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Costs, Competition Decay Puerto Rico's Sugar Industry

Published in The Orlando Sentinel on January 30, 2000
Copyright © 2000 THE ASSOCIATED PRESS. All Rights Reserved.

AGUADA, Puerto Rico -- Puerto Rico was once one of the world's great producers of sugar. No more. King Sugar is dying here.

After 26 years trying to save the industry and running up $1.2 billion in losses, the U.S. territory's government sold two dilapidated sugar mills and one refinery -- all that's left of a business that held sway on the island.

The price tag: $1.

Now the buyers -- a group of cane growers, mill operators and employees -- are working with the government to seek financing to keep the mills and refinery going. The government also announced plans in mid-January to import raw sugar for the refinery.

Producing home-grown sugar is still possible, insists Duhamel Zayas Rivera, a sugar expert for the government's Lands Authority. "But in 2000, the government will be out of it."

It could be an inglorious end for an industry that once enriched Puerto Rico's elite and gave the rural jibaro, or cane-cutting peasant, his romanticized identity as the island's soul.

Sugar has always captured the popular imagination of Puerto Ricans.

Generations of ancestors cut the cane, loaded it onto oxcarts and burned fields
for the next harvest.

Begun during Spanish rule, Puerto Rico's sugar industry reached its zenith with dozens of U.S.-owned mills from the 1930s into the 1950s.

The island was the Caribbean's biggest producer after Cuba, at one point processing 12 million tons of cane into 1.3 million tons of sugar a year.

It directly employed 93,000 people and supported tens of thousands more.

There was a dark side. The children of cane workers were chronically malnourished; housing conditions were poor and wages low. Workers often were hopelessly indebted to company stores.

Sugar's decline began in the 1950s, when the territory embarked on Operation Bootstrap, a plan to industrialize the island rapidly. Workers abandoned seasonal work in the fields for higher-paying city jobs.

As labor costs rose, sugar was produced more cheaply in neighboring nations such as the Dominican Republic. Competition also came from technological advances and beet-sugar production in the United States. Puerto Rican sugar exports dropped; investment dwindled; mills closed.

In 1973, the government created the Puerto Rico Sugar Corp. to save the industry. But it immediately bled money. Its cane fields shrank because of encroaching development, starving mills of raw cane.

Administrators found their chief job was to negotiate with more than 100 sugar-workers unions. Tougher environmental laws restricted cane-field burning, water runoff and smokestack emissions from oil-burning mills.
Investment in aging plants was put off as the government's sugar revenue stayed flat -- the price of the local Snow White brand was frozen by law in 1983, to keep voters happy.

Outdated equipment, poor cane quality and subsidies for politically influential growers only increased losses, according to a 1994 study by Price Waterhouse.

More recently, hurricanes have severely damaged crops and closed one of the two remaining mills, Central Roig in southeastern Yabucoa. The annual harvest has fallen to about 12,000 cuerdas -- a cuerda is slightly more than an acre -- compared with 361,000 in 1956.

Now Puerto Rico imports most of its sugar, from the U.S. mainland, the Dominican Republic and elsewhere. Sugar employment has dropped to 2,500, mostly field workers. Molasses for Puerto Rico's famed rum industry must be imported.

Some Caribbean nations have fared better, though sugar fortunes historically are volatile. Cuba expects up to 4.4 million tons in its current harvest; Guyana leads Caribbean Community producers with 325,000 tons.

But the Dominican Republic is privatizing its own unprofitable sugar holdings, and sugar loses money for Trinidad and Barbados.

The decline of sugar shows at Puerto Rico's hulking Central Coloso sugar mill, tucked away in a gentle green valley of cane in the western town of Aguada.
In this time between harvests, workers sit inside a cavernous administration building, trading memories, pondering the future, inspecting machinery and dealing with personnel problems.

"This is the first year we've operated independently," said Jose Melendez Pardo, a 47-year-old inspector. "We've always survived. Now we need to survive a few more years. Then a few more years after that. . . . We are loyal to the cane."

Outside, the steel teeth of the mill's giant cleaning grinder sit idle. A tree sprouts
out of a rusting smokestack.

"Our old ones gave their lives to this mill," Pardo said. "Now they depend on us, and we depend on them. They have the knowledge to keep this plant running."

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