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The Sugar Worker, January 2003. News from the Sugar Sector.

Posted to the IUF website 27-Jan-2003

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume V, Number 1
January 2003

Contents




Trinidad: Caroni Unions to Propose Alternative Restructuring

The five unions that organise Caroni workers and staff personnel decided on 24 January to set up a task force to work an alternative to the government's plans for the restructuring of the state-owned sugar company. The unions involved are the All Trinidad Sugar and General Workers Union, which represents the daily-paid workers, and four different staff associations, the Technical Administrative and Supervisory Staff (ATASS), the Sugar Industry Staff (SISA), the Sugar Boilers and the Estate Police, which represent Caroni's monthly-paid staff. Also attending the meeting were delegates of the Cane Producers Association of Trinidad and Tobago.

The start of the 2003 harvest was delayed for about a week because of negotiations between management and the four associations, which concluded in a Memorandum of Understanding (MOU) signed on 21 January. The main points in the MOU were the resumption of negotiations for a 2002-2004 CBA and a Voluntary Separation of Employment Programme (VSEP) for the staff to be offered by 15 February, when the government will offer a similar package to the daily-paid workers. It was also agreed that salary increases in the new CBA will be included in the VSEP, a job reclassification to be completed by 4 February, and no loss of earnings in 14-21 January, when the staff did not work.

On 12 January, the Minister of Agriculture said the government wanted all 9,000 daily-paid workers in Caroni to take the VSEP. The government has decided that the 2003 harvest will be the last of Caroni as a cane grower and, starting in 2004, private farmers would supply all canes. If workers want to continue in the industry, the minister said, they could farm the lands the company plans to lease. The Brechin Castle factory will close after the 2003 harvest and only the Usine Saint Madeleine will continue operating. Caroni will work with a 75,000-tonne production target and does not need to operate two factories, said the minister.

The All Trinidad Sugar and General Workers Union (ATSGWTU), an IUF affiliate, has strongly criticised the proposed restructuring and the highhanded way in which the government wants to introduce it. Regarding the VSEP, for instance, the All Trinidad says that there are key elements that influence it (and will define the individual situation of a worker who takes it), which have to be settled before a fair package is offered. Among them, a new CBA because the current VSEP uses conditions and terms from an already expired CBA, and a validation of work records which, in several cases, do not reflect the workers' actual number of years of service and go against them when defining a VSEP. Also important is to agree on the age at which workers will benefit from Caroni's pension plan given that, according to current regulations, many workers enrolled in the VSEP would have to wait several years before receiving any pension payments. In a related issue, the union wants to revise the information available at the National Insurance Scheme (NIS) due to concerns that not all contributions deducted to the workers actually appear on NIS records.

In addition to the VSEP, the All Trinidad is concerned with the lack of discussion about Caroni's plans. For instance, there is news that 12,000 new jobs would be created but, the union says, there is no information on where and what these jobs would be and what skills will be required to perform them. Meanwhile, the government set up a subcommittee of the Inter-ministerial Committee on Caroni, with representation of the Agriculture and Finance ministries and Caroni's board and management, to discuss with the unions about the restructuring process.

Guyana: Arbitration on Wage Increase


For the first time in twenty-seven years, an Arbitration Tribunal will decide on wage increases in the sugar industry. The Ministry of Labour intervened last October, after a seven-day strike called by NAACIE, when CBA negotiations had reached an impasse. The Ministry ordered arbitration in the dispute on wage increases between the Guyana Sugar Corporation (Guysuco) and the National Association of Agricultural, Commercial and Industrial Employee (NAACIE), and the demand for a 10 percent wage increase by the Guyana Agricultural Workers Union (GAWU).

The three-person tribunal will decide on wages and salaries, inclusive of merit increments, for 2002 and 2003 for workers represented by NAACIE and GAWU, and merit increments and salary scales in 2001 for NAACIE affiliates. All three parties have made their submissions to the tribunal, which started proceedings on 13 January.

GAWU organises about 17,500 workers from field and factory and 325 field foremen and forewomen; they represent about 94 percent of the labour force in Guysuco. NAACIE affiliates are the professional and technical staff and clerical workers, representing about 6 percent of Guysuco's workers. Both GAWU and NAACIE are IUF affiliates.

In 2002, Guyana produced 331,000 tonnes of sugar, the highest level since 1976, with three mills - Blairmont, Wales and Uitvlugt - achieving their all-time record high. Following negotiations between GAWU and Guysuco, workers will benefit with an Annual Production Incentive (API) equivalent to wages for 23.5 days; workers in mills that surpassed a certain production level will receive additional payments. (Source: GAWU Combat, December 2002-January 2003)

United States: CBA Reached in Baltimore Refinery

With a 269-22 vote, members of UFCW-Local 392 at Domino's Baltimore refinery ratified a new 3-year collective bargaining agreement, which was reached after 35 days of strike. The company dropped its demand to merge the workers' pension plan with that of its other plants, a demand that triggered the strike. Workers will keep two paid holidays, Veterans' Day and New Year's Eve, which the company wanted to eliminate; and will contribute USD 40 per family per month to their health care plan during the agreement, compared to the company's proposal for $50, $75 and $100 monthly contributions in each of the years of the agreement. There will be some job flexibility, allowing for the combination of jobs, but with no layoffs would result of this. Workers will receive a 2 percent wage increase in each of the three years of the agreement.

Australia: Mackay Outsource Transport Services

In the largest outsourcing agreement in the Australian sugar industry to date, Mackay Sugar, a cooperative of cane farmers, agreed last November to outsource the maintenance services in the transportation system to Transfield. The agreement covers over 800 km of rail track, more than 50 locomotives and all cane bins, as well as all rail operations. The transfer is scheduled for 1 March 2003. Transfield said that the five-year contract represents a total of AUD 200 million (USD 115.1 million). The company operates in eight different economic sectors, and last year won contracts worth 1 billion Australian dollars (USD 576 million).

An outstanding issue in the agreement are the conditions of service for some 300 Mackay workers whose jobs will be under Transfield. During negotiations with Mackay last October, the Metalworkers union demanded that workers be guaranteed the jobs they have and not be asked to reapply when the transfer is completed.

Meanwhile, the political discussion on restructuring continues. On 1 January 2003, after negotiating with the opposition, the government introduced a levy of three Australian cents on each kilogram of sugar sold in the domestic market in the next five years (equivalent of USD 17 per tonne). The levy will be the main source of financing for an AUD 150-million restructuring program, which includes government subsidies of 50 percent in interest rates on loans of up to AUD 50,000 for the replanting of cane and AUD 45,000 grants for farmers leaving the industry.

In a related development, the Queensland state government commissioned the Center for International Economics to do a study on the industry, which concluded with the recommendation of deregulating the industry. The Sugar Industry Act of 1999, said the study, has created a system that discourages changes and affects productivity. It proposed the elimination of the cane production system, which requires farmers to obtain a license to supply to a certain mill because it limits the farmers' ability to move their cane among mills; and recommended to modify the bargaining system that requires farmers to be part of a single agreement with a mill. The report said that the marketing monopoly on raw sugar held by Queensland Sugar Ltd. might discourage innovation and the development of new products. It also predicts that, if the reforms were implemented, profits in the industry would rise to AUD 338 million and some 3,400 new jobs would be created by 2006.

CANEGROWERS, which represents some 6,500 cane farmers in Queensland, said the report fails to take into account the practical realities of the industry and advised the government not to follow its recommendations. The Australian Cane Farmers Association (ACFA) said it had commission its own report on the industry, at a cost of AUD 20,000. Many farmers, said the Association, are willing to contribute 20 dollars each (USD 11.65) - "less than a cartoon of beer" - to finance the study.

Jamaica: Growers Want to Lease Hampden

On 8 January, the All Island Cane Farmers Association (AICFA) wrote to the Sugar Company of Jamaica (SCJ) to propose the long-term lease Hampden Estate in Trelawny by the farmers. They would also upgrade the fields, machinery and other equipment, and requested that the removal of any equipment or parts from the factory to stop immediately. The AICFA said it has already identified overseas expertise to manage the estate. (The government closed Hampden last December 2002.) Ten days later, Prime Minister Patterson said the SCJ and the Ministry of Agriculture would need to see a "proper business plan" that should include the proposed terms for the lease and any plan for the improvements to the factory.

Meanwhile, Long Pond, the other sugar estate in Trelawny, was to begin the harvest on 14 January. The government has invested 40 million Jamaican dollars (USD 800,000) in the purchasing of new generators and improvements to boilers and cranes in Long Pond. The SCJ expects the mill to produce 14,000 tonnes of sugar, compared to the less than 10,000 tonnes in the previous year, when Long Pond experienced a late start of the harvest - March instead of February - and the flooding of some factory areas because of heavy rains. The SCJ has planned that Long Pond will process the cane of Hampden farmers, who will continue delivering their cane to Hampden for weighing and quality testing. The cane will be transported to Long Pond, at the SCJ's expense. How the AICFA proposal would work in relation to the SCJ's plans is still to be seen.

As a reminder of the heavy political content of the industry, the Hampden Cane Farmers Association said that, if the government continues to ignore their plight, farmers will do their best for the PNP, the party in government, to lose the parish elections scheduled for next March.

Kenya: Nzoia Problems, Industry Problems

On 15 January, some 3,000 farmers occupied the Nzoia mill and stopped operations to demand payment of 681 million of Kenyan shillings (USD 8.7 million) owed in cane deliveries since 1999. After a tense week, the government said that the Kenya Sugar Board (KSB) had approved a loan for 50 million Kenya shillings to start paying farmers on 24 January, and the KSB had committed 10 million shillings more per week, for a total of 160 million shillings in the next four months. The government had requested a loan for 681 million shillings to pay all debts to farmers. On another important aspect, Nzoia carries 12 billion shillings in total debt (USD 154 million), said a local source.

Nzoia problems do not stop there: Representatives of the Nzoia Outgrowers Company (Noco) denied charges that they owe farmers 60 million shillings in retention fees. They say that the outgrowers' fees amount to 10 million shillings, monies invested in bonds. Noco was to sell the bonds and have the cash for the farmers. (Although outgrower companies like Noco are supposed to represent the outgrowers' interests before the miller, they have become independent entities that act as a broker between farmers and the mill. Outgrower is a category of farmers who grow cane in company lands under programs run by the company.)

On 21 January, the government decided to terminate the managing contract with F.C. Schaffer, a consultant firm running Nzoia, and announced an open competition to hire a new management team.

The Nzoia case is one instance of the on-going problems in the Kenyan sugar industry, where, despite the passing of the Sugar Act in 2002, many issues continue as a source of conflict. One of them, for instance, is fixing cane prices. Even though the Sugar Act mandates the Kenya Sugar Board to work a formula for prices based on sucrose content (quality), there is no agreement on how to proceed. (Some groups even say that paying on quality is too sophisticated for the Kenyan industry.) In January 2003, Mumias, the largest sugar company in the country, announced the reduction of the price of the tonne of cane by 350 shillings, from 2,050 to 1,700 shillings per tonne (USD 21.80 per tonne). In December 2002, however, Mumias itself had decided to continue paying 2,015 shillings per tonne, even after the Sugarcane Manufacturers Association (Kesma) decided to reduce the price to 1,500 shillings.

Meanwhile, continuing with the privatisation of the industry, the government has prepared the sale of 20 percent of Chemelil, where it owns a 95 percent share. Government officials said that Chemelil farmers have saved 120 million shillings (USD 1.54 million) to buy into the company, through deductions of 200 shilling per tonne of cane delivered to the factory since April 2000. The same officials were quick to dispel the fears of some farmers that the money had been embezzled.

In related matters, the Kenya Sugar Board said it would request the government to stop the importation of sugar from COMESA (the Common Market for Eastern and Southern Africa). In early 2002, because of the flood of inexpensive sugar (imported in the previous year), the government imposed a one-year 200,000-tonne import quota on COMESA sugar. Besides this less expensive sugar, there are ongoing complains that sugar from other countries enters Kenya as COMESA sugar.

Uganda: Production Increases, Kinyara Sale Still Unclear

Kakira Sugar Works, Uganda's largest sugar company, produced 75,000 tonnes in 2002, up from 56,000 tonnes the year before. According to management, the mill's performance was supported by the "magnificent" response from outgrowers, who supplied around 400,000 tonnes of cane, about half the cane processed by the mill. The mill's processing capacity increased from 2,500 tonnes of cane per day (tdc) to 3,000 tonnes in 2002, and there are plans to bring it to 3,500 tdc in the immediate future. Kakira is part of the Madhvani Group.

The Sugar Corporation of Uganda Ltd. (SCOUL) also reported an increase in production to 33,000 tonnes up from 24,500 tonnes in 2001. Spokespersons for both companies said that the negative aspect of 2002 were the low prices due to inexpensive sugar imported in the context of COMESA.

Meanwhile, the method of privatisation Kinyara continues unclear. As reported in the December issue of the Sugar Worker, a last minute decision by the government changed the initial public offering (IPO) through the Uganda Stock Exchange (USE) to the proposed sale of 51 percent stake in the company to a "core investor." The local press reported that the 3,000 employees of Kinyara asked the government last December to reconsider its decision. They said that a single core investor would change the management harming the good performance of the company and creating job insecurity for workers.

Some 650 outgrowers, who supply about 30 percent of the cane processed in Kinyara, have the same opinion. They said the current management, Booker-Tate, values the outgrowers scheme, it expects to expand the mill's processing capacity and the extra cane would be entirely supplied by outgrowers. This working relationship, they say, is not found in other mills, where outgrowers complain of delayed payments and problems in cane deliveries.

Recent news appears to confirm the concerns of outgrowers in Kinyara. The Monitor, a Kampala-based newspaper, reported in mid January that the Bugosa outgrowers are experiencing a surplus of cane because major buyers, SCOUL and the "jaggeries" (producers of non-centrifugal sugar), had reduced their demand, and that Kakira was their only buyer. Because of the oversupply, Kakira is not issuing new permits for cane growing and has advised growers to diversify their production out of cane - despite their contribution to Kakira's performance in 2002. Kakira is also expanding its own fields and has already planted cane in some 300 of the 1,200 hectares available in the Butamira forest reserve. (For more information on Butamira, see Sugar Worker, March 2002.)

Argentina: Government Vetoes Protection to Industry

On 8 January, the Duhalde Administration vetoed a bill from the Congress that would have provided indefinite protection to the domestic sugar industry, in the context of the trade integration in MERCOSUR. Government officials said that the industry receives protection until 2005 and there is no need for a new law. Argentinean producers, however, opposed the decision and are organising political opposition to have the bill passed into law.

The discussions on sugar within MERCOSUR focus on Brazil and Argentina. Sugar producers in Argentina claim that the Brazilian industry benefits from governmental support through the national alcohol program, Proalcool, and their own industry receives no support. They say while these "asymmetries" between the industries persist, protection is needed. At present, sugar is the only commodity not included in the trade liberalisation process in MERCOSUR.

Argentina has a protective tariff of 22.5 percent plus a variable tariff based on the difference between the London sugar price (at the time when the imports occur) and the average price of the previous five years - to avoid significant price fluctuations. The tariff applies to all imports, including those from within MERCOSUR. Brazil, it is said, applies a 17.5 percent tariff.

In June 2001, the two partners appeared to have reached a basic agreement. The protection for Argentinean producers would be in place until 2005, with a commitment by the Argentineans not to complain about the Brazilian alcohol program and for the Brazilians not to complain about the Argentinean tariff. Last December 2002, however, the Argentinean Congress passed a bill that would have extended the protection beyond 2005.

The sugar dispute also relates to MERCOSUR policy on common external tariffs for all commodities, including sugar. Other free trade agreements require partners to agree on conditions for locally produced commodities but each partner is free to determine their own tariffs on imports from outside the bloc.

Company News

Brazil: Pessoa Group Acquires its Ninth Factory

Continuing the process of concentration of ownership in the alcohol and sugar industry of Brazil, the Pessoa Group acquired the Usina Quissaman, in the Quissam� district in northern Rio de Janeiro, its second factory in the state. The Pessoa Group bought around 20,000 hectares of land and 50 percent ownership of the industrial facilities and in the next two years would invest 50 million Brazilian reais (USD 14.7 million) to modernise the processing facilities and develop new areas (to 12,000 hectares up from the current 4,000 hectares under cane). The Quissaman will have the capacity to process about two million tonnes of cane per year. Local sources said the Pessoa Group would control about 30 percent of the Rio de Janeiro market, the country's second largest market. The Quissaman, inaugurated in 1887, is the country's oldest sugar factory.

Meanwhile, the Cosan Group, Brazil's largest sugar and alcohol company, said that in the 2002/03 harvest the group produced 1.45 million tonnes of sugar and 462.5 million litres of alcohol, representing increases of 11.6 percent and 10.3 percent on the year respectively. The group processed about 17 million tonnes of cane. The Cosan Group has acquired five different companies in the past two years, three of them in 2002. The group is also negotiating a participation in the French sugar processor B�ghin-Say through Union SDA, its partner in Brazilian concerns.

China: Tate & Lyle Sells Factories

On 12 December 2002, Tate & Lyle announced the sale of Well Pure Ltd. to a Chinese private sector group for 5 million British pounds (USD 8 million). Well Pure is a Hong Kong-registered company that holds majority stake in two sugar factories in the Guangxi province in southern China. With this sale, Tate & Lyle completes the disposal of its sugar assets in China and continues its strategy of divesting non-core business.