New Start for Sugar

Hawaiian sugar growers have long been in an uncomfortably tight box. Their per-acre yields make them the most efficient producers in the world, but their high labor costs and long sea haul to market restrict them to selling in the high-priced, protected U.S. market. There, growth possibilities are virtually nil owing to 1) the public's fondness for dieting, 2) Government quotas on sales by foreign and domestic sugar producers.

Even though Congress threatens to slash Cuba's sugar quota in reprisal for Fidel Castro's seizure of U.S. property, Hawaii is in no position to step up its production to benefit. So, last week, Hawaii's leading sugar company, American Factors, Ltd., announced a plan that it hopes will help it break out of its box. It set up a new organization called Sugar International* to equip other countries with a Hawaiian-style sugar industry.

While per-capita sugar consumption in developed countries has leveled off or even declined, it is soaring in the rapidly developing countries of Asia, Africa and Latin America. This trend was first spotted two years ago by President Boyd MacNaughton, 51, of Hawaii's second largest sugar company, C. Brewer & Co., Ltd., which arranged to design and operate a 25,000-acre sugar plantation for Iran. Said MacNaughton: "If we want to grow and expand in the sugar business, we have to do it outside Hawaii and the U.S." Into the Sudan. Both Sugar International and Brewer are seeking a go-ahead from the four-year-old Republic of the Sudan to set up a joint U.S.-Sudanese privately owned sugar industry estimated to cost $25 million. The sugar plantation and mill would also set a free enterprise beacon in a key area of Africa. Many Sudanese leaders lean toward a state-owned industry, are being encouraged in that direction by the offer of easy credits from Yugoslavia and Czechoslovakia.

But the U.S. State Department feels it is so important to show the Sudan a successful private enterprise industry that it is arranging to fly a delegation of government leaders to Hawaii to see how U.S. methods produce 88 tons of sugar cane per acre (five times the Cuban average). Sugar International thinks that opportunities to set up new sugar industries are virtually unlimited, is studying prospects in Jordan, Ghana, Kenya, Angola, Tanganyika and Uganda.

Trouble in Paradise. Few Hawaiians ever thought they would see the day when sugar planters would want--or need--to look beyond their own verdant cane fields. In the old days, sugar planters dominated Hawaii's economic, political and social life. But in the last 20 years, sugar's share of the Hawaiian gross product dropped from 21% to 8%.

The planters' hold was further loosened in 1945-46, when the International Longshoremen's and Warehousemen's Union organized the plantations and mills and conducted a successful 79-day strike. There was a four-month strike in 1958, and today Hawaiian growers pay the highest annual wage scale in the sugar world ($15.63 a day v. $3.80 in Puerto Rico). But there is a compensation: the union cooperates to eliminate unnecessary jobs through early retirement and even repatriation of late-arriving Filipino immigrants. Result: the Hawaiian sugar industry is close to being automated. Only 13,000 production workers are needed to turn out more sugar than 55,000 produced prewar.

Looking ahead, sugarmen see good opportunities in Hawaii by diversifying into non-sugar lines, as some companies have already done. Another possibility is real estate: though they occupy only 6% of Hawaii's total land area, the sugar plantations have a much bigger share of the flat, cleared land ideal for factory sites, housing and tourist developments. Some 38% of sugar land is leased, and already planters report that lessors are more and more reluctant to tie it up in agriculture when the most attractive long green waving in Hawaii is increasingly not sugar cane but the developer's dollar.

* Other members: Hawaiian Dredging & Construction Co. Ltd. and J. H. Pomeroy & Co. Inc., a San Francisco engineering firm. Both Hawaiian Dredging and Pomeroy, which have done construction work for the sugar planters for years, are old hands at development projects; Hawaiian currently is in a three-company U.S. combine deepening the Suez Canal.

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