Business

Brazilian firm to manage Cuba sugar refinery

Friday, November 09, 2012    

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HAVANA — Brazilian company Odebrecht said that it will sign a 13-year contract this week to manage a sugar refinery in Cuba yesterday, as the Caribbean island nation overhauls a once-iconic industry that has since fallen on hard times.

In a statement, Odebrecht said the deal will be signed Friday and govern the administration of the September 5 mill in Cienfuegos province. The aim is to boost current output from around 30,000 tons to some 90,000 tons per harvest through modernization of the plant.

"The objective is to recover agroindustrial capacity by improving the productivity of the area planted with sugarcane," Odebrecht said in a statement.

Odebrecht said the contract is the first of its kind signed between a foreign firm and the island's Azcuba, a largely autonomous state-run company that replaced the Sugar Ministry in late 2011.

Azcuba's creation was a key component of President Raul Castro's campaign to decentralize the sugar industry, in hopes of reversing a long decline from the day when it accounted for 80 percent of Cuba's export income.

After peaking at approximately eight million tons in 1989, sugar production plummeted starting around 2002 amid rock-bottom international prices and what analysts call a legacy of decades of mismanagement.

Officials shuttered nearly two-thirds of the island's refineries and switched some three million acres (1.23 million hectares) of farmland to other crops. Sugar production hit a 105-year low of 1.1 million tons in 2010.

Cuba sugar expert Frederick Royce noted that Brazilian equipment is increasingly seen in island cane fields and refineries, and said bringing Odebrecht on in an administrative capacity is a logical extension of Castro's drive to separate the sugar industry from a government bureaucracy.

"As long as sugar was managed at a very centralised level of the government, then it was one of many competing demands upon the government for resources," said Royce, a professor of agricultural and biological engineering at the University of Florida. "It could be that bringing in partners to the management will require the Cubans' higher-level decision makers to partition sugar off a bit, so it can make decisions based on sugar income and profits in the sector."

One of Brazil's largest business conglomerates, Odebrecht is active in the engineering, construction, petrochemical and chemical sectors.

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