26 May 2025

As Cuba’s 2024-25 sugar campaign draws to a close,  provincial reporting, as well as industry sources cited by Reuters, suggest that the island is headed this year for an unplanned for production shortfall of as much as 100,000 metric tons. The outcome is likely to have a negative impact on the Cuban economy.

Although Azcuba originally forecast a harvest of 265,000 metric tons of raw sugar, most analysts now suggest that the island’s sugar sector will be hard pressed to exceed 160,000 metric tons, a figure if eventually confirmed that would rank with the lowest harvest on record since 1898. At its peak in 1989, Cuba produced 8mn tons of raw sugar, becoming one of the world’s largest exporters.

Cuba last published details of its sugar production following the 2022/3 campaign. Then, it reported that 350,000 tons of sugar were produced but has yet to publish details of the size of the 2023/24 harvest. However, earlier this year the widely respected former Minister of Economy, José Luis Rodríguez, indicated in one of his regular economic analyses republished in the country’s official media that the 2023/4 sugar campaign yielded just 160,000 metric tons of raw sugar.

According to reports appearing in various provincial publications, the decline in production is attributable to multiple causes, the most significant being ascribed to the US embargo, fuel shortages, and constant power outages. However, other problems include foreign exchange shortages resulting in a lack of agricultural inputs and spares, breakdowns during grinding, late running repairs, a late start in planting and harvesting, labour shortages caused by internal and external migration, and more generally, a lack of investment and poor management.

The figures reflect recent warnings of a poor outcome. The Minister of Economy and Planning, Joaquín Alonso, told a late April meeting of the Council of Ministers that the current sugar harvest “remains unfavourable.”  Separately, in comments apparently  reflecting the severity of the crisis facing the sector, the Russian Deputy Prime Minister Dimitri Chernyshenko, speaking following a meeting of the Russia-Cuba Intergovernmental Commission, suggested that Russian investors, would review all possibilities to “save the sugar industry.”

Highlights in this issue: 

• More detail provided on Russian plan to financially incentivise investment in Cuba
• Visitor arrivals continue to decline from major markets
• New US Dollar denominated export financing scheme for Cuban agriculture proposed
• China reaffirms its strategic collaboration on IT and cybersecurity
• Export oriented joint venture in pharma products established with Vietnam

The year began badly according to Cuban reporting, with just six out of the fourteen mills expected to grind this year, being operational at the start of January. Since then, even as more mills joined the campaign, the potential crisis facing the sector has continued to be reported on a provincial basis by Cuba’s official daily publications covering Sancti Spíritus, Matanzas, Santiago de Cuba, Las Tunas, and other regions of the country.

The likely shortfall in production is expected to impact negatively on the Cuban economy and place new pressure on the island’s already limited foreign exchange at a time when the country is adapting to a ‘wartime economy’, tourism arrivals and related foreign currency earnings are in decline, food imports are rising,  and public expenditure is being cut. 

Cuba requires about 700,000 metric tons of raw sugar annually, a figure largely met pre-COVID by local production after the sale of  contracted quantities, principally to China. In 2019/20 production stood at 1.3mn tons, but more recently in 2023 to meet domestic requirements, Cuba imported raw sugar valued at US$9.64mn, primarily from Brazil, Colombia, Spain, the US, and Chile.

The probable shortfall this year is likely to have a wider effect in relation to the Cuban sectors that rely on domestically produced sugar and its byproducts, including the island’s premium export grade rums which require only locally produced molasses if they are to meet regulatory requirements.

Other sectors that may also be affected include the island’s potable spirits industry, manufacturers of soft drinks, the island’s health care and scientific research sectors which require pure alcohol, the availability of a byproduct, organic fertiliser used on crops, and ‘honey’ for animal feed. Additionally, sugar cane bagasse is burnt at times to provide power into Cuba’s national electrical system.

Speaking late last year about the future of the sugar sector, Cuba’s Prime Minister, Manuel Marrero, told Cuba’s National Assembly that there was a need to identify innovative solutions to halt the deterioration of the island’s sugar agribusiness in such a way that overall results consider not just the production of sugar, but also its derivatives, the energy produced, and the generation of employment.

How Cuba intends addressing the many structural problems now facing the sector remains unclear, let alone the immediate impact a large shortfall in planned production will have on the macroeconomic problems the island’s government is slowly trying to address.

While foreign investment from Russia in sugar as an agribusiness may offer a way forward if Russian state support and independently  managed private sector operations  can be structured in such a way as to offer a return on capital, it is hard to envisage the sector becoming economically strategic in the near future in the way it once was.

26 May 2025, Issue 1281

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