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

Posted to the IUF website 01-Nov-2004

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume VI, Number 10
October 2004


European Union: WTO Panel Reports on EU Sugar Regime Released

The World Trade Organisation (WTO) made public its panel reports on the case against the EU sugar regime brought by Australia, Brazil and Thailand. The reports confirmed that the WTO found the EU illegally subsidising more than half of its 5 million tonnes of exported sugar, surpassing its subsidised export commitments under WTO. The reports also said that a "footnote" on the re-export of about 1.6 million tonnes, equivalent to imports from the African, Caribbean and Pacific (ACP) countries and India, has no legal force, and that exports of the so-called "C" sugar benefit from subsidies.

Franz Fischler, European Commissioner for Agriculture, said that the EU is "dissatisfied" with the WTO findings and would appeal the decision. The appeal, however, would not prevent the EU from going ahead with reforming its sugar regime, as proposed in July this year. The reform package is to be discussed and approved by the EU-25 ministers of agriculture.

The WTO ruling adds to the uncertainty about the future of the sugar industries in many of the ACP countries benefiting from the EU/ACP Sugar Protocol. On 4-6 October, the ACP Group held a sugar meeting to discuss the proposed reforms to the EU sugar regime, and build a common position to negotiate with the EU. The meeting said that the proposed 37 percent reduction on the preferential price and the timeframe for implementation would have devastating effects on employment, rural development and stability of their countries, and would also be a breach of the obligations agreed in the Sugar Protocol. The ACP countries said that the protocol provides guarantees of prices (taking into account relevant ACP economic factors), access to markets (amount of sugar), and is of indefinite duration; and, when reforming the EU sugar regime, these guarantees ought to be kept.
In a press conference after meeting ACP officials on 27 October, Pascal Lamy, EU Trade Commissioner said that the EU expects to conclude by mid 2005 a loss of income compensation package for the ACPs, once the proposed reduction on the preferential sugar price is implemented. He said that it is natural for the ACP countries to be concerned with the proposed reforms, and added that some countries should be able to offset the price reduction by increasing their exports, while others would need to look into diversification. Press reports said that ACP sugar protocol countries stand to lose some 250 million euros per year (USD 317 million at current exchange rates) if the price reduction is implemented. (Information on the ACP position is available here.)

On 27 September, the IUF Caribbean office sent a letter to the EU Parliament on behalf of eight sugar worker affiliated unions in the sugar exporting countries of the English-speaking Caribbean. In the letter, the IUF Caribbean stated that, while the unions welcome the European Commission proposal to open a dialogue on trade and development with the ACP Sugar Protocol countries, the price reduction proposal should be withdrawn because, if implemented, "most of our economies would suffer greatly and talks about development would sound hollow." (The IUF Caribbean letter is available here. IUF unions should request a password for the members only section by sending a message to [email protected].)

United States: Amalgamated Settles Women Discrimination Case

The US Department of Labor found that Amalgamated Sugar Co. unfairly rejected 151 qualified women job applicants, and discriminated against female employees at the company's plant in Nyssa (Oregon) by paying them less that their male counterparts.

Amalgamated agreed to a settlement, which would see the company hiring 22 of the women applicants, with a combined salary of USD 443,000 per year, and to increase the wages of five female employees by a combined total of USD 13,000, said the Idaho Statesman on its Internet edition of 2 October. The company also agreed to spend USD 1,500 in training its managers on equal employment opportunity regulations.

Amalgamated Sugar, a farmers' cooperative, operates four sugar beet processing facilities in the United States: three in Idaho and one in Oregon, and has a market allocation of about 832,000 tonnes for 2004/05.

Tanzania: TPAWU to Launch Legal Action Against Kilombero

The Tanzanian Plantation and Agricultural Workers Union (TPAWU) decided to launch a legal action because of the failure to conclude collective bargaining agreement (CBA) negotiations with Kilombero Sugar, a subsidiary of Illovo Sugar. After several meetings on wage negotiations, as the workers had agreed to renew the terms and conditions of service from the previous CBA, and notwithstanding an offer by management, the company failed to conclude a wage agreement. The union had demanded increasing the monthly minimum wage from 44,000 to 120,000 Tanzanian shillings (USD 42.40 to 110.00). There are 800 permanent workers and over 1,800 seasonal workers. (Illovo Sugar controls 55 percent of Kilombero Sugar, with two mills and cane plantations.)

TPAWU has negotiated wage agreements with other sugar companies, including the Tanganyika Planting Company (TPC), where it a minimum wage of 75,000 Tanzanian shillings (USD 72.20) per month was recently agreed. (With reports from TPAWU.)

Mozambique: Buzi Sugar Sold to MARAGRA

The Mozambican government has sold the Buzi sugar company in central Sofala to the Marracuene Agricola Ašucareira (MARAGRA) SARL in a transaction worth USD 1.25 million, which covers 1.5 million shares in the company plus all the company's assets. The operation would come into effect on 1 November, said the Mozambican news agency on 26 October.

Trade union sources reported that the Marracuene Agricola Ašucareira SARL, also known as MARAGRA, is a minority shareholder (24 percent) in Maragra Aš˙car SARL, where the South African Illovo Sugar holds the majority stake (76 percent). Maragra Aš˙car owns the Manhica sugar mill and cane plantation near Maputo.

The Petiz Family, which owns MARAGRA, has agreed to revive sugar production in Buzi. The company is being established as a small-to-medium scale agroindustrial operation, which would undertake studies for developing future projects, such as establishing sugar cane and forestry nurseries, producing alcohol, and possibly developing cattle breeding and timber activities. Sugar production is expected to be resumed in 2009/10.

Marracuene's MARAGRA said it would create 160 full-time jobs in the first year of operation. Also, the company has offered to work with the local government in rehabilitating the school and health care facilities within the company perimeter, and to deal with the erosion on the banks of the Buzi River. (With a report from SINTIA.)

Zambia: Luena Project Offered to Foreign Investors

International sources said that Zambia has offered 100,000 hectares of land free of charge to foreign investors willing to invest USD 150 million in a large cane plantation and a sugar mill in the Luena project. The project is located in Kawambwa, 650 km north of Lusaka, and is expected to produce 150,000 tonnes of sugar, tel quel, by 2010, 230,000 tonnes by 2015, and 285,000 tonnes by 2020. It would provide some 1,500 permanent and 2,500 seasonal jobs. It was added that there is a growing market in DR Congo and Angola, which Zambia would be in a position to supply. (FOLicht's ISSR, 14 Sept. 2004)

Cane and Ethanol: Brazilian Aircraft on Ethanol

Embraer, the Brazilian aircraft manufacturer, said that Ind˙stria Aeronßutica Neiva, its wholly owned subsidiary, received certification for the Ipanema aircraft, which runs on ethanol and is expected to reduce running costs as much as four times when compared to gasoline-powered planes, even though its initial cost is slightly higher than the latter.

The company said it is possible and cost-effective to retrofit conventional planes with the new ethanol-fuelled engine, and has already received 60 such orders for delivery in the first quarter of 2005. Ethanol is "a more environmental friendly fuel," the company added.

The Ipanema is an aerial fumigation plane, a crop duster. Health and safety concerns have been raised all over the world regarding the use of this method of fumigation. Let's hope that by using a "cleaner" fuel, the Ipanema does not become a cheaper way to pollute the environment and increase the health and safety risks of workers, the rural population at large, and final consumers.

Trinidad: School Children Affected by Pesticide Fumigation

One-hundred and thirteen children and three teachers from four schools in the Barrackpore area in Southern Trinidad were treated at the San Fernando hospital for nausea, vomiting and respiratory problems, result of pesticide poisoning.

The incident happened on 20 October, when the Sugar Manufacturing Co. Ltd. (SMCL) ordered fumigating malathion on cane fields because of froghopper pest. Briko Air Services, hired by the SMCL to spray the pesticide, and the SMCL maintain that malathion is safe for use, and that Caroni (1975) Ltd. has used it in the past. The problem, ventured a spokesman for the Waterloo Research Station, in charge of the chemical spraying program, aroused because "a large cloud" kept the pesticide lingering in the atmosphere before getting onto the field. The Poison Information Centre, affiliated to the University of West Indies, said, however, that malathion is toxic and it can cause vomiting and seizures. People exposed to high concentrations of malathion can fall into a coma or die, it added.

A web site (http://www.chem-tox.com/malathion/research/) supports the opinion of the Poison Information Centre stating that, contrary to what the agriculture industry and some government agencies say, malathion, even at low levels, is indeed a harmful chemical. The site reports a case in Pakistan, where during a malaria eradication program in 1976, out of 7,500 spray men, 2,800 were poisoned and 5 died.

Parents of the affected children are considering suing for financial compensation, and have consulted with the Ministry of Agriculture and the SMLC on the procedure to file claims. (Internet editions of Trinidad Express, Guardian.)

Guyana: GAWU Reaches Wage Agreement

On 25 October, the Guyana Agricultural and General Workers Union (GAWU) reached a wage agreement with the state-owned Guyana Sugar Corporation (GuySuCo) which provides a five percent wage increase across the board, retroactive to 1 January 2004.

After the wage increase, the highest salary for time-rated employees is the equivalent of about USD 296 per month, while the lowest is about US 70 cents per hour. (Overtime for time-rated employees is paid at 1Ż times, and work on Sunday and holidays is double pay.) Cane-cutters would be paid at the rate of USD 3.50/tonne for cutting and loading, with incentives running from USD 1.10/tonne for 10 tonnes to USD 1.75 from 18 tonnes. (Once the output per week is achieved the cane-cutter is paid from the first tonne, and payment is in addition to the USD 3.50/tonne)

The agreement also includes a 19.45-day tax-free Annual Production Incentive (API) if the corporation reaches the 305,000-tonne production target, and a one-day bonus per each 8,950 tonnes achieved thereafter. The API is calculated on the average day-pay of each worker. GAWU agreed that employees would be required to complete 80 percent of the time made available to them (up from 75 percent) to qualify for the bonuses. The union did not agree to change the Annual Production Incentive (API) for a profitability-based bonus as proposed by the corporation (and recommended by international financial institutions). The union said they are not allowed to participate in the corporation's policy as to be responsible for profits, and, more importantly, that the API is a method well understood by the workers, who see their efforts rewarded.

During harvesting, Guysuco employs 17,500 permanent and 4,000 temporary workers, with GAWU representing about 19,500 of the corporation's workers.

According to the local press, production towards the end of October stands at 264,000 tonnes, and the corporation's latest projection is to reach 325,000 tonnes. Last year's production was 302,379 tonnes. (With reports from GAWU.)

India: Massive Imports Expected, Cooperative Sector in Deep Crisis

India, the world's largest consumer of sugar, is heading for a massive importation of sugar in 2004/05 season, which trade analysts estimate at about 4 million tonnes. Recent trade reports said that India has already bought close to 950,000 tonnes of Brazilian very high pol (VHP) raws, of which 350,000 tonnes may have entered the country.

There is also some discussion on the quality of sugar to be imported: if India wants to import raws, it would probably do so before the 2004/05 crushing season ends by March, as mills would process the imported raws along with the domestic production. If imports come after the season ends, it would probably be white sugar, as it is expensive to keep the mills running to process raws. The government has said that the re-export program (importing duty-free raws and exporting refined) would require mills to export the sugar in the 24 months after importation (extended from the previous 18 months), and, by paying a fee, the period could be extended for another 24 months. It is expected that the refined sugar under the re-export program would find its way into the domestic market, with its re-exporting taking place once the market is balanced.

Sugar production in 2003/04 was about 13.8 million tonnes, white value, down from 20.1 million in the previous year. Initial estimates for the 2004/05 harvest are between 10 and 12 million tonnes, white value, although recent rains in Maharashtra and Tamil Nadu, after the monsoon season ended, may help production next year.

With the backdrop of production shortfalls and massive importation expected, the sugar cooperative sector, which accounts for the bulk of factories (about 269 of the total listed of 453), is in crisis.
In Maharashtra, the state government is to raise some 13 billion Indian rupees (USD 294 million) through open market borrowings (OMB) to help financially the state's cooperative sector. According to industry sources, the OMB is ready for launching and only requires the approval of the Central government. The OMB funds would go to about 100 cooperatives, with some 6 billion rupees (USD 135.6 million) towards the fixed costs of the factories that would remain closed this season and for wage- at 75 percent - owed to employees.

Maharashtra's cooperative mills are scheduled to start crushing around mid November, although about five of them, located in the Maharashtra-Karnataka border, may start crushing earlier. Out of the 165 cooperative factories listed in the state, about 70 are expected to qualify to operate this season. Industry sources said that they would operate on less than half their installed processing capacity.

In Karnataka, workers and farmers of the Aland Cooperative Sugar Factory (1,250 tdc) threatened self-immolation if no announcement that the factory would resume operations is made. The workers are on a 45-day dharna (a form of protest), reported the local press. A Joint Action Committee of farmers and workers in the factory took the decision because the government ignores their plight, while provides funds to other factories. The committee said the factory did not operate last year, and employees have not received their wages in 19 months. The committee also demanded the withdrawal of the illegal layoffs, payment of cane arrears to farmers and wages owed to workers, and the appointment of an efficient management team - as the committee understands that mismanagement is a major cause for the problems in the factory. The cooperative sector accounts for 21 of the 45 factories listed in Karnataka.

In Punjab, reported the Tribune News Service on 22 October, the cooperative sector is on the verge of collapse, with multibillion dollars debts, and a drastic reduction in cane areas, now estimated at 40,000 hectares, down from 70,000 hectares last year. The paper said that only three cooperatives are expected to start crushing by mid-November, while most of the rest would, in the best-case scenario, operate for a very reduced milling season. In fact, state government officials said that some mills have cane supply to operate for only a week or so. Three of the cooperative mills have been closed since 1997.

IUF India: Meetings in Karnataka and Maharashtra

From 11-12 October, the Karnataka Sugar Workers Federation (KSWF) held an education / planning meeting with the participation of some 90 delegates from 21 sugar mills in the state. The delegates reviewed the situation of the sugar industry at the international and national levels, in particular India's cooperative sector, reported on their factories' situation and discussed the trade union work. Among the proposals for future activities in coordination with the IUF are two zone meetings in 2005 to reach the grass-root union membership, and to support the KSWF's participation in the state tripartite committee of the sugar industry. The IUF Karnataka program also included a visit to the Mysore sugar factory near in Mandya. The IUF regional secretariat for Asia/Pacific and a representative from LO-TCO, the Swedish union that supports the Indian sugar program, also attended the meeting.

On 14-15 October, IUF South Asia Education Office (SAEO) and the global coordination visited Maharashtra, one of the two largest sugar-producing areas in the country. The delegation visited the Chintamaninagar cooperative factory in Haveli, near Pune, where it met the local union leadership and some 110-factory workers; and in Pune it met with about 80 delegates from the Maharashtra sugar workers federation, to discuss the international and the Maharashtra sugar situation. A visit to the Vasantdada Sugar Institute completed the program. The visit was part of IUF efforts to reach the sugar unions in India.