On August 28, the Tanzania Plantation Agricultural Workers Union (TPAWU) signed a wage agreement with Kilombero Sugar Company Limited, a subsidiary of Illovo Sugar, granting a five percent wage increase across the board. According to the union, some 5,070 employees are covered by the agreement. Payments will be retroactive of April 1st, 2014.
The agreement was reached after protracted and difficult negotiations that started in March. By July, given the deadlock in the negotiations, the Commission for Mediation & Arbitration (CMA) intervened. The company had argued that unprecedented high levels of sugar imports had depressed local prices and resulted in losses amounting to some USD 3.3 million. Some sources said that the company warehouses were “congested” with unsold sugar; a factor that influenced the union’s decision to accept the given wage increase rate. (With information by Nicholaus Valerian, TPAWU, Zonal Secretary, Morogoro.)
Kilombero Sugar operates two factories as one enterprise: K1, or Msolwa, and K2, Ruembe. In September 2014, the recently inaugurated distillery adjacent to K2 delivered its first alcohol. Illovo’s Merebank factory in South Africa will be the primary customer for this distillery, tightening the Illovo Group’s internal links. Illovo Sugar, subsidiary of AB Sugar, holds 55 percent of Kilombero, the London-based commodities group, ED&F Man, holds 20 percent and the government of Tanzania has the remaining 25 percent stake.