Development & Aid, Economy & Trade, Headlines, Latin America & the Caribbean

CUBA: Poor Sugar Harvest Harks Back to Early 20th Century

By Patricia Grogg

HAVANA, Nov 18 2003 (IPS) - Cuba’s limited sugar harvest this year and the continued decline of international prices are taking a toll on the state coffers, quashing hopes for an economic turnaround based on positive trends in tourism and other industries.

The socialist government did not officially report the results of the harvest that ended in June, but sugar industry experts say output was 2.1 to 2.2 million tonnes.

This marks a low point comparable only to the early 20th century and has forced Cuba to import from Brazil or Colombia to comply with export contracts and to meet domestic demand. The island might have to turn to the United States for sugar as well.

This unofficial estimate represents a reduction of some 1.5 million tonnes of sugar for export compared to the 2001-2002 harvest, and around 250 to 300 million dollars less for the struggling state accounts, depending on the average sugar prices by year end.

The price for a pound (400 grams) of sugar on the international market this month remained below seven cents on the dollar, although the reduced supply that tends to occur towards the end of the year could push prices up to eight cents pound.

Low international sugar prices prompted the Fidel Castro government to make adjustments to its sugar industry, closing down mills and limiting production to no more than four million tonnes a year.

The reforms left only 71 sugar mills operating, plus 14 for processing sugarcane derivatives, freeing up more than a million former sugarcane fields for cultivation of fruit and lumber trees, and vegetables and for raising livestock.

“The scant harvest generates some uncertainty about the benefits and importance of that process begun last year,” an economist told IPS, speaking on condition of anonymity.

In order to meet its export commitments and satisfy domestic demand – estimated at 700,000 tonnes a year – Cuba had to go so far as to import sugar from Brazil and Colombia.

Alimport, the Cuban state-run food import enterprise, is negotiating with PS International corporation, based in the south-eastern U.S. state of North Carolina, to buy 5,000 to 15,000 tonnes of sugar for the island’s domestic market.

However, the deal depends on an export quota – to be decided by the U.S. government – and could crumble under pressure from sugar-producers in the south-eastern state of Florida.

Cuba’s harvest this year lasted longer (180 days) than any of the past eight years, and probably had the worst results in terms of daily sugar production, says Juan Triana, director of the Centre for Cuban Economic Studies (CEEC).

Triana believes that “the poor sugarcane-per-hectare yields” will continue to be the leading impediment to achieving output that allows the industry to surpass its 40-percent share of Cuban exports.

“The greatest agricultural yield was attained in 1989, when Cuba produced 64.1 tonnes per hectare, but since 1992 it has not surpassed 40 tonnes per hectare,” he said.

The director of the CEEC, a research institution affiliated with the University of Havana, referred to the matter in an article on the performance of the Cuban economy during this year’s first six months.

The positive trend in Cuban tourism, as well as growth in the energy, communications and services sectors, “are cushioning the poor performance of the sugar industry,” Triana said.

He says it is “likely” that the forecast of 1.5 percent economic growth this year will become reality for Cuba, taking into account that the economy’s performance in the first six months is usually the determining factor for year-end results.

While some economists predict that the gross domestic product increase will be greater than the official forecast, there are others who argue that the impact of the poor sugar harvest could “attenuate the expected pace of growth.”

An expert in the sugar economy noted that this agro-industry has a “multiplier effect” on the broader Cuban economy.

When sugar is on the decline it limits access to credits, and there is reduced availability of alcohols and of pulp for generating electricity, producing paper and manufacturing animal feed.

Shortages of fuel and inputs like fertiliser and herbicides, as well as the lack of financial support for improving the efficiency of the sugar production cycle have been hurting the industry since the late 1990s.

Not enough attention has been paid to the plantations, so there will be less sugarcane available for the next harvest, the second one since the hectare reduction plan, added the source.

The socialist government’s restructuring programme calls for decreasing the area dedicated to sugarcane production by half. This gradual process is slated to conclude in 2004, according to sugar industry officials.

Cuba at one point had the capacity to produce 10 million tonnes of sugar annually. It was enough to meet the demands of the former European socialist bloc and the Soviet Union, which were the island’s primary trade partners until the late 1990s.