With Fidel Gone,
Will Cuba Become
a Global Ethanol Player?

By Chuck Squatriglia
Wired Magazine
USA
Infosearch:
José Cadenas
Analyst
Bureau Chief
USA
Research Dept.
La Nueva Cuba
February 22, 2008

Cuba has the potential to make 3.2 billion gallons of ethanol a year, a figure that would make it the world's third-biggest producer.

Fidel Castro hates ethanol. He thinks it punishes the poor by driving up food prices. But Cuba produces a lot of sugar, and with Fidel's brother Raul -- a fan of biofuels -- calling the shots (at least for the time being), Cuba could become a key player in the global ethanol game.

It wouldn't happen overnight, and it would take a huge investment in the country's rickety sugar industry, but Cuba has the potential to produce 3.2 billion gallons of ethanol annually, according to an analysis by Juan Tomas Sanchez of the Association for the Study of the Cuban Economy. Another Cuba expert, Jorge Hernandez Fonseca, puts the figure closer to 2 billion gallons but even that figure would place Cuba third -- behind Brazil and the United States -- in worldwide production.

Of course, reaching either of those numbers would require Raul Castro to open the door to foreign investment, but that may not be as unlikely as it sounds. The Washington Post notes there's speculation that Fidel's exit opens the door to economic reform like we've seen in China, and it's worth noting Cuba is quietly modernizing its ethanol infrastructure.

Raul Castro is seen as a pragmatist who is more concerned with improving Cubans' daily lives than spreading la revolución, and according to Reuters he is believed to favor loosening state control on Cuba's economy. The country has said it would allow foreign investment in its tourism industry.

Whether that means he'll allow foreign investment in the sugar and ethanol industries remains to be seen (Cuba produces about 1.2 million tons of sugar annually, but was the world's leading producer before Castro took over in 1959). Cuba started overhauling 11 of its 17 ethanol refineries last year. That's an expensive proposition, and the money will have to come from somewhere. And its not as if agribusiness wouldn't love to have a piece of that pie. The Wall Street Journal notes that Archer Daniels Midland tried to get in on the Cuban ethanol game in the 1990s but was rebuffed by Fidel. Perhaps Raul will be more welcoming.

Cuba doesn't have much need for ethanol, Sanchez writes, and could export as much as 3 billion gallons a year -- worth about $7 billion at today's prices. Don't look for any of that ethanol to flow in America though. The State Department says it won't lift the trade embargo on Cuba any time soon.

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