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The Sugar Worker, July-August 2005. News from the Sugar Sector.

Posted to the IUF website 01-Sep-2005

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume VII, Number 7-8
July - August 2005


Indonesia: Workers Fight for Union Rights

Last February, the Federation of Independent Tobacco, Cane and Sugar Workers' Unions (FSPM TG) was formed, representing over 14,000 workers. In the cane and sugar sector, the federation comprises 24 local unions from private and state-owned mills, plantations and distilleries. In April, the federation affiliated to the IUF.

Employers and the government responded to the independent federation with brutality and harassment to their elected leaders: Daud Sukamto, President, and Legimin (like many Indonesians, he has only one name) General Secretary. Daud works at the Gunung Madu Plantation in Central Lampung, Sumatra, Indonesia's largest sugar cane and mill complex which employs close to 13,000 workers at peak season. Gunung Madu is 45 percent owned by Robert Kuok's Hong Kong-based Kuok Investment Group, with the remainder held by two companies controlled by Suharto family and cronies. Until March this year, Daud headed the local union at Gunung Madu.

On March 14, Daud - who had announced that his local union would be leaving the SPSI (a Suharto-era union) to assure its independence - was suspended from his position as union officer by officials of the regional SPSI. One week later, he was suspended from his job. Daud's dismissal was upheld by a June 21 ruling of the Lampung P4D, the "tripartite" dispute resolution settlement committee whose only labour component is representatives of company-leaned unions. The P4D ruled that Daud should be fired, effective at the end of June, for having committed "gross misconduct" in advising Gunung Madu workers in January to reject management's proposal for the biannual wage increase. The P4D ignored a ruling by the country's Constitutional Court that the law that permits dismissals on the ground of "gross misconduct" was unconstitutional and required amendment. It also ignored testimony that workers at the plantation had rejected the increase as inadequate and needed no advise from the union, and the fact that the "gross misconduct" charge lay outside its jurisdiction and was a matter that the employer could only pursue in a criminal court. The P4D also accepted the employers' allegation that Daud's involvement with the IUF showed further evidence of "gross misconduct".

On the other hand, management at the state-owned PTPN X transferred FSPM TG General Secretary Legimin from his job in a sugar mill to the head office in Surabaya, a move which is widely viewed as part of an ongoing pattern of anti-union intimidation.

On 1 August, a large contingent of sugar workers travelled to Jakarta where, joined by members of the IUF-affiliated hotel, restaurant and tourism workers' federation, they demonstrated at the Gunung Madu management headquarters to support their demand for Daud's reinstatement and an end to union-busting. The demonstration, took place across the street from the offices of the Jakarta Governor and the Jakarta Parliament office. The IUF has lodged a complaint against the government of Indonesia with the ILO's Committee on Freedom of Association.

On 2 August, IUF affiliates in New York (US), Toronto (Canada), Melbourne (Australia) and Wellington (New Zealand) stage solidarity demonstrations by sending delegations to Indonesian embassies and diplomatic representations to support the Jakarta action. A similar action took place in Seoul on 19 August, when a delegation of IUF-affiliates delivered a message to the Ambassador of Indonesia to the Republic of Korea.

The IUF is urging workers and unions to show their solidarity with the FSPM TG by sending messages demanding the:
� reinstatement of Daud Sukamto at his job at Gunung Madu Plantation.
� cease all harassment of the FSPM TG.
� respect the democratic right of all Indonesian workers to join the trade union of their choice and to bargain collectively without intimidation
Messages should be sent to Mr. Fahmi Idris, Minister of Manpower and Transmigration,
(Fax: +62-21 7974488), and copies to The Minister of State-Owned Companies
(Fax: +62-21 34831778) and Mr. Jimmy Mahsun, General Manager, Gunung Madu Plantation, Head office fax: +62-21 3142159. Copies should be sent to the IUF Geneva Secretariat by electronic mail to [email protected] or fax (+41-22 793-2238)
More information on the FSPM TG struggle is available at the IUF web site and the IUF Asia/Pacific web site. The Sugar Worker reported on the constitution of the FSPM TG in the March 2005 issue.

St Kitts: Closing the Industry

In late July, the St. Kitts-Nevis Trades and Labour Union and the management of the St. Kitts Sugar Manufacturing Corporation (SSMC) reached an agreement on the redundancy of the sugar workers, after production of sugar for exports ceased in the island: on 22 July, two locomotives brought the last canes for processing in the factory.

The agreement calls for redundancy payments to be based on the 1961 Agreement with the union, which allows up to a maximum of 104-week severance payments for workers in field and factory, in comparison with the 1986 Protection of Employment Act that limited payments to 52 weeks. Additional graduated payments would be made available to workers with 36 years of service or more.

According to government sources, severance payments may reach a total of 44 million East Caribbean dollars (USD 1.00 = XCD 2.675), to be paid in two instalments: a first 52-week payment by mid September, which would comply with the 1986 Act; and the remaining half in December. Prime Minister Douglas said that the St Kitts-Nevis Anguilla National Bank, which would disburse the monies, is not able to pay the full XCD 44 million by September. The SSMC has gone bankrupt, said the Prime Minister, and the government is assuming payments.

The agreement also includes provisions for continued medical services, retraining and orientation for workers (some employees may benefit from an stipend while attending training), provision of housing facilities for certain categories of workers that do not own a house, and technical and extension services for workers going into farming. Full details of the agreement, which covers about 1,500 workers, were being worked between the union and the company.

In addition to severance payments, the local press reported payments for 4 million East Caribbean dollars to local and foreign workers in early August. Payments covered several benefits including payments in lieu of notice, Holiday Pay, and different bonuses (the Dollar Per Ton, the 5% Crop bonus, a 4% Dull Season, and Christmas Bonus). Payments are distributed according to the individual worker. The number of workers range from 86 local workers benefiting from the Dollar Per Ton bonus to 1,473 local workers receiving the 5% Crop Bonus. Between 295 and 390 workers from Guyana and the Dominican Republic shared payments made available to foreign workers.

A late July session of the National Assembly was to debate a resolution to officially close the 300-year old sugar industry in island. According to local press, the resolution would encourage financial institutions to create special financial packages for sugar workers interested in farming, fishing and small business, and introducing duty-free concessions on the importation of farming tools, equipment, and inputs for farming and small business related to farming which would be established by sugar workers. The resolution also proposes a 5-year tax relief for new small businesses of former sugar workers, and to ease regulations on taxi and bus operations to allow workers, who were drivers, to enter the sector. The resolution would also propose that the equipment owned by the industry become part of the protected heritage of the island, making it an offence to remove it without authorisation from the government.

Mexico: Cane Growers Battle Government on Sugar Cane Law

On 22 August, President Vicente Fox passed the so-called "Law for the Sustainable Development of Sugar Cane," after an agreement was reached between his administration, two main opposition political parties, and cane growers organizations. The agreement followed three weeks of protests by several thousands of cane growers, who occupied offices of the Ministry of Agriculture in 15 states, demonstrated in Mexico City, and had threatened to extend the occupation to all Mexico's 58 operating sugar mills.

The Fox Administration passed the sugar cane law as approved by Congress on 21 June, but the law would be amended as soon as the national legislature resumes in September, after the summer break. The modifications, it was reported, would allow the introduction of individual supply contracts between mills and cane growers, and would change the name of the law to refer to the sugar agro-industry as a sector rather than to cane growing alone. The law would maintain that growers would receive a 57 percent upfront payment on the delivery of cane, but will establish market prices, instead of the fixed minimum prices, as reference in the supply contract. (In January this year, the Fox Administration had drafted a decree proposing that the growing and processing of sugar cane would no longer be of public interest, eliminating also the guaranteed price on cane.)

In related news, the World Trade Organisation (WTO) has reportedly ruled in favour of the United States in its complaint against the 20 percent tax imposed by Mexico on soft drinks using HFCS. The report has not been made public yet, but it is expected that Mexico would appeal. According to trade sources, the WTO ruling would require Mexico to withdraw the tax and the country may be liable to pay penalties in excess of USD 300 million. The US Corn Refiners Association said that the tax has led to losses of more than USD 900 million in HFCS sales per year.

Cuba: Second Restructuring Expected

A Reuters dated on 6 July in Havana, said that the government plans to close at least 40 of 85 sugar mills, and take 300,000 hectares out of cane production (one third of the total area under cane); lands would go into other crops and livestock. Many of the mills, however, may not be dismantled by now. It is estimated that the program would result in some 75,000 jobs lost in the sugar and by-products sectors.

This second major restructuring program since 2002 comes after the short January-May 2005 milling season reached only 1.3 million tonnes of sugar, production comparable to 1908, and a debacle from the 8 million tonnes of 1990. It was reported that only 50 mills operated in the 2005 harvest.
In 2002, Cuba closed 71 of the 156 sugar mills, took some 1.2 million hectares out of cane cultivation, and some 200,000 jobs were lost in the sector. Workers went into training and education programs with their salaries paid by the government.

Sugar Trade: US Passes CAFTA-DR Free Trade Agreement

On 2 August, President Bush signed the Central American-Dominican Republic-US Free Trade Agreement (CAFTA-DR) into law, not before completing deals and negotiations. Early in the morning of 28 June, the House of Representatives reached a 217-215 final vote on the trade agreement: switching one vote to the "no" side would have resulted in a tie vote and the end of the trade agreement.

To reach this point, deals were made, in particular a Republican Party representative from North Carolina switched to the "yes" side when the Speaker of the House promised support to protect the North Caroline textiles from Chinese imports. As well, in mid July, a Republican senator from Minnesota went to the "yes" side, after receiving assurance that sugar imports from Central America would not be allowed during the life of the current farm bill (which expires in 2007), if they result in exceeding the 1.389 million tones import maximum under which marketing allotments operate.
In relation to sugar, the agreement offers the Central Americans and Dominicans a rather small increase in their access to the US sugar market, with an initial 100,000 tonnes per year. The domestic sugar industry, however, sees many risks if the CAFTA-DR sugar approach is taken as a template in other negotiations, such as the ones with Thailand, Andean countries (Colombia, Ecuador, Peru and later Bolivia), and Panama. The domestic sugar industry would like to see sugar only at the multilateral level negotiation in the WTO.

CAFTA-DR has been approved by national legislatures in El Salvador, Guatemala, Honduras and the United States, and would enter into effect at a date to be agreed by the parties. Costa Rica, the Dominican Republic and Nicaragua have up to two years to approve it.

Morocco: Privatisation of Industry Completed

In early August, the Moroccan government said it had sold all its shares in four sugar companies to the local group COSUMAR for 1.367 billion Moroccan dirham (about USD 152 million). The companies are SURAC (listed with 3 beet and 3 cane factories), SUNABEL Gharb-Loukos (4 beet factories), SUTA Tadla (3 beet factories and one refinery) and SUCRAFOR Moulouya (one beet factory). COSUMAR is listed with two beet factories and one refinery. The privatisation process, which started in 1990, has produced a monopoly in the sugar sector of Morocco.

The government said that several international groups expressed interest in the sugar sector, but COSUMAR offered the highest bid in terms of price and projects in industrial and agricultural developments. The Moroccan group said it invest USD 156 million in the next six years.

Moroccan sugar consumption is about one million tonnes per year. Domestic production is about 500,000 tonnes per year, with beet sugar accounting for about 80 percent. Brazilian raw imports refined in the country cover most of the balance.

IUF Caribbean: Discussing Future of Cane and Sugar In Trinidad's Agriculture

On 8 August, the All Trinidad Sugar and General Workers Union (ATSGWTU) hosted an IUF symposium which discussed the future of the cane growing and sugar manufacturing at the union's headquarters in Rienzi Complex, Cuova.

With the attendance of over 70 participants, the symposium was an effort to place the discussion about the virtual collapse of the cane and sugar sector in the larger context of the future of agriculture in Trinidad. The island reached a meagre 32,000 tonnes of sugar in the recently concluded 2005 harvest, well below the average of over 100,000 tonnes of the late 1990s, and less than half of the 75,000-tonne production goal set by the government when it dismantled Caroni (1975) Ltd. in 2003.

Participants pointed out that any future policy for agriculture (including cane growing and sugar manufacturing) should be driven by the sector's stakeholders, avoiding the usual top-to-bottom approach, which appears to be worsening by the lack of information from governmental agencies about agricultural policies. Such lack of guidance is most evident in the cane and sugar sector. (Since 2003, the Sugar Worker has reported extensively on the cane and sugar situation in Trinidad.)
The symposium gave some of the stakeholders the opportunity to discuss the building of meaningful development plans for the agricultural sector. There is a direct and clear connection to the sugar industry as Caroni (1975) Ltd. was reckoned as the largest landholder in the island with some 77,000 acres of land. In fact, the government has announced the transfer of some 15,000 acres to about 7,000 ex-Caroni workers willing to go into farming. The symposium heard that this program might in actuality be heading for future frustrations, with experts pointing out several shortcomings: from the size and location of the plots of land, to their quality and actual possibility of transforming them into farm lands, to the absence of irrigation and other infrastructure and lack of marketing mechanisms and strategies.

The symposium was attended by the executive of the All Trinidad, along with delegates from CFATT and TICFA (two cane farmer organisations), and representatives from the Agriculture Society of Trinidad & Tobago, the National Foodcrops Farmers Association, the Sugar Industry Team, among others. Some of the participating groups agreed to move the process forward, inviting other groups to the discussion in order to make it democratic and requesting the government to address some of their main concerns to achieve transparency. The symposium was part of the IUF English-speaking Caribbean activities in 2005.

Company News

United States: Concentration of Ownership

American Sugar Refining Buys C & H Sugar
On 9 August, American Sugar Refining Inc. announced the acquisition of the 40 percent stake in C&H Sugar Company Inc. owned by Alexander & Baldwin, adding to the 60 percent stake previously acquired from Citicorp's Venture Capital and others. C& H operates a cane sugar refinery in Crokett, California with a daily melting capacity of 3,200 short tons.

American Sugar Refining already owns three refineries: Yonkers (New York), and the two Domino refineries in Baltimore (Maryland), and Chalmette (Louisiana). With the addition of C&H's Crokett, the company would control about 58 percent of the country's total melting capacity, which is listed at about 19,600 short tons per day (17,781 metric tonnes).

American Sugar Refining Inc. was established in 1998, with the partnership of Florida Crystals and the Sugar Cane Growers Cooperative of Florida. Playing a crucial role in these sugar businesses is the Fanjul Family, which owns Flo-Sun of which Florida Crystals is a subsidiary. In turn, Florida Crystals controls 61 percent of American Sugar Refining, and operates a refinery in Florida. The Fanjuls, through Florida Crystals and American Sugar Refining, may be in control about 64 percent of the total daily melting capacity in the United States. In addition, the Fanjuls own the Central Romana, the largest sugar producer in the Dominican Republic, a country which holds the single largest share of the US tariff rate sugar quota.

Market analysts said that American Sugar Refining Inc. has strategically positioned itself to take advantage of the unrestricted importation of raw sugar from Mexico, once NAFTA comes into place in 2008/09.

Imperial Sugar Sells Holly Sugar

Imperial Sugar sold its subsidiary Holly Sugar to Southern Minnesota Beet Sugar Cooperative (SMBSC), based in Renville, Minnesota. Holly's operations include two beet-processing factories located in Brawley (with a 9,500 short tons of daily capacity) and Mendota (4,500 tdc) both in California, a distribution centre in Tracy (California), and Holly Hybrids, a beet-seed processor based in Sheridan, Wyoming. Holly Sugar represents about 15 percent of Imperial's production capacity. The transaction is worth some USD 50 million and will be completed in September.

Imperial Sugar reported that proceedings from the sale would reduce the company's unfunded pension liabilities by approximately USD13 million and related cash contributions requirements. Imperial also said it would focus on its sugar refining operations (Savannah, Georgia and Gramercy, Louisiana) and will continue owning the brand name of Holly Sugar.

The SMBSC comprises some 580 farmers, who supply the 10,500-tdc Renville plant. The plant provides about 260 year-round and some 460 seasonal jobs, according to the company. Workers at Renville are organised by a local of the Bakery and Grain Millers Union (BCGMTU). Workers in Brawley and Mendota are organised by locals of the UFCW-Distillery, Wine & Allied Workers Division.