Disastrous Cuban sugar harvest may force imports – and reform

HAVANA, (Reuters) – Rainfall has shuttered all but a few of Cuba’s 54 sugar mills, with output down nearly 40 percent to the lowest level in more than a century, which could force the island to import, official media and industry sources say.

While inclement weather played a big role in this season’s disastrous performance, local experts and officials also blamed inadequate reforms and decapitalization, reflecting more broadly the socialist country’s struggle to update its economy.

The Communist Party has already tasked President Miguel Diaz-Canel, who replaced Raul Castro last month, with carrying out a series of reforms aimed at making the state-dominated economy more efficient, according to party insiders.

The Cuban sugar ministry was eliminated in 2011 and Azcuba, a state-run monopoly, formed after output declined to a similar low comparable only to the first decade of the 1900s. Production is far below the 8 million tonnes produced in 1990 before the collapse of the Soviet Union, Cuba’s former benefactor.

The Caribbean island nation, where sugar was once synonymous with its name, planned to produce 1.6 million tonnes of raw sugar this season, compared with 1.8 million the previous harvest due to damage from Hurricane Irma in September.

It then reduced that figure to 1.3 million tonnes due to rainfall as the harvest began, but production is now pegged at 1.1 million tonnes of raw sugar.

The decline is more bad news for Cuba, which is struggling with a cash shortage due to ally Venezuela’s economic collapse, a hostile and sanctions-wielding Trump administration, a drop in tourism and its own inertia.

The sugar industry also contributes to electricity production and derivatives such as rum and animal feed.

Cuba consumes between 600,000 and 700,000 tonnes of sugar a year and has an agreement to sell China 400,000 tonnes annually.

The country has already exported some sugar, so it may have to import supplies, local traders said.

The Azcuba director in eastern Holguin province, Mayo Gonzalez, was quoted by the provincial media in late April as stating the production plan had to be met “because in large part it is the only way the country can avoid spending considerable amounts of money importing sugar to meet our demand.”

When Azcuba was launched as a model of state business reform, it forecast output approaching 3 million tonnes by now.

A local expert on state-run companies said weather was only part of the problem and the harvest was just another example of the poor performance of the system and need to deepen reforms.

“There are many causes. For example, the reforms have not led to significant decentralization and there is decapitalization and a lack of foreign investment along the entire value chain,” he said, requesting anonymity due to a ban on talking with foreign journalists.

The director of Azcuba in central Camaguey province, Alvarez Padilla, upon announcing this week that the harvest had ended there at 76,000 tonnes, well below the 145,000 planned, blamed “poor repairs of the industry and agricultural equipment, lack of technological discipline, operational errors, lack of cane, and other subjective problems on top of the weather,” the local Communist party newspaper Adelante reported.

The Cuban sugar harvest runs from late November into May. Yields and output fall significantly beginning in May as hot and humid summer weather sets in.

According to the local weather service, precipitation has been 46 percent above the historic norm so far this year.

Only 15 percent of plantations have adequate irrigation and drainage, leaving them and outdated roads and bridges impassable for days after heavy rainfall.

 

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