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| Milagro S.A.- San Miguel Uruguay S.A. |
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| Environmental & Social Review Summary |
This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. |
| Project number | 26890 |
| Country | Uruguay |
| Sector | Agriculture and Forestry |
| Department | Agribusiness |
| Company name | Milagro S.A.-San Miguel Uruguay S.A. |
| Environmental category | B |
| Status | Active |
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| Date ESRS disclosed | November 26, 2008 |
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| Previous Events | Invested: September 11, 2009
Signed: April 24, 2009
Approved: January 22, 2009 |
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| View Summary of Proposed Investment (SPI), click here |
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| Overview | Category & Applicable Standards | Key Issues & Mitigation | Community Engagements | Client's Documentation |
| Overview of IFC's scope of review |
| The investment team visited Milagro’s installations in Uruguay in July 2008 and San Miguel operations in Argentina were visited to monitor progress of wastewater treatment installation in 2007. IFC has received and evaluated considerable information related to quality management, good agricultural practices and food safety in operations. Moreover staff reviewed specific quality management procedures, the tissue laboratory, nursery, orchards and integrated pest management, and purchase, storage and use of agrochemicals. Further data on land acquisition, labor and working conditions, discharges to the environment and related matters have been evaluated carefully. Milagro has well developed programs for enhancement of biodiversity on unplanted lands, segregation of sensitive areas and protected areas, identification and removal of alien species and approval of the National Plant Service for all of the new species that they place into cultivation. |
| Project description |
San Miguel Uruguay owns and operates 3,744 ha of land in Uruguay, including 1,444 planted with sweet citrus trees. The project objective is primarily to modernize and expand sweet citrus plantations and associated activities consistent with 2008-2017 investment plans. Specific elements of the investment include:
- developing 1,175 ha of new irrigated plantation of sweet citrus to reach 2,056 ha (1074 ha of mandarin, 374 ha of table orange, and 518 ha of juice orange) over the next ten years, planting 150 ha per year
- enlarging fruit packing plants; and
- building a new packing and a industrial processing plant.
San Miguel Uruguay is a Uruguayan holding company, 100% owned by San Miguel Argentina, which owns 100% of the capital of Milagro S.A. (orchards and Young packing house) and of Terminal Frutera S.A. (Montevideo packing house, industrial facility, and trade). The consolidated operation is referred to as “Milagro” in all text below. |
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| Identified applicable performance standards |
While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:
PS1 – Social and Environmental Assessment and Management Systems
PS2 – Labor and Working Conditions
PS3 – Pollution Prevention and Abatement
PS4 – Community Health, Safety and Security
PS5 – Land Acquisition and Involuntary Resettlement
PS6 – Biodiversity Conservation and Sustainable Natural Resources Management |
| Environmental and social categorization and rationale |
| Milagro is an established company producing and exporting fresh fruit and industrial citrus products including essential oils and concentrated juices. The company owns and operates 3,744 ha of land situated from the northwest to southwest portion of Uruguay. Land and facilities acquisition transpired without economic or physical dislocation. The company uses a high quality assurance manual to guide management of its operations including nursery, farming and processing. Food safety is ensured through good agricultural practice certification (GlobalGAP and Nature’s Choice) on the farms and HACCP certification programs in fruit packing and industrial processing. Milagro’s labor management system and policies are transparent and adequately documented, and occupational health and safety is addressed in all operations. Organic waste and wastewater from fruit packing and industrial operations are well managed and in compliance with local regulatory agency requirements. Bulk organic waste is sold as an animal food additive. A potential risk to local host communities posed by raw materials and product transport is adequately controlled through the use of professional transport companies for these services. The company is fully cognizant of biodiversity and resource management issues and works closely with government agencies to ensure protection of sensitive and government-designated protected areas. |
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| Key environmental and social issues and mitigation |
PS1 – Social and Environmental Assessment and Management Systems.
Milagro has 3744 ha of citrus orchards consisting of farms owned and farms operated for others. At present there are 1444 ha in fruit production. Existing, unused land will be planted up to a total of 2056 ha by 2018. As project activities include replacement of aging trees with new varieties and drip irrigation and new planting on existing orchards property, a formal environmental assessment is not required by local authorities. Milagro purchased these farms over time (see PS5 discussion below). Local environmental authorities do not require environmental assessment studies for the proposed expansion and replanting of orchards. Guiding its operations, Milagro has institutionalized and obtained certification for a several management systems; its manual of procedures is far-reaching and thorough for all elements of operations. Management systems in place include Global Good Agricultural Practices (GlobalGAP), which is a food safety program on the farm that aims to minimize detrimental farming impacts, reducing chemical inputs (fertilizer and pesticides) and ensure a responsible approach to worker health and safety.
Tesco’s Nature’s Choice promotes protection and enhancement of the environment and raises standards in the farming industry. The certification provides assurance that procurement of fresh fruit, vegetables and salads is from farming operations demonstrating that production and produce handling systems are environmentally sound and responsible. In addition, Milagro’s Young packinghouse operates under hazard analysis and critical control point or HACCP (Codex Alimentarius (SGS)) food safety certification. The Montevideo packinghouse and the industrial facility (concentrated juices and essential oils), respectively, are finalizing preparations for the audit and in the pre audit phase for HACCP certification. The combination of GlobalGAP and HACCP systems facilitates avoidance of adulteration, provides traceability from farm to consumer, and enables a company to diminish food recall impacts and effectively protect itself against allegations of adulteration.
PS2 – Labor and Working Conditions.
Milagro’s quality assurance manual contains specific procedures that address labor, labor relations and employment. These procedures constitute the human resources policy. The manual and associated procedures are available for employees. Amplification and strengthening of procedural content is required to ensure compliance with this performance standard. The attached environmental action plan (EAP) defines specific tasks required to eliminate observed shortcomings. Similarly, quality system procedures address occupational health and safety in farming, fruit packing and industrial operations. In addition, both GlobalGAP and Nature’s Choice certification schemes mandate extensive occupational health programs in farming operations. Certification schemes emphasize the institutionalization of this program.
PS3 – Pollution Prevention and Abatement.
Milagro’s fruit packing operations at Young and Montevideo provide facilities for washing, disinfecting, drying, and waxing fresh fruit prior to packing for export. Milagro transports waste fruit not suitable for local or international consumption to an industrial facility that converts fruit to essential oils and concentrated juices. These operations consume electric power from the national grid. Fruit driers consume a light hydrocarbon (diesel) and, boilers burn wood and/or heavy fuel oil to generate steam in the industrial plant. Total CO2-equivalent emissions from hydrocarbon combustion and electric power consumption do not exceed 100,000 tonnes/year, which is IFC’s benchmark for mandatory action to reduce the carbon footprint. Packinghouses segregate industrial wastewater generated by fruit packing operations, which is principally water, from sanitary wastewater and discharge residual industrial waste to the public sewerage under a local permit. Milagro is required to conduct effluent quality monitoring and renew permits biannually with the State Sanitary Works (OSE). Milagro pays for wastewater treatment services through an assessment calculated from consumption of potable water. Residual solid organic waste from industrial processes is, in the main, sold in bulk as an animal food additive; a portion of the waste is unsuitable for this purpose and is disposed of in a municipal landfill. Wastewater from the industrial operation is relatively strong with BOD5/COD of 4600 and 4800 mg/l respectively. Treatment steps include neutralization and oil/grease segregation then passage through a series of five (5) lagoons providing anaerobic and facultative biological treatment.
Effluent from the lagoons flows to an irrigation system on a three ha parcel that operates under a permit from the Dirección Nacional de Medio Ambiente (DINAMA) for surface evaporation and infiltration into the subsoil. The permit stipulates specific limits on organic and inorganic quality parameters. Milagro’s integrated pest management program is multilayered. A National tissue laboratory (INIA) aids in development of hardy root and canopy stock suited to specific environmental conditions and resistance to harmful species. Milagro’s nursery employs strong biosecurity controls to propagate plants for placement in orchards, and extensive quality management procedures address decontamination for movement of equipment and vehicles from farm to farm, field monitoring for infestations, developing rationale for pesticide use, permitted agrochemicals, agrochemicals purchasing, receipt, storage, application, application machinery calibration and data logging. Field application is limited predominantly to copper compounds for bacteria and fungal infestations. The aggregate of these activities keeps pests of economic significance well under control and fresh fruit safe for consumption. Several modifications to strengthen this program are included in the attached EAP.
PS4 – Community Health, Safety and Security.
Third party companies transport fresh fruit and finished goods under contract. These companies are responsible for all fruit and product movement (fruit from orchards to packinghouses and industrial operations, from industrial processing and packaging to storage and from storage to ports for export shipment). Milagro prefers to subcontract these services and does not anticipate changing the existing model; contract administration enables Milagro to eliminate substandard performance posing a risk to host communities. Milagro does not employ security services for its operations. Direct hire security employees provide access control for packing and industrial operations but none is armed.
PS5 - Land Acquisition and Involuntary Resettlement.
During the past ten years San Miguel’s property acquisition program focused on the acquisition of appropriate lands for sweet citrus production. Selected areas were then analyzed for access to the parcels, availability of labor and services, availability of water for irrigation and industrial activity in the area that could have a negative impact on cultivation. San Miguel acquired their lands, which were predominantly existing citrus orchards, and facilities from existing companies. None of the transactions entailed economic or physical dislocation, impact to communities, or protected areas.
PS 6 – Biodiversity Conservation and Management of Sustainable Natural Resources.
Milagro’s quality manual includes procedural direction for environmental assessment and conservation for each plantation and a methodology for identification of protected areas within plantations. In addition, since the beginning of 2008, each plantation manages a program to identify and eradicate exotic flora and fauna and to promote the growth of indigenous species. Each plantation has an existing analysis of risks and environmental impacts that guide operations and efforts to strengthen indigenous species growth and biodiversity in uncultivated areas. For example, the critical habitat survey for Plantation No. 5 identified a nationally protected ecosystem known as Santa Lucia Wetlands. Plantation operations are specifically designed to protect these wetlands. Other plantations bordering the Uruguay and Queguay rivers adhere to the requirements of the Forestry Directorate of the Ministry of Agriculture and Fishing. Plantation No. 16 incorporates mountain ranges with designated high biodiversity value by the Forestry Directorate, which Milagro designates and manages as protected and unused areas. Milagro does not introduce alien species into citrus orchards; the Plant Protection Directorate also of the Ministry of Agriclture and Fishing approves all plant varieties used in Milagro orchards. Milagro trains plantation employees to identify and to eliminate Capin adonis an invasive species from Brazil. As discussed above Milagro plantations operate under GlobalGAP and Nature’s Choice certifications |
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| Client's community engagement |
| Milagro will develop and implement a community engagement program to formalize their interactions with communities in the general vicinity of their fruit growing, packing and processing activities. This will include development of a formal grievance mechanism for local communities. |
| Local access of project documentation |
Milagro will translate the content of the ESRS and the Environmental Action Plan (EAP) into Spanish and make this document available locally in the towns situated in the vicinity of fruit growing, packing and processing activities. Moreover the company will place newspaper advertisements in local papers stating where information about the project and associated impacts and mitigation measures may be found.
Further information may be obtained by contacting the following individual:
Carlos Rodriguez
Physical address San Ramón 800 – Montevideo, CP 11800
Telephone number(s): (02) 2007921 al 23
Facsimile number(s): (02) 2005192
e-mail address info@milagro.com.uy
e-mail address crodriguez@milagro.com.uy |
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| Availability of Full Documentation |
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| Information Disclosed |
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