Thursday, June 29, 2006

Cuba can't meet sugar harvest goal

Posted on Thu, Jun. 29, 2006

Cuba can't meet sugar harvest goal
Responding to high international sugar prices, Cuba tried to increase
its sugar production this year, but failed.

Cuba's struggling sugar industry won't make its harvest goals this year,
the government acknowledged this week, saying that inefficient mills and
a late start proved to be obstacles difficult to overcome.

''The recently finished harvest demonstrated that hard work and final
results don't always correspond,'' the Communist Party daily Granma
reported Tuesday.

In February, when sugar prices rose to 17 U.S. cents a pound, Cuban
leader Fidel Castro announced his country -- after having closed sugar
mills and furloughed workers in 2002 -- would try to increase its
production. The government announced it would shoot for a three million
ton harvest.

But experts say it is now producing about 1.3 million tons a year --
less than a fifth of what was grown in the 1950s. Government officials
also recently announced plans to increase ethanol production fivefold --
a lofty goal that requires a stepped up harvest.


The nation that four years ago had 156 operating mills now has just 42,
and says 28 of them began the season late. Of 22 low-production mills,
eight couldn't grind the amount of sugar cane that had been projected
and two were shut down due to ''reiterated inefficiency and high per-ton
cost,'' Granma reported.

Had all the mills operated at capacity, Cuba could have produced another
43,800 tons, the paper said. But Granma did not offer any actual
production figures for this year's harvest.

''The late start couldn't be beaten,'' the paper said.

''There are always excuses -- `no spare parts, it's the weather,''' said
Nicolás J. Gutiérrez, president of the National Association of Sugar
Mill Owners of Cuba, a group of exiled sugar growers. ``Even before this
decline in production, Cuba was producing at 1907 levels. Maybe now with
the decline, they are at 1800s levels.''

In the second half of the 1990s, production costs were up to 15 cents a
pound, and the selling price just eight cents. The industry had been so
heavily subsidized that in 2002 Castro closed 71 mills and announced
90,000 sugar workers would be paid to go to school for retraining.

Cuba, once a world leader in sugar exports, found itself having to
import sugar to meet domestic needs and international demand. In April,
Reuters news agency reported that Cuba was looking for foreign investors
for the first time since the industry was nationalized in 1959.

When prices rose again, ''Castro had second thoughts,'' Gutiérrez said.
But the cutbacks made just four years ago were too steep to recover,
experts said.

With the workforce diverted to other jobs and more than half the sugar
fields now used for other crops, Castro ''couldn't do an about-face if
he wanted to,'' said Florida International University economist Antonio

''The industry is devastated. It has collapsed,'' Jorge said. ``It
requires an investment in the order of $6 or $7 billion. I don't think
he has the money, and I don't think he'd spend it even if he had it. He
has other priorities.''


Jorge said Castro is more interested in the more profitable areas of
tourism, biotechnology and mining. Cuba had been criticized as being too
heavily dependent on sugar as its main industry.

But the former growers say a healthy sugar industry will be key to
maintaining a stable economy when Fidel Castro dies, because it's the
only island-wide industry that once employed up to half a million people.

''The industry will continue limping along,'' Jorge said. ``Castro will
try to get what he can out of it, which is not much.''

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