IUF Sugar Global Conference: Background Paper

Posted to the IUF website 24-Jul-2004

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Background paper prepared for the IUF Global Sugar Conference, Oberjosbach, Germany, May 19-21, 2004

Sugar and employment

The IUF and its affiliated unions represent millions of workers in the sugar sector, people who depend on sugar for their living, and with their labour support their families and entire communities. The IUF estimates that there are close to 2 million full-time jobs in factories (mill, refineries and alcohol distilleries) and about 8 million in agricultural operations, most of them seasonal jobs. The sugar sector internationally comprises some of the most productive agricultural resources, estimated in some 20 million hectares of land worldwide, and their use should be geared towards social development, with national objectives in a globalised economic environment.

Sugar and the Sugar Sector

Sugar, or sucrose (C₁₂H₂₂O₁₁), is mostly obtained from two completely different crops: sugar cane and sugar beet. Sugar cane is a giant grass cultivated in the tropics and subtropics, sugar beet, a root crop, is grown in temperate zones. The double source of sucrose allows sugar manufacturing to take place in very different geographic and climatic environments: from Canada and Finland in the north to Chile in the south. Worldwide, more than 110 countries produce sugar from cane or beet, some from both. The broad spectrum of geographic locations is the basis for a large number of different ways to organise the manufacturing of sugar, influenced by the social, economic, historical and cultural traits of the people involved. Industrialized, developing, and least developed countries all manufacture sugar. However, although the socio-economic and political configuration of the sugar industries is diverse, they tend to gravitate towards an international market, which functions as a reference and benchmark for their own production (although how accurate the measurement or convenient the reference are debatable questions). In 2002, according to the International Sugar Organisation (ISO), world sugar production was about 142 million tonnes, raw value, with about 72 percent obtained from cane, 28 percent from beet.

In some countries, mostly in the developing world, sugar is an important source of calories. In addition, because of its properties as preservative, flavour enhancer, and stabilizer sugar is used in several industries, like food processing, soft drinks, confectionary, and pharmaceutics.

The sugar sector comprises the activities from the growing of crops (sugar beet and sugar cane), through their harvesting and transportation, primary (cane) processing, and refining for consumption. These are usually related to extracting the sucrose present in the beet or cane, through a centrifugal process. Some countries use a significant portion of cane for the "open pan" non-centrifugal process that also produces sugars: gur and khandsari, panela and rapadura.

A relatively recent development in countries like Brazil is the growing of cane and its processing into ethanol (fuel alcohol). In addition, a series of ancillary economic activities based on the by-products of beet and cane processing are also naturally linked to the sugar sector.
Alternative sweeteners to sugar have been present in the international scene for some time. However, because of the rapid consolidation of corn syrups as a direct substitute of sugar in industrial applications (e.g. in soft drinks, food-processing, confectionary industries), it is necessary to understand the sugar sector in an extended sweetener world. This is now a world where natural and artificial sweeteners interact with the more "traditional" centrifugal sugar in prices and markets, crop production, agricultural policies, and other socio-economic aspects.

Restructuring: The Current Challenge

In comparison with other basic agricultural commodities, the international sugar sector has a complex structure. Generally, traditional commodities like coffee, cocoa, tea, and bananas tend to have a relatively clear division: Production takes place mainly in the developing world, processing in the industrialized countries. Raw material suppliers are located in the developing South, main consumers in the industrialised North. In sugar, no such division exists. Some of the largest producers are industrialized countries, some of the largest consumers are developing countries; some of the largest exporters are among industrialized countries in the North, some of the largest importers are in the South.

The global sugar industry is, like many other sectors, going through changes in its basic configuration: It is immersed in a restructuring process. Four distinct and individual processes can be identified in this restructuring:.

(1) Changes in the fundamentals of the industry at different levels: Over the past 30-40 years there has been a geographical shift of the industry's "centre of gravity" from North/Central America and Europe towards Asia and South America (Brazil); sugar substitutes, such as corn-based sweeteners, have consolidated their market share; products such as ethanol (fuel alcohol) and co-generation projects (electricity) are becoming a common feature in cane-based industries.
(2) Modernization of production through greater use of automated and computer-controlled processes in factories and the mechanization of agricultural practices (which have dramatic social impact when applied to harvesting operations in cane-based industries).
(3) A combined process of consolidation of production, in part due to new technologies, and concentration of ownership: new factories tend to have larger processing capacities; companies become larger and more powerful.
(4) Market reforms and economic liberalization programs massively introduced in the 1980s and early 1990s.

While the first three processes have a long history in the industry, it is the fourth that has come to dominate the restructuring of the sector.

There has always been substantial state participation in the sugar industry. State-owned factories and land, equipment and resources were common, as was state-control and regulation of the domestic and international trade, state-intervention in fixing prices of cane or beet and inputs, and support to research and development. Before the collapse of the Soviet Union, a substantial portion of the international sugar industry was under direct, sometimes, complete control of the state. However, the intervention of the state in the sector was not limited to the centrally planned economies: In the free market economies, the state had a significant participation in sugar: It owned factories, controlled trade, paid for research, adopted protectionist policies.

With the introduction of market reforms and economic liberalisation, the trend of the state withdrawing from the economy appears: In the 1990s deregulation and privatisation became a policy feature world-wide. And private-sector corporations have moved to fill the vacuum.

• The sugar sector in some Central and East European Countries (CEECs) after the collapse of the Soviet Union provides an example of how the state retreats and the transnationals move in. E.g. S�dzucker and Nordzucker, among others, in Poland and Hungary and Eastern Sugar in Czech Republic.


• The European Union knows quite well the one-country/one-company model (British Sugar in the UK's beet sector), as well as the one-company/many-countries (Danisco in Denmark and Finland).


• In Southern Africa, two South Africa-based companies, Illovo Sugar and Tongaat Hulett, have since the mid 1990s literally exploded into the regional industry.


• Brazil, with the world's largest sugar & alcohol cane-based complex, is a latecomer to this process, but it should be expected that the mergers and acquisitions process that started in the late 1990s would accelerate in the future.

The IUF Work: Solidarity and Economics

The IUF's task is to create a vision of the industry that encompasses the interests of workers world-wide, i.e., an understanding of the basic trade union and human rights perspectives that are shared beyond national and commercial barriers.
This is encapsulated in the ILO concept of "decent work":

• employment that is productive, where workers' rights are protected;


• where workers receive adequate pay and social benefits;


• have a safe and healthy working environment;


• where there is no use child labour.

The IUF task starts at the work place, where workers are and production takes place, where restructuring and modernisation occur, and labour practices change.

The IUF and affiliated unions have to deal with the now widespread practices of outsourcing and casualisation of employment. These are no longer limited to seasonal activities in agriculture/cane but are increasingly used to replace what were permanent, year-round positions in the factories companies try to cut costs and streamline operations.

On the other hand, given the dual nature of the sugar sector (field and factories), the unionisation of all workers is a major challenge. Organising factory workers is relatively less complex than organising agricultural/field workers, because of the nature of employment (year-round vs. seasonal), sometimes because of the workers' degree of literacy. But the strength of the union movement depends on organising and representing all workers, and in the sugar sector, particularly in the cane-based industries, the organisation into unions of field workers is a crucial task. This links directly to the question of child labour, which occurs in the cane fields rather than in the sugar factories: the unionisation of workers and decent employment for adult workers is the best and most sustainable way of eliminating to child labour.

Workers and their unions are a source of significant first-hand knowledge about what really happens in the production process. They are the first to experience the effects of unsafe working conditions and environmental malpractices, as in the case of agricultural workers becoming exposed to pesticides and other harmful substances. They and their families suffer from a damaged environment and polluted fresh-water sources.

A strong union at the grass-root is the only real guarantee that the workers' voice will be heard and their concerns taken into account whether when negotiating new terms and conditions of service or discussing and negotiating trade agreements. This, as any union is well aware of, requires a comprehensive application of the right to organise and bargaining collectively: old principles that still hold their value.

National and regional changes

While many changes occur in the workplace, developments at the regional and national levels are increasingly a matter of concern for trade unions. Important elements of the restructuring process, as explained above, directly influence the numbers and quality of jobs available in the industry, and how secure they are. Wages and salaries, terms and conditions, are key aspects of trade union work, while employment creation and income distribution are key aspects of any social and economic development. Because the sugar industry concentrates some of the most productive agricultural resources, such labour, land and access to water, its operations have a direct impact on the regional and/or national development.

When economic growth occurs, with gains in production and productivity, these need to be translated in higher wages and safer working conditions for workers, if development is to take place. This, however, is not always the case. A more dramatic situation ensues when restructuring - as in downsizing and closing of production units - happens without negotiation and social dialogue: Results are likely to be catastrophic for whole communities that depend on sugar. An imposed and dialogue-less restructuring of a sugar industry, beet or cane, easily results in widespread unemployment, and more precarious jobs for those workers who remain in the sector. When jobs are eliminated by modernisation or new technology, gains from increased productivity have to be shared with workers through higher wages and safer working conditions; and for those leaving, retraining programs - if retraining is possible - and social support must be available.

The main challenge in developmental terms is that, at present, when the state retreats, corporations/transnationals generally move in. The model of the industry as a profit-seeking operation implemented by private-sector corporations does not respond primarily to the needs of the population. It falls also on the unions, as part of the civil society, to build an alternative model for restructured industries. This perspective arises from the work place and the struggle for the right of the workers to a decent job. In the process, unions need to forge alliances and create contacts with other sugar groups, also concerned with the regional and national development, to make the process as democratic as possible.

International trade

From a trade union perspective, it is also at the work place that the alleged benefits from trade (freer or preferential) are to be really measured. Do the benefits from preferential prices or an increase in trade (as an hypothetical result of freer trade practices) actually reach the sugar workers and their families?

For workers and their unions, as well as the population at large, it is important to understand what in reality is (freely) traded. Unions are a special interest group because we represent workers, not commodities. Sugar being traded is sugar manufactured by workers who are paid certain wages and work under determined conditions in a given situation. Competition among sugars from different origins (even seen as price quotations from in the New York or London markets) is a comparison between different sets of agricultural conditions, wages and working conditions, and policy issues; not to speak of social, historical and cultural factors. A straight comparison in US cents per pound of raw sugar seldom tells why costs are so different; on the contrary, it tends to obscure such differences with the concept of efficiency: the lower the cost, the more efficient the operation.

Nowadays, unions need to tread with care as it has become common for large corporations to commission studies that demonstrate how poorer environmental and labour practices of a potential competitor are key factors in lower costs, and a justification to close borders to their sugar. These corporations usually request the unions' support for political lobbying on this regard, as if from this factor alone (potential competition from less expensive sugar produced in operations with lower environmental and labour standards) depends the jobs of the sugar workers. Corporations, however, continue restructuring and asking concessions from workers as usual, independently from the real - or imaginary - competition from less expensive foreign sugar.

Trade arrangements, even preferential ones like the EU/ACP sugar protocol or the US tariff-rate quota, do not respond to the particular needs of the labour force. However, before and after trade arrangements are in place, their impact on employment and the labour force has to be assessed, monitored and evaluated: For instance, in the past three decades, the EU has granted preferential treatment to Caribbean sugar, at prices substantially higher than the international free market prices, on a fixed amount of sugar, meaning that beneficiaries knew reasonably well the market conditions they were to face over the years. But, also over these years, sugar production in many Caribbean islands has declined, efficiency has been lost, and workers appeared not to have fared well (with some exceptions, although even in these cases benefits can not be attributed solely to the EU/ACP sugar protocol, but to other sources of income as well, like in the case of Trinidad and its oil-based sector). An assessment of what the impact of the preferential EU/ACP sugar protocol has been on Caribbean sugar workers and their families, beyond political arguments, is relevant when discussing the impact of trade and whether trade liberalisation can improve workers' lives: It is not only agreements, but also how the supposed benefits would be shared.

The situation becomes more acute from a gender perspective, as empirical evidence from the Caribbean industries underlines (an argument that can be safely applied to cane-based industries). Restructuring a Caribbean sugar industry, in part due to the uncertainty on the future access to the EU markets, places an unfair burden on women workers, in particular those in the agricultural sector as they lack mobility in/out of the industry. From initial reports, the IUF has also learned that a similar process takes place in Brazil, where it is more common that women workers lose their jobs, as a result of downsizing, than their male counterparts.

If preferential arrangements have not been a major factor in improving working and living standards of the workers, what should unions expect from freer trade negotiated with no or minimal input from unions and civil society organisations?

Besides making a direct link between freer trade and the need for improved wages and safer working conditions in the context of international trade talks, the IUF also believes that the reality of developing and least developed countries requires a differentiated treatment and transparent tools of political economy. The vulnerability of some traditional sugar exporting countries is a responsibility of the international community. However, they usually provide employment for a significant portion of the population, and their future is also a concern of the sugar unions and the IUF. The common wisdom that about 75 percent of the sugar produced worldwide is consumed in the country where it is produced underlines, among other things, the importance of the existing domestic market in moments of transition to freer trade, because prices in this market are usually more remunerative than the international "free market" prices. Some traditional exporting countries produce sugar in amounts that easily surpass the physiological consumption of humans: if the people of Guyana become a market for three quarters of the sugar they produce, each Guyanese would have to eat more than 330 kilograms of sugar per year; each Fijian some 280 kg. The IUF would not only speak for the sugar workers in these industries whose jobs are at risk in an open competition, but also supports a differentiated treatment for these countries in the context of a liberalised global economy.

Additionally, in 1998 IUF adopted a policy to oppose agricultural export subsidies because of their damaging effect on developing countries.

Solidarity is the guiding principle of the IUF's work. It is based on the reality and conviction that workers and their unions share basic common interests, that struggling for decent jobs and working conditions in any situation confers no disadvantages to any sugar producing country or endangers the future of any union.

Jorge Chull�n,
IUF Global Sugar Co-ordinator


See report on the IUF Global Sugar Conference.