Overdue payments to contract farmers, interruptions in feed supplies, delays in contractual bonus payments for factory workers, unpaid social contributions: these are but a few of the indications that something is terribly wrong at the Brazilian subsidiary of French poultry producer Doux. CONTAC, which organises meat workers in Brazil, has been sounding the alarm since early 2011.
In discussions with Brazilian management, representatives of CONTAC have learned that no bank will lend them money, as the company’s debt exceeds its available capital. The solution supported by CONTAC would be a sale or a merger, but it would appear that the parent company is expecting the Brazilian government to bail out its subsidiary.
In addition to the IUF-affiliated confederation CONTAC and its affiliated unions, the Federation of Agricultural Workers of Rio Grande del Sur (FETAG) has come out strongly in support of the contract farmers and their families, many of whom have not been paid for 6 months now. At a meeting held on 28 July, the company proposed to pay 50% of its arrears to the farmers by 15 August, a proposal which is unacceptable to the Federation. The company will be meeting this week with various financial institutions, while the Federation has scheduled a meeting with the Secretary of the State of Rio Grande del Sur.
What explanation has Doux Frangosul given for its inability to meet its financial obligations? The family-owned parent company in France is currently in the midst of a severe financial crisis aggravated by volatile commodity prices and the refusal of French retailers to accept price increases. In November 2010, the company announced a EUR 400 million bond offering to raise the necessary cash to pay down its debt. But the offering was quickly withdrawn and has not been heard of again.
What have been heard again are rumours of the imminent sale of the company. According to reports which appeared in the French press on 24 July, with sales of EUR 1.3 billion and an operating income of some EUR 100 million, Groupe Doux is valued at EUR 500 million – but is suffocating under a debt of almost EUR 400 million. The family has denied that it plans to sell its 80% stake in the company, but numerous red flags remain.
At a conference hosted by the IUF Latin America Regional Organisation in Porto Alegre on 16-17 June, representatives of CONTAC, the Federation of Food Workers of Rio Grande del Sul and the French food and agricultural workers federation FGA-CFDT discussed the current crisis situation at Doux in Brazil and the difficult industrial relations situation faced by workers and their unions in France. Currently, the French unions are in negotiations with Doux around the proposed closure of the slaughterhouse in Champagné-Saint-Hillaire and the redundancy of 39 workers specialized in goat and rabbit processing. But there is no mention of any sale plans and the company will not enter into discussions about the situation in Brazil.
Faced with issues in both Brazil and France with a company with a poor record in industrial relations and in communication, the unions participating in the conference agreed to take the step of creating an International Committee of Doux Workers, to maintain the exchange of information and to undertake joint action.
A special section dedicated to the crisis at Doux has been set up on the website of the IUF Latin American Region with articles in Spanish, Portuguese and French.