28 THECUBAREVIEW 



COST OF A SUGAR ESTATE IN CUBA 



[Report of United States Deputy Consul General H. P. Starrett, Havana] 



PRODUCTION COSTS AND PROFITS AMERICAN CAPITAL IN SUGAR 



MILLS NOW $54,000,000 EASTERN PROVINCES TO DEVELOP 



The treaty of reciprocity between the United States and the RepubHc of Cuba, which 

 was negotiated in 1903, allowed a preference of 20 per cent in the duty of Cuban sugar 

 entering the United States. Since that date Cuba has entered upon a period of de- 

 velopinent that has exceeded the predictions of the most optimistic. Vast new areas 

 of land have been brought under cultivation, new mills have been erected, old mills 

 have been remodeled and improved, and projects are on foot for many additional mills 

 to be built in the near future. So great has been this recent development that it can 

 safely be said that if the present activity continues, Cuba will be in a fair way of 

 becoming the largest producer of sugar in the world. 



The relations between Cuba and the United States have been so close during the last 

 few years that it is interesting to observe to just what extent American capital has 

 invested in the Cuban sugar industry. A careful estimate of this investment in mills, 

 lands, railroads and other equipment devoted exclusively to the industry, but not in- 

 cluding mortgages, gives a total of $54,000,000. In this estimate, however, are included 

 a few companies which were organized in the United States and hold charters granted 

 by different States, but whose stock is owned by persons other than Americans. Their 

 investment amounts to a very small percentage of the whole. The distribution of this 

 total investment through the different provinces of the island is as follows : Pinar del 

 Rio, $750,000: Habana, $.3,000,000; Matanzas, $5,750,000; Santa Clara, $14,500,000; Ca- 

 maguey, $4,700,000 and in Oriente, $25,300,000. 



Sugar in western Cuba has about reached the law of diminishing returns in agriculture, 

 but the prediction is that eastern Cuba — Santa Clara, Camaguey and Oriente Provinces — 

 will continue to develop and expand. 



The impetus given the industry by the recent high prices and the favorable outlook 

 for a continuance of at least a very remunerative price in the future has drawn the 

 attention of many American capitalists to the profits in this field of endeavor. In view 

 of this interest it would seem that a brief description of the methods of culture and 

 the cost of production, together with an estimate as to the cost of establishing a com- 

 plete sugar estate in Cuba, might be of assistance. With this object in view the 

 writer has collected, from planters, engineers and investors in the industry, data bearing 

 on the cost of production and the profits to be expected. It must be stated, however, 

 that these figures are only approximate and many factors tend to make them vary, 

 such as the location of the plant, price of labor, and whether European or American 

 machinery is used, but the endeavor has been to be very conservative in the estimate 

 as a whole. 



The two most important items to be considered are the fertility and adaptability of 

 the land and the transportation facilities. The ideal location is on or near a good 

 harbor, with the mill's own railroad to carry the cane. 



Let us take as a basis a sugar estate which will produce 100,000 bags of sugar of 320 

 pounds each per annum. The amount of land for all purposes — fields, roadways, pas- 

 tures, timber tracts, sites, etc. — should be about 20,000 acres, and good land of this 

 character would cost $6 to $10 per acre, according to fertility of the soil and nearness 

 to transportation facilities. The total first investment for such an estate would be about 

 as follows : 



20,000 acres of land, at $10 $200,000 



Clearing and planting 5,000 acres, at $50 250,000 



Oxen and carts 60,000 



Railroad and equipment 260,000 



Wharf 40,000 



Sugar mill and house 800,000 



Office, store, dwellings, hospital and barracks 40,000 



Working capital 50,000 



Total $1,700,000 



Two general systems of growing the cane are in vogue in Cuba — the "colono" system 

 and the "administration" system. The first contemplates the ownership of the land 



