Cuba’s sugar industry restructures as another bad harvest looms

HAVANA, Nov 24 (Reuters) – Cuba has carried out a fundamental restructuring of its sugar industry in a last-ditch attempt to prevent factories from collapsing in the face of collapsing production.

In recent weeks, the government has made 56 sugar mills subsidiaries of the state sugar monopoly AZCUBA and incorporated local plantations into the new entities, allowing them to take advantage of recent reforms that include setting wages and cane and controlling 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% of a peak of 8 million tonnes in 1989. Experts consulted by Reuters say that 2022 production could be even lower.

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“The industry has more or less collapsed. The situation is worse this year than last year and it will take time to bring it back,” said a local sugar expert, speaking on condition of anonymity as he does not was not allowed to talk to reporters.

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

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

Cuba’s economy has long relied heavily 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% of the land that should be cultivated for sugar was fallow, the provincial Communist Party newspaper Escambray reported last week.

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

MILL OPENING DELAY

Harvesting usually starts in November and ends in May, but this year the first mill will open on December 5, with the bulk starting to grind from late December through January.

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

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

The other provinces have not yet published their production targets.

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

It is unclear 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 command economy, which the government has only just resolved. New reforms, including a sharp devaluation of the local currency and the decentralization of export earnings, are aimed at reviving production.

Meanwhile, industry experts consulted by Reuters said there was no money to begin the export recovery, nor access to multilateral funding.

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

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

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Reporting by Marc Frank, editing by Dave Sherwood and Rosalba O’Brien

Our standards: The Thomson Reuters Trust Principles.

Rachel J. Bradford