass – consisting of bagasse and foliage – can produce an average of 27 kilowatts during harvest season from December to May.

According to official statistics, Cuba has the technology to produce 21 different kinds of sugar, including organically produced sugar, as well as rum and other alcoholic beverages and dozens of other by-products.

Bagasse itself, the fibre left after the cane is crushed to remove the juice, serves as raw material for 65 different products, and sugar cane syrup is used to produce liquor, livestock feed and other derivatives.

”We are forced to seek financing possibilities,” said the director of the governmental Cuban Institute of Research on Sugar Cane Derivatives, Luis Gálvez.

As of late last year, there were just under a dozen joint ventures in Cuba operating with capital from Spain, Mexico, Canada, Italy and France in the sugar cane by-products industry, which accounts for eight percent of the sugar industry.

But Gálvez said an accelerated effort to develop the industry by introducing modern technology would increase that proportion to 20 or 25 percent.

”In the restructuring of the sugar industry, priority has been put on the production of sugar cane by-products,” the official told journalists.

The plans include the upgrading of around 20 distilleries and the construction of several more, to increase production of alcoholic beverages for export to markets in Latin America and Europe.

A project for producing fuel alcohol from sugar cane, based on technology from Brazil and European countries, could also bear fruit in the medium-term, said Gálvez, who added that ”we must not be left out of that trend, due to economic and ecological reasons.”

Local authorities expect fuel alcohol, which has been profitable in a number of countries, to begin to be produced before the end of the year.

Fuel alcohol or ethanol is a high-octane alcohol produced from the fermentation of sugar or converted starch. It can be used alone or in mixtures with gasoline, to produce a high-performance fuel that cuts toxic exhaust emissions.

An expert in renewable energy sources told IPS that a mixture containing 10 percent fuel alcohol produces up to 30 percent less carbon monoxide than petroleum-based fuels.

Brazil is currently the world’s biggest producer and exporter of fuel alcohol, with an installed capacity to produce 600,000 litres a day.

Around 100 million dollars a year in sugar cane derivatives were produced at the industry’s peak in the second half of the 1980s. But the economic crisis of the 1990s, triggered by the disappearance of the Soviet Union and the east European socialist bloc, curbed the growth of the sector.

Sugar constitutes approximately 10 percent of sugar cane content. The rest of the cane’s organic material, traditionally undervalued in Cuba, is potentially more valuable than the sugar itself.

Economists consulted by IPS said Cuba is heading in the right direction with its strategy of diversifying the sugar industry, given the volatile prices of sugar on the international market.

If the projections of experts play out, the current harvest could hit just 2.1 million tons or even less – lower than the yields seen in the mid-1930s, and a far cry from the harvests of six to eight million tons of the 1980s.

The harvest that is now coming to an end was the first in the wake of the restructuring of the sugar cane industry, which reduced the area planted in sugar cane for industrial uses from 1.5 million hectares to 800,000 hectares.