IUF logo; clicking here returns you to the home page.
IUF
Uniting Food, Farm and Hotel Workers World-Wide


The Sugar Worker, December 2002. News from the Sugar Sector.

Posted to the IUF website 31-Dec-2002

Share this article.



The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume IV, Number 12
December 2002

Contents




United States: Domino's Baltimore Refinery on Strike

Three hundred and thirty workers at Domino's Baltimore refinery went on strike on 8 December, after rejecting the company's last-and-final offer of 6 December. The United Food and Commercial Workers, Local 392, which organizes workers in the refinery, said the company wants to modify the workers' pension plans, asking them to transfer all their retirement monies to a new company-run plan. Notwithstanding the importance of such proposal - in particular after the recent scandals of Enron and World Com -, the company has provided no basic information on the new pension plan.
The union also said that the company wants to cut two paid holidays (Veteran's Day and New Year's Eve) and introduce changes to the workers' health and welfare plan. Workers will have to pay USD 50 per month per family in the first year, $75 in the second and $100 in the third; this would be the first time workers contribute to their health care program. The company also wants to reduce wages and benefits for all new hires. The company offered a 2 percent wage increase in each of the three years of the new CBA.

Union members rejected the company's offer on a 263-to-3 vote and on 252-to-16 vote opted for the strike. There are about 500 employees in the factory, which according to a union source is now running at about 20 percent capacity. Last time a strike took place in the refinery was October 1981; the dispute was settled in one day. The previous CBA had expired on 7 December.

Domino products are among the most popular brands in the United States, appearing under labels such as Domino, America's Choice, Jack Frost and others. American Sugar Refining owns the Baltimore refinery, along with other Domino refineries in Louisiana (Chalmette) and New York (Brooklyn), in addition to the Yonkers refinery, also in New York. American Sugar is a company created by the Fanjul Family and the Sugar Cane Growers Cooperative of Florida when the partners acquired Domino from Tate & Lyle in November 2001. The Fanjuls, a family of Cuban origin, are a dominant force in the cane-based sugar segment in the United States. Besides controlling American Sugar, the Fanjuls own cane field and factories in Florida and the Central Romana, the largest sugar producer Dominican Republic, along with some other tourist and real estate businesses.

Jamaica: Government Closes Hampden

The Hampden factory in Trelawny closed its doors on 19 December, after years of economic losses and declining production. The minister of Agriculture had announced the closure at a Parliament session on 11 December; he said Hampden needed 400 million Jamaican dollars (USD 8 million) in the next three harvests, to bring its operations to a "minimum level of efficiency."

Following a strong reaction from the cane farmers, the minister of Agriculture gave a lengthy explanation of the decision to close Hampden, which the local media reproduced. He said that Hampden's total debt had climbed to USD 33.3 million by April 2002, when the government took control of the estate, through the Sugar Company of Jamaica (SCJ). The government had since invested another USD 2 million. The minister said that the factory is very old, with a 90-year old boiler and a 62-year old clarifier, for instance, and last year produced only 5,000 tonnes of sugar, about one third of its installed capacity. Hampden was not longer viable, said the minister, and the upgraded Long Pond, a neighbouring estate, would be able to process its cane. The government had estimated that operational losses for both Long Pond and Hampden would be about USD 2.6 million in the 2002/03 harvest, almost equally divided between the estates. By consolidating operations, the government estimates losses in USD 882,000.

Some 200 full time workers will lose their jobs; Hampden employed up to 750 workers during harvest. A meeting between the Sugar Company of Jamaica (SCJ) and the University and Allied Workers Union (UAWU) on 23 December agreed that workers would receive redundancy payments before 31 March 2003. Total payments to workers are estimated at 66 million Jamaican dollars (USD 1.3 million). The union expressed concerns because field workers are not included in the redundancy program. A new meeting scheduled for 10 January may look into the matter again and discuss a housing project for Hampden workers approved two years ago. Union representatives said that they would examine the information on redundancy to ensure that workers receive their full payments according to the years of service and basic wages at closure.

The Hampden Cane Farmers Association (HCFA), which represents over 300 farmers who supply cane to the estate, doubts that Long Pond has the capacity to process all the cane that they deliver to Hampden. They also are concerned with further losses because of higher costs of sending their cane to Long Pond, even though the government offered to subsidise cane transportation. They said that government's mismanagement is the main cause for Hampden's problems.

Even though the government had supported Hampden, over the years, through the Development Bank of Jamaica, the estate had been privately owned and operated until late 1999, went it went into receivership. In the following two years, the receiver tried unsuccessfully to find a buyer. On 19 April 2002, the Sugar Company of Jamaica (SCJ) took over the estate.

In the midst of the campaign towards the 2002 October election, which brought a fourth consecutive term for the ruling party (PNP), there was a proposal to set up a USD 100 million-new factory in Trelawny with an annual production capacity of 60,000 tonnes of refined sugar. When announcing the closure of Hampden, the minister of Agriculture said that, while the government is ready to support "any reasonable proposition," at present is in "no position to invest in the proposed plant, or to provide a sovereign guarantee for its construction."

Jamaica's sugar production in 2001/02 reached slightly over 170,000 tonnes, a 14.5 percent decline on the year and the lowest level in the past 50 years.

Philippines: Rehabilitation of Victorias, Retrenchment of Workers

With a debt of over 5 billion Filipino pesos and pressing interest payments, the Victorias Milling Co. (VMC) filed for a debt moratorium in June 1997. It then tried to get the approval of the Securities and Exchange Commission for a restructuring plan, while operating under a supervised rehabilitation program. The approval was eventually obtained in December 2001, when over 30 creditors agreed to a 15-year program, which included a 300 million pesos (USD 5.6 million) investment in 2002 and a debt-for-equity swap to ease the pressure from interest payments (although the Supreme Court is still examining the legality of the latter). Also in the proposal was the issue of 2.5 billion pesos (USD 46.64 million) worth of new shares, which took place in October 2002. The operation gave creditors a 69.5 percent stake in the company.

During 2002, the Victorias implemented six rounds of job cuts, reducing the number of workers by one third, from 2,450 to 1,650, following the restructuring program. The company is to focus on its "core business" of sugar manufacturing and workers in non-sugar areas, like railroad and engineering, have lost their jobs. The company spent 250 million Filipino pesos (USD 4.7 million) in the 2002 retrenchment program, financed with internal resources. Each worker receives 1.5-month wages per year of service as a severance payment.

In the 1980s, VMC employed almost 4,000 workers, making it the largest sugar milling company in the country. The mill was established in 1922 in Negros Occidental and is currently listed with 15,000 tonnes of daily capacity. In 2000, it produced close to 180,000 tonnes of sugar.

The Victorias Bioenergy Inc. (VIB) said it is negotiating with VMC the building of a cogeneration plant next to the mill at a cost of USD 74.8 million. The plant would generate 55 megawatts of electricity using bagasse, cane trash and wood. Construction may start in October 2003 and the plant would be operational in 2005. A VIB spokesperson said the company expects to provide energy to the mill in exchange for bagasse and sell the surplus electricity to the Central Negros Electric Cooperative. The company also said that 300 jobs would be required in the construction phase and, once in operation, the plant will need 200 full time employees. VIB is a 60-40 percent venture of Venture Factors, a division of Zabaleta & Company Inc., and the British Bronzeoak Ltd.

The Filipino 2001/02 harvest (September/August) produced 1.9 million tonnes of sugar, a five percent increase on the year, and the highest output since 1993 according to the Sugar Regulatory Administration (SRA). Negros is still the leading producing island with 52.6 percent of the national sugar output, followed by Eastern Visayas and Mindanao with 24.3 percent, Luzon 18.2 percent and Panay with 5 percent. Estimates for the 2002/03 cycle are for slightly below 2 million tonnes of sugar.

Uganda: Government To Revise Kinyara Sale

Two days after the Privatisation Unit and authorities of the Uganda Stock Exchange announced the floating of Kinyara shares on the market, government officials said on 26 November that the initial public offering was being scrapped and the government would sell a 51 percent stake to a single investor instead. The original process had been to sell 51 percent of Kinyara through a public offering, with employees, out growers and management buying 10 percent of the company each, and 29 percent going to the public. The government would have retained a 49 percent share.

Local sources said that main reason to revise the method of privatisation was that the government had expected to attract an "institutional investor" with enough capital as to guarantee the factory continued operations. After failing in its attempts, the government felt that a public offering would risk having an "accidental majority shareholder" in control of Kinyara and, possibly, no guarantee of fresh capital. The government had invested 3 billion Ugandan shillings (US 1.6 million) in preparing the public offering of Kinyara.

Officers of the privatisation unit said that it would take at least six months to sell the 51 percent of Kinyara to a single investor. The new process requires drafting the new conditions for sale and deciding on the requisites for companies to qualify as bidders; and "that's assuming we get bidders," added the sources. They said that the new method would still guarantee workers and out growers their 10 percent each but it is not clear if Booker Tate (with a management contract on Kinyara) would still be offered a 10 percent stake. The remaining shares would be offered to the public and, apparently, the government will keep no stake in Kinyara.

Sugar and Biotechnology: News from Australia and Cuba

The Australian government granted a USD 16 million for the establishment of the Cooperative Research Centre (CRC) for the Sugar Industry Innovation through Biotechnology, reported Planet Ark on its web site on 16 December. The CRC would develop molecular biology technologies to enhance sucrose content in the cane, and would aim to produce other products besides sugar, like biodegradable plastics, bio-fuels and pharmaceuticals. In related areas, the CRC would seek to improve sugar cane growing aspects, such as water absorption, and produce new varieties that are more resistant to pests and diseases to reduce the use of pesticides and chemicals. The CRC would combine the work from the Bureaus of Sugar Experiment Stations (BSES), the Commonwealth Scientific and Industrial Research Organisation, the Sugar Research Institute, the Sugar Research and Development Corp., universities and commercial partners. The government grant is for a seven-year period.

In early September 2002, the Australian Office of Gene Technology approved an application for a trial experiment to grow a genetically modified cane in a field in Cairns, which had already been grown in a greenhouse. A spokesperson for the BSES said that the experiment would be under strict controls; for instance, the Office of Gene Technology may require that, in case the cane flowers, the flowers be cut off before they could form pollen and that, on completion of the experiment, the plants are dug out and destroyed.

In related news, scientists of the Centre for Genetic Engineering and Biotechnology in Havana, Cuba, said they are researching the production of fructose from cane. Fructose contains fewer calories and is sweeter than the sucrose naturally produced by the cane. The experiments would allow Cuba to produce a greater volume of sweeteners with less cane, aiming to supply special markets at better prices. The Centre said it awaits permission from Cuban authorities to start the experimental planting phase. At a more advance stage are experiments with genetically modified cane to produce varieties of greater resistance to pests. In fact, several of these new varieties are already growing in greenhouses. If successful, Cuba would save resources in the use of pesticides.

Company News

United States: Imperial's Sugar Land Refinery to Close

Imperial's 160-year old and 3-million pound a day refinery in Sugar Land, Texas, closed just before Christmas. Three hundred and twenty six workers would lose their jobs while about 100 will continue in distribution operations and at the company's headquarters. The actual number of workers remaining will depend on talks between the Machinists Union and the company. The company said there would be programs to assist and counsel employees, and will negotiate with the union a severance package for the workers. The company made the announcement on a series or meetings with the workers on 3 December.

Imperial will consolidate its cane sugar refining operations at its plants in Gramercy (Louisiana) and Savannah (Georgia). Gramercy, said a company source, is located in a "robust" cane-growing area comprising ten raw mills and Savannah, near the water, allows for cheap barge transportation from the mills located in Florida. In contrast, the refinery in Sugar Land is not longer near cane fields while the raw sugar arriving at Galveston has to be transported to the refinery, about 50 miles inland, as the crow flies.

In addition to the refineries in Gramercy and Savannah, Imperial will continue operating its beet factories in Mendota and Brawley and a packaging plant in Tracy (all three plants in California). Imperial is a processor and marketer of refined sugar and a distributor in the food service sector. In 2001, it supplied about 28 percent of the refined sugar consumed in the United States. Before announcing the closure, Imperial employed some 2,200 workers countrywide. The company was founded in 1843 and was a privately owned company until 1988, when it bought the publicly listed Holly Sugar Corp.

Imperial had been on bankruptcy protection under Chapter 11 until August 2001. It is now implementing a restructuring plan to focus its business on the marketing sugar products to industrial users and retail chains. In early October 2002, Imperial completed the sale of three beet factories to American Crystal. It has also sold some non-sugar businesses, like Diamond Crystal Brands (DCB) that Hormel acquired in December. DCB packages and sells sugar products, drink and dessert mixes and similar products for the food service and retail market.

Brazil: Pessoa Group Acquires Its Eighth Factory

Jos� Pessoa de Queiroz, head of the Pessoa Group, announced the group's recent acquisition of 46.5 percent stake of the Alcoazul factory in Ara�atuba, Sao Paulo, for 70-million reais (USD 20 million). The Pessoa Group takes effective control of the Alcoazul as the rest of shares is scattered among several shareholders. The new factory would improve the group's synergy, said Pessoa, with the possibility of processing of surplus cane from the Ben�lcool mill in Bento de Abreu, which in the current harvest produced 1.3 million tonnes of cane but around 100,000 tonnes were sold to other factories.

With the transaction, the Pessoa Group now controls eight factories: Seragro in Sergipe, Santana in Minas Gerais, Santa Olinda and Debrasa in Mato Grosso do Sul, Santa Cruz in Rio de Janeiro, and Ben�alcool, Sanagro and Alcoazul in Sao Paulo. The group is one of the largest sugar and alcohol companies in the country, processing close to 7 million tonnes of cane per year. (Cana Web, 12 December.)