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Thread: Cuba prepares for another bitter sugar harvest

  1. #21
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    Re: Cuba prepares for another bitter sugar harvest

    Cuba's sugar problem = bad government. They were ill-prepared and are facing a crisis. Let's not waste time blaming everyone else. One cannot demand to operate in a static market environment just because their sluggish, archaic government is unable to adapt and overcome. Stop playing the victim card for an ineffective (and tyranical) government. Time came for change and they failed; those commies are lucky we don't allow failing to evolve politically and economically to cause their extinction.

    They will get bailed out for this lack of adaptability, but they will continue to live decades behind their neighbors as long as tyranny reigns.
    Last edited by ecofarm; 11-06-10 at 09:06 AM.

  2. #22
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    Re: Cuba prepares for another bitter sugar harvest

    Quote Originally Posted by ecofarm View Post
    Cuba's sugar problem = bad government.
    So you believe that declining sugar production across the world is due to bad government?

    They were ill-prepared and are facing a crisis. Let's not waste time blaming everyone else. One cannot demand to operate in a static market environment just because their sluggish, archaic government is unable to adapt and overcome. Stop playing the victim card for an ineffective (and tyranical) government. Time came for change and they failed; those commies are lucky we don't allow failing to evolve politically and economically to cause their extinction.

    They will get bailed out for this lack of adaptability, but they will continue to live decades behind their neighbors as long as tyranny reigns.
    It's a sad day when people just ignore whatever they want to outright fabricate lies about what their opponent said. You have addressed absolutely nothing I posted.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

  3. #23
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    Re: Cuba prepares for another bitter sugar harvest

    Quote Originally Posted by obvious Child View Post
    The Batista-era was not exactly a free market. However, you are correct that a free market will not necessarily lead to a diversified market. Actually a free market should actually lead to a less diversified market in the context of global trade as comparative advantage results in industries in certain non-competitive regions dying off. There is a reason that the US doesn't make T-shirts anymore in large numbers and why Mexico doesn't write software. Actual free markets should on a broad scale, especially in total dollar value, become very specialized markets. And considering Cuba's geographical location, it does not suggest that it could become significantly diversified. Virtually no island nation has its GDP gathered from dozens of industries. Most are dependent upon a handful, if not one, usually tourism. Nauru for instance is massively dependent upon phosphate exports.
    In the Cuban case your argument doesn´t apply. Cuban economist looking at the future recognized the need for agricultural diversification and industrialization. The economist Dr. Joaquín Martínez Sáenz, appointed president of the Cuba National bank in 1952, develop an economic policy oriented to the diversification and industrialization of the island.

    The Cuba National Census of 1953 estimated in 24% the labor force in the industrial sector. The Bank of Economic and Social Development (BANDES) provided the loans for the creation of industries, given great impulse to the industrialization of the island from 1952 to 1958. An Industrial Promotion Law was enacted in 1953 that granted, among other things, tax incentives to new industries. Cuban industrial installations exceeded $600 million from 1952 to 1956. Cuba, in the 1950s, made important gains in diminishing its dependency on the sugar sector.

    The Cuban Sugar Stabilization Institute was created with the objective to balance the offer with the demand of the international markets and stabilized the prize of sugar. The sugar industry contribution to the nation income declined from 29% in1950 to 25% in 1958. In 1959, there were 161 sugar mills in operation, and 120 of them were own by Cuban nationals which accounted by 65% of the sugar production. The diversification of the sugar industry using the sub products of the sugar cane, created new industries that include 16 refineries and 29 distilleries producing alcohol, ethanol, rum and brandy, candy; factories of yeast, fodder, wax, 12 fertilizers and paper plants from bagasse. This produced very favorable effects in the Cuban economy. The capital investment in the sugar mills and related sugar industries in 1957 was estimated at $1,160 million.

    Data from the UN 1955-56 ranked Cuba in 39 placed among 108 nations in the annual consumption of steal per capita, important index of the development of industrialization. The International Conference in Geneva 1955 ranked Cuba 24 among 124 countries (first place in Latin-American) in the annual consumption of electricity per capita, considered the most accurate indicator of the general development of the economy.

    Ginsburg in his Economic Atlas ranked Cuba as number 30 among 97 countries analyzed with regard to the population working in agriculture. Eugene Stanley of the Committee of Exterior Relations of the U.S., who analyzed 100 countries, positioned Cuba among the top 19 intermediate to developed countries in the world. These analysis of the data changed the traditional vision of Cuba from an agricultural country to one on the verge of industrialization. On the eve of the Cuban Revolution the island had a semi-industrialized market economy.

  4. #24
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    Re: Cuba prepares for another bitter sugar harvest

    Quote Originally Posted by obvious Child View Post
    Cuba's not Communist. Cuba has social classes, dictators, and no power to the people. Not to mention it does trade with the West. That's basically failing every major Marx test to be Communist.

    That said, Cuba has been exceptionally poorly managed. But the sugar probably has more to do with Brazil's constantly expanding sugar production depressing prices. There's no way Cuba can manage the economy of scale Brazil can with its sugar. Comparative Advantage clearly favors Brazil. The fact that government sugar mills in Cuba are closing is a partial sign of that.
    Your statement is only partially true. The demise of the Cuban sugar industry has to do with the deficiencies of the regime and management of it. Castro, in 1959, blamed the sugar industry as the major determinant of underdevelopment in the island, and the “economic genius” Che Guevara said that the American sugar quota was and “instrument of imperialist oppression.” When Guevara was appointed minister of industries in 1961, in his pursue of diversification, he reduced the sugar cane cultivated area and diverted idle manpower to other activities. His attempt to industrialization failed and by 1963 the plan was abandoned. Fidel Castro reverse course in 1965 and declared that sugar was the backbone of the economy. In the following 25 years the sugar production grows by 40% and the island maintained his position as the world’s larger sugar exported. During those years Cuba sugar industry remained largely artificial. Cuba who was leaving behind the monoculture, was brought back to it under Castro’s impulsive and incompetent leadership.

    The collapse of the Soviet Union in 1991 had disastrous consequence for the regime due to the discontinuance of the premium prices and credits received from the Soviet bloc countries. Due to lack of resources sugarcane yields and total sugar production fell steeply.

    During the period 1961 to 1991 the Island survived thanks to the Soviet subsidy of $150billion, 5 billion a year. During that period the resources dedicated to the construction of houses, transportation, modern facilities, equipment and infrastructure were minimal. About 90 of the 161 sugar mills were built before 1913 and the capital investment on them was minimal.

    The bulk of the money did not benefit the Cuban people since most of it was used to pay the cost of the wars in Africa, the subversion against the democratic governments of Latin America, the huge military force, and the repressive apparatus of the Department of the Interior.

    In 2002 the regime announced a restructuring of the sugar industry, closing 71 of the 156 existing mills; production was targeted at 4 million tons. In 2006 Castro gave instructions to take urgent steps to increase sugar production, in response to a rise in world sugar prices. During the decade of the 1950s the average sugar production was 5.7 million MT; from 2000-2010 the average has been 1.9 MT after the "urgent steps to increase sugar production", only 33% of the production 51 years ago.

    The restructure of Cuba’s sugar industry by the regimen had as main objective to restrict the private sector companies. Castro brothers regime never changed the way they do business. Castro describes his concept of administration when he said in 2005: “The central state administration doesn’t need to negotiate with any minister; it must issue orders to the ministers.”

    Change is inevitable as is the importance of the management in the change. The management of change by Castroism has been disastrous by doing it hastily alternating with hesitation.

    Many countries readapted the industry to the new conditions of the market. Brazil, India, Thailand, Australia and other nations have maintained their sugar industries, and have continued to develop new products derived from sugar cane, allowing them to continue increasing sugar production.

    Cuba can neither regain its former place in the U.S. and world markets nor match the production costs of Brazil, today’s world leader. But even Brazil cannot cover all of the world’s sugar and bioethanol needs. There is room for an efficient, suitably niche of the Cuban sugar industry. To succeed, it must rely as far as possible on market mechanisms that ensure feedback and accountability.

    Cuba has exceptional conditions for the planting of sugar cane and the know how to achieve high yields. It is the plant with better perspectives in the present and future global economy. In short to revitalize the Cuban sugar industry it is necessary to concentrate in the production of the ethanol and other products derived from sugar cane.

  5. #25
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    Re: Cuba prepares for another bitter sugar harvest

    Quote Originally Posted by obvious Child View Post
    You do realize that prior to the excessive tariff placed on imported sugar, the US production was on a serious decline? The US sugar industry exists because the government is protecting them from free markets. And American consumers are paying more then they should for sugar. There's a reason why food producers use high fructose corn syrup over sugar. Because sugar's price in artificially high in the US due to government manipulation.



    Because they are an island with expanding population? The same problem every island nation with expanding population has? Your grasp of economics, especially developmental coupled with geography is appallingly shallow.

    Oh I forgot. You don't respond to anyone who points out the flaws in your arguments.
    The US tariff on imported sugar isn’t new. In 1917 the US government started its intervention in the sugar industry by fixing the top price in its internal market. In 1923 the sugar cane production started to increase in the Philippines, Hawaii and Puerto Rico. In 1929 the tariff Hawley-Smoot on imported sugar was approved to protect the American sugar producers.

    The US quota close to 3 million MT assigned to Cuba in 1959, today is only 1.25 million divided among several counties. This is due to an increment of sugar production and a reduction in the consumption in the US. At the same time ethanol consumption and the use of bagasse in the generation of electric energy keep increasing. This open up a future opportunity for Cuba to sell ethanol derived from sugar cane to the US, with much better yields in comparison with corn, soybeans and other agricultural products. At the same time there use in the island will reduce the consumption of imported oil.

    Brazil is the world’s largest exporter of ethanol, accounting for 52 percent of the world’s ethanol exports. About 50% of the ethanol is exported to the US. Even with the 54 cent per gallon tariff barrier to offset the 51 cent per gallon subsidy for blended domestic corn or imported ethanol, making the actual import duty only 3 cents, Brazil managed to sell 790 million gallons of its more energy efficient sugarcane-based ethanol in U.S. markets in 2008.

  6. #26
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    Re: Cuba prepares for another bitter sugar harvest

    Quote Originally Posted by obvious Child View Post
    Still not getting it are you?

    I'll make this exceedingly simple for you.

    Sandokan argued Cuba's sugar problem = why Cuba's government is bad

    Does that make sense in the context of sugar economics? You tell me.

    Tell me, what do you think Cuba should have done to fix its sugar industry in the face of overwhelming Brazilian domination of the world sugar market?
    Brazilian domination of the world sugar market also affected Texas. Imperial Sugar used to be headquarterd in Sugar Land, Texas, just outside of Houston. A few years ago, the last sugar processing plant there was closed down, due to unprofitability because of the price of sugar. So, if I read Sandokan's logic correctly, then the closing of sugar plants in Texas is a condemnation of the American system of government.
    Last edited by danarhea; 11-13-10 at 04:07 PM.
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    Re: Cuba prepares for another bitter sugar harvest

    Castro brothers’ tyranny has decimated the Cuban sugar industry. The island economy is in shambles, surviving only on remittances of Cuban abroad, tourism, and Chavez subsidize oil and credit. A once beautiful and well-to-do nation has been plundered by the evil experiment of Fidel Castro and his mafia.

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