Tuesday, December 27, 2011

Sugar slavery is still big business – even with mechanization

The most effective criticism of Brazil’s biofuels program has not been the food vs. fuels diatribe but rather the excoriation of abhorrent and retrograde conditions of sugar workers. Descriptions of workers cutting cane from dawn to dusk with little access to water and frequent exposure to dangerous crop fires has left the sugar cane ethanol industry with a major public image problem.

Brazil’s ethanol industry, which now provides almost half the fuel consumed by Brazilian cars, has promised to address this problem by mechanizing the sugar cane harvest that is the most labor intensive – and cruelest – part of the process. Though this threatened to leave a lot of sugar workers without jobs and accelerate a migration toward cities, mechanization has by and large been seen as a logical way to improve working conditions while keep the industry competitive.

Turns out even with machines, wage slavery ain’t over – and the money it makes is going far beyond Brazil into the pockets of investors in America.

Reporter Brasil, the country’s most widely respected snoops on issues of wage slavery and environment, reports that a government operation in the state of Goias recently found 39 combine operators that were working 24 hours shifts plus an additional 3 hours transit to get to and from the cane fields. The story, here in Portuguese only, provides a detailed account:

Sugar-cane harvester operators and tractor drivers, as well as truck drivers, were among those that were freed. They were forced to work 27 hours at a time from the start of the harvest in May 2011. “We highlight that the work being done by the majority of the workers in question involved activities requiring considerable physical and mental effort and, as such, the workday should never be extended beyond the legal limit (of 8 hours), much less to 24 hours, which is absurd,” said Roberto Mendes of the Regional Superintendence of Labor and Employment for the state of Goias.

Proof of the risks of these exhausting conditions was the occurrence of two accidents involving two employees that were part of the team that were rescued. After more than 20 continuous hours of work, two cane collection drivers were involved in accidents caused by exhaustion at the wheel.

Cane cutting has for decades been known as one of the world’s most brutal forms of work, and folks got it into their heads that there was just no way that a guy with a machete under the blazing sun was ever going to be treated well. Machinery to the rescue is a common leitmotif throughout the history of industrial labor. But the problems of wage slavery in Brazil evidently go much beyond that. These things tend to happen in places that are exceedingly isolated, filled with poor itinerant workers, and far beyond the reach of the law.

I at times thought the term “trabalho escravo” had a certain melodrama to it, until I heard a pretty clear explanation of what it denotes: situations in which workers are in such isolated places that their food, housing, and transportation all depend on their employer. Something akin to sharecropping in which white farm owners would credit black farmers with a certain amount for the cotton they produced while debiting them for the groceries and materials they consumed – a formula which almost always left the farmers in debt to the owner. This is a problem that strikes me as endemic to Brazil given its enormous land mass, patchy infrastructure and tradition of plantation culture.

A cursory check through the supply chain also turns up some interesting things. The estate in question where these folks were found is called the Fazenda Santa Laura in the town of Goiatuba that belongs to the Association of Bom Successo Cane Suppliers. That group provides sugar cane to the Bom Sucesso mill, a 1 million tonne per year cane crushing facility that was purchased last year by a group called Vital Renewable Energy Company, or VREC. A glance at the VREC’s website turns up a couple of names including private equity groups Paladin Capital Group and Leaf Clean Energy Group that are both investors. With Paladin’s help, VREC has recently raised more than $1 billion from investors in the US, Europe, and the Middle East to launch ethanol and power generation projects in Brazil.

My take on Paladin and Leaaf from looking at their websites is that they’re responsible investors doing some pretty interesting work. I don’t get the sense they’re trying to squeeze a few extra bucks out of their ethanol business by keeping truck and tractor drivers working three or four times the hours they could reasonably be expected to. They are not directly implicated in this. But one of the things I keep trying to stress in this blog, like here, is that people interested in environmental issues need to get a better understanding of the supply chains that they’re part of.

Investors, particularly those interested in clean energy, are going to have to do the same thing. Brazilian mining behemoth Vale, for example, had to revamp its supply contracts after it got called out for selling iron ore to pig-iron makers that were using deforested wood for charcoal. It’s no longer enough for a company, investor, or even a conscientious individual to say “Not my problem, I wasn’t directly involved in that transaction.”

Biofuels investments in Brazil appear to carry a certain level of “headline risk” or risk of negative press and potentially debilitating press coverage – you just never know when a contractor supplying you with cane is buying from a farm that’s got children on its fields, workers in wage slavery or drivers being forced to stay behind the wheel for 27 hours. Twenty years ago that sort of media exposure was a minor annoyance. Today it’s a major business risk.

Just ask Cosan, the world’s largest sugar and ethanol producer, which in early 2010 saw its shares plummet and its customers avoiding it like the bubonic plague after it found itself on a government list of companies that used slave labor. It was quickly removed, which was crucial because staying on that list would have left it off the list of companies that receive financing from all-powerful state development bank BNDES.

I still hope Brazil’s ethanol sector gets it together when it comes to labor. Sugar cane ethanol does provide a significant amount of energy for Brazil, displaces a lot of oil that would be used in gasoline and contrary to pop environmentalist sentiment, is not the primary threat to the Amazon. But it’s obvious that swapping in machines for exploited cane cutters is not going to do the trick.

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