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The Sugar Worker, June 2005. News from the Sugar Sector.

Posted to the IUF website 30-Jun-2005

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume VII, Number 6
June 2005


Brazil: Modern Slavery in Cane and Alcohol

On 15 June, a special inspection unit of the Ministry of Labour and Employment freed 1,200 workers, who were labouring under conditions of semi-slavery in Hacienda Gameleira, in the municipality of Confresa, Mato Grosso. Press sources said this is the largest operation of its kind ever taken in the country.

The workers were found in "extremely degrading" conditions. "They, said the head of the special unit, were deceived with false promises of good salaries, good quality lodging and food." They were also promised unemployment insurance at the end of the harvest. (But) on arriving to the workplace, they saw that reality was different and their contract gave them no rights. They did not have the means to leave the place because transportation was provided only to return to the places of origin at the end of the harvest in September." Most of the workers came from the states of Pernambuco, Alagoas and Maranhao.

The workers are still in Hacienda Gameleira, awaiting the result of negotiations between the company and the special unit on the workers' rights and for transportation back to their homes. The Gameleira had been fined three times by the special unit. (A report in Portuguese is available in the IUF Latin America web site)

With this latest action, the number of workers rescued from conditions of semi-slavery is now over 2,000 in 2005. According to estimates from the ILO, there are between 25,000 to 40,000 workers in conditions akin to slavery in Brazil, mostly in rural areas. In the ten years of operations, the special inspection unit of the Ministry of Labour has freed 15,224 semi-slaves workers, according to Mato Grosso's Pantanal News. Over 9,000 of them under the Lula Administration.

European Union: European Commission Tables Sugar Reform

On 22 June, the European Commission (Agriculture) tabled a new proposal to reform the sugar regime, saying that it would improve the sector's market-oriented competitiveness and guarantee its long-term viability, and would strengthen the EU's position in the multilateral negotiations in the WTO. The proposal also encourages less competitive producers to leave the sector, and would provide assistance to cope with the social and environmental impacts of factory closure (e.g. financing social plans and measures to put sites into good environmental conditions) and funds to develop new businesses in the most affected regions. The proposal aims to bring the sugar regime in line with the reforms in other areas of EU's Common Agricultural Policy (CAP).

The Commission said that an 8-year assistance program would be established to support social, economic and environmental initiatives in the traditional sugar suppliers from the Africa, Caribbean and Pacific countries (ACPs), to assist them in readjusting to the reduced price for sugar. The Commission said that 40 million euros (USD 48.5 million) have been put aside for the ACP assistance program in 2006, and further funds would be made available for the 2007-2013 period. The program is to be tailored to the needs of each ACPs country, based on an Action Plan published last January, said the Commission. There are 18 ACPs sugar suppliers.

Some highlights of the sugar reform proposal include:

� A 39 percent cut in EU sugar prices over two years beginning in 2006/07. The EU sugar price will drop from 632 euros per tonne (USD 767) to 386 euros (USD 470). Beet prices would be cut in 42 percent.
� A compensation of 60 percent of the price cut will be paid to farmers, with payments linked to respect for environmental standards.
� A merger of the "A" and "B" sugar quotas, and the new regime will be in effect until 2014/15, with no review clause. (The current regime expires in July 2006.) Trade sources said that EU sugar production would fall from the current 19 million to 12 million tonnes by 2012.
� A voluntary restructuring program to encourage the reduction in the number of factories over four years (sugar, isoglucose, and inulin factories), consisting of payments to encourage factory closure and the renunciation of quota, and to cope with the social and environmental impact of the restructuring process. Payments in this program would start at 730 euros per tonne in year one, 625 in year two, 520 in year three and 420 euros in the final year. (Some 6 billion euros would be available to buy back quotas, according to trade sources.)

A press release by the European Commission on the proposed sugar reforms is available here.

Senior officials of the European Commission were reported as saying that the reforms may force some 29,000-factory workers and 7,500 beet farmers out of the sector; with some 60,000 related jobs also at risk.

Jamaica: Unions Against EU Proposal to Cut Sugar Prices

On 16 June, the Bustamante Industrial Trade Union (BITU), the University and Allied Workers Union (UAWU) and the National Workers Union (NWU), the three unions organizing in the Jamaican sugar sector organized a demonstration in front of the British High Commission with the participation of some 200 workers and representatives of the industry.

The unions delivered a letter to the British High Commissioner on Jamaica's Position on the Reform of the European Sugar Regime, stating that the proposed price cut of 39 percent in a 2-year period starting in 2006 will not help to put the industry "on a path of sustainable growth and profitability." The unions were responding to the European Commission's document which was leaked to the press and publicly announced on 22 June.

The unions said that the "Action Plan" on accompanying measures to the reform made public by the European Commission in January has not been formally discussed, consultations between the EU and the ACP countries have been "sporadic" at best: there has been no dialogue on the impact of the reform or the viability of the Action Plan. In the Caribbean, the pace of the talks has kept no relation with the urgency of the matter.

Regarding their own sector, the unions said that it requires a 6-year transition period with remunerative prices if it is to successfully restructure itself. The sector may need some 250 million euros in soft-term loans to develop alternative uses for cane, including ethanol, co-generation and refining (of sugar).

The unions went on to say that if the EU proceeds as proposed, the impact on rural Jamaica would be severe, "crime and security concerns will be exacerbated by the consequent increase in rural to urban migration." And added: "Neither Jamaica nor the United Kingdom can afford any development that creates further instability." The unions end their letter requesting the British government to spare no effort in ensuring that the EU's process of reform is "equitable for the ultimate survival of this most important Jamaica industry." (With reports from Clifton Grant, UAWU.)

United States: CAFTA in the Congress

Discussion on the Central American Free Trade Agreement (CAFTA) continues to dominate the US sugar scene, reports Dyergram in its 22 June issue, with a series of meetings held in different congressional committees, as well as negotiations taken place around the trade deal. A meeting of the Senate Finance Committee on 14 June resulted in an 11-9 non-binding "mock-up" vote in favour of CAFTA, but only after the US Trade Representative ensured the committee that the agriculture secretary would meet with the sugar industry on the impact of CAFTA.

The meeting with the agriculture secretary took place on 15 June, with the participation of representatives from Florida, Minnesota and Wyoming, all sugar-producing states. It is reported that sugar industry groups proposed a USD 100 million subsidy program to produce ethanol from sugar, as a condition to drop their opposition to CAFTA. (The program would use sugar imported under CAFTA and other future trade agreements.) Also, they asked for the reopening of NAFTA, in particular the provision that grants Mexico an unlimited access to the US sugar market in 2008, when NAFTA transition period finalises and full free trade would be in place.

A report by Reuters said that the Senate Agriculture Committee reached a deal with the Bush Administration on 29 June, which would allow some representatives from sugar-producing states to support CAFTA. The Bush Administration has agreed to limit the overall sugar imports to 1.532 million short tons (about 1.39 million metric tonnes) through the life of the current Farm Bill, which expires in 2007, and imports from CAFTA that exceed that limit would be purchased by the US Department of Agriculture and made available to ethanol production. The US Senate is to vote on CAFTA on 30 June.

Mexico: WTO Panel Rules HFCS Tax Illegal

A WTO Panel has issued a preliminary ruling finding the Mexican tax on HFCS-sweetened soft drinks illegal. The Panel's final ruling is expected in August.

In January 2002, Mexico imposed a 20 percent tax on soft drinks using HFCS to protect the domestic sugar industry from competition by imports of US corn sweeteners (and HFCS domestically produced with US corn). The HFCS tax is part of the still-unresolved sugar/sweetener row between the NAFTA partners, which had Mexico complaining - at that moment - about limits imposed on its sugar exports, as the country understood was entitled under NAFTA. After the tax was imposed, consumption of HFCS by soft drink manufacturers declined rapidly, US HFCS imports fell to almost zero, and the Mexican sugar industry recovered lost markets.

The WTO Panel preliminary ruling comes at a moment when the US Congress is discussing CAFTA and the possible access of more sugar to a sector that the domestic industry considers already oversupplied. If Mexico eliminates the HFCS tax, it should be expected that some soft drink manufacturers would revert to its use, displacing Mexican sugar, which then might find its way into the US market.

In related news, the 2004/05 Mexican harvest is gearing towards a new production record, having reached 5.752 million tonnes of semi-refined sugar by 11 June, a 15 percent increase over the same period last year, according to the national sugar producers association. Increased production is related to expansion of areas under cane.

Mauritius: New Restructuring Plan Proposed

A Cabinet meeting at the end of May adopted, at the request of the Mauritius Sugar Authority, a new restructuring plan for the industry designed by international consultants, reported L'Express on 31 May.

The new plan develops along two lines: one is through cutting production costs with a process of centralisation, a new voluntary retirement scheme (VRS) for workers, and grouping of small farmers; the second calls for massive investments to develop by-products, such as ethanol, and setting-up co-generation plants.

In a first round to reduce the number of jobs through a voluntary retirement scheme (VRS) in 2001-02, some 8,000 workers left the sector. They represented about one third of the sugar labour force. At that moment, the VRS included a lump sum and offer of plots of land to build houses. The proposed second VRS would go along the same lines of the first VRS, with the difference that the age requirement would be reduced from 55 to 50 years for male workers, from 50 to 45 years for female workers.

The industry would centralise production, reducing the number of factories from 11 to 6 by 2008, the area under cane would fall from 72,000 to 65,000 hectares, and sugar production from 570,000 to 550,000 tonnes per year. The plan calls for all six factories to have co-generation plants and produce some 600 Gw/h of electricity by 2015.

Health and Safety

Decent employment or decent job requires workers having access to a safe and secure workplace: it is a right of the workers.

Guyana: Sugar Workers Gone Missing

Two sugar workers, Sampersaud Taranauth and Maikhram Sawh, disappeared on 21 May when cleaning a canal in the Vigilance area. Their only belongings found were their bicycles and lunch packs. For more than two weeks, family members, relatives and friends, co-workers and company employees, policemen and army personnel unsuccessfully searched for them. People believed they have been victims of criminals roaming free in the Buxton, Friendship and Vigilance areas - near the capital city of Georgetown.

The episode has important connotations for the sugar workers and industry in the country. First, the growing insecurity and risks to workers' lives and property in the cane-growing areas has a direct and negative impact on making the work place a safe place. In this case, it is evident that public institutions (i.e. police) share as much responsibility as the employer, the Guyana Sugar Corporation (GuySuCo), in ensuring that workers labour in basic safe conditions. Second, because of the growing insecurity, the workers are, quite justifiably, refusing to do agricultural work in risk areas. The workers' refusal to work, as happened at Enmore and La Bonne Intention (LBI) sugar estates, would have a detrimental impact on production in the second harvest, which runs in the latter half of the year. There is no more clear evidence that safety in the work place is a major factor influencing production and productivity: the reader just needs to imagine how much workers could focus on performing their jobs if they believe or think they might be robbed, assaulted, or killed while doing it.
On 2-3 June, the Guyana Agricultural and General Workers Union (GAWU), an IUF affiliate, called a two-day protest strike on the disappearance of the two workers, who were GAWU members. GAWU has also called for the clearing of the forested areas surrounding GuySuCo's cane fields, which are used as hideouts by criminals.

The news coincides with reports that GuySuCo recorded a profit of 2.8 billion Guyanese dollars (USD 14 million) in the 2004 harvest, with a production of 325,317 tonnes. GuySuCo's CEO Michael Boast said that 2004 was not just a good year, but also "the second best in a long time," adding, however, that the company lost significant revenues as a result of industrial accidents. "This - the industrial accidents - may be worse than the cost of production, we would seem to have one of the unhealthiest work forces. We had to do something about it," Boast told the local press.

Jamaica: Five Died in Fire in Monymusk

Five Indian nationals died on Sunday 5 June when a fire broke in their house in the Monymusk Sugar Estate as a result of an electric short circuit, according to preliminary reports. Three of them were consultants with the Dhampur Sugar Company of Delhi, India, working in the Monymusk and Frome estates. The other two victims were the wife and child of one of the technicians. Local papers said that neighbours were unable to help them because doors and windows had been locked as a protection against criminals.

With the Monymusk deaths, eight people have died in the Jamaican sugar industry in the period March to June 2005. First, a machinist in the Long Pond factory died on 10 March when a cane knife exploded and he was struck by flying metal fragments. On 21 April, a worker was buried under 30 tonnes of sugar while cleaning a silo in the Appleton factory. And, on 29 May, a security guard at the Monymusk factory was found dead with gunshot wounds on the face and chest.

An IUF meeting on Health and Safety Issues and Gender Perspectives in the sugar and banana sectors in Jamaica, organised with the BITU and the UAWU on 16-18 May in Kingston, passed two resolutions: the first called the government to investigate the deaths of the two sugar workers (on 31 March in Long Pond, 21 April in Appleton) and find measures to correct the situation; the second called the government to urgently pass the national regulations on Health & Safety at the workplace and to ratify ILO Convention #184 on Safety on Health in Agriculture. The meeting was attended by 30 delegates representing workers from all sugar estates and the two major banana plantations in the country.
(This news first appeared on the IUF Sugar Workers Network Web site)

Company News

Thailand: Wang Kanai Expansion Plans

The Thai sugar conglomerate Wang Kanai said it would seek partners to expand production after a successful restructuring of its debt portfolio of about 17.8 billion Thai bath (USD 433.4 million). The group said it plans to focus on value-added products, create its own brands, and invest in an ethanol plant and a paper plant, which would use bagasse as a raw material.

The Wang Kanai has three main operation lines: sugar manufacturing in Thailand and Laos; sugar-related business such as sugar trade, warehousing, fertiliser and paper; and transportation, construction and palm oil.

It was reported that about 80 percent of the total revenues of the group comes from sugar sales. In Thailand, Wang Kanai has a production capacity of 400,000 tonnes of sugar per year from four mills, and 63,000 tonnes from two mills in Laos. Because of the current drought in Thailand, Wang Kanai lowered its production estimates by about 10 percent: Thailand expects a drop in production to 4.3 million tonnes, from earlier estimates of 4.8 million tonnes of sugar.

Swaziland: TSB to Buy Stake in Swaziland Sugar Corporation

The South African Transvaal Suiker Beperk International (TSB) is looking to buy a 26 percent stake in the Royal Swaziland Sugar Corporation (RSSC), the largest producer in the country. The RSSC accounts for about two thirds of the over half a million tonnes of sugar produced in Swaziland, after a merger with the Mhlume Sugar Company in 2001. The company has a 20,000-hectare plantation that supplies its two mills with some 2 million tonnes of cane, and produces some 370,000 tonnes of sugar per year. The group also has a 120,000-tonne refinery and a 13-million litres distillery. In 2003, TBS was reported as interested in investing in Angola's sugar sector, and last year it acquired Booker Tate, the multinational managing company, from Roberts & Murray.