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The Sugar Worker, January 2004. News from the Sugar Sector

Posted to the IUF website 03-Feb-2004

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume VI, Number 1
January 2004


Jamaica: Unions Reach New Agreement

A two-year collective agreement on wage and benefits for sugar workers was signed on 19 January between three sugar unions and the Sugar Producers' Federation (SPF). The agreement grants a 10 percent increase in all daily and task rates for each of the two years. Workers will get a 2.5 percent crop bonus calculated on gross earnings in Year 1, but there is no bonus in Year 2. Clothing allowance is 1,393 Jamaican dollars in Year 1, and $1,532 in Year 2, while out-of-base and overtime meal allowances are both set at $152 and $167. There is also an increase of $10,000 in Group Life Insurance, and from $50,000 to $70,000 in personal accident coverage. (All figures in Jamaican dollars, at USD 1.00 = JMD 60.00.)

According to the agreement, an list of medical facilities for workers will be completed by 30 April 2004, to help identifying improvements needed and to evaluate what could be implemented at this time. Also, the employers' SPF will study improving the workers' hospitalisation scheme, and the parties will continue discussing pension plans.

The parties also agreed that jobs because of mechanical harvesting would follow the existing CBA clauses for new jobs, while unions want higher wages for operators of the machinery. The unions are interested in a broader discussion on mechanical harvesting, which already several estates are introducing, because not all fields are suitable to be harvested mechanically and, in theses, manual harvesting is a better option. But, according to a union source, the companies said that there is a shortage of cane cutters that has to be filled by the mechanical harvesters.

The agreement would be in effect from 1 January 2004 or the start of the 2003/04 harvest whichever is earlier. The Bustamante Industrial Trade Union (BITU), the University and Allied Workers Union (UAWU) and the NMW, signed the agreement in representation of the workers. The first two are affiliated to the IUF.

In related news, in early January the Sugar Company of Jamaica (SCJ) paid 80 million Jamaican dollars in redundancy to some 450 former employees of Hampden Estate in Trelawny. The workers had received 22 million Jamaican dollars in lieu of notice last August, and were promised redundancy payments by year-end.

Meanwhile, the government said it would not act as guarantor for investors who plan to build a state-of-the-art factory in Trelawny, reported The Observer on 30 January. Two years ago, the All Island Jamaica Cane Farmers Association (AIJCFA) and two US companies, Arkel Sugar Inc. and Inter-American Transport and Equipment, submitted to the Planning Institute of Jamaica a project to build a new refinery with an annual production capacity of between 60,000 and 70,000 tonnes of sugar, and a co-generation plant. Total cost was quoted at USD 120 million.

United States: Florida Sugar Industry to Compensate Cane Cutters

A summary judgment issued by a Florida Court in late November 2003 ordered Florida sugar companies to pay over USD 50 million in back wages, having found "the Florida sugar industry guilty of systematically underpaying cane cutters" hired under the so-called H-2A working visa. The case started several years ago, and a trial to determine damages will begin on 27 July.

Caribbean cutters used to harvest Florida's cane for decades, with as many as 10,000-cane cutters being hired annually in the 1980s. Their numbers have dwindled, however, because of mechanization. The report said that after the Court's ruling, companies have "dramatically" increased their orders for mechanical harvesters, which might eliminate over 2,500 jobs. For instance, the US Sugar Corporation, which planned to acquire eight machines, increased its order with an additional 11 harvesters. The Fanjul Family's businesses of Okeelanta Corporation and Osceola Farms would buy 13 new machines, and Atlantic Sugar, where the Fanjuls have a 51 stake, would buy another 12. One machine, said the report, can replace 60 cane cutters, and costs USD 175,000. (Based on F.O.Licht's ISSR, 7 January 2004.)

Trinidad: Uncertain Future for the Industry

Just ten days into the 2004 harvest, pan boilers walked off the job in the Usine St Madeleine demanding longer contracts: unions sources said last year that the newly created Sugar Manufacturing Company Ltd. (SMC) would hire personnel on short term contracts to avoid social costs and prevent employees from organising themselves. The industrial action is having a negative impact on the start of a harvest that is crucial for the future of the sugar industry in the island.

The 2004 harvest started on 15 January with uneasiness prevailing among cane farmers. Although the government dropped the proposed system of cane payment based on quality because of its inability of implementing it in time - and the opposition of farmers -, the next set of problems appeared around the operation of cane weighing scales that until last year were run by Caroni (1975) Ltd., and were to be managed by the farmers starting 2004. One cane farmer association was awarded the management of about 80 percent of the scales, only to abandon the scheme before the harvest started, according to local papers. Independent operators are managing some scales, but there are reports of problems in the delivery and reception of cane, with several farmers complaining that they have to wait for the operators (and their close contacts) to deliver their cane first, before they are able to deliver their own production.

Under the restructured sugar industry, the SMC has a production target of 60,000 tonnes of sugar in 2004. To reach this goal, farmers have to deliver some 600,000 tonnes of cane, in addition to the 150,000 tonnes supplied by state-owned lands, and the St Madeleine factory has to run smoothly, with no breakdowns, technical or otherwise, during the 120-day harvest, which ends on 15 May.

The signing of a sugar trade deal between Guyana and Trinidad in early January added to context of the shaky start of the harvest: Guyana will supply raw sugar for processing in Trinidad's refinery, which is also run by the SMC. In 2003, Guyana delivered about 26,000 tonnes of sugar to Trinidad, and observers believe that the volume in 2004 would be much higher. Interestingly enough, after the deal was signed, Trinidad's Prime Minister said that his country -like other countries - is cutting down sugar production, while Guyana, because of investments and developments, is able to produce less expensive sugar. "Get accustomed to Guyanese sugar," wrote the Guyanese daily Stabroek, apparently quoting Trinidad's Prime Minister.

On the other hand, at least one commentator has raised the question of the potential loss of preferential markets: if the 2004 harvest fails to produce enough sugar for Trinidad to fulfil its quota in the European Union, he says, and unless the country can argue and prove "force majeure" (like natural disasters or droughts), the EU might decide to cut the current quota in the amount by which the country falls short. Government officials in Trinidad said that they expect the sugar industry to earn about USD 27 million through exports to the preferential markets in the EU and the United States.

Fiji: Saving the Sugar Industry?

The Fijian government announced that rescuing the sugar industry would be "top priority" in 2004, when it intends to lay the foundations for reorganising the sector. Two studies already in progress are examining the industry said the government, one by the Asian Development Bank (ADB), the other by a team of Indian sugar experts, and their recommendations would be combined and presented to Cabinet.
The government also said that an immediate resolution to land leases issues should precede the rescue program: hundreds of cane farmers of Indian background, whose leases have expired since 1997, have left the industry, a move that had a negative impact on cane growing. The government wants all lands under the Agricultural Landlord and Tenants Act (ALTA) to be transferred to the Native Land Trust Board, which, it believes, would help resolving land leases problems.

In April last year, the industry was supposed to have started a "restructuring" program that, in part, was stalled because of politics in the sector. It was then said that a project with the ADB, worth USD 105 million and already "in the pipeline," was to assist farmers to switch from cane growing to other crops or to leave farming altogether. Support from the ADB, and the European Investment Bank, was conditional on the industry becoming a profitable business.

Sugar groups, including a farmer association that represents many of the estimated 22,000 cane growers of Indian background, resisted the 2003-restructuring plan. The association said that the proposal was mainly a rescue plan for the Fiji Sugar Corporation (FSC), which is seen as a major cause of the crisis and is in deep financial problems. In addition, the plans included specific issues affecting the farmers, such as the transportation of cane by road instead of using the existing railroads, introduction of a quality-based system of payment for the cane, and the elimination of the "collective sugar master awards" with the division of the FSC in four independent companies, each controlling one mill. Sugar workers also opposed the proposal because of the massive retrenchment it demanded.

The sugar sector remains a major factor for the country's political, social and economic stability. Should the industry collapse, it is estimated that the jobs of about 25 percent of the 840,000 Fijians would be affected, directly or indirectly. Local papers said that the industry has been crippled by a combination of political influence, poor management, loss of skilled labourers, and the land leases problems that pushed cane farmers of Indian background away from the sector.

European Union: Considering Sugar Reforms

The sugar sector in the European Union is mulling about the reform options for the EU sugar regime, as the European Commission proposed last September. One of the options is a full liberalization, which implies the abolition of the price support and production quota systems, and the removal of import tariffs and quantitative restrictions on imports. To mitigate the impact on producers, the Commission proposed direct payments, similar to the reform of other sectors in the Common Agricultural Policy (CAP). The direct payment de-links subsidies from production, which, several analysts have identified as an important cause for the agricultural overproduction in the EU.

The EU sugar industry is concerned that as a result of a full liberalization, production might be cut in close to 75 percent, while the European Beet Growers' Association (CIBE) said that job losses would be significant among the estimated 500,000 jobs dependent on the current common market organisation (CMO) sugar regime.

The European Commission outlined two other options: extending the present regime beyond 2006, and reducing the support price for sugar. A fourth option, not submitted by the Commission but supported by sugar producers, calls for a system to control and manage sugar imports.

Discussions on the future of the EU sugar regime involve several actors and aspects. In addition to the impact on traditional suppliers, like the Africa, Caribbean and Pacific (ACP) countries, and the least development countries (LDCs) benefiting from the "Everything But Arms" initiative, the discussions may also refer to the corporate configuration of the EU sugar industrial sector. The industrial sugar production is dominated by a relatively small number of companies: about 30 companies control the 135 beet processing factories and six refineries operating in the EU; in some of the 15 EU countries, only one company holds the entire production quota, and, in some cases, one company dominates the processing in more than one country. On the other hand, sugar beet farmers constitute a major force in the politics of some European countries. At the EU level, there are some 275,000 beet farmers.

On another front, the European Union is also concerned about the possibility of sugar stockpiles being built in the countries slated to join the Union next May, with the intention to take advantage of price differentials: European sugar is sold domestically at three times the world price. To avoid such situation, the EU may impose heavy fines to those countries with an unusual large volume of stocks. Last December, the Commission said it would use statistical data to assess the expected volume of stocks in the new country members, which would be announced by 31 October 2004. The country that does not remove the surplus by 1 May 2005, submitting proof that it has actually disposed it by 31 July, would pay a fine based on the highest import duty applicable in the period from 1 May 2004 to May 2005, plus an administrative fee. Based on current levels, such fine would be about 550 euros per tonne of white sugar, about USD 690 at current rates.

Meanwhile, the European Union and the Mercosur bloc agreed last November to start negotiations for a Free Trade Agreement, which they expect to conclude by the end of 2004. The negotiations include five rounds of talks at the level of experts and two ministerial meetings, between December 2003 and October 2004. Some issues have already been identified as potentially problematic: access to EU markets for agricultural products from Mercosur, and the possibility of EU limiting imports of sensitive products, such as sugar and beef from Brazil. Mercosur comprises Brazil, Argentina, Paraguay and Uruguay.

Sugar Trade: US-Costa Rica FTA, US Negotiates with Australia

The Costa Rican Foreign Trade Minister described as "excellent" the Free Trade Agreement (FTA) his country signed with the Unites States on 25 January, after two weeks of negotiations. But the minister did no elaborate or said if the agreement actually improved the benefits already granted to other four Central American countries, with the signing of CAFTA last December. US officials said the agreement gave no special benefits to Costa Rica, only recognized some Costa Rican "sensitivities."

In sugar, Costa Rica would increase its duty-free exports by 13,000 tonnes annually in the first year - it currently exports about 15,000 tonnes -, and then the volume would increase by 2 percent per year in the next fifteen years. This volume includes raw, refined and organic sugar, and products containing sugar. Costa Rica will eliminate all tariffs on US sugar in 15 years. This sugar agreement is in line with what the other Central American countries obtained in CAFTA.

Costa Rica agreed to open the telecommunication and insurance sectors to competition, through a gradual process. Difficult negotiations in these two sectors had been among the reasons for Costa Rica to leave the CAFTA negotiations last December.

Legislatures of both countries are now to approve or reject the document.

The US and Australia would meet for the final round of negotiations on a Free Trade Agreement at the end of January in Washington, with political negotiations expected to solve problems left by technical talks. Sugar has become a quite problematic issue. Robert Zoellick, US Trade Representative, said that Australia is not a developing country and, therefore the US' position is "not to have any increase in sugar from Australia." Mark Vaile, Australian Trade Minister, emphasized that sugar is "not off the table" and that Australian have made very clear that "sugar must be part of the deal." Analysts said that the FTA may be worth over USD 3 billion per year to Australia - and sugar might become a key bargaining chip.

Australia is a major exporter of sugar, grains and beef, and has sought increased access to the US markets, but American sugar producers oppose any opening of the domestic market to foreign competition through bilateral agreements. Negotiations between the US and Australia started in November 2002.
Meanwhile, the US opened negotiations with the Dominican Republic on 12 January, with plans to conclude them by the spring. The DR holds the single largest quota in the US with 185,000 tonnes of sugar per year.

Health and Safety: Nicaragua: Information on Kidney Disease Among Sugar Workers

A source within the Labour Committee of the National Assembly said that the San Antonio mill agreed to pay between 20,000 and 38,000 cordobas per person as compensation to those ex-workers suffering a fatal kidney disease. Total payments amount to 26 million cordobas, about USD 1.7 million, but the company still refuses to recognize the disease as caused or partially provoked by working conditions. Sugar workers in Chinandega have been suffering from the fatal kidney disease for several years. (Thanks to JN in Managua for the update. For more information see Sugar Worker, Nov. 2003, Mar. 2001.)

Company News

Morocco: Cosumar to Increase Capacity

Cosumar, the country's main sugar refiner, announced on 29 January that would increase the production capacity of the Doukkala sugar beet plant to 15,000 tonnes from the current 6,000 tonnes per day, with an investment of USD 90.65 million. No estimate was given on the potential impact of the expansion project, which aims at reducing the country's needs of imported refined sugar. In 2002, Morocco produced 505,000 tonnes of sugar, while consumption was 1.1 million tonnes. The country imported slightly over 700,000 tonnes that year, two thirds of it as refined sugar. Brazil supplies over 90 percent of Morocco's sugar imports.