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What can Cuba learn from Guatemala's sugar industry?
CubaNews / June 2013

By Larry Luxner

It’s a 30-minute helicopter ride from the shiny glass skyscrapers of Guatemala City to the sprawling La Unión sugar mill in Guatemala’s department of Escuintla, not far from the country’s Pacific coast.

A few months ago, I got the chance to take such a trip, as a guest of two powerful organizations — the Guatemalan Sugar Producers Association [Asociación de Azucareros de Guatemala, or ASAZGUA] and its social welfare arm, Fundazucar.

Upon arrival at La Unión, I expected to find dozens of cane-cutters working the fields, filling containers with caña and maybe later eating lunch in a communal cafeteria. What I didn’t expect were colorful cartoons on the walls of their army-like barracks, in-structing these campesinos how to go to the bathroom and use toilet paper.

Or posters trying to convince them why they should be grateful for their jobs.

Or a social worker in the nearby town of Santa Lucia Cotzumalguapa using handmade puppets to teach expectant single mothers how to care for their new babies.

But I did see all those things, and more, in the company of Fundazucar’s assistant director, Griseldo Say López, and ASAZGUA spokesman Otto René Estrada.

What became clear after a morning tour of Guatemala’s third-largest sugar operation — followed by a presentation at the Centro Gua-temalteco de Investigación y Capacitación de la Caña (Cengicaña) and a later meeting with ASAZGUA President Armando Boesche back in Guatemala City — is that when it comes to efficiency and productivity in the sugar industry, Cuba sure has a lot to learn.

There’s also an element of exploitation in the industry that’s made such high productivity possible — which is why Cuba will never come close to Guatemalan standards, at least as long as the Castro regime is in power.

“Our industry’s competitiveness is based on three elements: productivity, R&D and technology. We offer the best working conditions possible because this translates into better productivity,” said Estrada, whose organization was founded in 1957 to represent Guatemala’s wealthy sugar interests.

“All this is based on social responsibility. In an industry as competitive as sugar, we have to respect our workers. This is fundamental.”

Fernando Letona should know. As human resources manager at La Unión, he’s in charge of the well-being of 8,700 workers.

“They’re very graphic,” Letona said as we gazed at the huge banners tacked on the walls of Tehuantepec barracks, home to some 400 cane-cutters (known in Spanish as cortadores). La Unión has four more barracks just like Tehuantepec, each with their own dormitories, clinics, dining rooms and exercise areas.

“All these workers have come from the altiplano,” he said. “Work hours are 6:30 a.m. until 3 p.m., with a 15-minute rest in the morning and half an hour for lunch. Breakfast and dinner are served in the comedor, while lunch is served in the field, from food trucks.”

Letona said that feeding workers well has resulted in dramatically higher yields.

“Before we invested in all this, each cortador was cutting 2.5 tons per day. Now they cut six to seven tons, and some up to 12 tons,” he explained. “It’s evident that this investment has had positive effects on productivity.”

Workers normally earn 3,800 quetzales per month ($485), which translates into Q21.60 or around $2.75 an hour, he said. That doesn’t include fringe benefits, which come to 42% of wages. After taxes and social security, workers keep an average of Q3,500 ($450).

“They get paid every Saturday, in cash. And every Christmas and Holy Week, they can go back to their villages in the altiplano,” Letona said. “We have a turnover of only 0.85% per month, and each harvest, nine out of 10 of our cortadores want to come back.”

Not that they have much of a choice.

Guatemala, with the highest proportion of indigenous people anywhere in Latin America, also ranks as one of the region’s poorest.

Its 15.2 million inhabitants have been ravaged by civil war, and its wealth is concentrated in the hands of relatively few families — as is the sugar sector, which (unlike the case in pre-1959 Cuba) was funded by local capital.

Under Guatemalan law, all workers have the right to form unions — as long as a minimum of 28 workers petition for one — but so far, only one of ASAZGUA’s member companies, Palo Gordo, is unionized.

This is one factor, but only one, that explains how Guatemala has become — by far — the top sugar exporter in Central America, and the third-most productive sugar producer in the world after Colombia and Swaziland.

In the 2011-12 harvest, Guatemala exported 1.65 million metric tons of sugar — more than Cuba’s entire sugar crop, and more than the sugar exports of El Salvador, Nicaragua, Honduras, Costa Rica and Panama combined.

Guatemala now ranks as the world’s fourth-largest sugar exporter (after Brazil, Thailand and Australia), according to the International Sugar Organization, while Cuba ranks seventh, just ahead of Colombia.

But when it comes to productivity, Guate-mala’s performance is even more impressive.

In 2008, according to ASAZGUA, Colombia led the world in productivity, with 14.6 tons of sugar per hectare under cultivation, followed by Swaziland (13.9) and Guatemala (12.2).

The next nine countries, in descending rank for productivity, were Australia, Sudan, China, Brazil, Mexico, United States, India, Thailand and South Africa. Cuba wasn’t even on the chart.

In 2012, sugar exports to the United States, Canada, South Korea, Mexico, Chile and other customers generated $843.7 million in foreign exchange for Guatemala and employed 350,000 people, 73,000 of them directly.

That ranks just behind coffee ($955.9 million) in terms of importance for the country, but well ahead of Guatemala’s two other key agricultural exports: bananas ($469.9 million) and cardamom ($250.3 million).

Sugar today represents 14.4% of Guatemala’s total exports, 27.1% of its agricultural exports and 3% of its GDP.

“Something elemental we’ve done is to give workers dignified, decent jobs so that they’ll feel content with what they’re doing,” he said. “You’ll see the same at any ingenio. In Cuba, a cortador doesn’t want to cut sugar because he won’t earn any money. Here, he has the possibility to improve his standard of living.”

In Cuba, by comparison, an average machetero earns the equivalent of $40 a month, plus a “stimulus” bag containing two bars of soap, a bottle of cooking oil and some pasta.

Cengicaña’s director-general, Mario Melgar, says Guatemala has the “recipe for success.”

Melgar partly credits the 1992 establishment of Cengicaña, which has 75 employees and operates on a $2 million annual budget.

“Before that, each ingenio did its own R&D,” he said, noting that Cengicaña is one of only six sugar research centers financed by the private sector (the others are in Australia, Brazil, Colombia and Ecuador). “Each sugar producer pays a quota depending on its production.”

In the 21 years since Cengicaña’s creation, it’s introduced 1,875 sugar varieties to Guatemala (including 1,155 brought from Florida, 164 from Mexico, 120 from Brazil, 60 from Barbados, 58 from Australia and Louisiana each, 54 from Cuba and 53 from Puerto Rico).

Guatemala now cultivates 235,000 hectares of caña, mainly in the departments of Escuintla, Suchitepequez, Retalhuleu and Santa Rosa. Unfortunately, said Melgar, the Guatemalan sugar industry “has learned nothing from Cuba” in the last 50 years.

“After the United States and Cuba broke relations, the U.S. began to distribute to Central America and the Caribbean its sugar quota. So the great majority of countries in Central America began their sugar boom after 1960, when many Cuban professionals came here to work in our sugar industry,” he said.

“We have had some interchange with Cuba, and sometimes we’ve sent congresses there, but not very frequently,” Melgar told CubaNews.

“Technologically, our best relations are with Florida, Colombia, Brazil and Argentina. With Cuba, there isn’t really anything substantial because their sugar industry is dead.”

Armando Boesche is general manager of ASAZGUA. We interviewed the 73-year-old executive at his wood-paneled office on the 19th floor of the swanky Euro Plaza skyscraper.

In the last 27 years he’s headed the organization, Guatemala’s area under cultivation has tripled, while yield has jumped from 66.3 tons per hectare in 1984-85 to 95.4 tons/ha today.

Daily milling capacity, meanwhile, has nearly tripled from 53,093 tons in the 1984-85 season to 151,673 tons in 2011-12.

“Guatemala is a small country, not like Brazil or Colombia, so productivity for us is very important,” Boesche said proudly. “With what we export, we could supply all of Central America including Panama.”

Around 2005, Guatemala’s raw sugar output surpassed Cuba’s. Since then, it’s kept going up even as Cuba’s sugar industry stagnates.

Yet even if Cuba could replicate Guatemala’s success, it’s not clear that it should — given the legacy of U.S. sugar barons controlling the island’s economy, with Cuban complicity.

Luís Antonio Velasquez, Guatemala’s ex-minister of economy, is now a private agribusiness consultant advising ASAZGUA.

“In February 1998, I was one of 40 Guatemalan businessmen invited by [then-President] Alvaro Arzú to accompany him to Cuba and re-establish diplomatic relations,” he told us. “We invited Cuba’s ambassador at the time to tour our sugar industry, and he said to me, ‘I wish my country could be like Guatemala.’”

Our humble advice to that naïve ambassador: Keep on dreaming.

“We would be happy to invest in Cuba,” said Velasquez. “We have the technology, we have the money and we have the entrepreneurial spirit — but only when Cuba gives us clear rules. The problem is, they don’t know how to run a business.”

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