Cuba’s Sugarcane Ethanol Potential: Cuba, Raul

Castro, and the Return of King Sugar to the Island

As the result of a precipitous contraction in the Cuban economy, Cubans have recently experienced crippling energy cutbacks and other shortfalls that are reminiscent of the devastating hardships of the “Special Period,” and industries have continued to falter due to the evaporation of credit and investment flows which largely dried up after the break-up of the Soviet empire. In the first half of 2009, the Obama Administration launched a series of modest initiatives aimed at normalizing U.S.-Cuba relations, most recently exemplified by the loosening of restrictions on travel by Cuba-Americans, lifting controls on remittances, and giving the nod to U.S. telecommunication investments on the island. Though President Obama recently renewed the Trading With the Enemy Act, policy mitigations have prompted speculation that a greater volume of trade and investment is likely to be permitted in the future. These factors, coupled with the current 28-year high in sugar prices and the delicate health of Fidel Castro, lead to the question: would Cuba benefit from, and does it possess the technological and infrastructural means and political will to expand and modernize its sugar and sugarcane ethanol industries to take advantage of the unique developments now taking place around the globe? Based on the following assessment, despite the precipitous collapse of Cuba’s sugar industry beginning in the early 1990s, the country’s economy would benefit from opening its markets to foreign investment and revitalizing its tattered sugar industry for the production of raw sugar, ethanol and electricity.

A Glorious Past and a Conflicted Present

Sugar has served as one of the most important formative influences on Cuba’s socioeconomic development; as according to the Cuban adage, “without sugar, there is no country.” Ever since Columbus introduced sugarcane to Cuba on his second voyage, it has been referred to as “the grass of Cuba,” and the island has been one of the leading producers and exporters of sugar since the 1600s. Even the implementation of Cuba’s railway system in the 1830’s was directly linked to sugarcane planting and cultivation. In the first half of the 20th century, while sugarcane agriculture was spurred by U.S. financial speculation and investment cycles, the industry was all but ruined by a drought of incoming funds brought on by the Great Depression. Later, it was devastated by the U.S.-Cuban embargo, which was in part targeted at undercutting Cuba’s sugar industry. Sugar cultivation had been heavily fostered by Soviet patronage and the Council for Mutual Economic Assistance (CMEA) trade bloc, producing an impressive zafra (sugarcane harvest) of 8.5 million tons in 1970. Throughout the 1980s, production was sustained at an annual average of 7.5 million tons with sugar accounting for three quarters of Cuba’s foreign exchange earnings, until the collapse of the Soviet Union led to a devastating 35 percent contraction in the Cuban economy from 1991-1993.

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