Impact of the Cuban Revolution of 1959 on the Sugar Industry
By: Julio Federico Camperio Ciani
Word Count: 3.550
When Cuba was at its apex, it was not only considered the country which
produced the most sugar in the world but it exported the vast majority of sugar throughout the
world: Cuba “provided almost one-third of global sugar exports”1. Since the 1900’s, after the
war of independence from Spain starting in 1895 and ending in 1900, the Cuban sugar
industry steadily increased production, giving Cuba and its upper and upper- middle class
populations a vast amount of wealth. Cuban wealth was also so great thanks to the investment
of American capital in the sugar industry – technology, machinery and fertilizer – , which
helped it revive after 1895. Even though the island was extremely prosperous from 1933 to
1959, it was governed by a corrupt dictator, Fulgentio Batista, who was strongly backed by
the US administration and who also had strong relations with the US mafia. Almost
everybody hated and wanted to overthrow Batista, but they were too afraid to take any
action.2 3 It was not until 1953, when they began to fight, that Fidel Castro and his
“compañeros”, supported by many rich and enligthtened Cubans, took action. Once Batista
and his corrupt government was overthrown on January 1st 1959, Castro and his trusted corevolutionary companions took power. In the beginning, Castro – son of Angel Castro, a
wealthy Catholic sugarcane farmer from the Oriente province – professed himself a freedom
fighter and non-communist and promised to temporarily run the country until democratic
elections were held, but, in the end, elections were never held. The USA, under J.F.
Kennedy’s presidency, launched an invasion against Cuba at the Bay of Pigs in 1961, but
failed tremendously. As a result, Che Guevara sent a famous letter to JFK, saying: "Thanks
for Playa Girón. Before the invasion, the revolution was weak. Now it's stronger than ever."4
1
2
Echevarria, Oscar A. "Cuba and the International Sugar Market." (1995): 12. Web.
"Fulgencio Batista." Encyclopædia Britannica. 2010. Encyclopædia Britannica Online. 19
"Fulgencio Batista." Encyclopædia Britannica. 2010. Encyclopædia Britannica Online. 19
Sep. 2010 <http://www.britannica.com/EBchecked/topic/56027/Fulgencio-Batista>.
3
T. J. English. “Havana Nocturne: How the Mob Owned Cuba and Then Lost It to the
Revolution.” William Morrow, 1st American Edition edition 2008
2
4
Anderson, Jon L. 1997,1998. “Che Guevara: A Revolutionary Life”. Grove/Atlantic
1
As Castro was afraid of even more US war actions, he declared the revolution to be in the
name of both Marxism and communism and turned, with the help of his brother Raul (the
Cuban President today), to Nikita Khrushchev, the president of the Soviet Union, for help. It
is at this time that the sugar industry began to fail for several reasons. One reason was due to
the vast majority of managers and skilled workers who left the country because they did not
want to see their businesses being nationalized and their wealth taken away or their salaries
greatly limited by Castro. Secondly, it was due to the United States, which dropped every
single trade with the newly communist island. This had a huge impact because America had
been purchasing 60% to 70% of all Cuban sugar. Thirdly, Cuba began trading vast amounts
of sugar with the Soviet Union, but when in 1989 the Soviet Union fell and could no longer
subsidize the island’s sugar exports, the sugar industry collapsed. In the end, the revolution of
1959 had a domino effect on the Cuban sugar industry, causing, event after event, the
destruction of the industry.
Before analyzing how the Cuban sugar industry was doing before the revolution, it is
important to understand why the sugar industry was so all-powerful and how it got to that
particular point in time. Cuba focused most of its energies on sugar rather than on other
foods, like vegetables, fruits, fish and meat, because they “were not suitable for the long trip
back to Europe” and also due to the perfect sugar-growing climate and flat land. 5 Having
“52% of the land arable” and its flat landscape, and lots of cheap laborers to grow and
harvest, made it easier to grow the manpower-intense sugar cane.6 Another reason why the
sugar industry was so advanced, was thanks to the immense capital investment from the
United States in the 1900’s, right after US assistance in the Cuban “War of Independence of
1895-1898 [which] devastated the island from one extremity to the other.”7 The impact of the
5
Echevarria, Oscar A. 12
Echevarria, Oscar A. 12
7
Guerra, Ramiro. "Industria Azucarera de Cuba."Bohemia May 1953: Print.
6
2
war was so great and destructive for Cuba that “agricultural machinery and industries
disappeared.” 8 The military personnel of the United States of America governed in Cuba
from the 1st of January 1899 to the 20th of May 1902, until a Cuban Republic was established,
and focused on “the urgent economic rehabilitation of Cuba.”9 The US administration always
kept Cuba under direct surveillance, and sponsored all of its leaders in power. During the first
years of Cuban rehabilitation, the capital invested in Cuba by the United States was
“estimated [at] around 50 million pesos (about $54 million); and 30 million shares in the
sugar industry.”10 In 1906, the capital increased to 120 million pesos, and finally, according
to the Division of Finances and the Division of Bureau of Domestic and Foreign Commerce,
by the end of 1926, the United States had invested “an enormous amount of 1.5 billion
dollars.”11 Until 1959, with constant investment from the United States, the Cuban sugar
industry was going extremely well and kept increasing its output. In 1914, Cuba produced
2,597,732 tons of sugar; in 1916 it produced 3,034,272 tons; in 1929 it produced 5.156,284
tons.12 Cuba’s landowners and traders did not only sell portions of their zafra (harvest), but
occasionally they sold the whole thing, keeping for the island only a small amount. In 1918, it
sold its zafra at 337,796,950 pesos, and again in 1919 at the price of 461.,113,225 pesos.13
These years, also known as the years of “vacas gordas” or “fat cows”, were extremely
prosperous years for Cuba.14 In 1928, the price of sugar per pound collapsed, from 3.26 cents
to 2.45 cents; the sole reason for this collapse was due to the intervention of the government,
which socially regulated the sugar industry to avoid a sugar shortage for the island in favor of
the high paying export – exactly what happened after the revolution and what is happening
8
Guerra, Ramiro
Guerra, Ramiro
10
Guerra, Ramiro
11
Guerra, Ramiro
12
Guerra, Ramiro
13
Guerra, Ramiro
14
Guerra, Ramiro
9
3
now.15 In 1928, the “zafra was reduced by the angry producers, unable to export all their
sugar, to 4 million tons,” where, under the restriction plan, 1/3 went to Cuba, 1/3 to the
United States and the other 1/3 to the world markets. With this new plan, “prices kept
decreasing”, and there was a strong opposition by many sugar producers and exporters.16 In
October of 1928, Cuba declared at the League of Nations that “Cuba was going to abandon
the restriction plan”.17 The government gave back to the farmers, producers and land owners
the right to “laissez faire” (free trade of producing, selling and exporting). In 1929, Cuba was
able to harvest the “zafra record”, which amounted to 5,156,284 tons. In 1937, Cuba
participated in the London Sugar Convention, where it promised to “sell sugar to all
participants at a decent price, favoring the sellers and the buyers”. This plan gave in returne a
big advantage to Cuba and its industry.
In 1959, when the communist-to-be revolution broke out, Cuba had 161 sugar mills
and 16 refineries. The day of the revolution, January 1st 1959, Castro “stole all 161 sugar
mills”, which are, still today, under the control of Ministry of the Sugar.18 The entire sugar
industry was expropriated in 1959-60. To justify the nationalization of all of the mills, Fidel
Castro told the public that the mills were all owned by Americans, but actually that was not
true; on the contrary, 113 of them were owned by Cubans, 41 by Americans, 6 by Spaniards
and 1 by a Frenchman.19 From 1957 to 1959, according to the “Manual of Sugar Companies”,
Cuban sugar production was increasing, from 5,504,576 tons in 1957, to 5,600,000 in 1958
and to 5,906,005 in 1959.20 With Castro’s revolution, production began decreasing: in 1960 it
was 5,686,375 tons, in 1961 5,609,325 and in 1962 5,562,267 tons, a small but sure decrease
15
Guerra, Ramiro Guerra, Ramiro 17
Guerra, Ramiro 16
18
"Cuba’s sugar mills have not been able to survive 51 years of hurricane castro. 51 years of
oppression. The Real Cuba- Miami, n.d. Web. <http://www.therealcuba.com/SugarIndustry.htm>
19
The Real Cuba <http://www.therealcuba.com/SugarIndustry.htm>
20
Farr, Withlock & Co., . Manual of Sugar Companies. 35th edition. New York: 1960. 348. Print.
4
in sugar production.21 Once Castro and his communist affiliates were in complete power, and
revealed their true socialist intentions and ideas, they took over the oil refineries and other
businesses owned by the US.22 Because Cuba was socialist at the start of the the revolution
and then communist, the US dropped all trade with Cuba. Like Germany in WWI, which was
afraid that Russian communism would flow over their borders, the US was afraid of Cuban
communism. The revolution also caused the vast majority of businessmen, skilled
professionals, executives and managers to leave the country, causing a huge dip in the
managerial force of the sugar industry.
The definition of socialism is that of “a system or society or group in which there is
no private property; and a system or condition of society in which the means of production
are owned and controlled by the state.” 23 Of course, peasants and the lower classes would
have loved to see this happen in Cuba, but wealthy men, like managers, owners and
executives did not want this to happen. Once the revolution took over Cuba and slowly
morphed into communism, many of these people left the country to save their wealth. In
1959, sixty-nine executives and managers remained out of the estimated 2,000 sugar-related
ones that fled the country.24 The government replaced these skilled workers with ones who
did not have any type of managerial skill in the sugar industry or in any other industrial
sector. This was one of the causes of the degradation of the sugar industry: the lack of skilled
workers. In fact, “post revolutionary sugar factories that retained experienced managers
operated significantly more efficiently than those that lost all their pre-revolutionary
managers.”25 “The population loss to emigration was over 10% between 1960 and 1995”, but
21
Farr, Withlock & Co 348 22
Echevarria, Oscar A. 12
"Merriam-Webster." Socialism. N.p., n.d. Web. 14 Sep 2010.
<http://www.merriam-webster.com/dictionary/socialism>.
24
Radell, Willard W. "Avoiding Managerial Human Capital Loss in Transition II Sugar Factories." 7.
(1997): 11. Web. http://lanic.utexas.edu/la/cb/cuba/asce/cuba7/radell.pdf
25
Radell, Willard W.
23
5
this 10% counts for 90% of the total of skilled workers and managers.26 The more skilled
workers left the island, the less the people were able to run the plants efficiently. What is also
important to notice is that skilled mechanics and technicians also fled the country between
1959 and 1980, and this was a major problem in the maintenance of the machinery. Every
time any machine, truck or gear broke down, it took precious time for trained mechanics to
fix it, but once those skilled mechanics had all fled the country, the peasants and common
workers were sent to do the repairs. A break-down in a factory, delays all the ongoing
processes, leading to “lost time”, or simply, the time a “mill is not grinding.” 27 28 With time,
if a machine is not properly fixed, it will keep breaking until it is unfixable. In Cuba, there
was an absence of factories to create the spare parts for broken machines, due also to their
previous dependance on the access to nearby American spares. When needed, the prerevolutionary managers knew exactly in which country to seek that spare part, so losing less
time to repair and avoiding more “lost time”. A lot of machinery and trucks were US-built
and, therefore, the spare parts for those machines where no longer exported from America
due to the embargo. After the revolution, with the immense loss of these managers, the
government and the new unskilled managers looked for the spare parts among their allies, the
Soviet Union and China. But, unfortunately, these two countries were situated on the other
side of the world, with long periods for shipments, taking weeks or even months, and costing
up to a fortune. But, of course, while the mill was waiting for the spare part, the machine was
still broken, greatly slowing down production. This idea of “lost time” can be supported by
the “lost time” percentage of 1966-67, which was “10.6 percentage points higher that the lost
time in 1956-57.” 29 Before the revolution, Cuba had 161 mills; after the revolution, with less
skilled workers, the chaos in which the government was and still is and the difficulty of
26
Radell, Willard W. 27
Radell, Willard W.
28
Radell, Willard W. 29
Radell, Willard W.
6
fixing machinery, most of the mills have been shut down and dismantled. Today there are
less than 20 mills in operation.
Trade is what keeps any market going. In fact, the Cuban sugar industry greatly
followed the fluctuation of world prices, meaning that if one year the prices are high, then the
zafra will be bigger, bringing in more money for the industry, but when the prices fall, the
zafra will need to be reduced, because in some cases the cost of production can exceed the
profits, crippling the industry. For the Cuban sugar industry, trade with the United States of
America and their allied countries was a key factor in maintaing a good market balance. But
once Cuba became communist, and Castro took over American businesses on the island, the
Unites States of America and the countries that respected the embargo decided to abandon
Cuba and all trade with it, greatly affecting the sugar exports of Cuba.
In the 1900’s, the United States of America was the “largest consumer of Cuban
sugar”, one reason for this phenomena is due to its proximity – 90 miles by ship –, drastically
lowering the cost of shipping, and another is due to the long support the US gave to Cuba
after the War of Independence, which had also temporarily crippled the industry. 30 In 1894,
Cuba produced 1,054,214 tons of sugar; after the war it produced 212,051 tons in 1897 and
increased to 300,000 in 1900, due to American capital. Cuba gave the US all the sugar it
wanted, and in return Cuba received any product or supply it wanted. 31 The relationship
between Cuba and the United States was at its best before the revolution of 1959, from 1896
until 1959, when America was its biggest buyer and kept investing money in the sugar
industry. Another reason for this was Americas’ love for sugar products such as chocolate
(Hershey, Mars), soft drinks (Coke, Pepsi), and chewing-gum (Wrigley). Once the revolution
was in full swing, and Castro and his party had overthrown the Batista regime, Castro
30
31
Echevarria, Oscar A. 12
B arroso, Jorge 7
“nationalized US oil refineries and other businesses” between 1960 and 1961 and began
taking over houses, buildings, banks, stores, industries and also the sugar mills in a text-book
Socialist way.32 When, on September 18th 1960, “Castro addresses the United
Nations General Assembly, lashing out at the United States and flaunting his new friendship
with Soviet premier Nikita Khrushchev” and also nationalizes “all US banks” and other
businesses, America began to restrict Cuban trade, until finally on January 3rd 1961, “the
United States ends diplomatic relations with Cuba” and established an “embargo”.33 34 The
loss of an American trading system which before the revolution granted Cuba enormous
amounts of wealth, ruined Cuba and its economy.35 On July 7th 1960, the United States of
America canceled its last purchase of 700,000 tons of sugar, closing all trade definitively.
The severing of US relations caused Cuba to seek a new permanent importer and caused the
US to find and finance new sugar producers in the region, such as Costa Rica and Puerto
Rico. Cuba looked towards its communist ally, the Soviet Union, to buy at “prices that were
far above the world market.” 36 Once again, the Cuban sugar industry was born thanks to the
subsidization granted by the Soviet Union. But once the Berlin Wall fell in 1989, Cuba did,
too.
On February 6th 1960, the Soviet Union promised Cuba that she would purchase five
million tons of sugar in a 5-year time span, which meant buying one million tons of sugar
each year for five years, while the Soviet Union would provide Cuba with grain, oil and
money.37 When the Unites States of America canceled their 1960 sugar purchase of 700,000
tons, the Soviet Union immediately seized the opportunity and declared that it would pay a
32
PBS, . "Timeline: Post-Revolution Cuba." PBS, n.d. Web.
<http://www.pbs.org/wgbh/amex/castro/timeline/index.html> 33
PBS. <http://www.pbs.org/wgbh/amex/castro/timeline/index.html> 34
PBS. <http://www.pbs.org/wgbh/amex/castro/timeline/index.html> 35
Echevarria, Oscar A. 12
36
Echevarria, Oscar A. 12
37
PBS. <http://www.pbs.org/wgbh/amex/castro/timeline/index.html>
8
much higher price. Cuba “became a privileged client-state of the Soviet Union.” 38 Another
event that devastated the industry was Castro’s decision in 1968 to mobilize the total Cuban
labor force to try and reach a 10-million-ton sugar zafra. This was called the “long harvest”,
but it failed and only gained an 8-million-ton harvest.39 Some bureaucrats identified Castro’s
action as “delusional fantasies about human nature.” 40 “Castro mobilized virtually the entire
Cuban labor force, vast stores of limited machinery, and what managerial expertise remained
on the island to attempt a whopping 10-million-ton sugar harvest. The effort failed although
the country did produce a record yield – over 8 million tons –". 41 This seemed a smart move
at the time, but what Castro and the government didn’t know was that it was going to cripple
future sugar production. If you have an 8 million ton zafra one year and the next year you
don’t, because you deplete the natural resources in the fields, you seriously bring down
further future productions. It took nearly 10 years for the sugar industry to recover from the
“long harvest”. From 1969 to 1977, production decreased to under 7.7 tons annually, and
only in 1978 was it able to stabilize, but not for long. With the fall of the Soviet Union in
1989, the Cuban sugar industry also fell. The average export of sugar from Cuba between
1986 and 1989 (before the fall of the Soviet Union) was 29.7 thousand metric tons, and
between and 1993 (after the fall of the USSR) it was 26.2 thousand metric tons, a drop of 3.5
tons. 42 Clearly, the fall of the Soviet Union, Cuba’s largest sugar buyer, meant lost revenue.
At the same time, the world sugar industry had opened new production territories in Florida,
Thailand, Puerto Rico, Central America, with the help of the big “sugar” families that had left
Cuba. These new production areas started supplying the world with the sugar that they could
no longer get from Cuba, and their production was more and more mechanized with new
38
Edward Gonzalez, Kevin F. McCarthy (2004). "Cuba After Castro: Legacies, Challenges, and
Impediments
39
Echevarria, Oscar A. 12 40
Sweig, Julia. Cuba:What everyone needs to know. New York: Oxford, 2009. 69-70
41
Sweig, Julia. 69-70
42
Echevarria, Oscar A. 12 9
machinery developed by US factories, and this greatly affected the island of Cuba, which did
not have the possibility or the means to use the new machinery. The export tonnage amount
kept decreasing: in 1991 it stood at 7.5 tons, in 1992 at 7.1, in 1993 at 4.2, in 1994 at 3.5 and
in 1995 at 2.7. The average sugar production of Cuba from 1986 to 1989 was 8.2 tons, and
after the fall of the USSR, from 1990 to 1993, the average sugar production was 7.4 thousand
tons. Again we see a drop, but less of a drop, of 0.8 tons. 43 44 If we look at production in the
following years: in 1991 8.4, in 1992 7.8, in 1993 4.7, in 1994 5.2 and in 1995 3.6. It is very
clear that with the fall of the Soviet Union, exports of the Sugar Industry of Cuba were
greatly handicapped. Today, Cuba is no longer a player in the open sugar market, to the
extent that it is now importing sugar for its own needs.
It would be accurate to say that the revolution of 1959 almost completely annihilated
the Cuban sugar industry for several reasons, and, of course, there is good evidence to
support that statement. Before the revolution, the little island of Cuba was the greatest
producer and exporter of sugar in the world, selling immense amounts of sugar to the United
States of America and to the rest of the international market. In the years of maximum profit,
Cuba had an average annual zafra of about 5 to 6 thousand tons. Now, in the 21st century,
with a worldwide increase in sugar consumption, the modernization of machinery and better
fertilizers, Cuba could have expected to reach a steady production of at least triple the 1960
production. Cuba can be compared to Thailand, which tripled its production in the twenty
years from 1976 to 1996. From 2000 to 2004, Cuba produced zafras of under four thousand
tons, not even making it to the first top five countries of sugar production (which today are
Brazil, India, China, Thailand, Pakistan and Mexico).45 46 Although before the revolution
43
Echevarria, Oscar A 12 Echevarria, Oscar A. 12 44
45
NaRanong, Viroj . "The Thai Sugar Industry: Crisis and Opportunities." DRI Quarterly Review, 3
September 2000. Web. 31 Aug 2010. <http://www.tdri.or.th/library/quarterly/text/s00_2.htm
10
Cuba produced sugar zafras of five thousand tons, in the 21st century it should have been
much higher due to technological advances, producing amounts similar to the top world
producers. Before the revolution, Cuba had 161 mills in operation, and with those mills it was
the greatest sugar producer in the world. Now, due to the present disorganized government,
there are less than 20 operating mills. Castro’s sending a large portion of sugar to the USSR
actually led to the development of new production territories (Mexico, Florida, Santo
Domingo, Puerto Rico and the Philippines) by expatriated Cuban families, giving new sugar
suppliers to the rest of the world, and thus marginalizing Cuba from the rest of the open sugar
market after the USSR collapsed.
Ultimately, Castro could have reached his socialist goal to improve the wellbeing of
the poor field workers and the lower Cuban classes with the implementation of higher
minimum salaries and mandatory education under a socialist government that was fairer than
Batista’s, without losing all the middle and upper classes in the largest exodus of brain power
in Cuban history. Today, Cuba resists change, poorer than ever, exploited by cheap tourism
and prostitution, and it exists as one of the last bastions of communism, a few miles away
from the greatest capitalistic power in the world, its people left unable and afraid to take any
action, as it was in the days of Batista in the 1950s. Sadly, the country that used to be the
worlds greatest producer and exporter of sugar, today buys its sugar in dollars on the open
market.
46
Cuba: sugar production, 2000-2004." Web.
<http://www.udel.edu/LAS/images/GonzalezCorzoCuba_sugar.gif>. 11
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12
Sweig, Julia. Cuba:What Everyone Needs to Know. New York: Oxford, 2009. 6970. Print.
T. J. English. Havana Nocturne: How the Mob Owned Cuba and Then Lost It to the
Revolution. William Morrow, 1st American Edition 2008
13
Appendix:
Used in reference 47
14