Foreign Money for Cuban Sugar Industry

Plans to revive processing and use waste to make biomass fuel.

Two foreign-funded projects designed to revive sugar production in Cuba are the first investments of their kind in half a century, and come at a time when this once-powerful industry is at a low ebb.

The weekly newspaper 5 de Septiembre reports that the Brazilian group Odebrecht and British-based Havana Energy Ltd. signed investment deals with the state sugar enterprise Azcuba during last month’s Havana Fair.

In a 60 million US dollar deal, Odebrecht will run the 5 de Septiembre sugar mill in Cienfuegos province. The firm is already working in Cuba, on a project to modernise the Mariel Port.

Havana Energy’s investment focuses not on so much on sugar as on the by-products. It will build Cuba’s first ever power station fuelled by sugar cane biomass, using waste materials from the Ciro Redondo sugar mill in Ciego de Ávila province.

Francisco Blanco Sanabria, an independent journalist in Cuba, says the agreements come at a time when the sugar industry is in crisis.

Production in the 2011-12 season stood at a mere 1.5 tons, a massive fall on the peak of 8.2 million tons achieved in the 1980s.

The decline dates to the early 1990s when the main market for Cuban sugar – the Soviet Union - collapsed. The industry was so reliant on guaranteed sales to its ally that it never tried to look at alternatives or at diversification into areas like ethanol production.

Economist Oscar Espinosa Chepe says that the government restructuring programme that followed amounted to dismantling mills and halving the area of sugar cane cultivation. In 1990 there were 156 factories; just over 40 of them survive.

One of them is the 5 de Septiembre plant, due to be taken over by Odebrecht. It will resume production as the December harvest comes in, now under foreign management.

At the Havana Fair, officials blamed the delay in securing foreign investment on the United States trade embargo.

In place since 1960, the embargo penalises foreign companies that buy or operate businesses confiscated from American citizens in the years after the Cuban Revolution. The dozens of sugar refineries built by the Cuban state between 1970 and 1990 are not subject to these restrictions.

Alejandro Tur Valladares is an independent journalist in Cuba.

This story was first published on IWPR’s website.