BERTIN LTDA

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public 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 decision. Board dates are estimates only.

Project number	23792
Company name	BERTIN LTDA
Country	Brazil
Sector	Food & Beverages
Environmental category	A
Department	Agribusiness
Status	Active

Date SPI disclosed	November 27, 2006
Projected board date	February 1, 2007
Previous Events	Invested: September 11, 2007 Signed: June 5, 2007 Approved: March 8, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Bertin Ltda (Bertin or the company) is a leading Brazilian cattle slaughterer, meat and hide processor and exporter. Its products include in-natura and processed beef, leather, cleaning products, personal protective equipment (shoes and gloves), and dog toys. The meat and leather businesses account for nearly 85% of total sales. Bertin procures 85% of its cattle from independent farmers and keeps an 80,000 heads farm and a 100,000 heads feedlot in reserve. Bertin’s strategy is to attend to the growing domestic and export beef markets with a range of further processed products with the highest quality and environmentally friendly standards.

The purpose of the project is to:

- increase Bertin’s beef product range to supply growing demand for in-natura and special cuts meats from the EU, Middle East and other countries in South America;
- increase production by attending new markets such as China for its leather division; and
- expand its domestic sales of its personal protective equipment and cleaning products.

Each of the project components includes investments to achieve compliance with World Bank/IFC environmental and social standards. Also, Bertin will enhance its traceability programs to ensure that all animals and hides originate from ranching operations that have environmental land use permits and do not impact sensitive land areas.

Anticipated development impact of the project

IFC will help modernize and expand the beef processing industry in Brazil which represented nearly $2.5 billion in exports sales last year. Together with other agricultural commodities exports, the industry contributes to Brazil’s economic growth. With the implementation of IFC/World Bank environmental and social guidelines, within a reasonable period, Bertin will be able to trace 100% of the animals and hides it processes, ensuring strict sanitary controls while avoiding procurement of cattle from protected areas, all as required by markets such as the EU. Bertin will utilize some of IFC’s funds to comply with IFC/World Bank effluent standards in all its facilities. The investment program will also add 7,700 direct jobs in new and existing plants, located mostly in semi-rural areas in the Central South region. IFC will also work with Bertin’s management to improve corporate governance and overall sustainability of Bertin’s operations, thus becoming a role model of corporate social responsibility.

IFC's expected development contribution

The proposed investment would support the on-going increased competitiveness and growth of the meat processing and tanning industries in Brazil, contributing to the country’s exports in a sector where Brazil has competitive advantage without subsidies or other Government support. IFC will provide much needed long-term funds at reasonable rates to support Bertin’s plans instead of relying on pre-export financing, thereby shifting more of its short-term debt to long term. IFC would also help the company pioneer environmental and social standards and a traceability system for cattle procurement that will ensure sustainability and safeguard of sensitive areas. IFC will also address corporate governance issues as Bertin prepares to become more transparent, establish a succession program and prepare for public listing.

Environmental and social issues - Category A

This is a Category A project according to IFC’s Procedure for Environmental and Social Review of Projects because significant impacts that are diverse, irreversible, or unprecedented may result. Potential impacts can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Supplemental, broader issues will be addressed through innovative utilization of animal management systems and relationships with third party vendors and slaughterhouses. The review of this project consisted of appraising extensive technical and environmental /social information submitted to IFC by the project sponsor; extensive discussions with the sponsor’s environmental management staff; visits to integrated operations; standalone tanneries; feed lots; and associated operations. The following potential environment, health and safety and social impacts of the projects were analyzed, according to IFC’s Performance Standards (PSs):

- PS1. Social and Environmental Assessment and Management Systems:

Bertin’s capacity to undertake adequate environmental and social management of its operations throughout Brazil was reviewed. The company undertook an Environmental and Social Impact Assessment (ESIA) of its Marabá slaughterhouse and the corresponding supply chain.

- PS2. Labor and Working Conditions:

Occupational health and safety and labor are an important consideration in Bertin’s industrial plants. In certain areas of Brazil where Bertin operates, such as the state of Pará, these issues may include slave labor in the supply chain.

- PS3. Pollution Prevention and Abatement:

Slaughterhouses and tanneries may air emissions and odors, as well as wastewater discharges that may contain high concentrations of organic material.

- PS4. Community Health, Safety and Security:

Community health issues involve biohazards and other emergencies, which are handled adequately by Bertin. Security is a matter of concern as Bertin and suppliers’ farms are at the risk of occupations and invasions by landless peasant’s movements.

- PS5. Land Acquisition and Involuntary Resettlement:

Illegal land acquisition and land holding issues are endemic in various areas of Brazil, particularly in the state of Pará. Numerous farmers in Bertin’s supply chain have no legal title to land or have fraudulent documentation.

- PS6. Biodiversity Conservation:

The state of Pará, where Bertin has a slaughterhouse and two tanneries, is in the Amazon area, where protection of biodiversity is a priority.

- PS7. Indigenous Peoples:

The ESIA mapped out a number of indigenous peoples’ reserves in the area of influence of their Marabá plant. Also, in the area of influence of a small hydroelectric unit owned by Bertin, Sacre 2, there is an indigenous reserve.

- PS8. Cultural Heritage:

Near Sacre 2 PCH a number of archaeological artifacts were found.

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