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The Sugar Worker, September 2003. News from the Sugar Sector.

Posted to the IUF website 03-Oct-2003

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume V, Number 9
September 2003

Contents




Pakistan: Defending Union Rights

With a weeklong hunger strike by a union leader, followed by a massive demonstration on 24 September in Badin City, the Army Welfare Sugar Mills Union (AWSMU) successfully defended union and labour rights in the dispute with management in the Army Welfare Sugar Mills.

The dispute is closely related to events that ensued after the Pakistan Sugar Mills Workers Federation (PSMWF) was created last May. The AWSMU is a member of the federation. The day after the setting up of PSMWF, management at the Army Welfare Sugar Mill told the union to stop activities and dissolve itself, on the argument that the mill was losing money and it was the only business of the Army Welfare Trust (AWT) where a union existed. Although the union was registered in 1983 and has collective bargaining status, the district Labour department was asked to cancel its registration. After protests and mobilization by workers, and an international solidarity campaign by the IUF, management decided in late June to retract itself from its decision not to recognize the union.

In September, however, management started some moves to harass the union and workers, such as non-consulted transferring workers to different areas, terminating loan programs for workers, administratively charging the union's general secretary with organizing meetings during working hours, and stating that as of 3 September the collective bargaining agreement would not be in effect, even when clauses in the CBA stipulate that while a new agreement is not signed, the agreement remains in place. The union's general secretary went on a hunger strike, while workers strongly protested management's decisions.

On 24 September, a massive demonstration in favour of the sugar workers shut down the town of Badin with hundreds of workers protesting at the front gate of the Army Welfare Sugar Mills, and dozens of women leading a procession through the town and staging a sit-in at the Kazia Wah Chowk place, a central location in Badin, reported Dawn in its Internet edition. Labour authorities intervened and the mill's management withdrew the administrative charges against the union leadership and commit itself to respect the collective bargaining agreement. The union and management agreed to wait for the Labour Court's decision on the union's registration. The district Labour administration set up a committee to monitor the implementation of the agreement between the union and management.
The Army Welfare Sugar Mill is Badin is owned by the Pakistani military, which have businesses in several economic sectors, purportedly to benefit military personnel. (With reports from Qamar ul Hassan.)

Trinidad: Restructuring, Transparency and Workers Training (or lack thereof)

In early September, the University of the West Indies (UWI), St Augustine, made some recommendations to the government regarding the future of the sugar industry and the fate of the assets of the now dismantled Caroni (1975) Ltd. The recommendations are a result of a symposium held by UWI scholars last April.

The UWI says the government must follow the guidelines of the National Physical Development Plans when deciding the future use of Caroni lands, and any departure from the Plan should be done through the legally stipulated process, which includes discussions in Parliament. The UWI also recommends establishing a process of consultation and information-gathering with ex-Caroni workers to provide the government with a profile of the labour force, which would identify skills available, needs, and possible workers' participation in future economic activities. Also, the UWI recommends setting up an independent committee to evaluate potential investors who may want to acquire Caroni lands, while the Ministry of Agriculture should establish an independent agency to develop agricultural programs. Above all, the UWI recommends transparency in the process of restructuring the industry. The UWI's call is only the most recent shown of the concern of national groups about the restructuring of the sugar industry, the future of the workers, and the fate of resources owned by Caroni.

In statements reproduced by the local press, the Minister of Agriculture said he was "really anxious" to start with the next stage in the training of workers. The papers explained that the phase is "collating information" on workers to learn what their "preferences would be for the future." The minister added that some workers want to get into agricultural production, others be trained in "different lines of occupation," others would like to pursue academic development. The minister made his statements at the same time that the UWI published its recommendations, a coincidence that highlights the worrying aspects of the situation: the government recognizes it had not put in place any program to support the workers in the transition period, a process that was inevitable once the government said that if the workers did not take the separation of employment package (VSEP), they would be retrenched.

By late September, it was also reported that the military were to be in charge of some of the training programs. A spokesperson for the Defence Forces said that training would be given in engineering, beauty culture (sic), and first aid care. "The army, the source said, has a number of soldiers who were trained at medical infirmaries abroad and their experience will be made available to the workers." (Trinidad Express, 29 Sept. 2003) After successfully completing the courses, workers would be certified.

The future of Caroni resources appears as uncertain as the training programs for workers, and especially worrisome is what would happen to the approximately 70,000 acres of Caroni lands. There has been news that 3,000 former Caroni workers have applied for agricultural land, but it is not clear how much land would be transferred to them or what sort of land this would be.

On the other hand, a spokesperson for Amarama, a recently created group that comprises local and foreign investors and former Caroni employees, met with the ministers of Agriculture and Public Administration on 29 September to present a proposal for the acquisition of Caroni assets. According to the spokesperson, a chartered accountant practicing in Trinidad, Amarama would create 10,000 permanent jobs over the next five years "with no reliance on the Treasury." The proposal is based on a new tripartite company, with participation of government, former employees and private investors, and would develop modern agriculture and non-agricultural businesses. Besides these general statements reproduced by the local press, there was no hard information on the businesses proposed, capital required, sources of funding, methods to ensure participation in the tripartite structure, and other key aspects. Not surprisingly, the Minister of Agriculture said that the government was not "keen" in transferring Caroni lands to one company - the state agency Estate Management and Business Development Co. was created last year to manage those lands - and reaffirmed that the newly created Sugar Manufacturing Co. Ltd. would process cane from independent growers and refine sugar.

Meanwhile, management of the Sugar Manufacturing Co. (SMCL) said that preparations for the 2004 harvest are underway. Around 55 employees were hired by Caroni to work on technical repairs to the Usine St Madeleine, work that should be completed by 30 November.

Mexico: White Sugar Imports Authorized

On 26 September, the Mexican secretariat of economy authorized the importation of 112,000 tonnes of sugar in the September-December period, in view of the low inventories, the need to maintain reserves, and the possibility that local production would not be enough to cover consumption. Import quotas would be allocated to importers through FEESA, the government agency managing the mills expropriated in September 2001. Imports will pay a USD 36.00/tonne tariff, about 1.6 US cents per pound. (In early September, trade sources said that Mexican buyers had bought 70,000 tonnes of Brazilian white sugar at USD 234.50 per tonne, with October and November dates for delivery.)

This would be the first time in ten years that Mexico needs to import sugar; a situation which is related directly to the 20 percent tax on soft drinks using high fructose corn syrup (HFCS), introduced in January 2002. With the implementation of the North American Free Trade Agreement (NAFTA) in the 1990s, imported and domestically produced HFCS started to replace sugar in the Mexican soft drink industry, one of the largest in the world; and by late 2001, it was estimated that soft drinks accounted for about 550,000 tonnes of HFCS. Since the introduction of the tax, HFCS sales have fallen to 110,000 tonnes, as sugar became, once again, the sweetener used by the sector.

Domestic HFCS production was about 360,000 tonnes per year, with two companies operating: Arancia and Almidones Mexicanos. Arancia is a subsidiary of Corn Products International (CPI), one of the largest corn refiners in the world, while Almidones Mexicanos is a joint venture of Archer Daniels Midland (ADM) and Tate & Lyle. (In January, CPI said it would seek USD 250 million compensation from the Mexican government, for costs and past and potential loss profits, because of the HFCS tax.)

On the other hand, the Mexican sugar industry was not able to satisfy this market and the sugar balance became tight, with domestic prices increasing by 10 percent, to about USD 600 per tonne in 2003, according to sources in the Mexican trade ministry.

Mexican sugar production in 2002/03 was 4.928 million tonnes, tel quel, up from 4.865 million the previous year. Production in the 2003/04 crop is estimated at 5.2 million tonnes. Consumption was put at 5.32 million tonnes in 2002/03 and is estimated at 5.34 million in 2003/04.

European Union: Sugar Reforms To Be Discussed

With the publication on 23 September of an impact assessment report, the European Commission has launched a process to reform the European Union (EU) sugar regime. Formal talks are expected to start in October. The report identifies three possible policy directions and assesses their probable impact on the EU sugar market:


The study also assesses the probable impact of the sugar reforms on the EU social and environmental areas, as well as on foreign suppliers.

The sugar reforms are proposed along with reforms for the olive oil, tobacco and cotton sectors, and follow the agreement for the reform of the Common Agricultural Policy (CAP), reached last June. The basic policy change agreed is that the CAP would no longer link subsidies to the volume of production, and subsidies would be replaced by direct assistance to farmers. Countries would be able to grant some support in order to avoid major dislocations in the agricultural production of marginal regions. The sectors to be reformed in 2004-2005 include, among others, milk, rice, cereal and durum wheat.

The proposed reform adds extra pressure on the EU sugar regime, which is also facing a challenge presented by Australia, Brazil, and Thailand at the World Trade Organisation (WTO) on possible illegal subsidies on EU sugar exports; and the enlargement process, which would integrate ten new countries by May 2004, among which are sugar producing countries.

(A summary of the impact assessment report is available at: http://europa.eu.int/comm/agriculture/publi/reports/sugar/index_en.htm)

United States: Sugar Loan Rates and Marketing Allotments for 2003/04 Crop

On 30 September, the Department of Agriculture of the United States (USDA) announced the levels of the sugar loan rates, and the marketing allotments and company allocations in the 2003/04 crop; two key policy elements of the domestic sugar program.

The sugar loan rates average US 18 cents per pound (c/lb) of raw cane sugar and 22.90 c/lb of refined beet sugar, unchanged from last year. Rates are adjusted for location and freight differential, however. For raw cane sugar, loan rates go from 17.33 c/lb in Florida and Hawaii (18 c/lb if the latter is stored in the mainland) to 18.44 c/lb in Louisiana. For refined beet sugar, rates vary from 21.99 c/lb in Idaho, Oregon and Washington State to 23.80 c/lb in Michigan and Ohio. Sugar loans are available through the Commodity Credit Corporation (CCC), with the requirement that processors pay growers a minimum price per tonne of cane or beet. The minimum price for beet is that agreed on the contract between processor and grower. The minimum price for cane, which can be adjusted for quality, goes from USD 21.23 per gross short ton (1 metric tonne = 1.1023 short ton) in Texas to USD 26.18 per short ton in Florida. (Puerto Rico is mentioned with USD 14.94 per gross ton, but Puerto Rico will not produce sugar in 2003/04: the industry there has in fact disappeared.) Failure to pay the minimum price makes processors ineligible for the sugar loans.

Sugar loans are "non-recourse": processors can put the sugar as collateral for the loan and deliver it to the CCC ("forfeiting" it), if they are unable to sell it at a convenient price. The government has no choice but to accept the sugar as payment for the loan and interests. The previous sugar program included a one-cent per pound penalty on forfeited sugar, but such provision was removed from the 2002 Farm Bill.

On 30 September as well, the USDA announced the marketing allotments and company allocations on beet and cane sugar, which were reintroduced in the 2002 Farm Bill to control the supply of domestically produced sugar. For the 2003/04 crop, the USDA set a total of 8.550 million short tons (7.758 million metric tonnes) in the "overall allotment quantity" (OAQ). The beet sector receives a 4.215 million-tonne allocation, while the remaining 3.54 million goes to cane. The OAQ is divided among processors of beet and cane based on three criteria: past marketing, processing capacity, and ability to market. (Puerto Rico's allotment was redistributed to other cane processors.)

WTO: Trade Liberalisation Talks Collapse, Again

That the Ministerial Conference of the World Trade Organisation (WTO) in Cancun, Mexico (10-14 September) had little chance of success was known even before negotiators descended on the Mexican tourist resort. In agriculture, Cancun had the task to advance the trade liberalisation commitments from Doha: increasing market access, eliminating trade-distorting domestic support and export subsidies; issues relevant to international trade of agricultural products since the days of the GATT.

The WTO work in agriculture run into difficulties very early: negotiators were unable to agree on the 'modalities" to negotiate tariffs and subsidy cuts before the deadline of 31 March 2003, and a "framework" was prepared for Cancun instead. The Cancun meeting also failed to draft the members' commitments on liberalisation, the second step foreseen in the Doha timetable. The next two original deadlines are 1 January 2005 to complete negotiations, and 1 January 2006 to start implementing the agreement.

In an interesting development, Cancun saw forces other than powerful countries at work. The so-called G21 led by Brazil (with a commanding presence in several agricultural products traded internationally), and including India and China, pressed hard to discuss farm subsidies in the industrialised world; while industrialised countries, like the EU and Japan, wanted the "Singapore Issues" of foreign investment, competition, custom, government procurement in the agenda. Negotiators were unable to negotiate: Cancun collapsed.

Whether the G-21 will maintain its internal cohesion is to be seen, but in Cancun, it did amass a political clout able to challenge the WTO bipolarity of US-EU. Besides the G21, other developing countries also banded together: the Africa, Caribbean and Pacific countries (ACP) and least developed countries (LDCs), among others, combined into a 90-country group that might gain strength for future negotiations.