Friday, March 26, 2010

Cuba faces major sugar decline

Cuba faces major sugar decline - by Nampa/Reuters

HAVANA – Cuba may open sugar production to foreign investors for the
first time since the 1959 revolution as it seeks to reverse the once
proud industry's relentless decline, business sources said this week.
Talks between investors and the government have come and gone with
little result for years, but what is shaping up as perhaps the island's
worst harvest in a century has increased interest in bringing foreign
partners, the sources said.

Their money and management know-how could help revive a sugar industry
that has collapsed from neglect and the decapitalization of mills and
plantations, local experts and foreign traders said.

President Raul Castro, who took over from ailing brother Fidel Castro
two years ago, is trying to right communist Cuba's cash-strapped economy
by increasing exports and cutting imports.
Sugar, once the driver of Cuba's economy, now accounts for less than 5
percent of Cuba's foreign earnings, but prices have been driven up by
ethanol demand, so Cuba is turning to it once again.
A Cuban source with knowledge of the sugar industry said the government
has been seriously exploring foreign participation for several months.
'The executive Committee of the Council of Ministers approved plans to
pursue talks last November, and again this year to sign administrative
agreements,' the source said.

Foreign banking and other business sources confirmed talks were
advancing toward agreements that would have investors jointly administer
several mills and share in the production for a limited number of years.
Similar agreements already exist in the citrus industry, where
Panama-based Israeli investors jointly operate juice plants with the

Cuba was once the world's biggest sugar exporter with raw output
reaching 8.1 million tonnes in 1989, but the industry went into decline
after Cuba's top ally for 30 years, the former Soviet Union, collapsed
in 1991.
With the harvest scheduled to end by May, Cuba is in danger of reaching
its lowest output since 1908, when 1.2 million tonnes of sugar were

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