Cuban sugar industry restructures as another grim harvest looms

Cuba has carried out a major restructuring of its sugar industry in a last-ditch attempt to prevent factories from retreating in the face of collapsing production.

In recent weeks, the government has made 56 sugar factories subsidiaries of the national sugar monopoly AZCUBA and incorporated local plantations into the new entities, allowing them to take advantage of recent reforms that include setting wages and prices for cane. and control of 80% of their export earnings. .

The communist-ruled country produced just over 800,000 tonnes of raw sugar last season, its worst performance since 1908 and just 10% from a peak of 8 million tonnes in 1989. Experts consulted by Reuters estimate that production in 2022 could be even lower.

“The industry has more or less collapsed. The situation is worse this year than last year and it will take time to restore it, ”said a local sugar expert, on condition of anonymity because he was not authorized to speak with journalists.

The Caribbean island nation has suffered from both the effects of the coronavirus pandemic and tough new US sanctions, slashing its hard currency earnings by around 40% over the past two years, shrinking the economy by 13% and reducing the resources available for factories and plantations.

The provincial media were filled with stories of cane shortages, overdue factory repairs, and a lack of tires, batteries and fuel to harvest and transport the cane.

The Cuban economy has long been heavily dependent on sugar exports, but production has plunged since the breakup of the Soviet Union in 1991.

In the central province of Sancti Spiritus, for example, about 45 percent of the land that should be cultivated for sugar was fallow, according to the provincial Communist Party newspaper. Escambray reported last week.

A statement from the National Council of Ministers from a June 2021 meeting said that an industry review was underway “to ensure in the future the vitality of these activities, which have meant so much economically and in the world. history of Cuba “.

INDUSTRY IN CRISIS. A farmer rides a horse next to a sugarcane field in Las Mangas, Cuba, May 26, 2018.

Alexandre Meneghini / Reuters

Crusher opening time

The harvest usually starts in November and ends in May, but this year the first mill will open on December 5, with the big one starting to grind in late December through January.

Last year 38 factories opened and this year there will be fewer, according to provincial media.

Key sugar-producing provinces Villa Clara and Las Tunas estimate production of around 125,000 tonnes each, slightly more than last season, while the provinces of Sancti Spiritus, Cienfuegos, Granma and Artemisa expect lower harvests. than the previous season.

Other provinces have yet to release their production targets.

Cuba consumes between 600,000 and 700,000 tonnes of sugar per year and has an agreement to sell China 400,000 tonnes per year.

It is not known how much sugar Cuba exported this year and whether it imported any to meet local demand.

Like other industries, agriculture and sugarcane cultivation face structural problems in the import-dependent government economy that the government is only addressing. New reforms, notably a strong devaluation of the local currency and the decentralization of export earnings, aim to revive production.

At the same time, industry experts consulted by Reuters said there was no money to start the export recovery, nor access to multilateral finance.

With the population fully vaccinated against the coronavirus and tourism – the engine of the economy and currencies – opening up, over time the situation could improve, the sugar expert said.

“But they will have to go further with reforms, attract foreign investment or divert money from other sectors such as tourism,” he said. –

Rachel J. Bradford