Cuba reports sugar production rose 8 percent, lower than expected

Cuba reports sugar production rose 8 percent, lower than expected

Mon Jun 17, 2013 10:15am EDT

* Output was 1.51 million tonnes raw sugar

* Production falls well short of forecast

* Possible impetus for investment

By Marc Frank



HAVANA, June 17 (Reuters) - Cuban raw sugar production

weighed in at 1.51 million tonnes this season, official media

said at the weekend, 8 percent above the previous harvest but

short of the 1.68 million tonnes forecast.

Cuban television, reporting Sunday on a weekend meeting to

review the harvest, blamed "obsolete mills and machinery" among

other factors such as Hurricane Sandy and poor management, for

the less than expected performance.

"Mills opened and closed, opened and closed, opened and

closed  even though managers said they were ready for the

harvest," Cuban Vice President Jose Ramon Machado Ventura told

the meeting.

Sandy also put a dent in the harvest before it began. The

storm damaged mills and flattened cane in eastern Santiago de

Cuba and Holguin provinces in late October.

The two provinces produced 70,000 tonnes less than forecast

before Sandy hit.

The harvest runs from December through April, but often

stretches into May and June.

Only 8 of 56 mills in the country were built after the 1959

revolution, the last in the 1980s.

Brazilian builder Odebrecht SA became the first

foreign company since the revolution to produce sugar when it

began administering one of the eight mills this year.

Administration agreements with the other seven mills are now

open for negotiations, according to the Cuban Chamber of

Commerce.

At least three other companies are negotiating management

agreements, according to two different company representatives.

"We hope this will push the Cubans to allow more foreign

participation in the industry," said a representative of one of

the companies, asking his name not be used.

Theoretically, the state-run sugar industry has been open to

direct investment since 1995, but in practice there has been

little interest on the government's part except in a few joint

ventures making sugar derivatives such as alcohol and parts used

in sugar processing.

A big obstacle is the U.S. Helms-Burton law, which penalizes

investment in properties seized from U.S. owners decades ago.

The law also contains a yet-to-be implemented section that would

allow Cuban-Americans to sue investors who "traffic" in their

expropriated properties.

The Sugar Ministry was closed two years ago and replaced by

state-run holding company AZCUBA, with subsidiaries in each

province.

AZCUBA hopes to reverse a long decline in output from 8

million tonnes in 1990, with plans to produce 2.4 million tonnes

by 2015.

Cuba consumes 600,000 to 700,000 tonnes of sugar annually

and has a 400,000-tonne export agreement with China. Cuban sugar

is also sold for export on the spot market.

Cuba has not imported sugar for a number of years.



Source: "Cuba reports sugar production rose 8 percent, lower than

expected | Reuters" -

http://www.reuters.com/article/2013/06/17/food-cuba-sugar-idUSL2N0ET0FV20130617