Cuban sugar harvest falter

Published March 04, 2014, 02:01 PM



Cuban sugar harvest falters

For the third consecutive year Cuba's reorganized sugar industry is

failing to perform up to expectations, increasing pressure on the

government to open up the once proud sector to foreign investment.

By: Marc Frank, Reuters



HAVANA — For the third consecutive year Cuba's reorganized sugar

industry is failing to perform up to expectations, increasing pressure

on the government to open up the once proud sector to foreign investment.



Already one mill, the first since the industry was nationalized soon

after the 1959 revolution, is under foreign management, with at least

seven others on the auction block.



AZCUBA, the state-run holding company that replaced the Sugar Ministry

three years ago, announced plans to produce 1.8 million metric tons of

raw sugar this season, 18 percent more than last season's 1.6 million

metric tons.



But the harvest is 20 percent behind schedule, sugar reporter Juan

Varela Perez wrote recently in Granma, the Communist Party daily.



"Continuous and heavy rainfall in almost all provinces of the country

has affected the harvest since January," state-run Radio Rebelde said

late last week, reporting on a meeting of AZCUBA executives at the end

of February.



"To this has been added the habitual problems of inputs arriving late,

disorganization and the poor quality and slowness of repairs," the

report said.



Sugar was once Cuba's leading export, both before the revolution and

afterward, when the former Soviet Union bought Cuban sugar at guaranteed

prices. Today it is Cuba's seventh largest earner of foreign currency,

behind services, remittances, tourism, nickel, pharmaceuticals, and cigars.



"These days it is a true odyssey to go through a harvest. The mills need

more profound repairs, but that costs millions upon millions of

dollars," Manuel Osorio, a mill worker in eastern Granma province, said

in a telephone interview on Tuesday.



"So they do some superficial repairs and start grinding and immediately

the problems begin and this year to top it off it is hot and raining

almost every day. The cane needs cool and dry weather to mature. If not,

it is like milling weeds."



The sugar harvest begins in December with the "winter" season and runs

into May, with January through March the key months as dry and cool

weather increases yields, but not this year.



"I can't remember a wetter winter and it is almost impossible to

harvest," sugarcane cutter Arnaldo Hernandez said in a telephone

interview from eastern Holguin province.



Cuban sugar plantations lack adequate drainage, making harvesting by

machine difficult when it rains, and humid weather retards the

production of sugar in cane.



"Going into the plantations is a heroic task, and when the cane reaches

the mills it yields little sugar," Hernandez said. "Look, even the

Guaraperas (sugarcane juice) they sell in the city is like water. I know

because I tried some myself yesterday."



Rainfall was twice the average for the month in key eastern and central

provinces through most of February, according to official media.



"So far this year 115.2 millimeters (4.5 inches) of rain has fallen in

(the eastern province of) Las Tunas, twice the historic average," the

National Information Agency reported in late February. The agency said

the harvest in Las Tunas was 35,000 metric tons of raw sugar behind

schedule to date toward a plan of 194,000 metric tons through May.



A similar situation was reported in central Villa Clara, where the goal

is 218,000 metric tons, and in central Camaguey, which reported

production to date was 13 percent, or 11,000 metric tons, below plan.



Investment opening



Cuba produced just 1.2 million metric tons of raw sugar three seasons

ago when AZCUBA was formed, compared with 8 million metric tons in the

early 1990s, before the demise of the Soviet Union led to the industry's

near collapse.



Industry plans call for an annual average increase in output of 15

percent through 2016, though over the last three harvests the increase

has been 12 percent, according to AZCUBA.



The poor performance so far this year may accelerate AZCUBA's plans to

open the sector to private investment.



President Raul Castro, who assumed power from his ailing brother Fidel

Castro in 2008, is trying to revive the country's economy through

reforms passed by the Communist Party in 2011. The plans include more

foreign investment.



This year, the Cuban Chamber of Commerce listed seven more sugar mills

as candidates for foreign investment, all of which were built after the

revolution and are therefore not subject to claims by previous owners.



The remaining 48 mills in the country were all built more than 60 years ago.



This month the Cuban National Assembly is expected to pass a new foreign

investment law that makes the island, and agriculture, more investor

friendly.



Odebrecht SA, a Brazilian corporation, began administering a mill in

central Cienfuegos province this year, the first foreign company allowed

into the industry since 1959.



Odebrecht subsidiary, Compañía de Obras en Infraestructura, plans to

upgrade the mill as well as the supporting farm and transport sectors,

and has expressed an interest in other mills, as have a number of other

foreign companies.



Its 13-year contract calls for an investment of around $140 million to

increase output to more than 120,000 metric tons of raw sugar from

40,000 metric tons.



Cuba consumes between 600,000 and 700,000 metric tons of sugar a year

and has an agreement to sell China 400,000 metric tons annually, with

what remains sold to other countries.



Source: Cuban sugar harvest falters -

http://www.agweek.com/event/article/id/22833/