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The Sugar Worker, February 2006. News from the Sugar Sector.

Posted to the IUF website 06-Mar-2006

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume VIII, Number 2
February 2006

Jamaica: Unrest in the State-owned Sugar Sector Continues
On 17 February, more than four hundred workers at Frome Sugar Factory (under the state-owned Sugar Company of Jamaica or SCJ) ended a two-day strike, after walking off the job because two supervisors had been suspended. The workers were also upset because the non-payment of some allowances. Union representatives intervened to resolve the dispute, and said it could have been adverted if proper procedures in investigating the allegations against the supervisors would have been followed. It was reported that the supervisors had been suspended after management criticised the work performed by cane cutters under their responsibility.
The two-day strike at Frome coincided with complains by tractor drivers at the Monymusk Sugar Estate who said the company, also part of the SCJ, has not properly repaired the tractors, which have developed mechanical problems and reduced their income. It was said that tractors from the Bernard Lodge factory, another unit of the SCJ, are used to transport cane to Monymusk.
On 27 February, cane cutters in Long Pond went on strike demanding higher salaries. By the time of writing, they were still on strike and management had refused talking to them while they are on strike. The workers claim that workers in other factories are paid better rates.
These are only three of the most recent episodes that express the malaise prevailing in the sugar industry of Jamaica, quite particularly with the performance and future of the five sugar estates owned and run by the SCJ: Bernard Lodge, Long Pond, Frome, Monymusk and Duckenfield. (There are seven estates in Jamaica, the other two are privately owned.)
In related news, a sugar forum sponsored by a local paper gathered representatives from different organisations, including the Sugar Industry Authority, the Jamaica Cane Products Sales (in charge of the marketing of sugar), the SCJ, representatives of the privately owned Worthy Park Sugar Estate, the cane farmers' association AIJCFA, among others.
Among several issues, the forum heard a report by Worthy Park Sugar Estates which described the company's optimistic business plans, even in the context of a cut in sugar prices of the European Union. A spokesperson for Worthy Park said they plan to expand areas under cane with the integration of the Innswood estate. The estate now produces an average of 48 tonnes of cane per hectare, and the company is convinced that, with proper management, agricultural yields would increase to 90 t/h. This would mean that Worthy Park might increase cane production by about 150,000 tonnes per year, representing an additional 15,000 tonnes of sugar, which would bring its output to 38,000 tonnes per year. Worthy Park is negotiating a USD 10 million loan on preferential terms to develop Innswood. Additionally, the spokesperson said that the government could provide assistance by improving road infrastructure to allow better and timely cane transportation.
This bright perspective for Worthy Park contrasts with the bleak future of the estates under the state-owned SJC. In fact, a study by a EU team of experts suggested closing three SJC factories, and a proposal by the governmental Planning Institute of Jamaica (PIOJ) suggested closing two.
Another interesting topic in the sugar forum was a discussion on the shortage of cane cutters. Participants, including farmers, said that the shortage of cutters is because of the competition from other sectors, such as construction, and that they face increasing costs because having to provide transportation and accommodation to the cutters. No mention was made, however, of the poor working conditions that are basically unattractive to cane cutters, such as low wages, poor social benefits and working conditions, and lack of protective equipment. In addition to historical and cultural shortcomings, which the sector has been unable to overcome, these poor working conditions push workers away from the industry, who prefer to look for alternative employment elsewhere.

European Union: Cut in Production Quotas
The European Union is proposing a 2.5 million-tonne cut in production quotas for the July 2006-June 2007 period, in order to avoid a significant increase in its sugar surpluses. The quota cut would be allocated to Member States according to the new regulations, while the sugar quotas already giving up in the marketing year would be counted against the proposed reduction. A decision is expected in early March.
The European Commission for Agriculture is concerned that the reduction in the domestic sugar prices to be implemented by 1 July as per the reforms of the sugar regime will not be enough to reduce output, in great part because the fund to compensate for reducing production will only start in January 2007.
Some Member States said that the idea of a one-time cut in production quotas was not part of the agreement on sugar reforms, which were formally adopted on 22 February, but the Commission said that the cut is not only a good idea but it is absolutely necessary to prevent building unmanageable surpluses in the 2006/07 market year (the first under the reforms). Without the cut, the Commission said, the surplus quota sugar would have to be withdrawn from the market and store it, which would then increase the pressure on the EU sugar situation, by adding to the sugar the EU has to dispose off before the 22 May 2006 deadline given by the WTO. It is not clear, at the moment of writing, what the EU would do with an estimated 5 million tonnes of "C" sugar, which would not benefit from export subsidies after the WTO ruled that the EU has been illegally subsidising exports to the world market.

Brazil: Why Cane Cutters Die in the Fields?
The death of 11 cane cutters in the past two years in the cane fields of Sao Paulo is under investigation by labour authorities on pressure by unions and support groups, including the Pastoral do Migrante de Guarib�. (See The Sugar Worker 2005 issues for news on the working conditions of the cane cutters in the Brazilian sugar sector.)
In a recent, short and penetrating article, Francisco Alves, professor of Production Engineering from the Universidade Federal de S�o Carlos, said that although cardiac - and pulmonary - arrest is reported as the immediate cause of death of the cane cutters, it is hardly the reason why they die on the job. To start discussing, and eventually find a solution to these senseless deaths, it is necessary to look at the working conditions and the system of payment which impose an enormous pressure on cutters to work harder and harder.
Over the past forty years, the sugar and ethanol sector in Brazil, particularly in the state of Sao Paulo, has grown considerably: larger areas are under cane, more cane is produced, and more factories and distilleries have been built. Productivity of cane cutters, measured through the tonnes of cane cut per day, has increased. In the 1960s, a cane cutter cut in average three tonnes of cane per day. The average went to about 6 tonnes in the 1980s, and today is about 12 tonnes, with a minimum of 10 tonnes per day, if the workers want to keep their jobs.
The article summarises the physical efforts performed by the cutters: he/she has to flex his/her legs about 36,630 times in order to strike the canes (close to the ground, where the sucrose content is higher) with a machete or pod�o some 366,300 times; he/she walks some 8.8 km per day; carries some 10-12 tonnes of cane in piles of 15 kilos each, and losses some 8 litres of water per day while cutting cane in the open, under the sun and heat, and using personal protective equipment which, even when protecting the cutter from the cane, increases body temperature.
The article identifies some developments which have influenced the conditions under which the cane cutters work:

The pressure created by the working conditions, expressed in a system of payment by productivity, is the main reason why cutters die in the fields: it pushes cutters beyond their physical limits and they die of exhaustion. Dramatically, this happens in the most advanced and largest sugar and ethanol complex in the world that utilises some of the most modern agricultural technology, like precision agriculture with satellite information and late generation machinery and equipment.
Death of cane cutters by exhaustion, if investigations eventually confirm - as they seemed to be heading to - would be the most devastating indictment against the Brazilian sugar and ethanol sector, placing a strong question mark on the kind of sustainability (and efficiency) of any industry that works their workers to death. (The article by Francisco Alves is available in Portuguese here.)

Sugar Trade: US-Colombia FTA
On 27 February, it was announced that the US and Colombia concluded negotiations for a bilateral free trade agreement (FTA) to lower tariffs in goods and services. Most Colombian imports already enter the US duty-free under the Andean Trade Preferences Act (ATPA), and the FTA would continue the preferential treatment. Only imports into the US of Colombian sugar would be limited in the FTA. Presently, the US tariff-rate quota (TRQ) for Colombia is 50,000 tonnes of sugar, which enter the US duty-free. Colombian sugar imports would increase by 1.5 percent per year, according to a spokesperson with the office of the US Trade Representative. Imports over and above the TRQ would face the prohibitively high "second-tier" tariffs.
Trade sources said the main obstacle for the FTA was that Colombia sought protection for her production of corn, rice and poultry, as some groups feared they would not be able to compete against US subsidised production. Colombia agreed to phase out import tariffs on US farm exports over the next 15 to 19 years, with the longest transition period assigned to rice. This is the second FTA negotiated by the US with an Andean country. Last December the US concluded negotiations with Peru, while talks with Ecuador are to resume in March.

Denmark: Danisco to Close Three Factories
News of the restructuring by European sugar processors which is directly linked to the EU sugar reforms continued with Danisco, the Danish food conglomerate, announcing the closure of three of its sugar factories after the 2006 campaign: Assens (9,900 tdc) in Denmark, K�pingebro (10,200 tdc) in Sweden, and Salo (7,000 tdc) on Finland. The company also said that it would sell a portion of its sugar quota in Sweden and Finland, and would buy extra quota for its Anklam factory in Germany. Danisco's management said that the closures would affect some 350 employees, and would reduce the company's total production of quota sugar by about 100,000 tonnes.
According to Finnish sources, Danisco will start negotiations with the employees in the Salo factory on their future situation. The factory employs some 60 permanent workers, and close to 100 during the processing season. Management said the company would try to minimise the number of dismissals, by offering workers the possibility of relocation to S�kyl�, Jokioinen, and Kantvik. They recognised, however, that relocation means workers moving to other towns, which may not be an option for many of them. Management also said that future plans for the Salo factory might include the production of fuel ethanol, which would depend on the government introducing policies on new energy sources.
In 2007, Danisco would review and optimise all administrative functions in its sugar division, attempting to achieve further synergies across the organisation. Part of the move would transfer some of the operations of the Arl�v office (Sweden) to other locations in Sweden and Denmark.
It is expected that Danisco would remain as the main sugar supplier to the Nordic countries. In fact, it is the only sugar processor in Denmark, Finland and Sweden. (Neither Norway or Iceland, the other two Nordic countries, produce sugar.)
The 2005 season ended with an excellent production in Danisco's sugar operations, supported by favourable weather conditions which led to an increased beet production and better quality beets - with higher sucrose content. New records were achieved in agricultural yields in Denmark and Finland, while the performance of Danisco's factories was strong. Danisco's sugar production was 1.274 million tonnes in 2005, compared to 1.242 million tonnes in 2004. Factories in Denmark accounted for 37 percent of the total output within the Group, followed by factories in Sweden with 32 percent. Facilities in Finland, Germany and Lithuania accounted for the remaining 30 percent of sugar. Danisco's total quota production for 2005/2006 is set at 1.027 million tonnes.

Italy: Sugar Sector Proposals
In a workshop attended by Italian sugar groups in Bologna, including company and union representatives and local authorities, the Italian sugar sector put forward objectives that their government should pursue in the context of the EU sugar reforms. Among them are a guarantee of 65.8 million Euros by the EU through subsidies and production quotas in the 2006 campaign; compensation for the carry-over sugar from the 2005 campaign; deadlines for redundancy funds for all employees in the sector; set up the criteria for competitiveness to identify the factories that would remain in operation; establish a bio-energy products Italian market, as alternative to sugar, with the possibility of legislating the mixture of bio-fuel products with gasoline and limiting such products to those of Italian origin. The workshop of sugar "stakeholders" also said that the uncertainty on the future of the sector should be removed, and that the government should not delay decisions on sugar policy. (Based on a report by AGI, 3 February 2006.)
The Italian sugar sector is considered as particularly vulnerable in the context of the EU reforms, and deemed as a "marginal" area when compared to other European producers, because of lower productivity and higher costs. Italy is a deficit country, and imported some 785,000 tonnes of sugar in 2004 (with more than half of imports coming from France and Germany). In the 2005 campaign, it was reported that the area under sugar beet increased from 185,000 to 240,000 hectares, mostly because of a shift from corn to beet in the Po valley in northern Italy. When the sugar reforms were initially discussed, there were concerns that the whole Italian sugar sector would disappear because competition from within the EU (France, Germany) and from foreign sources (Brazil and LDCs cane-sugar suppliers through the EBA arrangement). Concerns are now centered on the future of the sector in southern Italy, which seemed destined to disappear.

IUF Global Sugar: Jamaica, South Africa, Indonesia
Part of the work of the IUF global sugar program is to support our affiliates to discuss and build alternative proposals for the future of the sugar industry, an ongoing task that has taken central stage because of the globalisation and restructuring processes, the trend towards free(r) trade practices, and, of late, the process of reform of the sugar regime in the European Union, which would have a major impact on many traditional sugar industries.
In February 2006, the IUF held a series of activities, which focussed on building a proposal for the future of the industry that also responds to the concerns of workers (and their families).
In Jamaica, from 30 January to 2 February, the IUF and its affiliated unions, UAWU and BITU, held meetings attended by national union representatives, and meetings at estate level (Appleton and Frome), all of which focussed on social conditions in the industry. The national union leaders involved in the sugar sector discussed issues such as health and safety standards, pension plans, industrial relations; while the estate-level meetings focussed on health and safety standards, with the participation of the safety committees and monitors in the said estates. As part of the program, the local unions are working on a policy document, which is supported by a research by the IUF global sugar program on decent jobs in the international sugar sector.
On 27-28 February in Johannesburg, the IUF African office held a sub-regional sugar network meeting, with the participation of unions from Mozambique, Malawi, Zambia, Zimbabwe, and South Africa, and the IUF global sugar. The meeting was supported by the Danish federation 3F, representing a coordinated effort between the IUF and one of its affiliates active in solidarity programs in sugar. The meeting discussed issues of concern to workers and unions, such as the deteriorating terms and conditions of work (e.g. casualisation and outsourcing), and the proposals for EU assistance within the accompanying measures to the EU sugar reform. The unions said that severe limitations in the process of elaborating national sugar action plans have prevented in some countries an open and full participation of all sugar "stakeholders".
Meanwhile, IUF Indonesia launched an initiative to support the sugar workers' efforts to ensure employment and the viability of the industry, in particular in East Java. On 17-19 February, IUF Indonesia held a meeting in Bandung, with the participation of trade unions representatives from the sugar and other economic sectors, as well as sugar technical and administrative experts, to discuss some relevant issues facing the industry, such as inefficiency in factories, low quality and availability of cane, and concentration of the domestic trade system in few hands.
The challenges to build a comprehensive proposal for the sector based on a democratic participation of all sugar groups and on a thorough understanding of the sector are considerable, in particular because of the trend to consider that capital investments (e.g. building new factories, expanding plantations, or going into energy through ethanol and co-generation) would by themselves foster development, and because of the real limitations to create conditions for a participatory process. Union proposals have to go beyond the initial steps of defining capital investments, and look at reforming the configuration of the industry to allow more effective ways to create and fairly distribute income and, equally importantly, look into the working conditions under which workers labour in the sector: how sustainable or development-prone a sugar industry can be if it does not provide decent jobs to its workers?

Company News

South Africa: European(s) After Illovo?
Illovo Sugar, Africa's largest sugar company, reported an offer for a possible acquisition of a majority stake in the company by a third party. The company did not identify the interested party, but analysts tend to believe it is a European sugar manufacturer. Analysts have made a direct link between the significant amounts of money to be paid as compensation to European processors, as they close production facilities in the context of the sugar reforms, and the opportunities to use such monies to buy Illovo Sugar (or any other low-cost producer), which is able to sell unlimited sugar to the EU after the Everything but Arms (EBA) deal opens up the market to the Least Developed Countries (LDCs) in 2009, even if prices might be lower then.
Illovo Sugar has a dominant control over the sugar industries of Malawi, Zambia, Swaziland, Tanzania and Mozambique (all LDCs), and also in South Africa.

Mozambique: Tereos Invests in Sena Sugar
The Sena Sugar Company of Mozambique announced an investment of USD 30 million by the French Tereos Group, through the Berneuil Participations SAS, a member of Tereos. The investment would give the French group a 50 percent stake in Sena Holdings Limited, which controls Sena Company, and had been entirely owned by a Mauritian consortium. The agreement will increase Sena Holdings share capital from USD 20 to 40 million, making Tereos and the Mauritian consortium equal partners. Also, Tereos would fund directly the Sena Company through a shareholder loan for USD 10 million. Sena Sugar owns Marromeu, reported as the country's largest and most modern sugar refinery. The deal is expected to provide great advantages to Sena Sugar as the EU market is liberalised, even when the preferential prices received by the African, Caribbean and Pacific (ACP) countries would be reduced by 36 percent in the next four years. Tereos Group is reckoned as the second largest sugar group in Europe, and was formed by a merger of the former B�ghin-Say sugar interests and Union SDA, a beet farmers cooperative.