Honduras News - Daily News about Honduras

Tropical Storm Gamma caused severe flooding in Honduras and, as a result of the damage caused, Chiquita has had to make the difficult decision to close certain farms.

The entire region near San Pedro Sula sustained tremendous flooding damage from Tropical Storm Gamma in late November 2005 after receiving more than 22 inches of rain in 36 hours. Nearly 1,600 hectares of company-owned farms were damaged by the flooding.

At the Tibombo and Buenos Amigos farms as well as on a portion of another farm, the vast majority of the banana plants were under water so long that they died. Banana plants on many other farms sustained significant damage and will be out of production for several months, but they will survive - after the company’s commitment to invest in comprehensive repairs.

Rehabilitation of the Tibombo and Buenos Amigos farms would have taken an investment of several millions of dollars as well as nearly a year before these farms could have been restored to production. Unfortunately, these farms have flooded before, and with their cost structure, an economically viable project for rehabilitating these areas was not possible.

As a result, the company decided to close these farms and communicated this decision to the local union leadership of Sitraterco (representing the workers at Tibombo) and Sitrasurco (representing the workers at Buenos Amigos), COLSIBA and the IUF in accordance with our labor agreements.

In addition, the company had discussions and sought input from the Honduran government at the very highest levels - including a conversation between President Ricardo Maduro and our CEO Fernando Aguirre - to ensure that they understood the situation and the companys commitment to reinvest in most of the damaged farms, but to close the two farms where rehabilitation was not viable.

To be more specific about some of the communications that took place between the company and the union leadership over the past several weeks: On Nov. 19 and 20, in accordance with Honduran law and our labor agreements, management communicated the suspension of more than 1,000 workers to the Honduran Ministry of Labor and the leadership of Sitraterco and Sitrasurco.

On Nov. 21 and 22, the company notified Ron Oswald, general secretary of the IUF, of the extent of the flood damage and the companys request to the Ministry of Labor for authorization to suspend farm workers.

On Nov. 23, management met with Sitraterco and Sitrasurco leadership again to explain the logistics of the individual notification to the workers as well as explain how and where we would deliver humanitarian assistance to employees and their families affected by the flooding. Medical benefits, including hospital services, were continued.

On Nov. 25, a meeting was held with union leadership, including the head of COLSIBA, Germán Zepeda, to explain in detail the extent of the farm damage and the number of people suspended by farm. At this meeting, it was made clear that the Tibombo and Buenos Amigos farms were totally lost. On Nov. 30, the company issued a press release to investors and the news media outlining the extent of the damage to our banana production in Honduras.

It was noted that the company would incur a significant charge - in the range of $13-18 million - for asset writedowns and flood-related costs. On Dec. 1, it communicated to Sitraterco and the Ministries of Labor and Agriculture that it would not rehabilitate Tibombo.

On Dec. 7, the company and Sitraterco leadership agreed on the process to replace union workers who voluntarily decided to leave. The company also communicated that the applicable legal severance would be paid to the affected workers in time for Christmas. Also on Dec. 7, we lifted the suspension of workers who were needed to return to work.

Because many workers opted to leave voluntarily, Chiquita has made a great effort to accommodate as many of the suspended workers who want to work as possible at our other work centers. For example, Chiquita has sent buses to hire people from the communities affected by the shut down of these farms, and they are currently employing about 50 ex-Buenos Amigos workers on other farms in the region.

On Dec. 9, the company informed Ron Oswald that the Tibombo and Buenos Amigos farms would not be rehabilitated and that the company was working through the process with the union leadership of Sitraterco and Sitrasurco.
Even though the work suspension was lifted for most employees on Dec. 7, on some farms due to the lack of fruit for harvesting, the packing station workers were not able to work until alternative positions could be found.

Therefore, if there are no business interruptions, Chiquita has offered to pay a special monetary stipend on Jan. 14 (not to be considered salary) to all suspended workers to help with the economic impact of the suspension. In addition, since some farms will not have packing activities for the women (the men will be reassigned to the field), Chiquita will pay an additional one-time stipend on Feb. 14 to the women who are still out of work.

It is always difficult to make decisions that result in the loss of jobs. But Chiquita has made every effort to follow the procedures outlined in labor agreements with the local unions, COLSIBA and the IUF. The decision to close these farms was based on an analysis that the cost to rehabilitate these farms was not economically justifiable.

It is particularly regrettable that the Buenos Amigos farm was destroyed by the flooding. In fact, Chiquita had made a significant investment of time and money to attain Fair Trade certification on this farm. Chiquita was encouraged by its progress and indeed had passed pre-certification audits and had hoped to attain Fair Trade certification on this farm in the near future. The company will explore other alternatives for potential Fair Trade certification at other farms.