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

Posted to the IUF website 08-Jul-2003

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The Sugar Worker
Information and Analysis for Unions in the Sugar Sector
Volume V, Number 6
June 2003

Contents




Tanzania: TPAWU Negotiates Wage Increase in Kilombero

The Tanzania Plantation and Agricultural Workers Union (TPAWU) negotiated a new minimum wage for some 720 permanent employees in grades C1-A2 (Paterson system) in Kilombero Sugar, the country's largest producer and a subsidiary of the South African Illovo Sugar. The new minimum rates range from 43,600 to 50,000 Tanzanian shillings (USD 41.40 - 47.50) for permanent employees, and from 39,000 to 46,000 shillings (USD 37.00 - 43.70) for weeders. The rates would be in effect for one year, starting 1 April 2003, and also cover workers not belonging to the bargaining unit, as they demanded the minimum rates once the negotiations concluded.

In January, the company said it produced 98,400 tonnes of sugar in 2002, almost 2.5 times what it achieved in 1997/98, at the moment of privatisation. In the 2003/04 season, Kilombero expects to reach 105,000 tonnes. (Estimated annual sugar consumption in Tanzania is close to 200,000 tonnes.) Such increase in Kilombero's production has been achieved with a labour force drastically reduced: until mid 2000, there were some 3,000 workers but, after an industrial dispute and pressure from Illovo, the government dismissed all workers and the company hired some 750 workers.

On the other hand, the dispute on workers' representation in the outsourced areas of cane transportation (run by Unitrans) and security services (KK Security) continues. After Kilombero outsourced the areas, the new management invited other unions to organise the workers, attempting to undermine TPAWU's position. TPAWU and its members in Unitrans and KK Security have sought the court's intervention to stop the establishment of other unions and the compulsory deduction of union dues in favour of these unions. TPAWU also requested the intervention of TUCTA, the national trade union centre.

In other union activities, TPAWU is developing a project on HIV/AIDS for its members in Kilombero, Mtibwa and TPC (Tanganyika Planting Co.) Through workers' workshops, TPAWU has produced a Code of Practice on HIV/AIDS, which the union wants to attach to the collective bargaining agreements (CBA) with each of the companies. Mtibwa has already endorsed the code. The initiative is commendable as illustrates the union's concern with issues that affect workers in the work place and in society, and given the devastating effect of the HIV/AIDS pandemic in the African continent. According to figures quoted by TPAWU, AIDS has already taken 18 million African lives - two million last year alone -, and 28 million people are HIV positive. For a copy of the Code of Practice, send an electronic message to [email protected]. (With reports from Yahya Msangi, TPAWU)

Trinidad: Industrial Court Decision Favours Union

Advising the union of a Voluntary Employment Separation Programme (VSEP) on the eve of its launching is hardly "a consultation process," said the Industrial Court in Trinidad, which found Caroni (1975) Ltd. liable of an industrial offence and ordered to negotiate the implementation of the VSEP for Caroni's daily-paid workers with the All Trinidad Sugar and General Workers Trade Union (ATSGWTU). The Court expects the parties to report on their negotiations by 10 July.

The union said the decision of the Court vindicates their claims and is a call for the government to put in practice a well planned and negotiated restructuring of Caroni, the state-owned sugar company and sole cane processor in the island. Official reactions, however, were of a different nature. The Agriculture Minister, John Rahael, said that the daily-paid workers would be dismissed and would lose benefits offered in the VSEP. In early June, the minister had said that were the Court rule in favour of the union, the workers would be simply dismissed because the company would not longer be involved in cane growing and harvesting.

Notwithstanding the unresolved social and labour aspects, the government continues with the restructuring of Caroni. In mid June, the chairman of the Estate Management and Business Development Company Ltd. (EMBDC) said that the government wants to use Caroni's 77,000 acres of land for its restructuring and the development of new industries. (The EMBDC is a government agency created in 2002 to manage Caroni's lands, which reportedly are in the process to be transferred to the state.) The EMBDC chairman said that about 55,000 acres would be allocated to light manufacturing, agricultural estates, residential development and commercial complexes. The chairman added that 175 acres had been "earmarked" for commercial development, 250 for manufacturing, 400 for residential purposes and 600 for agricultural estates. These 1,425 acres are a very small fraction of the 55,000 acres that would be available from Caroni. Caroni is reckoned as the largest landowner in the country.

The 2003 harvest ended in early June with an estimated production of 65,000 tonnes of sugar, well below the proposed target of 96,000 tonnes and the average production of 100,000 tonnes in recent years. The government's decision to launch the VSEP during the harvest without consulting with the union and other groups created many obstacles for a normal harvest. There were on-going labour stoppages, problems with cane deliveries and late payments to growers. Caroni sources also blamed drought conditions and intentional cane fires that lowered the quality of the cane and contributed to the decline in production. Trinidad has some 58,000 tonnes of sugar in quotas to the European Union and the United States.

India: Sugar Scam Hits Maharashtra Industry

The Ministry of Food and Public Distribution has launched legal proceedings against at least 22 cooperative sugar companies in Maharashtra on charges of a trade scam, which might have allowed a tax evasion of over USD 10 million. The charges said that the cooperatives, in collusion with export firms, diverted sugar designated for exports to the domestic market. The difference between the export price and the domestic price was indeed attractive. The Indian Express reported on 17 June that exports were paid at about USD 225 per tonne, while the domestic price was USD 278 per tonne. The price differential on an estimated 600,000 tonnes of non-exported sugar was over USD 32 million.

A significant challenge to bring the proceedings to completion seems to be that some of the mills allegedly involved in the scam belong to, or are controlled by, leading state politicians, including ministers, former ministers and sitting members of parliament.

In late May, the Cooperative Commissioner had ordered legal proceedings against 10 factories in western Maharashtra, while other five mills were under investigation. Export firms were mentioned in the case and the Ministry of Consumer Affairs said that some firms existed only on paper and were registered in different states: Maharashtra, Gujarat and Delhi. It was added that at least three state ministers were involved in the scandal.

According to local papers, most of the mills mentioned in the case are losing money and in deep financial trouble. It is said that about 56 cooperative sugar factories in Maharashtra are in financial problems, and 48 of them are controlled or owned by politicians. The cooperative factories are said to carry debts of over USD 400 million, about 70 percent of it with financial institutions and the remaining with the state government. The sector is lobbying for financial support from the state government to refinance its obligations with private institutions, condone debts with the state government, and obtain further guarantees to convert losses due to the fall in domestic prices into short-term loans.

Despite the lobbying, the Sugar Commissioner said that 22 of the cooperatives have no future and should be liquidated, while the remaining 34 might have a chance for rehabilitation. To access a rehabilitation program, the Commissioner said, the mills should fulfil some conditions, such as to have used at least 75 percent of the installed capacity in the previous five years, have sourced out at least 50 percent of the cane from within their jurisdiction, and not to have been closed in the previous three years. Interestingly enough only sixteen of the 56 cooperative units would meet these requirements, said local papers when reporting the news.

Cuba: Call for Mass Mobilization in 2003/04 Crop

On 19 June, the Ministry of the Sugar Industry (Minaz), the Cuban Workers' Central (CTC) and the sugar workers union (SNTA) called for a mobilization of thousands of people and equipment to the fields to guarantee that canes would be available for the next harvest. People and equipment would be devoted to planting and weeding operations in two phases: the first phase would start immediately and run until 26 July, the second would end on 13 August. The news was reported by the Mexican agency Notimex quoting Trabajadores, a CTC publication, where the call had been issued.

The joint call comes when the 2002/03 season has ended; the first crop after the drastic restructuring, which saw the closure of 71 of the country's 156 mills, the move of some 100,000 workers to other activities, and about one million hectares taken out of cane growing. Such ambitious process is influencing provincial economies that still have sugar as their main economic activity - even when tourism is the island's top hard currency earner. The negative impact of the restructuring may also reduce the official forecast of 1.5 percent growth in the country's gross domestic product.

A reduced industrial park is creating serious challenges for industry suppliers and the whole economy. A representative of a Cuban-European joint venture of equipment supplies said the sugar industry is simply not placing orders and "will need less (equipment) in the future." Rubber tires demand experienced a decline of 67 percent, from 144,700 units in 2001 to 47,700 tires in 2002, a decline related to the restructuring, which has also a recycling aspect: a local source said that the Ministry of Sugar would use about 140,000 pieces of agricultural machinery as spare parts.

In the meantime, even though the 2002/03 harvest ended, Cuban authorities are still to release official production figures. In fact, said observers, no official announcement on sugar has been made since December 2002, when production estimates were readjusted down from almost 4 million to 2.7 million tonnes of sugar. Independent analysts said at that moment that production would barely surpass 2 million tonnes, which seems to be the case.

Belize: Union Gets 4 Percent Wage Increase

Some 350-factory workers of the Belize Sugar Industries (BSI), affiliated to the Belize Workers Union (BWU), got a 4 percent wage increase for 2003, the first increase since 2000. The increment is retroactive to January on wages that range from 5.75 - 6.90 Belizean dollars per hour (USD 1.00 = BZE 2.00) Wage negotiations concluded in April.

In 2000, a 2 percent wage increase was agreed and, then, the parties agreed to no increases because of the BSI's weak financial situation. As the situation improved, workers got a five percent bonus on 2002 wages, with a 2.5 percent paid in November 2002, and another 2.5 percent in April 2003. The bonus is not included in the calculation of the 4 percent increase for 2003. Wages are negotiated annually for the BSI workers, and the Collective Bargaining Agreement (CBA) on terms and conditions is negotiated every three years. The current CBA expires at the end of 2003.

Full-time employees of the BSI, including hourly-paid workers, are shareholders of the BSI Employee Holdings Ltd., a trust that owns an 81 percent share of BSI.

St Kitts: Crop Falls Short from Target

The St Kitts 2003 crop reached some 16,300 tonnes, 2,000 tonnes short of its proposed target. Officials of the St Kitts Sugar Manufacturing Corporation (SSMC) said that three main factors caused the shortfall: a prolonged drought, cane fires, and damages caused by cattle. The latter accounted for the loss of some 530 acres of cane (214 ha), translated into 1.6 million Eastern Caribbean dollars (USD 600,000)

The Ministry of Agriculture is exploring ways for the sugar industry to continue in operations and among the proposals are the packaging of sugar, the sale of molasses in the local, regional and international markets, and the upgrading of the mill. Also, the ministry is looking at the possible acquisition of cane harvesters to further mechanize the harvest. It is said that about 15 percent of the crop is mechanically harvested, and the ministry would like to increase it to between 60 and 80 percent. The move would reduce labour costs, in particular in the importation of foreign cane cutters. In the 2003 harvest, some 400-cane cutters were required, about 75 percent of them came from Guyana, the remaining from the Dominican Republic. There are about 1,300 local workers involved in the agricultural side of the industry.

In related news, a novel project, the St. Kitts Scenic Railway, was launched in early March. The company offers tourists a 30-mile journey through the island's cane fields and countryside, using the railway network of the sugar industry. There is news that the same company is planning a sugar museum.

Kenya: Mumias Ends Contract with Booker Tate

At the end of June, the multinational managing company Booker Tate ended its contract with Mumias Sugar, which had maintained for several years. The decision, taken by Booker Tate and Mumias, was somewhat controversial because some farmers thought that a more important question is the inefficiency of the Mumias Outgrowers Company (Moco), which instead of servicing the farmers has become a burden in their operations.

The problems at Moco are only part of a general dissatisfaction with the so-called "outgrowers" companies, which were organized to support the farmers but, over the years, have become independent entities and many were involved in financial scandals and mismanagement.

A similar situation is experienced in Nzoia Sugar Company, which has obligations amounting to 13 billion shillings (USD 174.5 million) including estimated debts USD 20.1 million to farmers. In mid May, the Nzoia Outgrowers Company (Noco) called for a boycott against the company, asking farmers not to deliver their cane and demanding around USD 8.5 million in cane payments. It was reported, however, that disputes and internal disagreement among farmers weakened the boycott, which some groups said Noco had called only to regain the farmers' trust, in view of the competition by new groups in the sugar sector. These groups are challenging Noco and organizing some of its members, among them is the Sugar Campaign for Change and the Kenya Sugarcane Growers Association.

Many problems continue plaguing the industry. On 14 April, the Efficiency Monitoring Unit, an audit agency attached to office of the president, published a report denouncing several frauds, which amounted to 2 billion Kenyan shillings (USD 26.8 million), in many activities of the old Kenyan Sugar Authority (KSA). The Daily Nation, a local newspaper, said frauds covered a wide range of activities, from cane seedlings contracts worth almost USD 7 million, which were never delivered, to a routine abuse of the procurement system that paid above market prices for good and services, unauthorized payments to staff, and investments that produce severe financial losses. A typical case was the cane seedling deals that involved employees of a research institute and the KSA, who used their own companies to forge the contracts.

Cane and Ethanol: New Models of Flexfuel Cars in Brazil

General Motors introduced its Corsa 1.8 Flexpower model while Fiat announced its Palio 1.38 model, cars equipped with an engine able to run on gasoline, ethanol or a combination of both fuels. The announcements follow the introduction of the Gol Total Flex model by Volkswagen earlier this year and, according to Brazilian sources, is only the beginning of a trend that would see some 10 new flexfuel models available in the Brazilian market in the coming months. Competition in this new market promises to be intense.

Meanwhile, in order to stabilize ethanol prices, the government approved a 500-million Brazilian reais (USD 175 million) credit to help sugar mills building their ethanol stocks for the inter-harvest period (November to March). This would avoid price fluctuations, said Reuters in a report dated on 12 June. A similar financing was available last year but it was offered late into the harvest and little of it was used.

On 26 May, representatives of Mitsui and Coimex signed a contract for the sale of ethanol to Japan through the C.M. Bio Energia Internacional Ltda, a 50-50 joint venture between the companies. A pilot plant in Costa Pinto, owned by Grupo Cosan, was established with Japanese technology for the production of anhydrous ethanol. Exports are scheduled to start in September, and production tests would continue in the 2003/04 harvest. Japan is considering the introduction of fuel ethanol to limit greenhouse emissions as agreed by the Kyoto Protocol.

It was also reported that a Brazilian delegation visited Colombia in a program to exchange technologies for ethanol production, which might be the basis for future bilateral programs. The delegation said Brazil could supply enough ethanol to Colombia to guarantee the starting of a program. The Hoyas del R�o Suarez factory in Colombia, the first distillery in operation according to Brazilian sources, may have an impact on the production of panela, as it would draw some of the cane used for its production, but would also use sugar from the internal market. Panela is an open-pan traditional sugar produced by hundreds of small factories in Colombia. Panela production is estimated at 1.2 million tonnes per year.