Sugar Industry

views updated May 11 2018

Sugar Industry





Sugar has been an important commodity historically due to a variety of factors, including the human appetite for sweet foods and drinks, the complementarity that sugar brings to the other flavors in food, its preservation and fermentation properties, and the calories it provides. Sugar (or more precisely sucrose) was first prepared in India. It was brought back to the Western world by the Greek conqueror Alexander the Great in 325 BCE. Trade in sugar was further expanded in the Mediterranean region by the Arab conquest of the sixth century CE. Improvements in the crystallization process expanded the sugar trade (especially in the form of molasses) in the twelfth century. However, the limited supply of sugar in the international market caused refined sugar to be relatively costly until the production of sugar by European colonies in the Americas grew after 1700. This expansion, coupled with improvements in refining technologies that reduced unwanted tastes in the sweetener, caused sugar to replace other sweeteners such as honey, becoming the dominant sweetener over time. While demand for sugar remained relatively unaffected by the introduction of non-nutritive sweeteners, in the early twenty-first century the dominance has been challenged, particularly in the United States, by high fructose corn syrup (HFCS). The competition between sugar and HFCS raises several policy questions.


The fact that the expansion of production and trade of sucrose was largely linked to the European colonization of the Americas had significant implications for the institutional arrangements in the international sugar market in place at the beginning of the twentieth century. Specifically colonization of the Americas as well as other parts of the globe in the eighteenth and nineteenth centuries was at least partially driven by economic considerations of the countries involved. Restrictions were placed on the countries with which colonies could trade. Raw goods produced in the colonies were required to be sold in the mother country and significant import restrictions existed to encourage the purchase of manufactured goods to each respective European power. This enabled the European powers economic benefits from the colonization of the New World.

Another byproduct of the rise of sugar in European colonies in general and in the Americas in particular was the linkages between sugar and slavery. As described by B. W. Higman in his 2000 article for Economic History Review, the rise of the sugar economies in the seventeenth through the nineteenth centuries in the Caribbean has been labeled as The Sugar Revolution. This revolution has been associated with several empirical facts, including the increased importance of monoculture, the replacement of small farms with plantations, and the increased use of black slaves. The movement toward monoculture and increased farm size has proven not to be unique to sugar; however, certain characteristics of sugar production may make the crop more susceptible to the establishment of plantations. The relationship between sugar and slavery may be more systematic. The exact reason for this linkage is unclear. One explanation for this linkage could be the presence of scale economies. In 1977 Mark Schmitz found evidence of significant economies of scale in Antebellum sugar production in Louisiana, which used slavery. Further evidence of the economies of slavery-based agriculture can be found in Robert Fogel and Stanley Engermans 1977 work.

The elimination of slavery in the colonial powers and the United States in the nineteenth century changed the institutions in the labor relationship. Slaves were replaced with contract labor, but the use of contract labor in the sugar plantations implied a radical change in the source of that labor. Before 1770 one-half to two-thirds of the contract labor destined for the British Caribbean and other North American colonies came from Europe. However, the contract labor for the sugar plantations was predominantly non-white. This shift also implied significant changes in the terms of the labor contract. In addition, the reduction of the availability of contract labor from countries such as India undoubtedly accelerated the introduction of labor-saving technology to the industry.

The entanglement of European powers in the trade of sugar also contributed to the first significant alternative sweetener. The British blockade of European ports during the Napoleonic wars led to the development of a viable sugar beet industry in France. In the twenty-first century sucrose from sugarcane and sugar beets share the global market for refined sugar. The expansion of sugar beet production in the second half of the nineteenth century followed a host of factorsincluding the abolition of slavery in Britain and France and the expansion of grain imports from Russiathat reduced the profitability of grain crops in Europe.

The decline in the price of sugar had two divergent impacts on the economy. First, lower sugar prices reduced the cost of a primary input for a variety of industries (i.e., bakeries, breweries, and the makers of jams). Second, lower sugar prices impoverished producers in the colonies. The same policy scenario applies to the present-day United States. Sugar tariffs pit the interest of sugar producers against the interests of confectionary manufacturers. The ultimate dispensation of this debate depends on the relative political power of each sector through rentseeking behavior. One response to the declining sugar prices both in the nineteenth and in the twenty-first centuries is the establishment of import tariffs or quotas to increase the domestic price and, thereby, protect domestic sugar producers.


Despite the end of European colonial rule, many of the tariff agreements continue to follow the trade patterns established in colonial times. With the emergence of the European Union (EU) as an economic union in the closing years of the twentieth century, agricultural policy coalesced into the Common Agricultural Policy (CAP) of Europe. The CAP established a system of tariffs to protect domestic producers from foreign competition. Historically, African, Caribbean, and Pacific (ACP) sugar producers were given access to the European market under the CAP through the Sugar Protocol of the Lomé Convention and its successor the Cotonou Agreement.

At the beginning of the twenty-first century, most countries that support their internal sugar price use a form of the tariff rate quota (TRQ) which is allowed under the Uruguay Round Agreement on Agriculture. The TRQ is a system of two tariffs. The first tariff allows the sale of a fixed quantity (or minimum access) of a commodity at a lower or first tier tariff. Any quantity of that commodity imported above this fixed quantity is charged a higher (typically prohibitive) tariff. Given that the second tariff level is prohibitive, the country can increase the price received by domestic producers by reducing the fixed quantity imported under the first tier tariff. This is the policy instrument used by both the United States and the EU to increase the price of sugar for their respective producers. However, apart from supporting domestic producers, the TRQ gives countries in the EU a mechanism to honor its commitments to the ACP. Specifically, former colonies can be allocated portions of the minimum access quantity, in essence giving ACP countries access to a higher internal price of sugar at a low tariff rate. The United States allocates its first-stage quota in a similar way to a group of forty countries.

Apart from its grounding in historical trade patterns, the international sugar market is also affected by a myriad of regional and global trade agreements. Regional trade agreements involve a small number of countries in the same geographic region. In this context, the agreements forming the EU are a regional trade agreement. Other regional trade agreements include the North American Free Trade Agreement (NAFTA) and proposed trade agreements such as the Free Trade Area of the Americas (FTAA). The effect of each of these trade agreements on sugar markets is dependent on the role sugar plays in each group of economies.

An example of the ambiguous role regional trade agreements play in the sugar market can be found in NAFTA. As discussed, the sugar price in the United States is protected by a system of tariffs. From this perspective both freer trade with both Canada and Mexico raise critical issues. First, while Canada does not pose a direct threat to the U.S. sugar industry from production, the TRQ on sugar prohibits pass-through imports of sugar into the United States through Canada. However, NAFTA still allows for the importation of sugar containing products from Canada, increasing the competition for confections in the United States and reducing the demand for sugar. For example, lower sugar prices contributed to Kraft Foods decision to move the production of Life Savers candy entirely to Canada in 2003.

A different set of problems was raised by the potential effects of Mexican sugar production on the U.S. sugar market. Mexicos government has historically been involved directly in its sugar industry through its ownership of its sugar mills and other policies but had divested these holdings as a part of its economic liberalization program in the late 1980s. In recognition of the potential competition from Mexico, NAFTA includes specific provisions governing Mexicos access to the U.S. sugar market. Many of these provisions are concerned with Mexicos status as a net sugar producer. Specifically, since Mexico imports sugar and other sweeteners, the domestic producers wanted to be protected from pass-through sugar (i.e., sugar purchased at lower world market prices for sale at protected U.S. prices). Hence, Mexico was granted duty-free access to the U.S. market for 7,258 metric tons of sugar. If Mexico obtained the status of a net sugar-surplus producer, the quota would be expanded to 25,000 metric tons in years 1 to 6 and 250,000 metric tons in years 7 to 15. Some controversies have arisen in the implementation of these provisions. Specifically, the original provisions were restricted to becoming a net sugar-surplus producer, ignoring the potential impact of alternative sweeteners such as HFCS. This raised the possibility of substituting HFCS for sugar especially in the manufacture of soft drinks to enhance Mexicos net surplus of sugar.

In the mid-2000s the URAA of the WTO remains the most relevant multilateral trade agreement facing the international sugar market. Within this context, it is important that the TRQ format of the EU and the United States is the sanctioned agricultural policy and thus completely legal under the WTO. The primary question is then whether significant changes to these accepted instruments will occur in the Doha round of WTO negotiations started in 2001. At its inception, increases in market-access were primary to the Doha round discussion on agricultural trade. One idea is to increase market access by expanding the minimum access portions of the TRQs.


Various domestic factors affect the production of sugar and institutions within the U.S. sugar market. As discussed, sugar prices in the United States are supported by a TRQ. Adding a layer of complication, the government supports the domestic price of sugar by providing a nonrecourse loan for raw sugar at 18 cents per pound and refined sugar produced from sugar beets at 22.9 cents per pound, according to 2002 statistics (Haley and Suarez 2002). If the market price falls below 18 cents per pound, producers (or more accurately sugar mills) store their raw sugar and receive a loan from the government of 18 cents for every pound of raw sugar placed in storage. If the market price for sugar rises over 18 cents per pound plus any interest accrued, they take the sugar out of storage, sell it at the prevailing market price, and repay the loan. However, if the market price for sugar does not exceed 18 cents per pound plus accrued interest during the marketing year, producers simply forfeit sugar in storage to the government in fulfillment of the loan. While the nonrecourse loan program for sugar is typical for agricultural commodities in the United States, it is encumbered by the Dole Amendment, which requires the sugar program to be operated at no cost to the government.

Certain characteristics of sugar production have implications for vertical integration in the market channel for sugar. Sugar is produced from two different primary crops: sugarcane and sugar beets. While the end product (i.e., sucrose) is identical for each process, each crop implies a different market channel. The production of sugarcane typically occurs in tropical or subtropical climate zones. The stalks containing the sucrose are removed from the field for milling that produces a raw form of sugar that is relatively stable. The raw sugar is then later refined into table sugar, removing impurities that may affect the flavor. Technical considerations require that these mills be located close to production. When the stalks are harvested in the field the sucrose content of the sugarcane starts to deteriorate. Further, the sucrose content of standing sugarcane deteriorates after a freeze.

Following Coasess paradigm (1937) that the boundaries of the firm are determined by the comparison of transaction costs with the diseconomies of scope, the technical characteristics of sugarcane are conducive to the vertical integration of production of processing of sugarcane. Specifically, in Coasess paradigm the boundaries of a firm are dictated by a comparison of transaction costs and diseconomies of scope. In this case transaction costs include the possibility of using a thin market to extract monopolistic rents while the diseconomies of scope involve the economic costs of carrying out an activity that is outside of the firms specialization. In the case of sugarcane, the potential deterioration of quality gives rise to the possibility of monopolistic rents. The possible economic losses of economic rents more than offset the economic costs of diversification into processing facilities. Viewing the transaction from the other side, the diversification into sugarcane production insures a steady supply of sugarcane into the future, reducing the risk of investment.

Production of sucrose from sugar beets does not face the same climatic constraints as sugarcane. Further, the sucrose content of sugar beets is more stable than sugarcane, extending the period for the extraction of sucrose from sugar beets. Thus sugar beet producers have less impetus for vertical integration than producers and processors of sugarcane.

Finally, any discussion of the sweetener markets, particularly in the United States, is not complete without reference to HFCS. HFCS is a liquid sweetener derived from corn that can be used in production of soft drinks and other industrial uses. It is typically conceded that sugar tariffs in the United States provided the incentives for the commercial development of HFCS production. However, while HFCS is a perfect substitute for sugar in many applications, it lacks the baking quality to replace sugar completely. The interaction between sugar and HFCS prices is then dependent on the saturation of specific sweetener markets. For example, HFCS is easily used in the production of soft drinks and, because it is typically priced lower than sugar, dominates the sweetener market for this market. Thus the relationship between HFCS and sugar prices depends on the substitutability of the use at the margin.

SEE ALSO Agricultural Industry; Caribbean, The; Industry; Plantation; Slave Trade; Slavery; Slavery Industry


Coase, Ronald H. 1937. The Nature of the Firm. Economica 4 (16): 386405.

Engerman, Stanley L. 1983. Contract Labor, Sugar, and Technology in the Nineteenth Century. Journal of Economic History 43 (3): 635659.

Fogel, Robert W., and Stanley L. Engerman. 1977. Explaining the Relative Efficiency of Slave Agriculture in the Antebellum South. American Economic Review 67 (3): 275296.

Greene, Gretchen. 1998. Transitions in the Mexican Sugar Industry. PhD diss., University of Florida.

Haley, Steven L., and Nydia R. Suarez. 2002 U.S. Sugar Policy and Prospects for the U.S. Sugar Industry. In Sugar and Related Sweetener Markets in the Twenty-First Century: International Perspectives, eds. Andrew Schmitz, Thomas H. Spreen, William A. Messina Jr., and Charles B. Moss, 241258. London: CAB International.

Higman, B. W. 2000. The Sugar Revolution. Economic History Review 53 (2): 213236.

Josling, Timothy. 2002 The Place of Sugar in Regional and Multilateral Trade Negotiations. In Sugar and Related Sweetener Markets in the Twenty-First Century: International Perspectives, eds. Andrew Schmitz, Thomas H. Spreen, William A. Messina Jr., and Charles B. Moss, 1330. London: CAB International.

Moss, Charles B., and Andrew Schmitz. 2002 Trade in HFCS: Cointegration with Substitute Goods. In Sugar and Related Sweetener Markets in the Twenty-First Century: International Perspectives, eds. Andrew Schmitz, Thomas H. Spreen, William A. Messina Jr., and Charles B. Moss, 299314. London: CAB International.

Polopolus, Leo C. 2002 World Sugar Markets and Entangled Government Programs. In Sugar and Related Sweetener Markets in the Twenty-First Century: International Perspectives, eds. Andrew Schmitz, Thomas H. Spreen, William A. Messina, Jr., and Charles B. Moss, 112. London: CAB International.

Pryor, Frederic L. 1982. The Plantation Economy as an Economic System. Journal of Comparative Economics 6: 288317.

Schmitz, Andrew, and Charles B. Moss. 2001. Vertical Integration in Production and Marketing: The Case of Sugar in the United States. International Sugar Journal 103 (1234): 443446, 461.

Schmitz, Mark D. 1977. Economies of Scale and Farm Size in the Antebellum Sugar Sector. Journal of Economic History 37 (4): 959980.

Charles B. Moss

Sugar Industry

views updated May 21 2018


SUGAR INDUSTRY dates back to the very founding of the New World, and has been intricately entangled with its history. Because of its role in the slave trade, sugar played an important role not only in the economy but also in how social relations developed in the New World. In the infamous "triangle trade," English colonies in the Caribbean shipped sugar to England for refining, and the products went to Africa where traders exchanged them for slaves, who were brought to the Caribbean plantations to raise more sugar. Sugar plantation work was among the most brutal and dangerous, as workers labored in oppressive heat and swampy conditions, and with dangerous tools.

Brought to the New World by Christopher Columbus, sugar cane was first cultivated successfully in Louisiana around the middle of the eighteenth century. Although efforts to make sugar from the cane juice succeeded in Louisiana as early as 1760 and in Florida a few years later, until the 1790s cane was cultivated in small quantities, mainly for the manufacture of syrup and rum. The spectacular success of a wealthy Louisiana planter, Jean É tienne Boré, in making sugar on a substantial scale in 1795 was followed in the next years by a rapid shift of planters from indigo to sugarcane. When the United States took possession of Louisiana in 1803, there was already a small but thriving sugar industry in south Louisiana. Likewise, when the United States acquired Puerto Rico and Hawaii in 1898, sugar culture was already well established in both areas. Though slavery in the United States ended after the Civil War, sugar producers continued to keep sugar workers in slave-like conditions in parts of the South, supported by government programs.

The need for cane sugar laborers was a key reason that seventeenth-century plantation owners in the Caribbean began importing slaves, and the labor-intensive character of sugar growing later encouraged planters in the U.S. South to hold large numbers of slaves. Climatic conditions in the southern United States were not as favorable for cane culture as those of the West Indies, because of shorter growing seasons and the danger of freezes. Nevertheless, as a result of the availability of enslaved workers, a protective tariff, the introduction of cold-resistant cane varieties, the adoption of steam power for grinding cane, and advances in the processes of clarification and evaporation of cane juice, the cane sugar industry grew rapidly in the years prior to the Civil War. Major improvements were made in the manufacture of sugar, including the introduction in the 1820s of steam power for crushing cane and the invention in the 1840s by Norbert Rillieux, a Louisiana Creole, of a multiple-effect system for evaporating cane juice, which replaced the open kettle boilers and revolutionized sugar manufacture. Although cane was grown for syrup mainly on small farms in South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, Arkansas, and Texas, only on the large plantations in south Louisiana and Texas was a successful sugar industry established. In 1850, on plantations worked by slaves, the southern states produced almost 114,000 tons of cane sugar, approximately one-half of the sugar consumed in the United States. Prior to 1861, most Louisiana cane sugar was shipped to cities throughout the Mississippi Valley and the East Coast, and much of it was consumed in the form of raw sugar. Refiners in eastern cities imported raw sugar from the West Indies and, by a refining process of melting the sugar, clarifying the juice in boneblack filters, and centrifugal drying, produced a dry, white sugar.

Beets, the other principle source for the sugar industry, have only in the twentieth century become a widespread source, though attempts at making beet sugar date centuries back. Sugar beets, which probably grew wild in Asia, were cultivated at an early time in Egypt and southern Europe. A German chemist, Andreas Marggraf, demonstrated in 1747 that sugar from beets was identical with cane sugar. Early in the nineteenth century, when France was cut off from overseas sugar supplies, Napoleon Bonaparte established the sugar beet industry. Although the industry declined with Napoleon's downfall, it gradually revived, spreading first to Germany and then to much of the rest of Europe.

One reason that the beet sugar industry was established so slowly in the United States is the large amount of hand labor required in growing beets; because of where beets grew, their growers could not rely on enslaved labor. In the late nineteenth and early twentieth centuries, the cultivation of sugar beets spread throughout the central and western states from the Great Lakes to California, and in both cane and beet processing, large expensive central mills came to dominate the manufacture of sugar. Four small beet sugar factories were constructed between 1838 and 1856, but all failed. The first successful one was established by E. H. Dyer at Alvarado, California (twentytwo miles east of San Francisco), in 1870 and operated through 1967. The next successful plants were established in Watsonville, California (1888); Grand Island, Nebraska (1890); and Lehi, Utah (1891). During the 1870s, Maine and Delaware offered a bonus for beet sugar manufactured within their limits, and factories destined to operate only a few years were built at Portland and Wilmington, respectively. The Portland factory inaugurated the practice of contracting with farmers for a specific acreage of sugar beets that would be raised from seed furnished by the company. This plan of operation, adapted from French practices, has persisted to the present. Despite the activity in Maine and Delaware, production in the United States has tended to concentrate in irrigated areas in the West.

By 1910 more beet than cane sugar was produced in the continental United States. In 1920 the output exceeded one million tons, and in 1972 it was about 3.5 million tons, which was more than one-fourth of the sugar consumed in the United States. In the 1970s, some sixty plants were producing beet sugar in eighteen states, with more than one-third of the total factory capacity located in California and Colorado. During the 1930s, studies began on the mechanization of growing and harvesting beets. Since World War II, mechanical devices have replaced much of the handcutting of cane, as machines for planting, cultivating, and harvesting beets—all requiring specialized technological changes—were developed by the beginning of World War II, and their adoption was hastened by shortages of hand labor during the war and by postwar prosperity.

By the 1960s, the refining branch of the sugar industry was dominated by large corporations and was concentrated in coastal cities, especially New York, New Orleans, Savannah, Baltimore, Philadelphia, Boston, and San Francisco. Refiners process raw sugar from Louisiana, Florida, Hawaii, Puerto Rico, and foreign countries. Refined sugar was marketed in more than one hundred varieties of grades and packaging to meet highly specialized demands. Per capita sugar consumption in the United States increased rapidly during the twentieth century and by the 1970s had been stabilized at about one hundred pounds per year. Although sugar production in Texas ended in the 1920s, a thriving modern sugar industry emerged in Florida south of Lake Okeechobee.

Since 1934 the U.S. government has assisted the sugar industry, which has a powerful lobby. Until the late twentieth century, sugar growers had access to extremely lowpaid, non-unionized immigrant workers through a federal "guest worker" program for the industry. In the early twenty-first century, the sugar industry was receiving $1.6 billion from the U.S. government. Rather than making direct payments to growers, as the Agriculture Department does in other industries, the department gives sugar processors short-term loans, and maintains high domestic prices by strictly limiting imports. Critics of this policy note that sugar consumers pay two to three times the world market price. In fiscal year 2000, domestic growers grew more than the government-set limit, and the government had to spend $465 million to buy their excess sugar and cover the cost of processors' loan forfeitures. According to the Center for Responsive Politics, which tracks political campaign contributions, the sugar industry contributes more than one-third of the money that crop production and food processing interests spend on political campaigns. The industry has a growing U.S. market; sugar consumption has practically doubled in the past century, from 86 pounds per U.S. citizen to nearly 160. However, the fortunes of the U.S. sugar industry may change in the wake of the North American Free Trade Agreement, as Mexican imports are likely to flood the U.S. market beginning in fiscal 2004.


Hall, Michael R. Sugar and Power in the Dominican Republic: Eisenhower, Kennedy, and the Trujillos. Westport, Conn.: Greenwood Press, 2000.

Melendy, H. Brett. Hawaii, America's Sugar Territory, 1898–1959. Lewiston, N.Y.: Edwin Mellen Press, 1999.

Mintz, Sidney Wilfred. Sweetness and Power: The Place of Sugar in Modern History. New York Penguin Books, 1986.

Roberts, Paul. "The Sweet Hereafter." Harper's Magazine 299, 1794 (November 1999): 54.

Rodrigue, John C. Reconstruction in the Cane Fields: From Slavery to Free Labor in Louisiana's Sugar Parishes, 1862–1880. Baton Rouge: Louisiana State University Press, 2001.

Sandiford, Keith Albert. The Cultural Politics of Sugar: Caribbean Slavery and Narratives of Colonialism. New York: Cambridge University Press, 2000.

Woloson, Wendy A. Refined Tastes: Sugar, Confectionery, and Consumers in Nineteenth-Century America. Baltimore: Johns Hopkins University Press, 2002.

Wayne D.Rasmussen

J. CarlyleSitterson/d. b.

See alsoAgricultural Machinery ; Agricultural Price Support ; Agriculture, Department of ; Diets and Dieting ; Plantation System of the South ; Slave Trade ; Subsidies .

Sugar Industry

views updated May 23 2018

Sugar Industry

Carried to the New World from the Spanish Canary Islands by Columbus on his second voyage in 1493, sugar was first grown in the New World in Spanish Santo Domingo and was exported to Europe beginning around 1516. Santo Domingo's incipient sugar industry was worked by African slaves who were imported soon after the sugarcane itself. Thus, Spain pioneered growing sugarcane, making sugar, using African slaves as labor, and establishing the plantation form in the Americas.

Within the New World, however, the early achievements in Santo Domingo and the rest of the Caribbean were surpassed by developments on the mainland. By 1526 Brazil was shipping sugar to Lisbon in commercial quantities. In Mexico, Paraguay, the Pacific coast of South America, and in fertile valleys everywhere, sugarcane thrived. In the other Greater Antilles—Cuba, Puerto Rico, and Jamaica—Spanish settlers eventually imported sugarcane plants, the methods for their cultivation, the technology of water and animal-powered mills, enslaved labor, and the processes of grinding, boiling, and fabricating sugars, creating molasses from extracted sugar juice, and distilling rum from the molasses.

Portuguese planters in Brazil, with the assistance of Dutch capital and merchants, enormously expanded sugarcane cultivation throughout the Northeast. A typical plantation consisted of fifteen or twenty Portuguese workers and more than one hundred African and Indian slaves, a chapel, workshops, a processing plant, a casa grande (big house) for the owner and his family, and a senzala (slave quarters). The entire enterprise depended on its engenho (mill), a water- or oxen-powered grinder that used a three-roller mechanism to extract the cane's juices. By 1618 the larger mills could produce between 192,000 and 320,000 pounds of sugar annually (85.7 and 143 tons), of which they exported some 384 million pounds to Europe.

The productive capacity of Brazilian sugar plantations drew foreign invaders to Brazil: first the French fruitlessly tried to found their own colonies there, then the Dutch succeeded in capturing Brazil from 1630 to 1654. In the meantime the British and the French were themselves trying to establish a presence on other Caribbean islands and turn them into sugar factories as well. By the time the Brazilians under Mem da Sá finally drove the Dutch out of Brazil in 1654, they had lost their predominance over world markets to competition from a series of new Caribbean producers and the erection of tariff barriers in Europe, notably in France and England. Nevertheless, the lust for sugar profits resulted in the continuous populating of other Caribbean islands with masters and slaves and helped spur the settlement of areas of the present-day United States, like South Carolina.

Within a century the French and, even more so, the British became the New World's great sugar makers and exporters. Inseparably linked to this development was the emergence of the triangular trade and mercantilism in the latter half of the seventeenth century. Finished European goods were sold in Africa, where African slaves were bought and transported to the Americas for sale, and then the profits from the first two parts of the journey were used to buy American tropical commodities (especially sugar) to market in the mother country and her importing neighbors. In the eighteenth century, as the imperial relationship solidified between mother country and colony, the French and British slave-based plantations of the Caribbean reached their apogee.

The late eighteenth and early nineteenth centuries brought dramatic changes to the Caribbean sugar colonies. First, revolution destroyed France's most lucrative and profitable slave-based sugar economy, Haiti. Subsequently, the British moved to limit and then abolish the slave trade and slavery (1834–1838). In the wake of these developments, European demand for other sugar sources increased significantly in the early decades of the nineteenth century.

Although sugarcane was planted there in the sixteenth century, Cuba was the last Caribbean island to develop its industry. By the beginning of the nineteenth century, sugar had become Cuba's main export. In the late 1820s about 1,000 sugar plantations covered some 500,000 acres, largely in the western region of the island. Investments in sugar, including the mechanization of the industry, led to spectacular increases in production and the construction of a railroad system. Before the Ten Years' War for independence (1868–1878), owners grew their own cane and milled it in their own mills. Massive destruction of property throughout the island coupled with the emancipation of the slaves, upon whom the industry had depended, led to bankruptcies and purchases by foreign investors, largely from the United States. After the war, the number of mills declined to 500 and the cultivation of sugarcane fell increasingly into the hands of Colonos, renters, or sharecroppers who depended on the mill. Some scholars have speculated that this investment played a role in U.S. involvement in Cuba's second war for independence (1895–1898) with Spain, which became the Spanish-American War. Furthermore, the production of beet sugar in Europe and the United States forced sugar prices down on the global market.

Technological innovations developed during the twentieth century led to even further mechanization and concentration within the industry: by the 1920s there were fewer than 200 mills working on the island, of which 40 to 50 percent were controlled by U.S. investors. During World War I, when Cuban sugar had to make up for losses of European beet sugar, cultivation expanded and prices skyrocketed. From the end of the war until 1920, a time known in Cuba as the Dance of the Millions, sugar reigned supreme. But then average prices per pound dropped from a high of 22.5 cents in May 1920 to a mere 3.75 cents by the end of the year, causing industry collapse and opening the door to greater U.S. takeover. Yet, the sugar industry continued to dominate Cuba throughout the first half of the twentieth century and affected all segments of its economy. By 1958, for example, it is estimated that the sugar industry alone generated one-quarter of national GNP.

After the success of the Cuban Revolution in 1959, Fidel Castro believed that agrarian reform measures would finally end the island's dependence on sugar cultivation. Yet, despite efforts to diversify agriculture and industrialize, Cuba soon found itself desperately trying to harvest 10 million metric tons of sugar in 1970. Meanwhile, international agricultural conglomerates rapidly developed sugar substitutes for use in food processing and as sweeteners for the diet-conscious, thus cutting the need for sugarcane even further. Cuba, more than any other economy in the Western Hemisphere, has dramatically demonstrated the risks and rewards that come from dependency on a monocultural crop like sugar.

Since the 1990s, sugar producers have principally complained about the levels of subsidies and import quotas that the United States provides to national producers. Without these subsidies, Latin American sugar could compete in the larger U.S. market. Moreover, U.S. intransigence on this issue has caused much skepticism within Latin America over trade pacts. Latin American sugar producers, as well as other agricultural producers, fear that free trade will still be stifled. Brazil has successfully turned sugar into ethanol on a wide scale, and it is frequently used in place of gasoline, confirming the increasing importance of this crop as a bio-fuel and renewable resource.

See alsoCuban American Sugar Company; Economic Development.


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Wolford, Wendy. "Of Land and Labor: Agrarian Reform on the Sugarcane Plantations of Northeast Brazil." Latin American Perspectives 31, no. 2 (March 2004): 147-170.

                                          Wade A. Kit