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The Sugar Worker, July-August 2004. News from the Sugar Sector

Posted to the IUF website 26-Aug-2004

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume VI, Number 7-8
July - August 2004


United States: Bakery/Grain Millers in Contract Negotiations

Locals from the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union (Bakery/Grain Millers) represent workers in several beet-processing plants in the United States. In the past six months, collective bargaining agreements for not less that twelve locals have expired, and their renegotiation has been marked by the companies' attempts to have workers increasing their payments on health care coverage, which in several cases would have surpassed the wage increases offered by the companies. The negotiations come in the wake of a sustained campaign by the US domestic sugar industry against a free trade agreement with Central America (CAFTA), a campaign where sugar beet companies have been particularly outspoken arguing that any FTA that includes sugar threatens the stability of communities based on sugar beet growing and processing, and put at risk the "good paying" jobs it creates.

Lockout in Southern Minnesota Beet Sugar Company

After a four-week lockout, 220 workers in the Renville plant of the Southern Minnesota Beet Sugar Company, a farmers-owned cooperative, voted in favour of a contract on 24 August. In the new three-year contract, the company abandoned its demand for the workers to increase payments on health care coverage, which had been a central issue in the negotiations and the main reason for the lockout.

Management locked out workers on 29 July, after workers rejected the company's "final offer." Union officials said that in the company's proposal workers would have to pay some USD 100 per month on health care premiums in the second year of the contract, and USD 200 per month in the third year. These payments would have wiped out the 2 percent wage increase in each year of the contract offered by the company. The lockout came "out of the blue" said union officials, adding that labour relations have been good, and that union and management have a common position against free trade agreements.

Some 580 farmers process their beet production in the factory located in Renville, a small town with a population of 1,300 people, where the main employer is the farmer cooperative-owned plant. The plant provides 250 year-round positions and 350 extra jobs at harvest time. Such local realities make it difficult to understand the company's willingness to lockout the workers, in particular, when the factory was to be prepared for the 2004/05 harvest. Additionally, because the workers were locked out (not on strike), they were eligible to receive half their normal wages (up to a maximum of USD 493 per week for 26 weeks) at the "ultimate" expense for the employer, said a union official. Local 369G of the Bakery / Grain Millers Union represents the workers in the Renvile plant.

Pickets in Michigan Sugar

In late August, the 20-member strong union representing workers at the Michigan Sugar facilities in Ohio (Fremont and Findlay) resumed their picketing in front of the company's four plants in Michigan (Caro, Carrollton, Croswell and Sebewaing). In a shown of solidarity, some 300 workers in the Michigan factories did not cross the picket lines.

The Ohio workers had been renegotiating a contract where changes proposed by the company on health care coverage are the key issue. Union officials said, as in the case of Southern Minnesota, the changes would wipe out the wage increase offered by the company. In a move that precipitated the strike in early August, the company imposed its last contract offer on the workers without the negotiations having reached an impasse. On 12 August, the union filed a complaint with the National Labor Relations Board (NLRB) on the issue. While on strike, the Ohio workers receive strike support.

Michigan Sugar said it filed a complaint with the NLRB regarding the Ohio workers' pickets in front of the Michigan plants. The company says that the Ohio workers are covered by an agreement different from the Michigan one, and their picketing is illegal. The company's charge comes after the Ohio workers' own complaint with the NLRB, and after the Michigan workers filed another charge claiming their right to honour the picket line of another labour organisation.

Locals of the Bakery/Grain Millers union represent the workers in the facilities in Ohio and Michigan, all owned by Michigan Sugar, a cooperative of about 1,000 farmers. Michigan Sugar employs some 350 permanent employees and some 1,000 seasonal workers.

In related news, effective 30 September, Michigan Sugar bought the Michigan-based Monitor Sugar, a subsidiary of the South African Illovo Sugar. The deal is worth USD 40 million.

American Crystal and Amalgamated Sugar

At the moment of writing, some 1,500 workers in five factories and two handling facilities owned by American Crystal Sugar in North Dakota, Iowa and Minnesota, were to vote on a new contract. The company wants to increase health care deductibles, and offered a 2 percent wage increase and a 50-cent increase in the pension multiplier in each year of the three-year contract. About 3,000 farmers own American Crystal Sugar, the largest beet sugar producer in the United States.

Meanwhile, locals of the Bakery/Grain Millers union signed a new 4-year contract covering some 1,500 workers in four factories in Idaho and Oregon owned by Amalgamated Sugar, a farmer owned cooperative. The contract was a result of mediation talks.

Tanzania: Worker Protests in Kilombero

More than 1,000 workers went on strike in late August to protest high house rents and low salaries in Kilombero Sugar. According to PST news, the workers demanded a stop on rent collection, which are considered extremely high in relation to wages. Workers added that up to 10 workers have to share one room at the factory, paying a total of 25,000 Tanzanian shillings per month (USD 23.00) for the room. Interviewed by PST, Kilombero's district commissioner said that rent collection has been stopped until the housing facilities are evaluated, and that wages should be negotiated according to labour laws.

Last year, Kilombero Sugar produced some 127,000 tonnes of sugar, representing a 30 percent increase on the previous year's production record. The South African Illovo Sugar owns 55 percent of Kilombero Sugar, with the UK-based commodities group ED&F Man owning 20 percent and the Tanzanian government the remaining 25 percent. Tanzania is a net sugar importer, but Kilombero exports small amounts of sugar to the European Union preferential market.

In its 2004 Annual Report, Illovo Sugar said that its Tanzanian operations (Kilombero's two estates and factories) accounted for 15 percent of the company's total operating profits of 726.6 million South African rands (about USD 111.3 million). This should be compared to the 18 percent contribution to profits from the well-established operations in South Africa that comprise five sugar cane estates, seven sugar factories, four refineries and six downstream plants.

Belize: Fighting Redundancy at BSI

Management at the Belize Sugar Industries (BSI) has proposed eliminating 90 permanent jobs, or 32 percent of the labour force, from the current permanent hourly paid crop of 276 factory workers, as part of a strategy to reduce costs in 3.5 million Belizean dollars (USD 1.75 million), reported the Belize Workers Union (BWU). It is estimated that the job cuts would save the company close to USD 750,000, and savings would also be introduced in other areas.

After meeting with management, the BWU made a counterproposal, which includes a voluntary redundancy package - with management to accept all signatories -, to offer a lump sum redundancy payment and full pension to 28 hourly paid employees scheduled for retirement in 2010, to cut wage rates to USD 2.50 per hour for 39 permanent positions in the factory and 30 temporary positions in the sugar house, among other initiatives that would more than cover the savings through job cuts proposed by management. The union also demands that management share full information on the BSI strategies for the next five years; a clear explanation and commitment on BSI reduction costs; a program for counseling workers leaving the industry, and information on the proposed co-generation project.

Over 80 percent of BSI stake is owned by the Belize Employees Holdings, a trust that comprises all full-time employees of the BSI. Belize benefits from the EU/ACP sugar arrangements and from the US tariff-rate quota system.

European Union: Proposed Reforms and International Sugar Commitments

Included in package to reform the EU sugar regime proposed by the European Commission on 14 July is a section related to the continuation of the EU international sugar commitments, once some basic parameters, such as the cut in domestic prices (the new reference price) and production quotas, are redefined by the reforms.

The Commission said the EU would continue buying 1.3 million tonnes of sugar, white value, from the African, Caribbean and Pacific (ACP) countries and India, but at lower price, which would be related to the reference price. The new ACP sugar price would be about 329 euros per tonne (USD 400/tonne or US 18.4 c/lb at the current exchange rate). Sugar imported from the Least Developed Countries (LDCs) under the Everything but Arms (EBA) initiative will be bought at prices not lower than the ACP sugar, and the Commission proposed a tariff-rate quota to preserve current trade levels with the Western Balkans.

The ACP/EU Sugar Protocol, as proposed in the 2000 Cotonou Agreement, would be integrated in the new Economic Partnership Agreement (EPA), which the EU is negotiating with its development partners. The EPAs are to be in place by 2008, while open market access for LDC sugar under EBA would come into effect in 2009. The Commission also said that it plans to open a "structured" dialogue on development with ACP Sugar Protocol countries and India, and that the EU would support the ACP sugar industries to become competitive or to diversify if this is not feasible.

The Commission also noted that processes like the World Trade Organisation (WTO) dispute on the EU sugar regime brought by Australia, Brazil and Thailand and the WTO Doha Round, which are still to reach their final results, would have an impact on the EU sugar regime. In early August, the WTO made known a preliminary and "confidential" ruling against the EU sugar regime. The WTO found that EU exports of "C" sugar are illegally subsidised, because of the high prices for "A" and "B" sugars, while the re-export of some 1.6 million tonnes (equivalent to imports from the developing world) exceeds the EU commitments under the WTO. A final ruling is expected in September and it is also expected that the EU would appeal.

On the other hand, it would seem that the "intense negotiations" among key WTO players (i.e. Brazil, US, EU and Japan) at the end of July have revived the WTO Doha Round. The agreement is for industrialised countries to eliminate subsidies in agricultural exports, with an immediate cut of 20 percent in allowed subsidies, although some domestic support might be kept. Also, the WTO members agreed that the highest tariffs would get the highest cuts, but countries would be able to keep tariffs on some "sensitive" products. The WTO aims at finalising a deal by December 2005, in time for the ministerial meeting in Hong Kong.

Guyana, Jamaica: Unions Demand EU Withdraw Price Cut Proposal

On 19 July, the IUF affiliated sugar unions in Guyana, GAWU and NAACIE, staged a demonstration in front of the offices of the European Union delegation in Georgetown demanding the EU withdraws the proposal to cut preferential prices by 37 percent over the next two years. The sugar unions and workers were joined by senior management of the state-owned Guyana Sugar Corporation (GuySuCo), and the Minister of Foreign Affairs also supported the action. A complete report on the protest is available on the IUF web site.

In early August, three sugar worker unions in Jamaica, the BITU, the UAWU and the NWU (the former two affiliated to the IUF) presented a letter to the EU delegation and to some European ambassadors expressing their concerns with the proposed cut to the preferential price, and requesting that changes are made in an equitable manner to ensure the survival of the sugar sector in the country.

IUF Indonesia: Workers to Organise Sugar Federation

About 80 delegates from sugar worker unions organising in about 45 of the country's 60 mills met for a national sugar conference on 23-25 August in Malang, East Java. The conference, supported by the IUF, discussed the current challenges of the industry and how the workers would face them. Representatives from seven unions signed a declaration calling for the organisation of a Sugar Federation to defend workers' interests.

Indonesia is a sugar deficit country where domestic production accounts for about 1.5 million of the 3.5 million tonnes consumed annually. Recently, there has been news of rampant sugar smuggling, but the Indonesian sugar industry also faces fundamental questions such as the low agricultural yields and poor quality of cane among farmers supplying the mills under the state-owned PT Perkebunan Nusantara (PTPN) and PT Rajwali Nusantara Indonesia (RNI) groups; the small processing capacity and old equipment of the factories; and limited availability of land to expand cane growing. Indonesia is one of the largest importers of sugar in the world, and Thailand Brazil and Australia accounted for over 90 percent of the imports in the past ten years. Indonesia imports raw and refined sugar.

In response to these challenges, the conference called the government to control imports, and provide some protection to the industry, while, at the same time, to encourage farmers to improve the quality of cane and to consider the modernisation of the factories.

Representatives from management of some of the state-owned mills also attended part of the conference proceedings. Staff of IUF Indonesia, the IUF Asia / Pacific regional office and the global sugar coordinator participated in the conference. The IUF program of activities in the context of the conference also included a meeting with middle management from eleven mills of PTPN X, and visits to mills and cane fields in East Java.