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

Posted to the IUF website 28-Sep-2004

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume VI, Number 9
September 2004


Caribbean: CARICOM Sugar Meeting

>From 28-29 September, a Caricom meeting of the "stakeholders" of the Caribbean regional sugar industry was held in Georgetown, Guyana, to discuss the proposals of reform of the European Union (EU) Sugar Regime and the Caribbean position on future actions.
After hearing reports on the sugar sectors of the six producing countries in the Caribbean (Barbados, Belize, Guyana, Jamaica, St. Kitts and Trinidad) and reviewing the international trade situation, the Caricom meeting, among several decisions:

The IUF-affiliated sugar unions (GAWU and NAACIE) were part of their national delegations, and the IUF Caribbean region also attended the meeting as part of the Guyana delegation.

Tanzania: TPAWU in Wage Negotiations

Wage and contract negotiations between the Tanzania Plantation and Agricultural Workers Union (TPAWU) and Kilombero Sugar are to resume on 30 September, the union reports. Last month, cane cutters in Msolwa (Kilombero 1, K1) demanded that management stop collecting house rent as no evaluation had been done on the housing facilities, which workers consider very poor, and have become a matter of protests. The workers also wanted the company to resume collective bargaining negotiations with the union by 11 August. Workers at Ruembe (Kilombero 2, K2) made the same demands.

While the rent deductions were stopped, when the union and local government officials intervened, negotiations on wages and terms and conditions did not start on 11 August, and cane cutters in K1 went on strike. Only at the beginning of September, Kilombero, a subsidiary of Illovo Sugar, asked the union to start negotiations, with the management requesting to negotiate non-wage issues first. The workers accepted all terms and conditions from the previous contract and pushed for negotiations on wages. They demanded a minimum wage of 120,000 Tanzanian shillings (USD 113) per month, from the current 44,000 shillings (USD 41), and also asked the company to make its offer known. Management then requested the union to suspend negotiations in order for them to consult with Illovo's Durban headquarters. Negotiations are to resume on 30 September.

Meanwhile, a similar development took place in Mtibwa, near Morogoro. More than one thousand cane cutters went on strike demanding a minimum wage of 150,000 Tanzanian shillings (USD 141) per month, up from their current 53,000 shillings (USD 50). Collective bargaining negotiations in Mtibwa are scheduled for October. Poor housing facilities and high rents are also part of the workers' demands.

On the other hand, TPAWU concluded negotiations with the Tanganyika Planting Company (TPC) reaching a new minimum wage of 66,000 shillings (USD 62) for new employees and 75,000 shillings (USD 70) for current employees, up from the previous minimum wage of 55,000 shillings (USD 51) per month. The new minimum wage is retroactive to 1 July 2004.

Sugar production in the country is on the rise. In 2003/04, production was 223,843 tonnes, tel quel, compared to about 190,000 tonnes the previous season. Kilombero Sugar accounts for slightly over 47 percent of country's production, while the Tanganyika Planting Co. (TPC) produces 27 percent, and Mtibwa 22 percent. A fourth company, Kagera Sugar Limited is expected to produce 30,000 tonnes when reactivated. Tanzania's domestic consumption is about 375,000 tonnes per year.

Kilombero Sugar Company announced it would start producing refined sugar in July 2004, with an initial annual production of 10,000 tonnes. Sugar industrial users have complained, however, that Kilombero requested the government to have domestic traders buying the domestically produced sugar first, before imports. Industrial users said they pay between USD 320-350 per tonne (US 14.5-15.8 cents/lb) on imported sugar, against the USD 460 per tonne (US 20.8 c/lb) charged by Kilombero. Tanzania imports between 75,000-85,000 tonnes of refined sugar per year, mostly from Brazil, said an international source. (With reports from TPAWU.)

Zimbabwe: Anglo American's Mkwasine Estate Listed for Expropriation

The Mkwasine Estate, jointly owned by Anglo American and Tongaat-Hulett, has been listed for acquisition under the government's land redistribution program. The acquisition order on the 11,500-hectare estate came on 23 July, and management and staff have 90 days to end operations and vacate the property, said the local press. Close to 4,600 hectares of irrigated land are under cane, with an annual production of between 475,000 - 500,000 tonnes of cane. Mkwasine is located in the southeastern part of the country.

Anglo American, one of the largest mining companies in the world, owns 53 percent of Mkwasine through its subsidiary Hippo Valley Estates. On 23 September, Anglo American announced it would challenge the government's decision on Mkwasine.

Hippo Valley Estates, where Anglo American has a 49 percent stake, is also listed for acquisition, and has been notified that their large land holdings should be subdivided in small/medium size plots of land. If such a move is actually taken, it might have a real negative impact on cane growing and production. The estates were listed for acquisition in 2000, and, since then, the company has been in a lengthy legal process to get them "delisted."

Hippo Valley Estates, the largest sugar producer in the country, has seen its production fell as much as 10 percent in the past year. The company says that although milling performance has improved in certain areas, production is declining because of the low quality cane delivered by independent growers. International sources said that agricultural production has fallen by 60 percent in the past three years largely as a result of the land distribution program.

United States: Bakery / Grain Millers Signed Seven-Year Contract

Locals of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union finalised contract negotiations with American Crystal, and workers ratified a new seven-year contract on 1 September granting a 2 percent wage increase in each year of the contract, and includes no increase in workers' share of health costs, which has been a difficult issue in the negotiations.

The seven-year contract is a unique case in the United States and covers some 1,650 full-time and seasonal employees in American Crystal's operations in the Red River Valley, located between Minnesota and North Dakota. They are five beet-processing plants (Moorhead, East Grand Forks and Crookston in Minnesota, and Dayton and Hillsboro in North Dakota) and two-bulk sugar handling facilities (Mason City, Iowa, and Chaska, Minnesota). The previous contract was signed in 1999 and lasted for three years, and then it was extended for two years, until 2004. The current CBA will expire in July 2011.

A federal mediator helped the contract negotiations, after workers had overwhelmingly rejected a company proposal on 5 August, which had offered a 2 per cent wage increase in each of the three years of the contract, but also wanted to more than double deductibles on medical care and to increase co-payments on prescription drugs.

After the new seven-year contract was approved, a spokesperson for the company said that it "sets a good tone for the next seven years" and stressed the strong partnership with the union in political issues, referring to the opposition of the US domestic sugar sector to include sugar in any bilateral free trade agreements.

Meanwhile, the 20-member strong local of the Bakery / Grain Millers at the Michigan Sugar locations in Fremont and Findlay (Ohio) approved a new three-year contract on 12 September, ending its five-week strike, and its picketing of four Michigan Sugar's processing plants in Michigan (where workers did honour the picket lines and only returned to work on 13 September). The new contract will increase hourly rates in between USD 2.05 to 3.10 over the three years, and employees would have an option to choose between two different health care plans.

Dominican Republic: Tax on HFCS-sweetened Soft-Drinks

On 28 September, the Dominican government issued the so-called fiscal reform bill, part of its efforts to resume negotiations with the International Monetary Fund.. The bill includes a 25 percent tax on soft drinks using high fructose corn syrup (HFCS) imported from the United States, which, according to press reports, was not part of the first draft of the bill, but was added when the bill was under discussion in the C�mara de Diputados (representatives).

The Dominican Executive branch had requested the Senate to pass the fiscal reform without the HFCS tax, because, it said, it would risk the approval of the recently signed free trade agreement (FTA) with the United States, which is yet to be seen by the US Congress. (The US-Dominican Republic FTA was added to the Central American FTA and the US-Costa Rica FTA, and would be submitted to US Congress as a package.)

Dominican sugar companies as well as cane farmers have expressed their dissatisfaction with the FTA. They believe that negotiations were not conducted in the best possible way, and for sugar and agriculture, the FTA is a "complete failure". The FTA with the US granted the Dominican Republic a 10,000-tonne immediate increase on its close to 180,000-tonne quota, and a 2 percent increase per year in the next 15 years. Some sugar groups say that, if HFCS imports are allowed, then domestic sugar production would in the medium-term collapse. They add that, from the seven mills that operated in the 2003/04 campaign, only the Central Romana, by far the largest producer in the country, would survive the competition.

The US Ambassador in the Dominican Republic told the local press that the HFCS tax goes against the FTA, and it would be difficult to recommend including the Dominican Republic in CAFTA. After issuing the fiscal reform bill, the Dominican Executive said it was preparing an amendment to send to Congress to leave the HFCS tax without effect.

(In June, the Dominican Republic said that it would request renegotiating sugar within the FTA, because the US had not agreed to open their sugar market to Dominican sugar, but the country opens the market to HFCS imports, which could mean some 100,000 tonnes annually.)

IUF Caribbean: Meetings in Guyana and Trinidad

Thirty-two delegates from the Guyana Agricultural and General Workers Union (GAWU) and the National Association of Agricultural Commercial and Industrial Employees (NAACIE) met for an IUF-sponsored seminar at GAWU headquarters from 6-8 September, in Georgetown.

The first part of the seminar focused on the recent developments in the European Union, in particular the proposed reforms to the sugar regime, and the impact of a possible 37 percent reduction in the EU/ACP Sugar Protocol price on the Caribbean sugar economies. Presentations were made by the Minister of Foreign Trade, the chairman of GuySuCo, the state-owned sugar company in Guyana, and an official of the Sugar Association of the Caribbean (SAC). The speakers, emphasized that the price reduction, if implemented, would represent a USD 35 million loss to GuySuCo, and an annual USD 90 million to the Caribbean industries. Under the EU/ACP Sugar Protocol, Guyana exports 167,000 tonnes annually, at prices close to US 26 cents/lb. On the other hand, the pace of implementation of the reforms would seriously hamper GuySuCo's expansion program, which, anchored in the construction of a new 100,000-tonnes of sugar factory in Skeldon, would help reducing GuySuCo's costs to US 10 cents/lb by 2008. In this discussion, the IUF global sugar coordinator outlined the role of the IUF and unions in ensuring decent jobs, a safe working environment, and adequate working conditions for workers as key aspect in the development talks between the European Union and Cariforum, the Caribbean states within ACP.

Discussions on Health and Safety and the HIV /AIDS program in the workplace were the second part of the seminar. A lively exercise to identify hidden health and safety hazards in the work place was carried out by participants, who also heard an in-depth presentation on HIV/ AIDS education and prevention program by the Minister of Health.

GAWU and NAACIE delegates were branch leaders and shop stewards from the Berbice and Demerara sugar estates. (With report from GAWU Research Department.)

Trinidad: Post-restructuring

The national council delegates of the All Trinidad Sugar and General Workers Union (ATSGWTU) took part on a one-day workshop focussed on evaluating the situation in the sugar sector after the dismantling of Caroni (1975) Ltd., and a discussion on perspectives for the sector.

The workshop took place against the background of a reported production of 43,000 tonnes of sugar in the first post-Caroni harvest, a 18,000-tonne shortfall from the revised 65,000-tonne goal (already a reduced figure from the 75,000 tonnes announced in 2003), the lack of information on actual achievements in the workers' retraining program, and the absence of a national sugar policy.

The head of Caroni restructuring agency, an official of Caricom's Regional Negotiating Machinery, representatives from cane farmers associations, politicians, and the Chamber of Commerce of Point Lisas-Couva (where the cane growing areas are concentrated), in addition to the IUF, addressed the workshop. While the restructuring program is not achieving its proposed goals, the workshop showed a possibility for the sugar groups to discuss the future of the sector, beyond politics - which heavily permeates all policy discussions in the country.

The restructuring has dramatically changed the terms and conditions of service for workers, as all workers in the St Madeleine factory, about 400 of them, are hired on short-term contracts, with no protection, benefits, or possibility to organise. Agricultural workers hired by contractors, who bid on the harvesting of Caroni's cane lands, are even in a more precarious situation: they have no assurance they would be hired the next day. The All Trinidad has a claim for successorship rights in the sugar sector, based on the fact that workers do the same work they performed for Caroni, but the legal process might take several years to conclude.

Company News

India: Bajaj Hindusthan to Set Up New Factories

Bajaj Hindusthan is set to become by far the largest sugar producer in India, with four new projects announced in 2004. In addition to the factory under construction in Kinoni, Meerut (Uttar Pradesh), scheduled to come on line in December 2004, the company announced plans for three new factories, one in Thanabhavan (Muzaffarnagar), one in Bilai (Bijnor), and one in Bhaisana (Muzaffarnagar), all in Uttar Pradesh. Production in these three factories would start in October 2005.

Bajaj Hindusthan is reported to have invested a total of USD 115 million in the new projects, which would raise its production capacity from 430,000 tonnes to about one million tonnes of sugar per year. The new mills have a 7,000-tonne of daily crushing capacity, and the company says that cane availability is adequate to supply the mills; even in the company expands capacity in the future.

South Africa: Illovo Sugar Selling and Outsourcing

Umfolozi Mill
In a press release dated on 23 September, Illovo Sugar advised its shareholders that it had entered in negotiations to sell the Umfolozi sugar mill (6,000 tdc) at Matubatuba, KwaZulu-Natal, "as part of the process to re-align its assets in terms of its strategic objectives." Local press reported that a black empowerment group was the interested buyer. This would be the second mill to be sold by Illovo in 2004. Last May, the company sold the Gledhow mill, refinery and cane estates, to Grand Bridge Trading 40 (Pty) Ltd., a black empowerment group, in a USD 49 million transaction. (More information on Sugar Worker, May 2004.)

Barloworld Logistics
Illovo Sugar has also outsourced its South African warehousing and distribution operations to Barloworld Logistics, in a transaction worth 3.8 billion South African rands (USD 595 million), said the Business Day. For the next 10 years, Barloworld Logistics would assume the management and operation of 18 Illovo distribution facilities, mostly in KwaZulu-Natal, which delivered about one million tonnes of sugar per year to over 2,500 destinations. One hundred and eighty three staff would transfer to Barloworld, which said it would invest close to USD 9 million in demand planning, warehouse management and transport-management systems. The deal is one of the largest of its kind in South Africa. (Business Day, 24 August 2004.) Barloworld Logistics markets its products and services in over 100 countries, employs around 23,000 people in 31 countries, and has an annual turnover of USD 3 billion.

Monitor Sugar
Illovo Sugar said in early August that, effective on 30 September 2004, the company is to sell Monitor Sugar, a company in the state of Michigan, United States, to Michigan Sugar, a cooperative of beet farmers, which owns four other beet processing plants in the state. The deal is worth USD 40 million, with USD 36 million in cash and USD 4 million in ten-year promissory notes. Illovo has the obligation to settle USD 20 million loans of Monitor Sugar, upon receiving the cash, and has the right to participate in future earning up to a maximum of USD 5 million over a ten-year period starting on 30 September 2005.