| Overview of IFC's scope of review |
| IFC’s environmental and social review included review of extensive company information and project information provided by the sponsor. A team of IFC professionals representing environmental and social disciplines visited Agrokasa operations and the areas most affected by ground water issues at Ica. These physical visits included Agrokasa’s operations in northern and Southern Peru. |
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| Project description |
| Agrokasa was founded in 1995 and is an existing IFC client since 1999. It is the largest and most modern fresh asparagus and table grapes producer and exporter in Peru, focusing exclusively on premium export markets in the northern hemisphere. Since 2003, the company is also a producer of avocado and has farms located in Ica, south of Lima, and in Barranca, north of Lima. IFC will provide a loan to support the company’s 2008–10 investment programs and restructuring of its balance sheet from short- to long-term obligations. The investment program includes implementation of new areas in the northern farm and hydraulic improvements in the south. The hydraulic improvements element of the investment program includes measures to reduce stress on the Ica aquifer in southern Peru. Specifically, water from the Santa Rita site, (i) either from current wells, and/or (ii) four (4) new Ranney-type wells, (if approved by the government), and/or (iii) Ica River surface water (if approved by the government), will be conveyed in a PVC pipeline to La Catalina farm. If the authorities allow (ii) above, four existing ground water wells servicing La Catalina, which is one of the most distressed portion of the Ica aquifer, will be closed. Ground water from these wells will be replaced by the four new Ranney-type wells in Santa Rita, an area of the aquifer that is less stressed. These Ranney-type wells will be situated in the vicinity of the Ica River to take advantage of surface water recharge of the aquifer. |
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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:
- PS 1: Social and Environmental Assessment and Management System
- PS 2: Labor and Working Conditions
- PS 3: Pollution Prevention and Abatement
- PS 4: Community Health, Safety and Security
- PS 5: Land Acquisition and Involuntary Resettlement
- PS 6: Biodiversity Conservation and Sustainable Natural Resources Management; and
- PS 8: Cultural Heritage
PS 7 will not apply as no indigenous populations are situated in the project area. |
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| Environmental and social categorization and rationale |
This is a category B project according to IFC’s procedure for Environmental and Social Review of projects because a limited, specific environmental and social impacts may be avoided or mitigated by adhering to generally recognized good international industry practice, IFC performance standards, EHS guidelines, and design criteria. IFC professional staff performed a physical evaluation of the project and environs, and reviewed relevant company and government documentation. The Ica aquifer’s overuse is a significant issue. According to a World Bank mission report published in November 2008, overexploitation is attributable to a combination of factors occurring from 2002 to 2007 after the establishment of Agrokasa farms in the area. These include rapid increases in agricultural production areas; population and economic growth; and, construction of more than 150 clandestine (unpermitted) production wells.
Since the inception of its farms in the area, Agrokasa introduced irrigation technologies that minimize water use and pursued sustainability of water use in all its operations. The company is preparing an Environmental Assessment (EA) to fully document their practices and to assess the impacts of the proposed hydraulic improvement projects at Ica. IFC will carefully review the EA to discern the importance of any elucidated negative impacts. Using the EA, and other documentation, Agrokasa will conduct public disclosure and outreach programs consistent with the requirements of Performance Standard 1. As currently described, the project may help to reduce the stress in the aquifer by utilizing water in areas that benefit from intermittent surface water flows to enhance recharge and to thereby avoid use of water in areas with slower recharge. Agrokasa will continue its work with the private sector to build consensus together with local communities and various levels of government regarding appropriate technical measures needed to alleviate and eventually reverse the overexploitation of the aquifer. |
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| Key environmental and social issues and mitigation |
PS1 - Social and Environmental Assessment and Management Systems.
Agrokasa operates in a manner required to maintain full compliance with the legal regulations in Peru for food safety. The Company follows strict food quality control procedures, especially in food packing operations. PESU in Barranca, and PV1, PV2, and PELAC in Ica have a quality control laboratory to monitor processes and products. The company maintains several food safety certifications ensuring safety and traceability from farms to the consumer. These include GlobalGAP (food safety in farming and production activities); Tesco Nature’s Choice that certifies that fresh produce originates from growers using good agricultural practices (GAP), and who operate in an environmentally responsible manner and with proper regard for the health and well being of staff; and, Hazard Analysis and Critical Control Point (HACCP) food safety in food processing. In addition Agrokasa is a member of the Business Alliance for Secure Commerce (BASC) which is an international business alliance created to promote supply chain security in cooperation with government agencies and international organizations. Agrokasa will develop and institutionalize supplemental management system procedures to strengthen operations and to comply with the requirements of IFC performance standards and applicable EHS guidelines in various areas. These requirements are incorporated into the attached.
Ground water availability and sustainability of use in Ica farming activities (southern Peru) is a well known issue and a concern for local ground water users including Agrokasa. Aquifer recharge at Ica is insufficient to balance actual water demands in this arid region of the Peruvian coast that routinely experiences <50 mm annual rainfall. A recent World Bank report and diagnosis of Peruvian ground water resources acknowledged overexploitation of the Ica aquifer and the need for scientific approaches to address impacts. In order to facilitate full documentation of Agrokasa’s situation and local understanding of the company’s operations, historical efforts to reduce ground water use, the technical details of a project to reduce stress on the aquifer, the company is preparing a detailed Environmental Assessment (EA) addressing the baseline situation and all project considerations including potential economic displacement, local/regional impact of water extraction, regulatory agency approvals for new structures and wells, allowable water extraction rates, permit conditions and requirements for monitoring and reporting data to establish a current base line of ground water use. The company’s goal is to reduce ground water use by 5% over the next five (5) years and to lead private sector efforts to build consensus with local communities, various levels of government, and other stakeholders on the preferred technical measures needed to alleviate and eventually reverse overexploitation of the Ica aquifer.
The company will develop and implement a public disclosure and outreach program and use the EA as well as the information developed in this document and the to ensure adequate public disclosure and outreach to promote understanding of the current situation and Agrokasa’s efforts to address public perceptions and concerns. Agrokasa will conduct robust stakeholder engagement with communities, regulatory agencies and other stakeholders in accordance with the attached.
PS 2 - Labor and Working Conditions.
Agrokasa’s Human Resources Department is well managed, respectful of workers rights, and provides a safe work environment for its workforce. All employment relationships are in compliance with Peruvian national labor laws. Agrokasa is a nondiscriminatory and equal opportunity business enterprise. During the induction period, technical, hygiene and quality procedures are fully explained to employees. The company is proactive in preventing accidents, injury, and disease by minimizing causes of hazards. The human resources policy includes all requirements of IFC Performance Standards on labor and working conditions (such as freedom of association and collective bargaining, mechanisms to avoid use of child labor and forced labor directly or through contractors, etc.). An informal mechanism is in place to address workers grievances, but it will be formalized by Agrokasa at the corporate level and incorporated into management systems procedures manuals and fully institutionalized.
PS 3 - Pollution Prevention and Abatement.
The main sources of emissions to the environment and the risk of environmental contamination emanate from food packing plants. These include process liquid effluents, sanitary discharge and solid waste. Agrokasa implemented measures to reduce energy costs and emissions. Potential air emission sources from Agrokasa facilities include diesel-fueled engine-generator sets which provide contingency power for selected facilities. Of the fifteen generators only one approaches annual run time of 500 hours; the aggregate of all fifteen has an annual run time of less than 1000 hours. Waste materials to the extent feasible are collected for recycling. Hazardous waste is disposed in accordance with Peruvian and local regulatory requirements.
The wastewater management system for the PESU pack house in northern Lima was designed and installed as part of an earlier IFC investment. Data collected during appraisal show that, although there has been a steady improvement from 2007 to 2008, the wastewater treatment facility does not consistently treat industrial wastewater adequately. One quality parameter periodically exceeds limits defined in IFC EHS guidelines. This may be related to peak worker population of the pack house. In accordance with the attached, the company will evaluate water saving measures and process improvements required to consistently produce an effluent that complies with national and IFC effluent quality requirements and then implement the indicated modifications.
Agrokasa implemented a well designed integrated pest management system aimed at minimizing pesticide use. The company is promoting non-chemical approach for products placed into commerce in the USA. Agrokasa and another company have been approved for a pilot program with SENASA and APHIS-USDA to avoid mandatory fumigation of its produce in the US. The company has built predator insect species rearing facilities to produce beneficial insects, and promote biological controls. To bring the program into full compliance with the requirements of this performance standard and to continue to eliminate chemical controls Agrokasa will introduce further biological controls and associated techniques including, for example, crop management practices; monitoring of pest/disease incidence; use of beneficial predators; and further training in protocols for monitoring, handling and applications.
Selected Agrokasa produce is fumigated in Miami with methyl bromide (MeBr) in accordance with the U.S. Department of Agriculture's (USDA) Animal and Plant Health Inspection Service (APHIS) requirements. The service is performed by USDA-APHIS contractors. Although not a Class Ia or Ib pesticide, MeBr depletes the stratospheric ozone layer, thus its use is inconsistent with this Performance Standard. However, Agrokasa is engaged, as described above, in a pilot program with USDA-APHIS to phase out this fumigant with alternative, technologies with reduced impact.
PS4 – Community Health Safety and Security.
Agrokasa’s agricultural operations are governed by good agricultural practices (GAP) and certification programs as discussed above, as well as associated protective measures for employees and consumers. These on farm and industrial practices have a positive influence in protecting local communities from any adverse effects of food production and processing. Established biological controls for pest species of economic significance include predator programs to eliminate these pests without resorting to chemical controls. Agricultural operations and population growth have led to the overexploitation of the Ica aquifer in southern Peru. This could conceivably deprive communities and other agricultural operations of precious ground water. Agrokasa is not planning to increase its water consumption but is seeking permission to enhance sustainability of the local aquifer. The objective of the components of a current project (i.e. the pipeline between Santa Rita and La Catalina), attempts to alleviate the pressure on water resources in areas of higher demand/recharge imbalance. The impact and rationale of this strategy is to be fully analyzed in the EA. As part of Agrokasa’s emerging disclosure and outreach programs and full implementation of a grievance mechanism, the company will be better able to discern and address local communities concerns regarding the company’s operations.
PS5 - Land Acquisition and Involuntary Resettlement.
Agrokasa has obtained all rights-of way and associated permits for the water conveyance system from Santa Rita. Specific, detailed information regarding this program as well as required land acquisition, compensation for the rights-of-way and other arrangements will be incorporated into the EA. To date all transactions have been conducted in a willing buyer-willing seller framework. The EA will also, as described above, address in house efforts to sustainably use the Ica aquifer to avoid impacts to local communities and to continue reducing pressure on it through a continuing program of water extraction reduction.
PS 6 - Biodiversity Conservation and Sustainable Natural Resource Management.
There are no legally protected areas where Agrokasa operations are located. Agrokasa’s operations do not involve modification, conversion, or degradation of any critical habitats. Existing water demands on the Ica aquifer for agricultural operations is a well publicized issue. Agrokasa is working to reduce its water demand and the EA will provide details on all historical, current and proposed future efforts to sustainably manage the aquifer and to ensure that impacts are mitigated as part of proposed new operations. Ground water sustainability for Agrokasa’s Ica farming activities is complicated by limited aquifer recharge. The World Bank report from late 2008, among others, highlights overexploitation and the need for scientific approaches to address impacts. Agrokasa’s EA will document descriptions of the company’s efforts to sustainably manage the Ica Aquifer natural resource, further reduce ground water demand, and protect the interests of other resource users.
Agrokasa’s is committed to biodiversity conservation; this commitment is underscored by its investments in scientific research, fauna identification and the dissemination of associated knowledge. Diverse bird populations live in and visit Agrokasa’s northern and southern farming lands; these and other indicators underscore Ica Valley’s sustainable coexistence with Peru’s dry ecosystem biological resources and diversity. Agrokasa recently signed a memorandum of understanding (MoU) with the Kew Royal Botanic Gardens. The agreement will lead to restoration and conservation of land corridors and the growth of indigenous plants such as Inga feuille using wastewater from La Catalina’s agricultural activities.
In March 2007 Agrokasa first published, Aves en el Desierto de Ica, la Experiencia de Agrokasa (Birds of the Ica Desert, Agrokasa’s Experience), a well documented inventory of bird populations and ongoing monitoring programs in the vicinity of the company’s southern Peru farms. An English version of the book will be published in 2010.
PS 8 - Cultural Heritage.
Agrokasa has in place and will strengthen a chance finds procedure for incorporation into its management systems procedures manuals to ensure that cultural heritage found within their property will not be adversely impacted by business operations. For its northern farming operations, Agrokasa obtained a Certificado de Inexistencia de Restos Arqueológicos (CIRA) (Archeological Survey and Protection Plan) from the Peruvian National Institute of Culture (INC) in November 2008. Agrokasa’s Ica operations encompass existing farms and thus a CIRA is not required by the government. |
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| Client's community engagement |
| Agrokasa has a social responsibility unit focused on their relationship with nearby communities. Agrokasa places a high level of importance to maintain good relationships with the communities that surround its operations. Many, if not most, of its workforce is drawn from these communities. An informal, grievance mechanism is in place to address external requests and complaints. As part of the EA findings and recommendations, the company will create the mechanisms for a formal process whereby grievances and queries will be received acknowledged and processed. This will be done at the highest level of management. As part of their corporate social responsibility program Agrokasa will fully implement supplemental procedures (for existing management systems) to ensure community disclosure of company activities, outreach to stakeholders, and implementation of a grievance mechanism to ensure that public concerns are received and responded to by the company. The EA as discussed above as well as the contents of this document and the accompanying action plan will be made available in public places including Agrokasa’s internet home page (http://www.agrokasa.com/) in accordance with the attached, and will be presented in person to local and regional authorities for their records and local availability. |
| Local access of project documentation |
Agrokasa will disclose information about the project as well as potential environmental impacts and mitigation measures contained in the EA required for this investment. In addition Agrokasa will disclose the information contained in this environmental and social review summary (ESRS) and in the companion environmental action plan (EAP) without reference to IFC. The documents will be prepared in Spanish. Copies of the documents will be made available to the public at strategic locations in the following cities. The availability of this information will be announced weekly in local newspapers during the minimum disclosure period of 30 days. This information will also be published on Agrokasa’s website (http://www.agrokasa.com/) and made available to the public at the following locations.
Agrokasa en Lima
Av. 28 de Julio 150, piso 8 - Miraflores , LIMA 18
Atención: Jose Chlimper A
Presidente
Agrokasa en Santa Rita
Carretera Panamericana Sur Km 312, Distrito: Santiago, Departamento: ICA
Sr. Carlos Arrese P.
Gerente General
Agrokasa en La Catalina
Pampa de los Castillos s/n, Pachacútec – ICA
Sr. José Briceño
Administración
Agrokasa Office in Las Mercedes
Fundo El Pedregal s/n Lotes F1- Barranca – Lima
Sr. Randolph Montero
Administración
Agrokasa Office at PESU
Carretera Panamericana Norte Km. 184, SUPE Puerto – Barranca –
Sr. Randolph Montero /Sr. Enrique Maticorena
In addition a printed copy of the EA will be delivered to and available from:
Junta de Regantes de Agua de Subsuelo de Ica y Villacuri
Municipality of Santiago - Mayor’s Office
Municipality of Tate - Mayor’s Office
Municipality of Pueblo Nuevo - Mayor’s Office
Municipality of Los Aquijes - Mayor’s Office
Municipality of Pachacutec - Mayor’s Office
Municipality of Ica, Ica - Mayor’s Office
Municipality of Barranca, Lima - Mayor’s Office
The following individuals may be contacted for further information:
Mr. Jose Chlimper A.
President
Email address: josechlimpera@agrokasa.com.pe
Telephone: (51 – 1) 501 0000
Address:
Av. 28 de Julio 150 – 7mo piso
Miraflores – Lima 18
Enquiries sent to the e-mail address above will be forwarded automatically to: Carlos Arrese, Jorge Caillaux, and Miguel Bachrach. |
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