VZCZCXRO6746
RR RUEHRG
DE RUEHSO #0432/01 2211632
ZNR UUUUU ZZH
R 081632Z AUG 08
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 8450
INFO RUEHBR/AMEMBASSY BRASILIA 9591
RUEHRI/AMCONSUL RIO DE JANEIRO 8808
RUEHRG/AMCONSUL RECIFE 4169
RUEHAC/AMEMBASSY ASUNCION 3475
RUEHBU/AMEMBASSY BUENOS AIRES 3228
RUEHCV/AMEMBASSY CARACAS 0769
RUEHMN/AMEMBASSY MONTEVIDEO 2753
RUEHLP/AMEMBASSY LA PAZ 3887
RUEHSG/AMEMBASSY SANTIAGO 2475
RUCPDOC/USDOC WASHDC 3142
RHEHNSC/NSC WASHDC
RUEHC/DEPT OF LABOR WASHDC

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 
 
SAO PAULO 00000432  002 OF 003 
 
 
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 
 
SAO PAULO 00000432  003 OF 003 
 
 
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. 
 
White