Cuba's Sugar Industry (review)

Abstract

Reviewed by: Cuba's Sugar Industry Richard Sicotte José Alvarez and Lázaro Peña Castellaños. Cuba's Sugar Industry. Gainesville: University Press of Florida, 2001. 160 pp. Cuba's Sugar Industry, by José Alvarez and Lázaro Peña Castellaños, is the fruit of almost a decade of international scholarly collaboration. Their purpose is to examine the evolution of the Cuban sugar industry since 1959, with a special focus on 1980–2000. Containing a multitude of statistics, analyses, and an excellent bibliography, the book is a marvelous achievement and will be extremely valuable to researchers on Cuba. Around 1980 the Cuban government began to increase greatly the use of inputs in sugar production, a program the authors call the state extensive growth model. There were marked increases in the amount of land dedicated to sugarcane, and in the use of fertilizers, pesticides, and tractors. New mills were constructed for the first time in decades. Nonetheless, as the authors show, the main economic indicators of the sugar industry did not improve, and even deteriorated by the beginning of the 1990s. An interesting aspect of the authors' approach is that they do not blame the decline of the Cuban sugar industry entirely on external factors, but also on internal policies. For example, the authors note the poor care for sugarcane which resulted in productivity decline and a substantial rise in prices. The state experimented, mostly unsuccessfully, with a variety of management models employing monetary incentives in an effort to improve efficiency. The "exhaustion" of the state extensive growth model, coupled with effects of the fall of the Soviet Union and increased U.S. economic sanctions, led to a crisis in the sugar industry and in the economy more generally. Production in 1994 was half that of 1990, and agricultural and industrial yields fell dramatically. The authors explain that in this new environment, it is more imperative than ever for the industry to improve productivity in order to be able to compete in the international sugar market. The industry must reduce costs, and to do so it needs to recapitalize, but domestic capital is too scarce to do the job alone. Beginning in the 1990s, the Cuban government experimented with the Basic Unit of Cooperative Production (UBCP), a new form of sugarcane cooperative. As this book and a more recent journal article by Alvarez show, the [End Page 185] effectiveness of this experiment has been limited by the continued intervention of the government, a lack of UBCP autonomy, and insufficient investment. Besides the necessary internal adjustments, Cuba must face the challenges of competition in the international sugar market. Since the collapse of the Soviet Union, Cuban sugar exports have principally found a market in Russia. Expansion elsewhere is possible with rising world demand for sugar, but this is mitigated in part by subsidies in beet-sugar-producing countries, especially in Europe, and exclusion from the U.S. market. Moreover, the U.S. market is (since 1934) strictly regulated by a quota regime, and U.S. sugar imports since 1960 have actually fallen due to the rise of substitutes such as corn syrup and the expansion of U.S. output. In the event that U.S.-Cuban relations should improve at some uncertain date, it is possible that the United States would seek to find a place for Cuban sugar within the quota regime. The authors analyze three different scenarios, and even under their most optimistic scenario (for Cuba) this would amount to a relatively small increase in exports. Only radical changes in the world sugar market, encompassing (ironically) Cuba's embrace of true free-market principles held by the United States and European nations, would actually open up the possibilities for substantial expansion of Cuban sugar exports. But this could only take place, as discussed above, if Cuba's industry increases its productivity. Since the publication of the book, important developments have taken place in the Cuban sugar industry. Namely, the government has closed a number of obsolete mills and "downsized" the industry considerably. Exports are lower than they have been for nearly a century, and production is around the levels last reached in the Great Depression. The continued scarcity...