MercoPress. South Atlantic News Agency

Cuba replacing Sugar Ministry for a holding company ‘efficiency oriented’

Once sugar king, since the fall of the Soviet Union the harvest has plummeted from 8 million to 1.5 million tons

Cuba is closing its once powerful Sugar Ministry in favour of a state holding company charged with pulling the sector out of a long decline, official media announced on Thursday.

A government communiqué said the decision was made at a meeting of the Council of Ministers on Saturday. “The Council of Ministers, after an analysis of the sector, decided to close the Sugar Ministry as today it carries out no state functions” it said. The holding company will be “efficiency oriented” as part of the reform policies to alleviate burden on the state.

President Raul Castro was quoted as stating the ministry would be replaced by holding company. Castro said 13 provincial companies would belong to the new holding company with 61 mills, of which five would close.

The ministry's demise is the last chapter in the dramatic decline of the sugar industry in a Caribbean island country where sugar was once king but now accounts for around 5% of foreign exchange earnings.

Cuba's fall from once being the world's biggest sugar exporter, producing 8 million tons of raw sugar annually, began with the collapse of former benefactor the Soviet Union in 1991. Since then, the sector has declined relentlessly to 1.2 million tons.

The country plans to produce 1.45 million tons during the harvest that gets underway in December. Former Economy Minister Marino Murillo, recently promoted to lead economic reform efforts, said last year plans called for the industry to gradually increase production to around 2.5 million tons by 2015 with a clear modern efficiency emphasis.

Cuba itself consumes a minimum 600,000 tons of sugar annually and has a 400,000 tons toll agreement with China. In a painful 2002 downsizing of what was once the island's flagship sector, Cuba shut down and dismantled 71 of 156 mills all 71 built well before the revolution, and relegated 60% of sugar plantation land to other uses.

More than 200,000 of the industry's 400,000 workers were moved to other employment and many rural sugar towns were left stagnating, their closed mills marking the skyline.

More mills have closed since then. Only 700.000 hectares of over 2 million hectares once controlled by Cuba's sugar ministry are currently dedicated to sugar cane.