SUGAR, ETHANOL, CHARGES OF SLAVERY, AND TIP STRATEGY IN

UNCLAS SECTION 01 OF 03 SAO PAULO 000432

SENSITIVE
SIPDIS

STATE FOR WHA/BSC, WHA/EPSC, G/TIP
EEB/ESC AND GREG MANUEL
STATE FOR DRL

E.O. 12958: N/A
TAGS: PREF KCRM PHUM ELAB EAGR ENRG BR
SUBJECT: SUGAR, ETHANOL, CHARGES OF SLAVERY, AND TIP STRATEGY IN
BRAZIL

Ref: A) 08 Sao Paulo 269; B) 08 Brasilia 962

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SUMMARY
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1.(SBU) Brazil's high profile, high-tech ethanol industry has fallen
under an international spotlight for alleged use of forced or slave
labor to harvest sugarcane. The press focus on sugarcane has drawn
attention away from other sectors which may be at higher risk for
forced labor/slave exploitation (cattle ranching, charcoal
production, the sex industry). Top NGO labor experts have stated
that while isolated problems remain in the sugarcane industry, the
situation is improving and these other industries should be of more
concern. Singling out or over-emphasizing sugarcane could play into
the hands of some in the GOB who allege that U.S. TIP policy is only
a cover to attack Brazil's flagship ethanol industry (Ref B).
Mission suggests a broad anti-TIP strategy that enlists the large,
more advanced sugarcane producers as allies in the fight against
forced labor. Our efforts should also emphasize that the USG
commitment to TIP is global in scale and rooted in our commitment to
human rights. End Summary.


Sugar is (Again) King

2.(U) Brazil has been a sugar producer for centuries and the
development of ethanol as a promising green fuel has lent new energy
to this key industry. The country's contemporary sugar industry is
worth $40 billion, or 2.35 percent of GDP. It directly employs 1.1
million people, and its prospects for growth are tremendous (Ref A).
Understandably, Brazil's leaders take great pride in their
country's world class status as a leader in green fuels production.


The Evidence for Forced Labor/Slavery

3.(U) Reports of forced or slave labor in sugarcane harvesting have
marred the image of Brazil's ethanol industry. In May, the State
Department's Trafficking in Persons (TIP) report characterized
forced labor on sugarcane plantations as a growing trend. Days
later, Amnesty International echoed the TIP report's assessment.
With Brazilian ethanol production for export on the rise, the issue
has caught the attention of the international press, particularly in
the U.S. and Europe (Ref A).

4.(U) Concerns about forced or slave labor in sugarcane are
understandable. Among the many red flags/factors that contribute to
the concern are the following:

--Sugarcane cutting has been, for most of its history, a
slave-dominated industry. Cane cutting itself remains difficult
work, little changed in 500 years. A sugarcane cutter harvests on
average 8-10 tons of cane a day, striking with his machete an
average of 73,000 times under the hot sun.

--Sugarcane workers do not live where they labor. Many migrate from
the Northeast, the poorest region of Brazil, to Sao Paulo State, the
richest part of the country. They often come with the help of a
coyote-type figure known locally as a "gato"("cat" in Portuguese).
Gatos work most frequently with small sugar plantations. In their
role as middlemen, they can exploit those desperate for work,
operating as illegal outsourcers of labor for cane cutting.
(Brazilian law forbids enterprises from outsourcing their principle
economic activities.) Industry studies show that outsourced workers
suffer worse conditions than their direct hire counterparts.

-- In 2007, GOB Ministry of Labor authorities "liberated" nearly
6,000 agricultural workers from conditions deemed slave-like as
defined in Brazilian law. More than half of those freed worked in
the sugarcane sector.

But the Case is Not Open and Shut

5.(U) Despite the negatives, the case for expanding forced/slave

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labor in the sugarcane industry is not open and shut, according to
industry reps, government officials and NGO anti-slavery activists.
All cited a number of factors that qualify the recent negative image
the industry has garnered in the press. Among the points they made
to Econoff were:

--Sugarcane is not one of the top sectors most at-risk for slave
labor. According to Leonardo Sakomoto and Caio Magri - widely
regarded as two of Brazil's leading experts on slave labor - the
cattle industry is by far the leader in this category. Sakomoto and
Magri estimate that as much as 60 percent of slave labor cases are
concentrated in this industry. (Note: This assessment coincides
with GOB findings per Ref. B. End Note) ConGen contacts state that
cattle, soy, cotton, corn, and charcoal are all activities that
surpass sugarcane in the risk of employing slave or forced labor.

--Sugarcane workers receive wages that are higher than those of
unskilled workers in other industries. The average wage in Sao
Paulo state for a cane cutter is 81 percent higher than the minimum
wage. Nationally, the average wage is 30.3 percent above minimum
wage.

--The vast majority of sugarcane workers are formally employed. In
Sao Paulo state (which accounts for 60 percent of Brazil's sugarcane
production) 92 percent of the cane workforce is formally employed.
In the North-Northeast, 65 percent of the cutters work in the formal
sector. The national average for the industry stands at 74 percent,
well above the national average for formal sector employment of some
57 to 62 percent according to GOB official figures. (Note: Some
institutions claim that these official figures are wildly inflated
for the percentage of the work force employed in the formal sector.
Consulate General sources cited figures that indicated a far lower
level formal sector employment in Brazil - 33.6 percent according to
our calculations -- as closer to reality. Regardless, the number of
cane workers employed in the formal sector is significantly higher
than the national average for formal sector employment. End Note.)


--Formal sector labor brings a number of benefits to workers,
including access to ISSB (Social Security and Health Benefits) and
regular labor inspections. A recent study of mortality among cane
workers by Marcia Azanha, a university professor and former World
Bank consultant, found that cane cutters have a lower incidence of
fatal work accidents than the average of workers in Brazil's
agricultural sector as a whole.

--Workers liberated by Labor Inspectors cannot automatically be
counted as former slaves because, according to Leonardo Sakamoto,
Brazilian law defines forced labor or "slave like" or "degrading"
conditions more broadly than does the ILO or the relevant UN
Protocols. Consequently, a company cited for violations of the
Brazilian labor code is not necessarily guilty of employing slave
labor, but may in fact have fallen short in some other area.

-- Sakomoto noted that proven problems of forced labor have been
limited to nine plantations (out of approximately 50,000 across the
country). The worst situations occur on small plantations that use
out-sourced labor. In contrast, larger, more modern plantations
provide far better housing and working conditions.

A Muddy Debate and Pending Mechanization

6.(U) If key considerations muddy the debate over forced/slave labor
in the sugarcane industry, a second challenge that faces Brazil is
looming mechanization. Most of the large producers are now moving
rapidly toward replacing sugarcane cutters with harvesting machines,
in order to improve efficiencies and to reduce the sugarcane's
carbon footprint. Some experts argue that the real crisis will come
when mechanization destroys many of the cane-cutting jobs and leaves
thousands unemployed.

Comment: Sugar, Slavery and TIP Strategy

7.(SBU) While there is reason to be concerned about the sugarcane
cutters, observers agreed that the vast majority of cane workers

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enjoy formal employment, which gives them access to social benefits,
and that their employers are subject to labor inspections. These
are basic conditions that the vast majority of Brazilian workers do
not possess.

8.(SBU) Moreover, by focusing our TIP concerns on sugarcane and, by
extension, the ethanol industry, the USG fuels the fires of anti-TIP
critics who argue that our anti-slavery TIP policies are just a
cover to promote U.S. economic interests at the expense of Brazil's
flagship ethanol industry (Ref B).

9.(SBU) Mission suggests that the USG take a broad front strategy
against TIP in Brazil, by highlighting the most at-risk industries:
remote cattle ranches in the Amazon and other frontier agricultural
areas, urban brothels, and the already highly-publicized charcoal
industry that feeds into pig iron and ultimately steel production.
We might also engage large sugar producers as allies in the fight
against forced labor and TIP, something that sector-wide criticism
could inhibit. Finally, at the most general level, the Mission will
continue our efforts at education to demonstrate to the Brazilian
public, as well as government, that USG TIP policies are global and
based on genuine moral/humanitarian principles and not simply a
function of US economic interests. End Comment.


10. This cable was coordinated with and cleared by the Embassy in
Brasilia.

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