34 T H E C U B A li E V I E W 



Does It Pay to Refine Sugar in Cuba? 



The question, does it pay to refine, or will it pay to refine, sugar in Cuba has been 

 put to us on a number of occasions. In reply, we have frequently made the statement: 

 Sometimes it does, and sometimes it does not, but there is Uttle doubt that under 

 certain conditions it can be made to pay in Cuba as well as anywhere else. We are 

 still of this opinion, but what the conditions are cannot be very easily stated. 



At the present time, the refining capacity of the plants now operating or that 

 are able to operate, producing a fairly high grade product, is about three times the local 

 consumption of practically 100,000 tons of raws annually. In other words, if these 

 plants run to full capacity, and supply only the demands of the island of Cuba, they 

 will be able to operate only one-third of the year; and if they operate to full capacity 

 throughout the refining year, they will oversupply the local demand, and will have 

 about 200,000 tons for export. 



The question then arises, can these plants refine at such a cost as to compete 

 in the export trade with the larger refineries of other countries? In reply to this 

 query, we may state, on the basis of our knowledge of the present cost of refining, 

 that we believe it is doubtful if they can. However, we do know that the relative 

 cost of refining in Cuba and in the United States, for plants of practically equal capacity, 

 is almost identical. The refineries, both modem and antiquated, now operating in 

 Cuba are therefore not sufficiently large to turn out the volume production which 

 would permit them to compete against the larger refineries of the United States. The 

 remedy, then, would appear to be that of increasing the unit capacity in order to 

 reduce unit cost of production. 



The claim, however, has been made that there are other factors which would 

 operate to prevent refining on a large scale being a financial success in Cuba. Such 

 an assertion cannot very easily be denied, but, at the same time, it cannot any more 

 easily be denied that there exist certain advantages in Cuba for the refining of sugar 

 that probably do not exist anywhere else. Labor at the present time is not any higher 

 than in the United States, although perhaps a bit higher than in some of the European 

 countries. It is true, though, that fuel and the proper quality of water is more or less 

 at a premium. The water in Cuba, as is well-known, is very "hard," but with thorough 

 study and expert advice, that problem can be solved. Practically all fuel oil has to be 

 imported, paying a heavy duty, but it may be that the Cuban Government would make 

 concessions in this regard as well as others for the establishment of the sugar refining 

 industry. Freight on a refined product is usually much higher than on the raw material, 

 but when Cuba exports 3,500,000 tons of 96-test raws each year, there are 140,000 

 tons of impurities shipped out upon which the same freight rate is paid as up>on the 

 sucrose contained therein; one may pay a higher freight rate on refined sugar and still 

 gain on the deal. Moreover, of these 140,000 tons of impurities contained in the 

 3,500,000 tons of raws, there are 17,500 tons of plant food sent out of the country 

 every year, thus to this extent depleting her soil, while by exporting only refined sugar, 

 merely air and water are being transported from her shores. 



The tariff question also arises, for, in the United States particularly, the import 

 duty on refined sugar is greater than on the raw product. The answer to this tariff 

 question is to export to other countries, at first, and to produce the final product — 

 refined standard granulated sugar— from her cane at such a low cost that the refineries 

 of the United States cannot compete, even in their own markets. But if one will 

 only reflect a moment, he will remember a statement which appeared in these columns 

 some time ago showing that the refiners of the United States are now controlling or 

 producing 2>2> per cent, of their raw material requirements, thus guarding against that 

 time when all raws produced in Cuba can be refined in Cuba. The tariff, too, they 

 have manipulated to their own interests. 



As a final answer to the query, does it pay to refine, or will it pay to refine, sugar 



