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

Posted to the IUF website 05-May-2003

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume V, Number 3
March 2003

Contents



Tanzania: Wage Negotiations and Outsourcing in Kilombero

In 1998, the South African Illovo Sugar acquired Kilombero Sugar, which owns two of the five mills in the country. Initially, Illovo refused to recognise the Tanzanian Plantation and Agricultural Workers Union (TPAWU) as the union representing the workers, and eventually signed a collective bargaining agreement in 2002. In February 2003, wage negotiations started. In a meeting of 12 March, the company offered a 4.5 percent wage increase while the union demanded a 35 percent increase on individual wages. At that point, reported TPAWU, negotiations stalled.

In the meantime, another issue aroused. The company has outsourced transportation services to UNITRANS, and security services to KK Security. Both companies invited other unions to organize employees in the outsourced areas, trying to undermine TPAWU's position in the industry. Employees in these areas expressed in writing their will to join TPAWU.

UNITRANS is a company in the transportation of cane with operations in several countries in the region: Malawi (Nchalo and Dwangwa), Swaziland (Simunye) and Mozambique (Xinavane, Mafambisse and Maragra), in addition to being a major transport operator in South Africa. Murray & Roberts, a South African engineering and knowledge-based company, is the single largest stockholder in UNITRANS. Murray & Roberts acquired Booker Tate, a sugar industry-managing company from Tate & Lyle in 2000. Booker Tate has contracts in Kenya, Uganda and Swaziland, and in other regions like the Caribbean and the Middle East.

KK Security is one of the largest security-services companies in East Africa, with operations in Kenya, Tanzania, Uganda, Rwanda and the Democratic Republic of Congo (Kinshasa). In the sugar industry of Tanzania, it services Kilombero Sugar and Tanganyika Planting Co. (TPC).

Solidarity request - The Tanzania Plantation and Agricultural Workers Union (TPAWU) requires information on wages and conditions and terms of service in other Illovo Sugar operations in the region. Please send information to:
G.P.Nyindo (TPAWU) [email protected]
Yahya Msangi (TPAWU) [email protected]
Jorge Chull�n (IUF Sugar) [email protected]


Jamaica: Appleton's New Factory

Implementing a business decision taken some five years ago, the privately-run Appleton Estates opened a new factory in St. Elizabeth to expand production from the current 20,000 tonnes to 60,000 tonnes of sugar per year. The company has invested some USD 25 million in improving cane farming, sugar manufacturing and distillery operations.

In early April, a spokesperson for the company said that some years ago the company pondered the future of the sugar industry in the country and the future of the company in sugar. It decided then to become an "efficient, sustainable" and profitable operation and set forth two main objectives: to produce 12.5 tonnes of sugar per hectare and operate at 85 percent of the net available time. Achieving these objectives required improving technical matters, such as dealing with extraneous matter, stale cane and similar issues. Appleton is also modernizing agricultural practices, through mechanical cultivation, irrigation systems with central pivots, a new powerhouse and new equipment for higher-grade sugar. A cane-based operation, Appleton Estate produces rum using imported molasses. Appleton is owned by Wray & Nephew, part of the Lascelles Group.

Hampden Resuscitation Programme

Meanwhile, the chief executive officer of the Sugar Company of Jamaica (SCJ) said that a development plan for Hampden Estate in Trelawny would be submitted to the government, which local papers put at 200 million Jamaican dollars (USD 3.6 million). Hampden Estate closed last December, after the government said it had amassed debts for USD 8 million in the previous five years, and required about USD 7.1 million to achieve "minimum efficiency." The executive officer said that the plan contemplates planting some 1,500 hectares of cane, and rehabilitating and modernising the distillery, among other improvements. He said that Trelawny has some of the best cane fields in the island, while local newspapers said that the plan would also make some 300 of the current 400 jobs redundant.

The All-Island Jamaica Cane Farmers Association (AIJCFA) said that farmers would establish a sugar refinery in Trelawny, which would also produce ethanol. By the end of May, the association expects to learn about a USD 120 million loan from an US-based agency, which would be used to set up the refinery.

In related news, the SCJ and the AIJCFA agreed to work together to accelerate a replanting program worth 150 million Jamaican dollars (USD 2.7 million), out of which only 30 million have been disbursed. There is concern about the negative impact on the industry of the slow pace of the program that, some farmers said, is because the burdensome process to access the funds. The scheme involves several institutions (the People's Cooperative Bank, the Development Bank of Jamaica and the sugar estates' credit committees) and heavy paperwork. The SCJ and AIJCFA would cooperate to see that the funds are used for the right purposes, referring to some abuses of the system that happened in the past, and identify farmers who are seriously involved in cane growing and are in good standing as to avoid bad debts.

In a related issue, according to local newspapers, the sugar industry faces a shortage of cane cutters, particularly felt by the state-owned mills and independent cane farmers. The labour shortage is causing severe difficulties to the mills and increasing costs: the mills are processing cane below their capacity or have to stop-and-resume operations. The shortage has provoked intermittent closure of factories reported The Observer, and Bernard Lodge, Monymusk and Frome, three factories under the SCJ, might lose over 3 million Jamaican dollars (USD 54,000) each day they do not operate. Although Appleton and Worthy Park, the two private sector-owned companies in the island, do not experience directly the shortage, their milling operations have been affected because the private farmers, who also supply them, have difficulties to harvest their cane. The papers, however, did not explore the causes for the labour shortage.

Trinidad: Government Bails Out Caroni

The Trinidadian government has decided to give some 490 million of Trinidadian dollars (USD 70 million) to Caroni (1975) Ltd. to finance its operations until September this year. In early April, Caroni said it did not have the resources to pay wages and salaries to employees, cancel outstanding debts to farmers, and to pay for services and utilities.

Trinidad's Trade Minister said that Caroni obligations, in addition to the TTD 490 million, include TTD 735 million in debts serviced by the State, TTD 300 million in statutory liabilities, and close to TTD 1 billion in costs related to the Voluntary Separation of Employment Programme (VSEP) and a deficit in Caroni's pension plans. Total obligations are over 2 billion Trinidadian dollars, about USD 260 million.

In the meantime, the 2003 harvest of Caroni continues facing difficulties. Employees have staged several work stoppages around the VSEP process, and farmers continue to demand cane payments while complaining that the company is buying less cane than usual.

The VSEP for the monthly-paid employees ("staff") of Caroni continues as scheduled. By the deadline of 3 April, company sources said that only 50 of the approximately 1,100 staff did not sign the VSEP. The All Trinidad Sugar and General Workers Union (ATSGWTU), which represents Caroni's daily-paid employees ("workers"), obtained an injunction to stop the VSEP for the workers. The Industrial Court will see the matter on 7 May.

Philippines: Lucio Tan Group Invests in Victorias

Tanduay Holdings Inc. will invest 300 million of Filipino pesos (USD 5.3 million) in the rehabilitation of the Victorias Milling Co. (VMC), as a result of a public process to identify a source of fresh financing. Tanduay Holdings, a liquor producer of the Lucio Tan Group, uses molasses as raw material and might have access to the by-products of the Victorias. The group also owns Philippines Airlines.

ABS-CBN reported that the fresh financing would be used in capital expenditures to increase production, improve energy and cost efficiency, and services to farmers. The operation is part of the rehabilitation program approved by some 32-creditor banks. It is still to be decided if Tanduay Holdings will get a seat in the 11-member board of VMC. The Victorias continues to improve operations. By early April, it had increased in more than 5 percent its milling operations, in 8 percent its raw sugar production and almost 23 percent the volume of refined sugar, in comparison with the same period the previous year.

In related news, a group of local investors will join Ace Group of Companies, a retail firm related to a Singaporean interests, to establish a new mil in South Cotabato in Mindanao island, reported Asia Pulse. The Singaporean group will control production and other technical aspects of the project. Local officials said that the investors have asked the provincial government to allow increasing the area under cane to 20,000 hectares from the current 1,100 hectares.

Cane growing in South Cotabato started in 2000, with 900 hectares around the Polomolok and Tupi towns and 200 hectares in Surallah, all in central south Mindanao. The officials added that sugar plantations could replace one third of the 63,000 hectares of land under corn in Mindanao.

Zambia: New Sugar Projects

Consolidated Farming Limited (CFL) announced the establishing of a USD 16 million new sugar company in the Kafue Flats, west of Lusaka. The project includes 5,000 hectares of land, of which 2,000 hectares have already been planted; a sugar factory with a daily processing capacity of 1,000 tonnes of cane (tdc), with the possibility of increasing to 2,000 tdc; and a packaging facility. The company said that some 400 permanent and 800 seasonal workers would be required and, in the future, a small town of 600 households with all facilities might be created. Production tests have been announced for August this year.

In related news, officials said in early February that the government was seeking talks with Zambia Sugar about the development of the Luena sugar plantation in Luapula province, in northern Zambia. The officials said that Zambia Sugar, subsidiary of the South African Illovo Sugar, has the expertise required for the project, and the government would share with it feasibility studies and related information to prepare the talks. Zambia Sugar's managing director said that the company would not hesitate in discussing the Luena project with the government.

Azerbaijan: First Sugar Factory to be Built

Azersun Holding will soon start building the country's first sugar factory in Imishli, at a cost of USD 60 million, reported Baku Today. The factory will produce 350,000 tonnes of sugar per year, with 150,000 tonnes from beet and 200,000 tonnes of refined from imported raws, which will be sourced out from Brazil and Cuba. Spokespersons for the holding said that in the future the ratio between beet sugar and imported raws would change in favour of the former.

The holding also wants to invest in beet growing, the training of farmers, acquiring agricultural machinery and seeds, and improving irrigation infrastructure. Farmers would repay loans with their crop. A related activity might be stockbreeding, because the by-products of beet processing may be used as input for animal feed.

The new factory aims at supplying the domestic market and also neighbouring Georgia and Dagestan. The factory would create about 800 jobs in sugar production and ancillary activities, and some 15,000 farmers may supply the factory. (From Baku Today, 4 April 2003)

Sugar Trade: Brazil, Australia and Thailand to Seek WTO Panel on EU Subsidies

Official Brazilian sources said that their country, supported by Australia and Thailand, would ask the World Trade Organisation (WTO) to set up of a panel to examine sugar subsidies in the European Union. The Brazilians said that studies on costs of production and the impact of the EU subsidies would be completed shortly, in order to support their demand. Australia and Brazil requested consultations last year, the first step in a WTO dispute. Thailand did the same this year and the consultation period has already elapsed. The three countries maintain that the EU sugar industry benefits from subsidies on 3 million tonnes of sugar exported to world markets, exports that depress prices. Brazil also claims that the EU policy represents losses of about USD one billion in their own sugar exports.

In late March, Brazilian sources said that a meeting between Celso Amorin, Brazil's minister of External Affairs, and Pascal Lamy, EU's marketing commissioner, explored some possible solutions proposed like the EU granting a larger market access to Brazilian sugar and/or compensating through improved trading conditions on other products. According to the sources, the EU said that compensation related to sugar trade was unacceptable.

Meanwhile, South Africa said that distortions in the international trade should be addressed in the context of the WTO multilateral talks on agriculture and expressed concerns about the future of the EU preferential market, which benefits sugar from the African, Caribbean and Pacific (ACP) countries. South Africa is a member of the Global Sugar Alliance that seeks increased liberalization in the sugar trade. The group also includes Brazil and Australia.

Peru: Development of Ethanol Production

Petroleos del Peru (Petroperu) and a US-based consortium signed an agreement to set up a factory to produce ethanol (fuel alcohol) from cane in the Huallaga Valley, in central Peru. The factory would come on line by the end of 2004 and would process cane from some 32,000 hectares.

The US-based consortium comprises Coler & Colantonio and Natural Corp. from the United States, and Coimex from Brazil. Coler & Colantonio will invest an initial USD 5.5 million in the building of the ethanol factory, and there will be an additional USD 2.5 million to develop cane fields, financed by private banks. Total investments are estimated at USD 185 million in a ten-year period.

In its first phase, the new company would produce 6,000 barrels to supply the Iquitos-area in eastern Peru. The project aims at supplying export markets staring in 2005, especially California in the US, when it expects to produce some 25,000 barrels per day. The project includes building a 1,000-kilometres pipeline to the port of Bayovar on the Pacific to facilitate exports.

It was said that conditions for cane growing in the Peruvian central jungle are better than the already good conditions in the coastal areas. Cane reaches maturity in nine months and fields may last up to twenty years producing acceptable yields, before renewing. Local sources said that sugar cane growing in the central jungle area might eventually cover 250,000 hectares. The project would create 32,000 jobs in the first phase, and 160,000 more in a second phase, in the San Martin and Huanuco departments, northeast of Lima.

Meanwhile, thanks to the mediation of the newly elected regional government, workers-shareholders in Cayalt�, a Chiclayo-based ex-cooperative, agreed to set up a trust and transfer to Cofide, a financial institution, the managing of the bankrupt company for the next ten years. Cofide told the local press that the company would start developing, among other projects, 2,500 hectares of corn for export to the European Union. In mid January, Cayalt� was the scenario of a clash between some 300 employees and dozens of land occupiers, which left eleven people dead and over 100 wounded.