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

Posted to the IUF website 02-Nov-2003

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume V, Number 10
October 2003

Contents




IUF: Global Sugar Conference in May 2004

In 1994, the IUF decided that sugar was a priority work area for he Agricultural Workers Trade Group (AWTG) because of its importance in the international agricultural sector, its process of restructuring, and as a result of the merger of the IUF with the international plantation and agricultural workers federation.

Since then, the IUF and its regional structures have developed diverse initiatives in the sector, which have ranged from regional seminars to research and publications (including this newsletter, the Sugar Worker). The activities have been developed against the background of a massive restructuring of the international sugar industry and the need for unions and workers to fully participate in the process of change.

With the support from the German food workers federation NGG, the IUF will hold its first global sugar conference from 19-22 May 2004 in Frankfurt, Germany. The conference is an excellent occasion for affiliated unions and IUF structures to get together and exchange information and experiences, and deal with relevant social, economic and environmental issues in the international sugar industry. The conference is also a welcome opportunity to discuss an IUF position on rights of workers and trade unions in the context of the restructuring of the industry worldwide. Deciding on programmatic goals would help guiding the future work of unions and IUF structures in the sector, consolidating the IUF's role as a spokes-organisation for unions and workers in sugar.

The invitation to attend the conference has already been issued to affiliated unions, and efforts will be made to ensure that the conference has an adequate regional and gender balance. Some initiatives have been taken in preparation for the conference, among them, the Caribbean unions meeting in Guyana decided to set up a working group to draft a regional position paper for the conference (see article elsewhere in this issue), while the Ukrainian Agro Industrial Workers Union, which organizes sugar workers in one of the most dramatically restructured industries in the world, is planning a seminar to discuss their national situation and produce a contribution for the conference.

Some 100 union delegates are expected to attend, and speakers from international and regional sugar groups as well as government and intergovernmental organisations will be invited to address the conference. Unions requiring more information on the conference, contact Jorge Chull�n, IUF Sugar Coordinator, at [email protected], or Sue Longley, AWTG Coordinator, at [email protected]

Brazil: Wage Campaigns in the Northeast

Several thousands cane rural workers were negotiating wages this month in the Brazilian Northeast. The agricultural workers federation in Para�ba (the third largest cane producer in the region) agreed to a minimum monthly wage of 260 Brazilian reais (USD 90.90) up from 240 reais, in effect since 15 October. The agreement was reached between the employers' Sindicato da Ind�stia da Fabrica��o de �lcool no Estado da Para�ba (Sind�lcool) and the rural workers' Federa��o dos Trabalhadores na Agricultura do Estado da Para�ba (FETAG).

Rural workers unions in Alagoas and Pernambuco (the first and second largest producers in the region) are also involved in negotiations. According to the local press, 49 unions affiliated to FETAEG, the Alagoas state rural workers federation, are demanding to bring the monthly minimum wage up from 250 to 320 reais (USD 112.00). It is estimated that some 150,000 workers are hired during harvest time. The dateline for an agreement is 1 November.

In Pernambuco, some 50 unions organised in FETAPE, the Pernambuco state rural workers federation, are demanding the minimum wage be increased from 250 to 350 reais (USD 122.00) per month. Workers also want to discuss productivity bonus.

The poor levels of basic remuneration for agricultural workers, most of them cane cutters hired for the harvest, contrast highly with the formidable expansion of the Brazilian sugar and ethanol complex and its massive influence on the international sugar sector.

A report by Reuters of 23 October, gives a brief account of investments in infrastructure for transportation and shipping of sugar and alcohol. In the next ten years, the report quotes Datagro, a local analyst firm, Brazilian sugar exports are estimated to grow from 15 million to 21 millions tonnes per year, while fuel alcohol (ethanol) shipments would rise to 4.4 billion from some 800 million litres. In the early 1970s, Brazil exported slightly over 1 million tonnes of sugar per year and had no ethanol shipments at all.

The Companhia Vale do Rio Doce, the country's largest rail operator, Reuters continues, is investing USD 24 million to expand its transportation facilities; while Crystalsev, a large exporter of sugar, announced it would build a "dedicated" ethanol terminal at Santos, the country's largest port for sugar exports, with works starting in September 2004. Coimex, a company involved in ethanol with a venture with the Japanese Mitsui, is planning to build an ethanol terminal in Santos as well. Traditional sugar exporters like Copersucar and Cosan, and international trading houses like Cargill and Sucden, have already invested in facilities in Santos, achieving substantial gains. For instance, Cosan, a large sugar company, said the cost of loading sugar in bulk has been cut by two thirds in the ten years since 1993 (from USD 35-36 to 10.50-12 per tonne). Sugar exports from Santos have grown at 21 percent annually since 1998, Cosan added.

Interesting as well are reports from last June that the J. Pessoa Group wanted to try transporting sugar via river to Argentinean ports for export, with an initial shipment of 15,000 tonnes from a mill in Matto Grosso do Sul. If commercially viable, the group expects to export 100,000 tonnes in the next three years using this route. Meanwhile, a recent report by the Gazeta Mercantil (29 October) said that an Egyptian trader, Octo Sugar, is studying new investments in a sugar terminal in the Center-South region. Trade sources said that Egypt imports about 860,000 tonnes of sugar from Brazil per year, roughly half in raws, half as refined sugar.

India: Twenty-four Mills to be Transferred to Private Sector in Uttar Pradesh

The government of Uttar Pradesh announced it would transfer the management of 24 mills owned by the UP State Sugar Corporation Ltd. to the private sector on 30-year leases. Eleven of the mills, said the Hindu Business Line on 23 August, are currently operating, eight are described as in financial difficulties, and five are closed. The mills have a daily processing capacity ranging from 800 to 2,500 tonnes of cane.

It was also reported the Shishir/Kushagra Bajaj sugar group, controlled by the Bajaj Hindustan Ltd., has placed a bid for all 11 operating mills, while other groups are interested in acquiring mills which are located next to their own facilities, as they look to secure the cane areas attached to the mills being privatised.

Private-sector groups have complained that the process has many limitations: the mills are transferred on long-term leases, after which they would revert to the state; the new managers would require government approval for any investment in the factory, including modernization or expansion; the new lessees will not be allowed to reduce the number of jobs and would have to pay the cane at state government-fixed prices.

And Politics and Sugar in Maharashtra

Meanwhile, the Times of India reported on 21 October that the lobbying of the sugar cooperatives in Maharashtra was successful in leading the central government to borrow some 9.47 billion rupees (USD 208.9 million) to support the financially troubled cooperatives mills in the state. Going against a decision taken few months ago, the Maharashtra state government also requested the central government to approve financing capital requirements for 56 cooperatives, which may fluctuate between USD 66.1 and 110.3 million. The newspaper said that individuals linked to a political party, with influence in the state government, control most of cooperatives beneficiaries of the package. The Maharashtra cooperatives have received on-going financial support and loan guarantees from the state government, and last year several financial institutions claimed guarantees for amounts close to USD 66 million.

Czech Republic: No to Merger of Sugar Interests

The Czech anti-monopoly agency, UHOS, rejected in late September a proposed take-over of a Czech unit of the French group St. Louis Sucre by a subsidiary of S�dzucker of Germany, on grounds that it would have jeopardized competition and raised domestic prices. With the acquisition, S�dzucker would have acquired control over 40 percent of the country's sugar industry. S�dzucker acquired St. Louis Sucre in 2001, and the merger of interests was approved in the European Union, but in the Czech Republic was awaiting approval from UHOS.

Three West European companies dominate the sugar sector in the Czech Republic, which has an annual production of 450,000 tonnes of sugar and a processing capacity listed at 41,200 tonnes of beet per day (tdc). The Austrian Agrana, where S�dzucker controls a 43 percent stake, owns two factories (7,500 tdc), while the French St. Louis Sucre controls three factories (11,000 tdc) through Eastern Sugar, a joint venture with the British Tate & Lyle. A third company, with majority participation of the French Union SDA and the German Nordzucker, controls three other factories (14,800 tdc).

The Czech Republic is slated to access the European Union in May 2004, in a process that, among other things, requires the candidate countries to report their sugar balance, as to avoid problems when implementing policy after accession. By mid October, however, the Czech Republic had yet to determine the volume of her sugar reserves, although it had been required to do so by end of September. (In February 2002, the EU said that the new country members - except Cyprus, Malta and Estonia - would have a combined production quota of 2.9 million tonnes of sugar per year, with 445,000 tonnes allocated to the Czech Republic.)

Sugar Trade: US - Central America Negotiations (CAFTA)

A 10 percent increase on the current Central American sugar quota of 126,000 tonnes was offered by the US in the eighth round of negotiations of the Central America Free Trade Agreement (CAFTA), held in Houston, Texas, from 20-24 October. The offer is an extra 12,600 tonnes, which is quite far away from the proposal of an immediate and complete free sugar trade made by the Central American producers.

The Azucareros del Istmo Centroamericano (AICA), which represents Central American sugar producers, said it was concerned with the way sugar negotiations are conducted, but it also considered a positive step that the US had presented a sugar proposal. AICA's opinion is that being the US a deficit country is able to take more sugar from the region; some ventured the idea that, because of the deficit, the region would not need to reciprocate the US on sugar trade. An open sugar market or a substantial increase in their quota would represent a major boost to the Central American sugar sector, which, according to AICA produces high quality sugar at low cost, and holds great importance to their countries. Asked about the CAFTA negotiations by Sugar Worker, the Salvadoran sugar association said that the sector provides some 300,000 direct and 2.5 million indirect jobs in the region, accounts for 3 percent of the regional gross product, and is a key element in the stability of rural areas, where about 45 percent of Central Americans live. In April this year, AICA's executive director stated the association's position: the biggest access possible (to the US market) in the shortest time possible.

An immediate free trade in sugar is almost impossible to achieve because the opposition of the powerful lobby of the US sugar and sweetener sector, which does not favour the inclusion of sugar in any bilateral or regional trade talks, and has proposed instead that the WTO is where negotiations should take place.

The Central Americans have mentioned some options to a complete free trade: one is a five-year phase-out of import tariffs; a second is to increase the sugar quota (AICA has suggested an amount between 200,000 to 500,000 tonnes per year) and, third, and related to the latter, to fix an increasing annual rate of the quota, until free trade is achieved: the lower the increase of the quota, the higher the rate of its annual growth. Increasing the quota would include redistribution among the regional producers. Notwithstanding the enthusiasm of the Central American sugar producers, US sources were of the opinion that liberalising the sugar trade might be eventually agreed at the political level, probably in a meeting of ministers, or even presidents.

On other areas, a key aspect of the negotiations, from the Central American perspective, was the integration of the benefits of the Caribbean Basin Initiative (CBI) within CAFTA. The US agreed to zero tariff to 99 percent of the industrial products included in the CBI, while Central America reciprocated with free trade on 80 percent of industrial products from the US.

After the failure of the WTO ministerial conference in Cancun (September), it was not a surprise that agricultural trade liberalization was also a major issue in the eighth CAFTA round. In general, it is expected that trade liberalization in sensitive products (including some agricultural products) would require a transition period, which may be of 5 to 15 years. The US has proposed that some products be allocated quotas, with safeguards against import surge to be based on prices of reference and volume.

On labour issues, the negotiations agreed that each country should "effectively" enforce their labour laws, and still to be decided are fines in case of labour laws violations and international cooperation.
The ninth round of negotiations is scheduled for 8-12 December in Washington, preceded by a meeting of chief negotiators (9 November) and a ministers' meeting (18 November), just before the Free Trade Area of the Americas (FTAA) meets in Miami. The CAFTA negotiations include five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua (neither Belize nor Panama participate in CAFTA).

A draft of the agreement is expected to be ready for discussion in the national legislatures in January 2004, while the US negotiating team expects the text to be introduced in Congress in June or July next year, an election year, with the potential to make CAFTA another political issue.

IUF Caribbean: Sugar Meetings Held in Guyana

From 6 to 10 October, the IUF regional office and affiliated sugar unions in the English-speaking Caribbean met in Georgetown, Guyana, with the occasion of the First Women Sugar Workers Seminar and the Fifth Regional Sugar Meeting.

The meetings were attended by thirty delegates, in representation of representing eight sugar unions (from a total of nine in the region), which organise an estimated 45,000 workers in the six sugar-producing countries in the English-speaking Caribbean: Barbados, Belize, Guyana, Jamaica, St. Kitts, and Trinidad. Local unions, GAWU and NAACIE, hosted the events.

The Fifth Regional Sugar Meeting met from 8 to 10 October, the first since 1999, to work three main areas: The first was a review of recent developments in the Caribbean industries, through presentations by union delegates, a representative from the Sugar Association of the Caribbean (SAC), the chairman of the Guyana Sugar Corporation (GuySuCo), and the Guyana Minister of Trade. The regional industry has witnessed an acceleration of the restructuring process, with the most dramatic case in Trinidad & Tobago, where Caroni (1975) Ltd., the state-owned and the island's sole cane processor has been dismantled in a process that suffered from a complete lack of social dialogue. Barbados will reduce the number of mills from three to one by year 2005, and Jamaica, having closed one mill, wants to redevelop the industry under state ownership. The future of the industry in St. Kitts continues undecided, in contrast with Belize and Guyana, where sugar production has been consolidated and expansion plans are under discussion and/or implementation. Notwithstanding all changes, something still remains unchanged: the importance of sugar for the economic, social and political stability of countries in the region.

A second area was an evaluation of the national activities in 2000-2003 in the sector, which followed the decision of the 1999 regional meeting to bring the IUF's information, analysis and network to the unions' grass-root membership. Not less than 15 national activities took place in all the English-speaking Caribbean sugar countries, using different formats: from conferences and seminars, to field visits and estate-level workshops. Delegates to the meeting agreed the activities have contributed to building unions' capacities as their membership was exposed to IUF's regional and international work, while raising the unions' profile in the national sugar scene.

And the third area was the discussion and decision on strategic goals for the 2004-2006 work program. Since communication is fluid between the unions and the IUF, delegates recommended strengthening bilateral contacts; that special focus would be placed on women activities (see below) and lobbying activities should be developed in view of the expected changes in the international trade agreements (in particular with the European Union). Part of the program for the meeting was a visit to LBI sugar mill and plantation.

The First Women Sugar Workers Seminar in the Caribbean was held on 6 & 7 October, and was attended by fifteen women delegates from seven unions. They were also delegates to the regional meeting - while the delegates to the regional meeting were invited as observers to the seminar.

The Women seminar built on the national activities of 2000-2003, as many of the delegates had taken part in those activities and were familiar with the IUF's work. The seminar decided on future work areas, among them: an on-going research and actions on equality on employment and wages, programs on Health and Safety, including joint union-management programs on HIV/AIDS in the work place, and activities to encourage the participation of women in union structures and leadership. The recommendations were integrated in the 2004-2006 regional program.
Both meetings also agreed to draft a regional position paper and on women in the sugar industry as contributions to the IUF global conference. (See article in this issue.)

In response to the difficult situation in Trinidad & Tobago, the meetings passed a resolution calling the Trinidadian government to support the country's cane farming community and ensure successorship rights to the All Trinidad Sugar and General Workers Union (ATSGWTU) in the companies that have replaced the dismantled Caroni (1975) Ltd. The Women Seminar knew first-hand about the deterioration of the industrial relations in Trinidad, as the employer of one delegate denied her full union leave to attend the IUF meetings. A letter of protest was sent to the employer. (A report on the Guyana meetings is available from Jorge Chull�n at [email protected].)

The Caribbean regional sugar program receives an on-going support from the LO-TCO in Sweden and, since 2002, has been expanded to include a systematic work in the regional bananas sector.

Company News

Chile: Restructuring of IANSA

IANSA, the sole sugar beet processor in Chile, announced a restructuring plan to improve productivity and competitiveness, through which the company would reduce its labour force by 15 percent and sell non-core businesses. Management said that from a total labour force of about 660, around 100 people would be laid-off, with 75 already retrenched. (The announcement might be related to the government's proposal to liberalize the sugar sector with the removal of the "price band," a tax on less expensive imports that levels their prices with prices of local production. In July, some 3,000-beet farmers in Linares, Central Chile, clashed with police while protesting against this proposal.)

Ebro Puleva, Spain's largest food conglomerate and sugar producer, controls a 51 percent stake in Campos Chilenos, which owns 42 percent of Empresas IANSA. IANSA is a food processor operating in sugar, tomato paste, fruit juices, frozen food and similar lines.