July 6, 2002

Cuba sugar industry to undertake overhaul

                 HAVANA (AP) -- After decades in Cuba's sugar industry, Ezequiel Bonilla is
                 finding it hard to give up the only way of life he's known.

                 "I don't like it," Bonilla says of the government's decision to cut sugar's industrial
                 capacity by 50 percent and close many of its 154 sugar mills, including the one he
                 has lived near all his 65 years.

                 "Since I was born I haven't done anything else," Bonilla said in the village of sugar
                 worker families built around the Osvaldo Sanchez mill in Havana province, about 20
                 miles southeast of the capital.

                 As world prices tumble, Cuba is struggling to remain competitive by remaking its
                 sugar industry and replacing about half of the 31/2 million acres once used to grow
                 cane with crops that bring more income or help feed Cubans. The overhaul will
                 change the lives of hundreds of thousands of Cubans.

                 Sitting in the doorway of the home he shares with his wife and two small children,
                 Bonilla is anxious about the change. He has spent the past 49 years operating the old
                 steam trains long used to transport cane.

                 The government promises workers will not suffer because of the overhaul.

                 In the November-to-April harvest season this year, Bonilla said the government paid
                 workers a $30 to $40 bonus in January -- along with their average monthly salary
                 of just more than $20.

                 At another nearby mill -- Amistad con los Pueblos, or "Friendship with Nations" --
                 authorities are examining ways to retire older workers. For younger workers,
                 alternatives include training in new trades, or agricultural jobs such as rice
                 cultivation or ranching.

                 "Land that isn't used for sugar can be used for rice," said Rafael Villegas, vice
                 director of the National Institute of Sugar Cane. He said an islandwide study
                 completed last year found only about half of the 5 million acres of land traditionally
                 devoted to cane was suited for that use.

                 Foreign analysts say Cuba is on the right track by trying to downsize.

                 "It is the right step at the right moment," Peter Baron, president of the
                 London-based International Sugar Organization, said during a sugar conference
                 here in June.

                 By focusing on land best suited for sugar cultivation, industry officials hope to
                 improve the yield from about 16 tons of cane for every acre to 23 tons in three

                 In addition to the worldwide price slump, the Cuban sugar industry has been
                 battered by Hurricane Michelle, which marched across central Cuba in early

                 A U.S. Agriculture Department report in December estimated Michelle caused about
                 $75 million in damage to the 2001-2002 sugar harvest that just ended. The same
                 report estimated Cuban sugar exports -- which have averaged $550 million annually
                 -- fell to about $476 million.

                 The hurricane also caused heavy damage to mills. Even before Michelle, Cuban
                 authorities estimated it would cost $4 million to $5 million to modernize each one.

                 Baron says foreign capital would be needed to undertake such renovations.

                 "We are always open to hearing proposals," Sugar Minister Ulises Rosales del Toro
                 said recently about opening the state-run industry to foreign capital. Such
                 investment thus far is extremely limited.

                 Cuba, nevertheless, remains among the world's most important sugar exporters --
                 fourth behind Brazil, the European Union and Thailand. For Cuba to stop producing
                 sugar altogether, Baron said, "would be a sin."

                  Copyright 2002 The Associated Press.