The Multinational Monitor


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Tate & Lyle

The Grandaddy of Sugar

by Katherine Isaac

Although the sugar barons have given up their plantations, the economies of sugar producing countries are still dominated by a handful of powerful sugar conglomerates. And in many developing countries Tate & Lyle still rules supreme.

Today Tate & Lyle is the world's largest sugar company. Its pre- tax profits in 1988 were £ 120.1 million, a 30.5 percent increase over the previous year. Fortune Magazine lists this sugar giant as the 15th largest foreign investor in the United States--59 percent of its assets are in the United States and Canada. World-wide Tate & Lyle employs over 17,000 people.

Before 1921, Tate and Lyle were two separate cane sugar refining operations: in 1921 the two merged to form Tate & Lyle. In the mid-1930s Tate & Lyle began to purchase land and set up production facilities in Jamaica, Trinidad, Belize and Mauritius. To insure that their increasing demand for sugar would be met, the United States and Britain encouraged cane sugar production in many Third World countries.

In 1949 the British Labor party proposed nationalizing the cane sugar industry. Tate & Lyle waged a successful public relations campaign with "Mr. Cube," their anti-parastatal cartoon character, to blunt a state take-over of sugar production. Tate & Lyle convinced the public that nationalization would bring higher sugar prices.

In 1965, Tate & Lyle diversified into agribusiness and chemical research, leaving fewer resources to improve sugar technology or yields. In the mid-1970s Tate & Lyle sold its plantations in Jamaica, Trinidad and Belize and began to concentrate on importing and refining in the United Kingdom. This left countries that produce and sell raw sugar with the most risky part of the business.

With world sugar prices high, in 1966 Tate & Lyle sold its Jamaican operations to the local government. The Jamaicans were eager to be rid of the colonial presence and to try sugar production on their own. Unfortunately for Jamaica, Tate & Lyle's operations were in a state of disrepair. And, Jamaica did not have the capital to rebuild and replace machinery and make its new acquisition profitable.

Nineteen years later the Jamaican government asked Tate & Lyle to come back to Jamaica to manage its sugar-producing facilities. Currently, Tate & Lyle is managing and consulting for 19 firms in countries including Zambia, Swaziland, Belize and Jamaica. In 1988, Tate & Lyle Agribusiness merged with Booker Limited to form BookerTate which expanded this agribusiness conglomerate's ability to provide management services for the tea, coffee, cotton, rice and the vegetable industry.

Traditionally a cane sugar importer and refiner for the British market, in 1988 Tate & Lyle purchased two American corporations: Amstar (a cane refiner using the brand name Domino Sugar) and Staley Continental (a producer of High Fructose Corn Syrup). Tate & Lyle also tried to buy into the beet-processing market in June of 1986, by bidding to take over S&W Berisford, owner of British Sugar. The British Monopolies and Mergers Commission vetoed this acquisition because it would have given Tate & Lyle control over 94 percent of the British sugar market. A similar move in the United States, however, was successful. Tate & Lyle bought eight U.S. sugarbeet factories in 1986, which are now operating under the name Western Sugar.

Increased awareness of the health problems associated with sugar may be contributing to the declining demand for sugar. Too much sugar can contribute to health problems including diabetes, heart disease, cancer of the bowels, kidney stones, obesity and dental decay. In addition, sugar's only nutritive value is to provide calories which often replace important parts of the diet.

Per capita consumption of sugar is declining in most developing countries, perhaps in part due to an increased awareness of sugar-related health problems. In the United States, yearly consumption of white sugar dropped from 48 kilograms per person in 1974 to 30.5 kgs in 1985. But in developing countries sugar consumption is increasing. In India, yearly consumption rose from 6.5 kgs per person in 1974 to 12 kgs in 1985 and in Zimbabwe, from 20.5 kgs in 1974 to 27.3 kgs in 1985.

The switch to alternative sweeteners is also reducing sugar consumption. High Fructose Corn Syrup (HFCS) can be produced more cheaply than sugar because corn prices have dropped dramatically in recent years. Between 1975 and 1985, HFCS share of the U.S. sweetener market increased from 4 percent to 33 percent. Manufacturers, such as Coca-Cola and Pepsi-Cola, are using HFCS in their products instead of cane or beet sugar.

Tate & Lyle, in conjunction with Johnson & Johnson, is also planning to market a new non-caloric artificial sweetener called sucralose, which "is still under scientific review," according to Blondale Anderson of the Food and Drug Administration.

Between 1980 and 1988 the United States cut its cane imports from 3.8 million tons to about 1 million tons wreaking havoc in sugar producing countries. To offset the impact of this drop in demand, the Philippine National Federation of Sugar Workers has requested $2.5 million each from Coca Cola and Pepsi Cola to compensate sugar workers. Sugar workers plan to develop alternatives to sugar production. Nearly a quarter of a million sugar workers on the island of Negros in the Philippines were laid off by 1985 because of the decline in U.S. demand.

Today, Tate & Lyle has operations in Belize, Barbados, Belgium, Bermuda, Brazil, Canada, Denmark, France, Guyana, Ireland, Italy, Kenya, Malaysia, Mauritius, Mozambique, Netherlands, Nigeria, Norway, Portugal, Somalia, Sudan, Swaziland, Trinidad, United Kingdom, United States, West Germany, Zambia and Zimbabwe. Tate & Lyle also owns 100 percent of the South African Pure Cane Molasses Company.

The workers at Tate & Lyle's North American subsidiaries are represented by a variety of labor unions including the Allied Industrial Workers; the United Food and Commercial Workers; the International Longshoreman's Association and the Teamsters.

A labor researcher, commenting on Tate & Lyle's labor practices, says the company's managers "are enlightened capitalists; a bit paternalistic, but looking to avoid fights."

Oxfam's The Hunger Crop, by Belinda Coote suggests numerous possibilities for lessening the impact of the inevitable demise of cane sugar on the economies of developing countries including: 1) compensation for loss of markets; 2) regulation of over production of HFCS; 3) enactment of a stronger International Sugar Agreement that would include HFCS and other alternative sweeteners; 4) development of alternative uses for sugar, such as in Brazil where sugar is used to make ethanol; 5) diversification out of sugar to produce cash or food crops; and 6) establishment of alternative marketing arrangements or cane refining facilities. These measures won't be popular with sugar companies like Tate & Lyle. Nonetheless, sugar producing countries that act on these suggestions may be able to sweeten their economies--those that do not are only awaiting a bitter future.

Katherine Issac is a freelance writer, living and working in Washington, D.C.

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