A mill designed to handle 100,000 bags of sugar in a crop season will require about $1,000,000 investment, including $150,000 for running expenses. The area of cane necessary to supply such a mill is 6,000 acres. This, if owned and worked by the mill, would call for an additional $500,000 investment. As has been said, however, the tendency is to secure the supply from independent growers, under contract, in the same way as the beet-sugar mills of our western country deal with the neighboring farmers. In this case, the planters receive five per cent. of the cane in sugar, or its equivalent in money. Sugar cane in Cuba contains from ten to twelve per cent. of sugar, of which the mill retains five or seven per cent. Plantation and mill management are generally separated, in few cases combined.
| Price of sugar at mill | per 325-pound bag | $10.27 |
| Railroad freight | “““ | .56 |
| Wharf expense | “““ | .025 |
| Ocean freight | “““ | .39 |
| Landing | “““ | .055 |
| Duty per pound 1.36 cents | “““ | 4.42 |
| Expense per bag | $15.72 |
The calculation of returns is based on the very conservative rates of ten per cent. extraction and a price of 2.75 cents per pound. The price of sugar is subject to great and frequent fluctuations, but there are mills in Cuba that produce a twelve per cent. average constantly.
The 6,000 acres (180 caballerias) presupposed will produce 325,000,000 pounds of cane, and from this will be extracted 32,500,000 pounds of sugar, or the equivalent of 100,000 bags of 325 pounds each.
| 32,500,000 pounds of sugar at 2.75 cents | $893,750 |
| Due the planters, 5% of total | 446,875 |
| CHARGEABLE TO THE PLANTERS | |
| Expenses per year about | $110,000 |
| 5% interest on $500,000 | 25,000 |
| Cutting and hauling | 185,000 |
| Loss on transportation, etc. | 6,375 |
| Profit for plantation | 120,000 |
| $446,375 | |
| CHARGEABLE TO MILL | |
| 20% expense of yield | $180,000 |
| 5% interest on $1,000,000 | 50,000 |
| Net profit | 216,875 |
| $446,875 | |
The beet-sugar competition of late years, and particularly that of the German product which is supported by a bounty, has had a very depressing effect upon the Cuban industry. This was considerably relieved by the countervailing duty placed upon bounty sugar by the Dingley Bill of 1894. The effect of this was to place the latter products on exactly the same footing, so far as the United States market is concerned, as though they did not enjoy the advantage of a bounty. The competition is still severe, however, on account of the vast quantity of Germany’s production and the lower cost of it. This is due, not to cheaper labor, but to more scientific and intensive methods. In fact, the future value of Cuban sugar is dependent not upon the cost of producing it so much, as upon the cost of production in Germany, and the extent to which the commodity may be admitted duty free into the United States from Hawaii, the Philippines and Puerto Rico.
On this subject, Mr. E. F. Atkins is quoted as follows in Industrial Cuba:
“With new capital and skill the average cost of production in Cuba can be reduced, and with either free sugars or a uniform rate of duty in the United States, assessed upon all sugar (a countervailing duty to offset foreign bounties being always maintained), she can hold her own and recover her prestige as a sugar-producing country, but the margin of profit in sugar manufacture is so small, and the world’s capacity for production so great, that Cuba cannot recover her prosperity in the face of any advantage to be given to sugars from other countries entering the United States. At current prices in Cuba, cane is worth to the planter the equivalent of $2 to $2.50 per ton net, out of which price he must pay for his planting and cultivation, cutting and delivery to the nearest factory or railroad point. As the cost of cane production consists almost entirely of labor, and wages in Cuba, for some years previous to the insurrection, ranged about the same in Spanish gold as similar work commanded in the United States, the profits in this branch of the business have not been great, and have been dependent upon skill in management, quality of lands, and proximity to the factories.
“The supply of labor and rates of wages in the future are now most serious questions to the sugar producer in Cuba, and present the greatest obstacle to reduction of cost. For supplies of cane the manufacturer must depend either upon his own resources, or upon large planters. Factories to be operated at a profit must be kept running day and night, and cane, owing to its nature, must be ground immediately it is cut. The grinding season in Cuba