Cuba sugar ministry to be shut in reform

Cuba sugar ministry to be shut in reform
Published: 6:52AM Thursday April 08, 2010

Cuba's sugar ministry will close in the coming months and be replaced by
a state-run corporation, business sources said, in the most important
reorganisation of the once-thriving industry since it was drastically
downsized in 2002.

Plans to create the new sugar corporation and revitalise the industry
by, among other things, allowing foreign investment and closing
inefficient sugar mills are nearing final approval by President Raul
Castro, said the sources, who know the industry well and asked not to be
identified.

The ministry's upcoming demise appears to be the last chapter in the
dramatic decline of the sugar industry in a Caribbean island country
where sugar was once king but now accounts for less than 5% of foreign
exchange earnings.

This latest move is similar to other agricultural reforms under Castro,
who replaced older brother Fidel Castro in 2008 and is trying to
increase food output by loosening the communist-led government's control
over farming.

Cuba's fall from once being the world's biggest sugar exporter,
producing 8 million tonnes of raw sugar annually, began with the
collapse of former benefactor the Soviet Union in 1991. Since then, the
sector has declined relentlessly and output is expected to be only 1.2
million tonnes this harvest.

But with the upcoming reorganisation, "in the medium-term they hope to
increase production to 2.8 million tonnes using fewer mills," a Cuban
source with intimate knowledge of the sugar industry said.

"Yields per hectare are currently around 3 tonnes per hectare and the
goal is to bring them up to at least 6 tonnes," he added.
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The international standard is 8 tonnes per hectare.

Cuba itself consumes a minimum 700,000 tonnes of sugar annually.

More autonomy sought

Similar corporations to the one planned for sugar operate with foreign
partners in nickel (Cubaniquel) and oil and gas (Cubapetroleo) under the
Basic Industry Ministry. It was not clear if the new sugar sector
company would fall under the agriculture ministry or some other
government authority.

"The new structure will give decision makers in the industry more
autonomy and allow them to keep a percentage of revenues for
re-investment," a Cuban economist said, asking like the others that his
name not be used.

The United States, before the 1959 Cuban Revolution, and later the
Soviet Union, paid padded prices for Cuban sugar to boost the island's
economy, so the subsequent collapse of the Soviet bloc hit Cuba and its
sugar industry hard.

Today, technical service exports are Cuba's most important foreign
exchange earner, followed by other services such as aviation, tourism
and communications, then nickel, refined oil products, pharmaceuticals,
cigars and only then sugar.

In a painful 2002 downsizing of what was once the island's flagship
sector, Cuba shut down and dismantled 71 of 156 mills, all 71 built well
before the revolution, and relegated 60 percent of sugar plantation land
to other uses.

More than 200,000 of the industry's 400,000 workers were moved to other
employment and many rural sugar towns were left stagnating, their closed
mills marking the skyline.

More mills have closed since then, with just 44 mills open this season.
Another 20 have been maintained in working condition for future use.

Only 700,000 hectares of the more than 2 million hectares once
controlled by Cuba's sugar ministry are currently dedicated to sugar cane.

Under Raul Castro, former sugar plantations already have been shifted to
the agriculture ministry, and a vast railway system to move cane from
the fields and sugar to port has been handed over to the transportation
ministry.

http://tvnz.co.nz/business-news/cuba-sugar-ministry-shut-in-reform-3451985