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How Sugar Affected the Cuban Economy

Table of Contents

Introduction
The Development of the Sugar Economy
Relationship with the Soviet Union
Analysis of the Primary Source
Conclusion
References

Introduction

For centuries, sugar has been considered a commodity of high trading value. Sugar plantations were profitable to the extent that sugar was called white gold because of the high demand for it on the market. Being extracted from a plant called sugar cane, it has been the backbone of agricultural economies in America. The Caribbean Island of Cuba is known for its nearly two-century history of being one of the worlds largest sugar exporters. This paper investigates the way sugar has impacted the Cuban economy through the analysis of both primary and secondary sources. The primary source for analysis would be an interview with Fidel Castro on their return from the Soviet trip in 1963.

The Development of the Sugar Economy

Cuba and Haiti have been Spanish colonies in the Caribbean Sea since the 15th century. In Cuba, the first sugarcane plantations were planted in 1523, but the production was not as high and profitable as it became later. Cuba was restricted in terms of trade and served the needs of the Spanish market. However, after the Haitian Revolution in 1791, Cuban farmers started to understand the trade and production opportunities, which they refused. By demanding scaling down the trading restriction as well as free importation of slaves, Cuba managed to significantly boost the production of sugar for the first time in history (Smith, 2019). Further liberation and growth came with a free trade agreement in 1818, which allowed Cuba to develop relationships with new markets, such as the United States. Finally, after a decline in the price of coffee in the 1840s, sugar attracted more investors and workers, which made sugar plantations a source of profit and the main export of Cuba.

In the middle of the 19th century, Cuba was still under Spanish rule. However, the commercial success of sugar plantations allowed it to attract foreign capital, develop cities, and growing population. The worldwide consumption of sugar increased throughout the 19th century. In addition, the industrial revolution allowed for an increase in supplies. For Cuba, sugar production increased from 55,000 tons per year in 1820 to almost a million tons in 1895 due to technological advancements and the increased population (Smith, 2019). Therefore, it became one of the most prosperous Spanish colonies.

As a result of the Spanish-American War in 1898, Cuba gained independence and formed a republic in 1902. Soon Cuba became an attractive place of investment for capitalists and entrepreneurs from the United States. The consumption of sugar in the United States was growing to the point where it doubled in the period from 1903 to 1925 as sweet food and beverages started to become an essential part of American cuisine (Smith, 2019). In these circumstances, the US banks supported Cuban sugar producers by giving them loans. However, the boom of prices on sugar collapsed, and local producers could not pay off their loans, which led to the takeover of those plantations and refineries by the United States banks. The protectionist policies applied by the US artificially lowered the price of sugar to the United States, leading many Cuban companies to the crisis, which resulted in an overall economic crisis and the Cuban Revolution of 1933 (Smith, 2019). Such a complicated relationship with the United States had an adverse effect on the industry and on countries economy as well.

Relationship with the Soviet Union

Cuba is also famous for its role in the Cold War, which was a rivalry between the United States and the USSR. The rivalry entailed competition for world leadership and caused the involvement of these countries in the affairs of other countries. Being geographically close to the United States, many of the Cuban sugar plantations and factories belonged to owners and investors from the United States. However, shortly after Fidel Castro came to power in 1959, he started expropriating all of the sugar plantations and refineries. As a result, the largest consumer of Cuban sugar the United States refused to buy it.

This situation did not put Cuba into crisis because the USSRs ruler Nikita Khrushchev offered to buy Cubas sugar on preferential terms, and Fidel Castro agreed. Moreover, Cubas ruler launched a large effort to boost production. He set a target of ten thousand tons, and thousands of people were sent to work in the fields cutting sugar cane during harvest time. Regardless of their age, sex or occupation, the Cuban demographic was involved in harvesting. Countries leaders such as Fidel Castro himself and Che Guevara acted as an example and worked on plantations as well, stacking bags of sugar. The initial goal was never met, but by the late 1980s, the production of sugar was boosted to the record number of eight million metric tons annually (Smith, 2019). After the USSR collapsed in 1991, the demand for Cuban sugar reduced, leading the sugar industry to a slow decline.

Analysis of the Primary Source

The primary source that emphasizes the importance of sugar in the Cuban economy is the 193 interview with Fidel Castro. The interview was taken by Havana Domestic Ratio and Television Networks after Castros return from the Soviet trip. The interview was broadcasted to Cuban citizens via television and radio. The Prime Minister of Cuba provides a report to his people about the reception, honors, and attention given by the Soviet Government, as well as the agreements that the two countries reached. The particular agreement, which is important to this paper, is a negotiation on the matter of the long-term export of Cuban sugar to the Soviet Union by a fixed price. After the embargo by the United States, the Cuban economy was at risk of collapse. As Castro says in the interview: Why are prices higher? As a result of the imperialist blockade, the elimination of our quote, and because our sugar that used to go on the American market, the world market, went to the socialist market. (Castro, 1963). Hence, the deal was beneficial to Cuba, and this is why Castro wanted to boost production to improve the Cuban economy. The importance of sugar production to the Cuban economy is further emphasized in the reaction of Castro to the embargo from the United States: They said: Let us starve the Cuban people to death; we will take away their sugar quota; we are going to reduce them to hunger, misery, want; we will see where they sell their sugar, we are going to put sugar at two centavos. (Castro, 1963) Cuba heavily relied on sugar, and low prices could lead to the starvation of the economy and its population as well.

Conclusion

Although in the present day, sugar production is declining, its export played an extremely important role in both the economic and political life of Cuba. The commercial freedom of Cuba was for centuries limited by Spanish rule. After gaining political independence in 1902, the economic relationship with the United States shaped the economy of Cuba due to loans and quotas. The Cuban Revolution of 1959 expropriated the American sugar production factories but caused an embargo from the United States market. The agreement on the export of Cuban sugar to the Soviet Union at a price higher than on the market caused Cuba to boost sugar production as a main means of profit. Therefore, sugar determined the state of the Cuban economy.

References

Castro, Fidel. 1963. Castro Interview On Return From Soviet Trip. Havana Domestic Radio and Television Networks.

Smith, John, T. 2019. Sugar dependency in Cuba: Capitalism versus socialism. In The Gap between Rich and Poor (pp. 366-378). Routledge.

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