Radical reorganization and cutback of Cuba's sugar industry

 Vol. 68/No. 5           February 9, 2004  

Radical reorganization and
cutback of Cuba’s sugar industry
Restructuring of island’s largest agro-industry
lays basis for diversification of food production
(feature article)
 
BY JONATHAN SILBERMAN,
MARTÍN KOPPEL,
AND MARY-ALICE WATERS  
(First of two articles)

HAVANA—A December 24 report to Cuba’s National Assembly by Economy and Planning Minister José Luis Rodríguez confirmed that the country’s 2002-03 sugarcane harvest resulted in the “less than satisfactory” production of 2.2 million tons of raw sugar.

While the Cuban government had expected production to be less than the 3.6 million tons of raw sugar produced in 2001-02, the decline was substantially greater than anticipated. Similarly low production levels have not been seen since the early 1930s, at the depth of the Great Depression, when output dropped just below 2 million tons. In order to fully meet long-term contracts to supply sugar to other countries, Cuba will have to buy sugar on the world spot market.

The 2002-03 harvest is the first since Cuba began a radical reorganization and cutback of its sugar industry in April 2002. The shortfall registers the scope of the challenges in sugar production still confronting Cuban workers and farmers and their government.  
 
New government measures
Numerous measures have been taken by the Cuban government over the last year and a half to reshape what has been at the center of Cuban agriculture and industry for more than 150 years:

* 70 of the island’s 155 sugar mills have been closed (50 had already been idled prior to the April 2002 decision);
* 3.4 million acres of land (1.38 million hectares) have been taken out of sugarcane—some 62 percent of the total land area previously devoted to the crop—and allotted to other agricultural uses;
* the number of workers employed in sugar production has been reduced by one-quarter—from some 420,000 to 300,000; and
* 100,000 former sugar workers have been guaranteed their former wage rate as they take the opportunity to enroll in further education and job retraining, and make the transition to new occupations—where they will continue to receive no less than the wage they were earning as sugar workers for the rest of their lives.

The goal of this transformation is to concentrate resources on the most efficient mills and or the best land for the cultivation of sugarcane in order to cut the cost of producing a pound of sugar to below the long-term average price the crop brings on the world market. The annual production target is to average some 4 million tons to meet domestic consumption and international contracts.

This transformation of the sugar industry would further advance what has been a goal of the Cuban Revolution from its outset: breaking the stranglehold of Cuba’s economic dependence on sugar and further diversifying both agriculture and industry. The timing of the decision to introduce these changes now, however, was not dictated by that goal. Nor was it determined by the long-term decline of raw sugar prices on the world market (which have fallen at an average annual rate of some 1.5 percent, adjusted for inflation, over the second half of the 20th century).

The timing of these moves is the product of Cuba’s increased vulnerability over the last decade to the pressures exerted through the world market and Washington’s economic warfare, as well as the need to reverse the growing obsolescence of Cuba’s sugar industry. The inefficient production methods, machinery, and exceptionally high cost structure of Cuba’s sugar agro-industry are a legacy of three decades of production geared to demand and trade agreements with the countries that were then part of the Soviet-dominated Council for Mutual Economic Cooperation (Comecon).  
 
Opposite of capitalist ‘downsizing’
Workers in any capitalist country know that when their bosses start making proposals to “restructure” production and increase efficiency, the last thing they have in mind is the well-being of the producers. Words like “downsizing,” “rationalization,” “productivity,” “competitiveness,” and “modernization” have become synonyms for brutal speedup, layoffs, wage cuts, longer workdays, union busting, and social devastation.

The leadership in Cuba has set out to demonstrate that none of this will be the case in the cutback of the sugar industry, a restructuring within which workers and their organizations are helping shape each decision and supervising the implementation of each step.

To find out more about this process, a team of Militant reporters spent several days last year with leaders of the Central Organization of Cuban Workers (CTC) and National Union of Sugar Workers (SNTA), as well as Sugar Ministry economists and technicians, and visited one of the closed sugar mills in Havana province, the Camilo Cienfuegos complex in Santa Cruz del Norte. The large mill had previously employed more than 1,700 workers. There we met and talked with scores of them about the changes (see article in next week’s issue).

“In carrying out this reorganization, which involves substantial cutbacks in the number of workers employed in sugar production, we proceeded from two principles,” Pedro Ross told the Militant. Ross is the national union federation’s general secretary and a member of the Council of State.

“First, that no worker would be abandoned, left to fend for themselves.

“And second, that the workers and communities affected by the reorganization would come out of the process better off, discovering they had benefited from it.”

One fact explains the difference between what happens to workers in Cuba and workers in capitalist countries such as the United States and United Kingdom in face of such changes. That fact is the socialist revolution initiated by Cuba’s workers and farmers more than 40 years ago.  
 
Roots of Cuba’s monoculture
The roots of Cuba’s dependence on sugar for export earnings are found in the legacy of four centuries of Spanish colonial domination followed by more than half a century of U.S. imperialist exploitation.

Following the successful slave revolt and victory of the Haitian Revolution of 1791-1804, Cuba, under the boot of imperial Spain, was transformed into the world’s largest sugar producer, using slave labor on an increasingly massive scale.

As Cuban President Fidel Castro explained in an Oct. 21, 2002, speech to 10,000 sugar workers and their families in the town of Artemisa in Havana province, the entrenchment of a sugar mono-culture accelerated even more rapidly in the second half of the 19th Century following the devastation of Cuba’s coffee-growing plantations by two powerful hurricanes in 1844 and 1845.

The historical “accidents” that led to the dominance of sugar production also prolonged the life of slavery on the island. Almost 600,000 slaves were brought into Cuba between 1816 and 1867, more than were brought to the United States over the entire period of the slave trade. In Cuba, more than half the slaves labored—and died—on the sugar plantations. Only in 1886 did the Spanish colonial government in Cuba outlaw the use of slave labor. Cuba and Brazil were the last two countries in the Americas to do so.

With the defeat of Spanish colonial rule in 1898, Cuba immediately fell under Washington’s military occupation and was subjected to U.S. imperialist domination. Vast new sugar plantations and steam-powered mills were established under the ownership of wealthy U.S. families. Corporations such as United Fruit supplied North American markets for 60 years. Cuba became the top sugar-exporting country in the world—as the U.S. rulers prospered off soaring demand created by two world wars, while millions of Cuban workers and farmers lived in desperate poverty.  
 
1959 revolutionary triumph
All that came to an end in 1959. Cuban workers and farmers, led by the July 26 Movement and Rebel Army under the command of Fidel Castro, overthrew the U.S.-backed dictatorship of Fulgencio Batista and opened the road to a deep-going social revolution.

As the victorious rebels had promised, the new revolutionary government implemented the most far-reaching land reform the Americas had ever seen. Millions of acres of land owned by U.S. families and their corporations were expropriated and turned over to the rural toilers who had long worked them. The land was nationalized, so peasants would no longer face debt slavery and foreclosures and would be guaranteed permanent stewardship of the soil they tilled. The former owners were compensated with long-term bonds funded by future earnings from the sugar quota, the annual sales they had previously been guaranteed by the U.S. government.

Washington retaliated by drastically cutting the sugar quota, and soon by barring all Cuban trade with the United States. It set about organizing to overthrow the revolutionary government. As the struggle deepened, Cuban working people expropriated the remaining U.S.-owned corporations, overturning capitalist rule and breaking free from imperialist domination. “Sin cuota, pero sin bota” (without the quota, but without the boot), a slogan that appeared on walls and placards across the island, captured the revolutionary spirit.

Washington has not forgiven the Cuban people for their audacity and dangerous example. And never will.

Comprising the largest single component of the working class in Cuba, sugar workers had long been in the vanguard of revolutionary struggles. Following the 1959 victory, organized and led by their revolutionary government, they proceeded to transform the sugar industry as well. Profits wrung from the labor of peasants and farm workers no longer poured into the coffers of U.S. and Cuban exploiters. Privately owned plantations were expropriated and replaced by cooperatives and state-owned farms. Revenue from sugar production was turned toward national economic development aimed at increasing labor productivity and improving the living standards of working people.

The conditions of sugar workers themselves were radically transformed. The infamous tiempo muerto—the nine-month “dead period” between harvests, during which most sugar workers were jobless and their families went hungry—disappeared. There was a shortage of labor everywhere, as workers and other volunteers built housing, schools, and clinics and attended to other social needs.

In a few short years, as the harvest and other backbreaking agricultural jobs were mechanized, workers increased their productivity on the farms, and hundreds of thousands of toilers were released to take on other work. Schools, clinics, and hospitals were established, free for everyone. An internationalist-minded revolutionary armed forces was constructed. Farmers and workers in the countryside and cities exerted growing weight in policy decisions related to development of industry and defense of Cuba’s socialist course.  
 
Goal was to diversify
At the session of the National Assembly a little over 12 months ago in December 2002, Sugar Minister Ulises Rosales del Toro reminded delegates that during the opening years of the revolution, Cuba’s oft-reiterated goal was diversification of agriculture and the reduction of Cuba’s dependence on sugar. He quoted an August 1960 speech by then-prime minister Fidel Castro outlining this goal to 600 sugarcane cooperative coordinators some 10 days after the nationalization of U.S. sugar interests. Despite early efforts in that direction, however, this course of action was diverted.

“Only because of the emergence of a market with fair and stable prices with the Soviet Union and the other socialist countries did we postpone that strategy,” noted Rosales del Toro.

“Over the course of more than three decades, the revolution built up the sugar agro-industry until it reached a productive capacity of some 10 million tons of raw sugar” in order to fulfill trade agreements with the Soviet Union and other Comecon countries. Rosales del Toro reminded delegates of Castro’s remark that “if it had been possible to grow cane in flower pots, the wealth that meant for Cuba would have fully justified it.”

Between 1959 and the opening of the 1990s, Cuban workers produced an average of 6.4 millions tons of sugar a year, surpassing 8 million a half dozen times.

“When the Soviet Union and socialist camp disintegrated, however, the base of support sustaining this fabulous market collapsed,” Rosales del Toro explained. “Our ability to cover the costs of production fell drastically, as we again had to sell on the world market.”

Cuba’s sugar production had become dependent on extensive cultivation of land ill-suited to sugarcane, requiring large quantities of fertilizers, pesticides, and fuel obtained through barter arrangements on favorable terms with the oil-rich Soviet Union. The highly mechanized process relied heavily on gas-guzzling Soviet-produced tractors, as well. In the early years of the revolution, when relative sugar and oil prices were such that one ton of sugar could buy 8 tons of oil—as opposed to today’s ratio of 2 tons of sugar to buy one ton of oil—there was little economic incentive for Cuba to develop more efficient machinery, Cuban president Fidel Castro explained to the sugar workers in Artemisa.

The biggest problem was the one that Castro explained so clearly almost a decade earlier to a November 1993 congress of the Union of Writers and Artists of Cuba (UNEAC). The Cuban leadership acted on the assumption that the Soviet and Eastern European regimes would last forever, he noted, and so would the aid. When the collapse of these regimes began, it was “as if they said one day that the sun wouldn’t rise,” Castro told the UNEAC delegates. “Everyone expects the sun to rise every day in the same way that everybody, revolutionary or not, expected that the socialist camp would continue to exist and that the USSR would continue to exist. But what happened to us was as if one day the sun didn’t rise at 6:00 a.m., nor at 7:00 a.m., nor at 10:00 a.m., nor at 12 noon, and in the midst of this darkness we have to look for solutions.”

The long-term Comecon trade agreements had accounted for 85 percent of the island’s imports and the majority of its export contracts for sugar. With the abrupt cancellation of these trade pacts, sugar output was devastated in Cuba. Production fell precipitously from a high of 8 million tons in 1989-90 to roughly 4 million tons in 1992-93. It has remained at that level or less ever since.

Even so, Rosales del Toro explained in his 2002 National Assembly report, “during the first seven years of the Special Period, the Sugar Ministry tried to restore production of cane and sugar, and did not dismantle the industrial capacity to do so.” Such a course had remained possible during those years, he explained, when world sugar prices were fluctuating between 18 cents and 12 cents a pound and oil was running closer to $15 a barrel than the current $30.

By 1998 Cuba had fought its way through the worst years of the Special Period—its very survival had been at stake! With some hard-won breathing space, the leadership began to implement a course toward decreasing the size and weight of the sugar sector and accelerating the diversification of agriculture.  
 
April 2002 turning point
In early 2002, as Fidel Castro told the sugar workers in Artemisa, sugar prices on the world market had plunged to less to less then 6 cents a pound. “In April it became crucial to make an immediate decision,” he said. To proceed with the planting of 270,000 hectares “would have been disastrous.” Reorganization was imperative. Simply put, Castro said, the government decided “to select the best sugar mills, with the best lands, the ones with which we were producing sugar, or we could produce it, at a cost of even less than four cents” a pound.

The April 2002 decision was influenced by additional factors, Castro told the workers in Artemisa. Not only had the price of oil risen to $27 a barrel, but with the approach of a U.S.-led imperialist war against Iraq, the Cuban government had no alternative but to draw up contingency plans anticipating an even greater spike in fuel costs. That same month, he noted, there was also a “coup attempt in Venezuela, which interrupted our supplies for several months…. We had to spend even more money to obtain oil.” Venezuela supplies one-third of Cuba’s oil. “This is when the decision was made to restructure the sugar industry,” he said.  
 
Crisis for sugar-producing nations
The crisis in the sugar industry is not unique to Cuba. Many semicolonial sugar-producing nations face similar challenges: increased use of sugar substitutes and other sweeteners in the industrially developed countries, obsolete technology, the imbalances and shocks reinforced by the lack of diversification of agriculture and industry, and aggressive protectionism by the U.S. and European Union governments in relation to their own cane and beet sugar growers. These factors and others have led to a tendency toward overproduction on the world market.

Many countries in the semicolonial world have been forced to scale back sugar production as well. In these capitalist countries, unlike in Cuba, however, the consequences for workers and farmers have been devastating.

A May 2002 report by Cuba’s Sugar Ministry cites the example of a sister Caribbean country, the Dominican Republic. Despite having a preferential quota with the United States, the report says, sugar production in the Dominican Republic has been reduced by one-third since 1960, and over the last decade almost half its mills have been closed. The impact on sugar workers has been catastrophic. Working conditions of Dominican cane cutters, in particular those of superexploited “guest workers” from Haiti along the border between the two countries, are notoriously brutal.

Sugar production by countries in the Caribbean has fallen by more than 50 percent over the past 18 years, declining precipitously from 11 percent of world output in 1985 to 3 percent last year. In the Philippines, once an important sugar-producing country, tens of thousands of former sugar workers are now jobless or permanently underemployed. On the island of Negros, the country’s main sugar-producing region, the decline in output has drastically increased poverty and malnutrition. Since 1980 sugar production has also fallen sharply in Indonesia and in Malaysia.

In addition, imperialist governments use numerous protectionist measures against Third World imports, including subsidizing the production of sugar in their own countries, dumping surpluses on the world market, and imposing tariffs on imports. In the United States the domestic price of sugar, about 21 cents a pound—more than three times the world market price—is supported by protectionist tariffs as well as quotas that limit imports from countries in the Caribbean and elsewhere. The European Union countries subsidize their domestic beet sugar industries to the tune of $1.5 billion a year. The surplus dumped on the world market contributes substantially to the depression of world sugar prices.  
 
U.S. economic war
On top of these challenges common to all sugar-producing countries in the semicolonial world, however, Cuba continues to face Washington’s more than four-decade-long economic war against the revolution. One of the early acts of that war was the decision by President Dwight D. Eisenhower to slash Cuba’s sugar quota by 95 percent in July 1960. The administration of President John F. Kennedy subsequently barred not only all remaining imports of Cuban sugar but imposed a complete embargo on trade with Cuba. Among many other consequences, the embargo cut off access to spare parts for machinery used in sugar production, much of which was U.S.-made.

With the Torricelli law adopted in 1992 during the administration of George Bush Sr., and the Helms-Burton law signed into law by President William Clinton in 1996, Washington has further tightened its embargo. The 1992 law bars trade with Cuba by U.S. subsidiaries abroad, and penalizes ships that dock in Cuba by prohibiting their entry to U.S. ports for 180 days. The 1996 law allows U.S. businessmen to sue non-U.S. companies investing in property that was expropriated by Cuban workers; this has led to a number of foreign companies stiffening terms, canceling investments, and even ending trade with Cuba.

The impact of these two U.S. measures on Cuba’s sugar agro-industry is estimated by the Cuban government to be $70 million a year.  
 
Inefficiency of Cuba’s sugar industry
Three decades ago, at the beginning of the 1970s, Cuba was the world’s leading sugar exporter. By 2001 its exports were less than those of Brazil, Australia, and Thailand, among others.

The cost of production of Cuban sugar—estimated to be 20 cents per pound at the end of the 1990s—is more than twice that of Brazil and 20 percent higher than the global average.

Cuba’s sugar milling complex is ancient. Upwards of 90 percent of the factories here were built before 1925. The grinding capacity of the majority of mills is small, and many have antiquated boiler houses badly in need of rebuilding.

The soil structure of much of the land on which sugarcane has been planted is low in nutrients needed for high cane yields. In recent years, Cuba has sought to compensate for these obstacles by extending the length of the harvest. Since the yield in sugar production is based not on the amount of cane cut, however, but on the amount of raw sugar extracted per ton of cane, extending the harvest ended up lowering the average yield, since the quality of cane cut either late or early in the growing cycle is inferior. Lengthening the harvest, moreover, worsens mechanical problems because work is done in the rainy season, increasing inefficiency. Most importantly, it has a cumulative negative impact on the following years’ crops.  
 
Restructuring unavoidable
The restructuring now under way makes permanent many temporary measures already initiated over the last half decade. Following the decisions of the fifth Cuban Communist Party congress in October 1997, the 1997-98 harvest began with 116 mills in operation. Forty had already been taken out of production as too inefficient and too costly to repair.

In his Oct. 21, 2002, speech to sugar workers in Artemisa, Castro pointed out that over the previous five years the number of idled sugar production complexes had increased to 45, all but two or three of which had effectively shut down. In 2002 the number had risen to 50.

“All these factors made the restructuring of the Cuban sugar industry unavoidable,” Miguel Toledo, a member of the national secretariat of the National Union of Sugar Workers (SNTA), told Militant reporters in an interview at the union’s national offices. He cited “the bad and deteriorating state of repair of the sugar mills, the fact that sugarcane was planted on land of highly differing quality, making yields in some areas of the country very good but in others very low, and the very high production costs” resulting from cultivation methods and the poor condition of the mills.  
 
Steps to restructure industry
In 2001 a Central Government Commission chaired by Carlos Lage, secretary of the Council of Ministers, was established to oversee this reorganization, Toledo explained. The commission includes other ministers as well as the national leaders of the CTC, SNTA, and the National Association of Small Farmers (ANAP). A separate Ministry of Agriculture commission was also established, and the two commissions have met weekly ever since. Commissions were also established in all 13 provinces and in each of the 155 production complexes. Their work led to the decision to set an annual production target of 4 million tons of raw sugar.

“Meeting this goal will supply Cuba’s domestic requirements of 700,000 tons annually and provide more than 3 million tons for export to meet our international commitments,” Toledo explained. “After the shutdown of 70 production complexes, it will leave 85 running. Of those, 71 will be geared toward sugar and 14 toward the production of enriched syrup for use in animal feeds, alcohol, and medicines for which a significant export market exists, especially in Russia, China, and Japan.”

Integral to this plan is the more effective use of the sugar by-product bagasse as an energy source. “The sugar industry used to be a heavy consumer of imported oil,” said Tirso Sáenz, president of the National Association of Sugar Technicians, in an interview with the Militant. Today, in fact, the sugar industry contributes to meeting Cuba’s energy needs.

Overall, the reduction in acreage and mills is designed to release substantial resources for other sectors of agriculture and industry—workers first and foremost, as well as machinery and equipment, fuel, fertilizer, and land.  
 
Workers discuss, back plan
The government’s plan was submitted to assemblies of the sugar workers for discussion. Union leaders and sugar workers described to us the five rounds of assemblies in 2002 involving nearly one million workers. Workers discussed everything from the overall plan and needs of the national economy, to the consequences for the living standards, working conditions, and lives of the sugar workers, their families, their communities, and Cubans as a whole.

“The objective is to improve workers’ lives alongside the benefits accruing to the country,” Toledo said. “All housing and other social services of the local communities near the sugar complexes are being maintained intact and improved. We’re working to improve quality of life through additional libraries, theater, and other cultural groups, sporting activities, and museums. Some workers, of course, will decide to move and take jobs elsewhere.”

Toledo pointed out that diversification will result in expanded needs for labor in other fields of agriculture and industry. But that transition will not take place overnight. Part of laying the foundation for such a change involves taking advantage of the moment for tens of thousands of workers to have the opportunity to return to school full-time or part-time while continuing to receive an income slightly higher than their previous wages.

Seventy mills began to be decommissioned on Sept. 1, 2002. Five are being only partly dismantled as they are turned into museums, while another five are being mothballed to serve as backups to those remaining in operation. The newer, more efficient, and larger mills, concentrated in the eastern part of the island, comprise the bulk of those that will continue to process sugar.

“We’re striving to use the machinery and components of the decommissioned mills as spares for those still running or for other uses,” Sáenz said. “For example, the tubing inside the big mill cylinders is proving very useful in new hi-tech greenhouses we’re developing. Some components we’re selling second-hand to other sugar manufacturers in the Caribbean. So, a bare minimum is being left to be recycled as scrap metal.” Paneling, fixtures, and fittings are being sold off to the workers.

“Under the plan, the 1.38 million hectares [3.4 million acres] of land that is being taken out of sugar production is being reclaimed for other uses, principally reforestation, livestock, and milk production, and fruits and vegetables,” Sáenz added. Some 700,000 hectares (1.7 million acres) of the most productive land, where the harvest can be completed within 90-100 days, will be kept for sugar production.  
 
Farm cooperatives
“About 97 percent of Cuba’s sugar cane comes from the UBPCs,” Sáenz noted, referring to the cooperative farms known as Basic Units of Cooperative Production.

The cane-producing UBPCs were established at the end of 1993 by reorganizing the large state farms into smaller cooperatives, whose members own and sell what they produce. That move was designed to give those working the land more say in the operation of the farms, to increase incentives to produce more effectively, and to drastically cut the large numbers of workers assigned to administrative tasks on state farms—sometimes exceeding 50 percent of the total work force.

“You could say the establishment of the UBPCs was the first stage in the restructuring of the sugar industry,” Sáenz said. “Today we’re involved in the further effort to put them on an efficient, long-term sustainable footing.”

The political leadership challenge in carrying through the massive restructuring of sugar production—of leading the human beings who will make this transformation a reality—is the single biggest task Cuban workers and their government confront in reorganizing agro-industry.

The social and proletarian character of the reorganization of the sugar industry is reflected by the summary presented in the “Programmatic Document” prepared by the Ministry of Agriculture in 2002 for distribution to sugar workers. It served as a basis for discussion in the multiple rounds of workers’ assemblies that molded the changes. The document states:

“With regard to the excess personnel resulting from the reduction in size of the work force, there are inviolable principles:

* No one will be left abandoned
* All workers will have wage guarantees
* There will be guarantees of employment or schooling for all sugar workers
* One hundred thousand sugar workers will be able to be incorporated into various advancement courses
* All workers who continue working in the sector will remain members of the sugar workers union
* All farmers will continue belonging to the National Association of Small Farmers (ANAP)
* Agricultural workers whose income depends on output will continue receiving their wages on the same basis.

“The number of those taking advantage of the option of requalification and advancement—which will include the university level—is not limited by any quotas. The enormous and noble goal we aspire to is incorporating 100,000 agro-industrial workers into these requalification and advancement programs, and the facilities to accommodate them will not be lacking.

“It is possible to offer this exceptional opportunity today to our agro-industrial workers, and it’s already been done with tens of thousands of young people who were neither working nor attending school.”

(Next week: Cuba’s working people explain the effects on them of the sugar industry’s reorganization.)