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/