CubaBrief: Cuba now imports sugar and overtaken by Dominican Republic “as the cigar capital of the world.” Milton Hershey’s Cuba reveals what enlightened capitalism did in Cuba.

Prior to the establishment of Castroism in Cuba in 1959, the island’s private sector generated riches and a rising standard of life for the majority of Cubans. Ric Morris’s 2013 documentary “Milton Hershey’s Cuba” explored a little-known chapter of an American business titan’s involvement in Cuba. It gets certain things wrong on Cuban history, especially the 1933 general strike, and leaves out the Autentico governments, but provides a compelling look.at one American’s impact on the lives of many Cubans.

“In 1916, American chocolatier Milton S. Hershey went to Cuba to grow sugarcane. While he was there he built a massive empire on the tropical island, including a town for 2,000 employees and their families, 251 miles of electric railroad, and the largest sugar refinery ever built in Cuba. In its first year of operation, the Hershey refinery produced enough sugar to make 1.6 million Hershey’s™ chocolate bars. Milton S. Hershey was a philanthropist, and it was in Cuba that his belief in a kinder and gentler society was brought into sharpest focus. From the Roaring Twenties to the Great Depression and beyond, Hershey not only provided steady work to thousands of Cubans, he also offered them a better life.”

On October 28, 1969, Fidel Castro proclaimed at Havana’s Chaplin Theater, “We shall never again have men waiting in line outside a sugar mill. The old workers who used to know these problems and the new ones who did not know them no longer have to suffer those bitter, humiliating circumstances which forced them into work discipline as a matter of life or death.” Communist central planning destroyed Cuba’s sugar industry that for over a century produced a substantial portion of the world’s sugar supply. Cuba, which was once one of the world’s top sugar exporters, now has to buy sugar to meet domestic demand, reported Nora Gámez Torres in the Miami Herald on August 8, 2023.  On February 20, 1992,  Fidel Castro stated at the Havana Convention Center, “People have tried to produce those famous cigars in many places, in Central America, Santo Domingo, other places. After the embargo against Cuba began, they tried to produce that good tobacco in other places. They did not succeed, because it is a problem of the microclimate.” Simon de Burton on August 11, 2023 in The Spectator revealed that Cuba has been overtaken by the Dominican Republic “as the cigar capital of the world.”

“The fuel behind the success of the Dominican Republic’s cigar business is principally the fact that Cuban products can’t legally be imported into the US, which is far and away the world’s biggest market for cigar sales. If we chart the story back to the early 1990s, the Dominican Republic was really nowhere in terms of global sales and the cigars available here were not very distinguished or sophisticated. But that has changed completely and the fact that everything is driven by private capital – rather than being state-owned [as in Cuba] – has enabled the quality to grow year-on-year through constant investment and innovation.”

From 1902 through 1959, a powerful labor union movement emerged and expanded into a national sociopolitical economic force in Cuba, raising living standards throughout the country. Gerardo Machado on May 20, 1925 was elected Cuba’s fifth president, but he extended his rule through dubious constitutional means, becoming a dictator, and a hated one when Cuba was impacted by the Great Depression. With a nationwide strike in 1933, the Cuban labor movement brought about national change, but it also became disillusioned with Cuba’s communists, who struck a deal with Machado that undercut Cuban strikers. Historian Pedro Roig in 2018 described what happened.

“The end of the dictator was ignited by a minor labor dispute.  On July 25, 1933, Havana bus drivers went on strike protesting a municipal tax increase.  The strike turned into a political confrontation that escalated when streetcars operators (tranvias) and taxi drivers joined the protest.  Capital transportation came to a halt.  By August 1, it had spread to other labor sectors and grown into a general strike. Machado called for a meeting with the communists perceived by the dictator to be the leaders of the strikes.  Machado offered them legal recognition and state support.  Rubén Martínez Villena, and Joaquín Ordoqui met with Machado and accepted the offer. The communists called off the strike but failed.  It turned out to be the agreement of the impotent, since neither party had the strength to control the mounting crisis.”

Machado was driven out of office on August 12, 1933 and Cuba’s communists were discredited for having made a deal with him that was viewed as a betrayal of Cuban workers. With the communists discredited, a revolutionary moment took place that benefited Cuban trade unions, and workers. Ramon Grau San Martin’s provisional government lasted a hundred days, and marked a before and after in Cuban history. Grau between October and December of 1933 issued a first package of popular and nationalist measures:

“University autonomy; the dedication of 2% of the National Budget to the university and the granting of a thousand free enrollments for poor students. He created the Ministry of Labor, since there was no body specifically in charge of labor matters. He established employer liability for accidents; he suspended the evictions of tenants and canceled 50% of the taxes and contributions not paid in due time. He decreed the forced repatriation of West Indians who came to Cuba at harvest time and who were unemployed the rest of the year, which generated many different problems. He established the eight-hour work day and the right to unionize. He promulgated the Labor Nationalization Law that established the obligation that 50% of the workers and employees had to be native Cubans. He lowered the cost of electricity.”

Labor legislation passed in 1938 guaranteed workers’ rights such as the minimum wage, pensions that assumed a constitutional character; and the establishment of the Central of Workers of Cuba  Central de Trabajadores de Cuba (CTC, by its Spanish acronym) on January 28, 1939.  All of this combined to make trade unionism an integral part of Cuban civil society.

In 1939, a new Constitution was drafted that preserved and enhanced worker rights while ushering in a democratic renaissance in which power was peacefully challenged and civil liberties were honored. It was adopted in 1940. The right to strike was officially recognized in the Cuban Constitution of 1940. This resulted in real-world benefits for Cuban workers. For example, the sugar union “managed to impose a guarantee clause, as a result of which the sector’s workers received an additional salary of 13.42%, known as the sugar differential.” The CTC was the second largest trade union in Latin America in 1945, with half a million affiliates.

All of this came to an end with the 1959 communist revolution in Cuba led by Fidel and Raul Castro. The communists eliminated all of Cuban workers’ hard-won rights.

Chart taken from “Sugar Cane and Agricultural Transformations in Cuba” by Reinaldo Funes Monzote

Neil Monnery’s February 11, 2020 article in Human Progress titled “Sixty Years of Meager Human Progress in Cuba”described the inadequacies of Communist central planning.

“Virtually all of agriculture, industry and commerce were nationalized; output objectives and pricing were set centrally, as were wages and employment levels; food and consumer goods were rationed, down to the level of how many eggs each person could buy each month; most savings were seized; investment followed a central industrial policy; foreign exchange and trade was controlled. It was one of the most comprehensive attempts ever implemented to use socialist central planning to deliver human progress. That approach largely continues – six decades later. As an economic approach, it has failed. It also failed to bring progress to the people of Cuba. GDP per capita has risen at only around 1 percent per year, and that includes (now ending) subsidies from Venezuela and transfers from Cubans living in the United States. Two million people have emigrated to the United States and elsewhere. Despite its fertile land, Cuba imports two-thirds of its food. When the USSR subsidy ended in the early 1990s, GDP fell by a third and there was widespread famine. The inefficiencies of planning meant that Cuban productivity languished as other countries overtook even the previously competitive sugar industry. And planning also failed to direct investment to genuine economic opportunities. Instead investment has produced low returns and failed to deliver growth.”

These two charts on sugar production offer a visual presentation of this failure.

Fidel Castro’s predictions, like the communist economic model he and his brother imposed on Cuba, are incredibly consistent in being wrong.

The Spectator, August 11, 2023

How Cuba was Overthrown as the Cigar Capital of the World

The Dominican Republic is Now Number One

By Simon de Burton

A reputation for excellence has long maintained the status of everything from French wines to Scottish tweed – but globalisation has disproved the myth that the best of any particular product can only come from one country. Cuba is no longer seen as the source of the finest cigars thanks to the increasing dominance of its near neighbour, the Dominican Republic.
The Dominican Republic’s cigar-producing boom can be traced back to 1959 when the revolution in Cuba – then by far the world’s leading cigar exporter – led to the nationalisation of industry
This year, Habanos SA – the Havana-based business that oversees all Cuban cigar sales – reported 2022 revenues of $545 million, a 2 per cent increase on the previous 12 months (a figure helped considerably by skyrocketing prices of Cuban cigars).
The Dominican Republic, however, broached the $1 billion mark almost three years ago and exports are still growing, making cigars its fifth-largest export after gold, electrical products, textiles and medical equipment (who knew?).
Much of the country’s success has been fuelled by a significant increase in the production of machine-made cigars and there are now more than 50 factories in the country employing more than 120,000 people. But the DR also leads the field in the type of ‘luxury’, hand-made cigars for which Cuba has long been famous, helping Santiago achieve the title of ‘cigar capital of the world’ through premium smokes such as the Davidoff Aniversario, the Ashton Classic and the Arturo Fuente ‘Hemingway’.
The Dominican Republic began to nose ahead of Cuba and Nicaragua during the so-called ‘cigar boom’ of the early 1990s, but its success didn’t happen overnight – the oldest factory, La Aurora, was founded 120 years ago by an 18-year old called Eduardo León Jimenes.
La Aurora is now the biggest commercial organisation in the DR, but it still prides itself on the hand-rolled, doble figurado ‘perfecto’ cigars of which only 100 are made per day. Since Jimenes established the business, the plantations around Santiago have expanded to cover more than 600,000 acres, not to mention the packaging manufacturers, cigar factories, greenhouses and fertilizer producers.
The Dominican Republic’s cigar-producing boom can be traced back to 1959 when the revolution in Cuba – then by far the world’s leading cigar exporter – led to the nationalisation of industry. Many top growers moved to the slightly less restrictive DR. Soon after that came the assassination of the DR’s murderous dictator General Rafael Trujillo (who ruled the Republic’s cigar business with a rod of iron) and the imposition of an American ban on all Cuban imports. Cuban cigars still can’t be sold in the US.
Someone who has been able to closely observe the rise of the Dominican Republic’s cigar dominance since the turn of the century is Eddie Sahakian who, for the past 30 years, has worked at Davidoff London – the cigar retailer founded by his father, Edward, in 1980.
The fuel behind the success of the Dominican Republic’s cigar business is principally the fact that Cuban products can’t legally be imported into the US, which is far and away the world’s biggest market for cigar sales. If we chart the story back to the early 1990s, the Dominican Republic was really nowhere in terms of global sales and the cigars available here were not very distinguished or sophisticated. But that has changed completely and the fact that everything is driven by private capital – rather than being state-owned [as in Cuba] – has enabled the quality to grow year-on-year through constant investment and innovation.
Dominican Republic’s lead over Cuba has also been helped by decades of global shortages in cigars. Cuba has suffered a combination of natural disasters and the loss of veteran rollers who have either retired or died. That lack of supply has, inevitably, led global retailers to stock an increasing number of New World cigars which, in turn, has helped to raise interest in those from the Dominican Republic.
And, as the DR’s hold on the market has grown stronger, so have its cigars.
Once known for being relatively mild, even bland, the vast range of blends and flavour profiles means there is a Dominican cigar for every taste – so beginners beware starting off with something such as the ‘Double Ligero Chisel’ from La Flor Domenicana or the ‘Power Ranger’ from Carlos Fuente Jnr. The clue, as they say, is in the name.

https://www.spectator.co.uk/article/how-cuba-was-overthrown-as-the-cigar-capital-of-the-world/


The Miami Herald, August 8, 2023

Cuba’s Economic Crisis Is Worse Than After Fall Of The Soviet Union, Economists Warn

By Nora Gámez Torres 

Cuba, which for decades was one of the largest exporters of sugar in the world, now has to import sugar to meet its domestic demand. 

Six decades after the Cuban Revolution, the country is again undergoing a severe economic crisis, this time worse than the infamous “Special Period” in the 1990s, as the economic downturn that followed the collapse of the Soviet Union is known. But Cuba is also experiencing a boom in private enterprise, a contrasting reality fueling more inequality, economists gathered in Miami to analyze the situation on the island said. 

“The economic crisis in Cuba that started around 2019 has worsened, approaching or surpassing the magnitude of the severe crisis of the 1990s,” Carmelo Mesa Lago, the most prominent expert on the Cuban economy, said at the annual conference of the Association for the Study of the Cuban Economy at Florida International University.

[ Full article ]

https://www.miamiherald.com/news/nation-world/world/americas/cuba/article278068487.html