Cuba may import sugar, rum industry pressed amid disastrous harvest

By Marc Frank

HAVANA (Reuters) - The Cuban sugar harvest is winding down at the lowest tonnage since 1900, forcing the government to import and putting more pressure on its domestic rum, soft drink and pharmaceutical industries, according to official reports, two economists and a rum industry source.

President Miguel Diaz-Canel said at the end of April that the state-run industry had produced 71% of the 412,000 metric tons planned, or just shy of 300,000 metric tons, and would mill into May.

Cuba produced 350,000 metric tons in the last harvest and while some sugar mills remain open, yields drop sharply in May as hot, humid weather sets in, accompanied by summer rains.

“This means we will have to import and, of course, less sugar means there is less syrup and alcohol for various industries and, of course, rum,” said Cuban economist Omar Everleny.

The communist-run Caribbean island nation was once the world’s top sugar exporter, and produced 8 million metric tons of raw sugar in 1989, before the collapse of its former benefactor, the Soviet Union, sparked a steady decline.

Everleny said government data released this week showed the production of sugar cane-based alcohol used for various products from rum to pharmaceuticals was down more than 50% since 2019, as was most manufacturing since tough new U.S. sanctions and the COVID-19 pandemic gutted the import-dependent country’s foreign exchange earnings and kicked off a grueling economic crisis that continues today.

The crisis has dramatically reduced supplies of fertilizer, fuel and other inputs needed to grow and harvest cane and spare parts for mills, devastating the harvest.

Cuba has historically consumed up to 700,000 metric tons of sugar annually and exported the rest.

Unlike the pharmaceutical sector and other industries that can import sugar-based raw materials, rum makers must use Cuban ingredients to maintain brand identity.

For the rum industry, domestic alcohol prices are up 46%, a well-placed industry source said, requesting anonymity.

Some Cuban mills opened briefly this season just to produce molasses that can be distilled into alcohol for rum, and that did help, the source said, ”but comes nowhere near solving the issue. The situation is dire.”

(Reporting by Marc Frank; editing by Jonathan Oatis)