IFC requires that this document be made available through the World Bank InfoShop and to locally affected communities no less than 30 days prior to project consideration by the IFC Board of Directors. The Summary of Project Information (SPI) also provides details of where the ERS has been made available to locally affected communities. The SPI must be sent to World Bank InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental and social information submitted by the project sponsor, a physical review of existing farming and crushing operations by an environmental engineer and a Brazilian social specialist. The following potential environment, health and safety and social impacts of the projects were analyzed. - Farmland acquisition; - Impacts from agricultural practices (use of agrochemicals, and water and land management including possible impacts on natural habitats); - Environmental management of processing operations (air emissions, liquid effluents, solid waste, and use of hazardous materials); - Occupational health and safety (OHS) management; - Logistics and transport; - Corporate environmental and social management capacity; - Environmental and social issues associated with prefinancing contracts; - Community development initiatives; and - Other stakeholder initiatives.

The sponsor has presented plans to strengthen its programs to ensure that the proposed project will, upon implementation of specific agreed measures, comply with the environmental and social requirements, host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. Information about the project and the project/sponsor’s continuing efforts to sustainably manage its environmental and social affairs is summarized in the paragraphs that follow. Further information is provided in the attached documentation. - Farmland acquisition. Amaggi produces soy and other agricultural products on 12 established farms in Matto Grosso (MT). Amaggi is in the process of obtaining land use permits for the Querencia Farm, which was acquired in 2003. Eighty percent of these farms were developed on land that was previously farmed by others. Amaggi’s land acquisition for other farms did not result in involuntary resettlement or economic displacement. None of the farms are located in indigenous, conservation or preservation areas. Amaggi has met, or is in the process of meeting, all state conservation set-aside requirements. Amaggi has applied for environmental permits under the Unified Environmental Law (LAU) for all its farms and has received permits from MT’s environmental agency for approximately eighty percent of its properties (see summary in Table 2). The remaining LAU permits will be obtained in accordance with the Corrective Action Plan (CAP). Amaggi has commissioned a study to define preferred areas where it will continue expanding its operations and site new silos. This study along with proposed new silo locations will be submitted to IFC by the end of the second quarter 2004 or prior to the first loan disbursement. The study will also incorporate a summary of potential impacts and proposed mitigation measures. Amaggi has not and will not purchase land in illegally deforested areas or where resettlement or economic displacement might result from such acquisitions. - Impacts from agricultural practices (use of agrochemicals and water and land management, including possible impacts on natural habitats). Amaggi farming areas cover approximately 239,837 ha (including 49,805 ha leased from others) of which approximately 122,841 ha (including 46,800 ha leased from others) are cultivated (see Table 2, Conservation Areas on Amaggi Farms). Amaggi’s crop production systems concentrate on soy, corn, and cotton. The farms primarily utilize direct planting techniques (no soil tilling) to reduce soil erosion. Amaggi has sound procedures in place to manage agrochemical classification, application, and proper disposal of agrochemical packaging materials. Amaggi is replacing the use of organophosphate compounds with less toxic products. In addition, Amaggi is evaluating the implementation of biological controls. Amaggi farms continue to reduce irrigation; Amaggi irrigates approximately 200 hectares, all of which have the required permits. Amaggi staff provide technical extension services to independent soy farmers, including demonstration of sustainable agricultural and safety practices. Amaggi continues to produce, buy, and sell only non-genetically modified grains. - Environmental management of processing operations (air emissions, liquid effluents, solid waste, and use of hazardous materials). The company operates two soy crushing plants, one in Cuiaba and the second in Itacoatiara. At the Cuiaba facility there is minimal use of water at the site and domestic effluent is discharged to the municipal sewer. Process effluents are recycled or used for irrigation in a nearby orchard. Solid wastes are disposed to a landfill or recycled. Use of extraction solvent (hexane) is consistent with industry standards and IFC requirements. The boiler uses a combination of dust, rice husks and diesel oil for fuel. As part of the first investment with IFC, Amaggi implemented actions to ensure that occupational health and safety programs including ambient dust concentrations are in compliance with IFC requirements. Boiler modifications are underway to reduce particulate emissions. Monitoring data to demonstrate compliance will be submitted to IFC in second quarter 2004 as part of the Annual Environmental Report. By mid 2005, Amaggi will install a bag house to control the emissions from the dryer at the Cuiaba plant, thus bringing this source of particulate emissions into compliance with IFC/WBG guideline limits. Process effluents from the Itacoatiara plant are collected in a facultative lagoon with adequate capacity. There are no discharges of treated effluent outside the premises. Wood and biomass-fired thermoelectric generators service the crusher. Wood fuel for the boilers and generators is currently obtained from the legal sale of wood sourced from cleared land authorized by a government-run agricultural colonization program for previously landless farmers. Previously, Amaggi commenced development of its own fuel wood plantation (800 ha on degraded land) to meet wood fuel demands. The operation is expected to be self sufficient in approximately five (5) years. Emissions controls for the boiler are being improved currently and analytical results on air emissions will be submitted to IFC by May 2004 as part of the Annual Environmental Report. Modifications to the current emissions controls are anticipated to reduce particulate emissions to comply with IFC and World Bank guideline limits. The silo and trans-shipment facilities at Itacoatiara are in compliance with IFC requirements. At soy drying and seed warehouses, grain dryers use wood as fuel. The company is developing its own eucalyptus plantations to meet wood fuel requirements for at least 8 of its Almazens (5 in Sapezal and 3 in SM4) within the next 5 years. In the meantime, Amaggi will continue purchasing IBAMA certified wood. Domestic wastewater is discharged to septic tanks and subsurface infiltration systems or to municipal sewers. These operations do not generate process effluent. Solid waste is disposed to municipal landfills; ash from dryers is used as a soil amendment or soil conditioner on agricultural fields. - Occupational health and safety (OHS) management. The company has developed occupational health and safety plans for each of its operational sites and has a formal health and safety management program implemented in accordance with Brazilian health and safety regulations. Amaggi conducted a detailed health and safety audit and implemented all actions needed to ensure compliance with IFC requirements (relating to use of personal protective equipment, ambient air quality, exposure to noise and dust, electrical grounding, fuel spills, etc.) as part of the first IFC investment. Most recommendations included in the audit have been implemented; currently, Amaggi operations are essentially in full compliance with the IFC and WBG guideline requirements. Additionally, as part of the first investment, Amaggi prepared and implemented an environmental, health and safety training program for its employees. The training program included familiarization with the content and assigned responsibilities incorporated into the Environmental and Social Management System (ESMS). As part of the second investment project, the company will strengthen training programs to ensure that Amaggi employees fully comply with established ESMS procedures and with IFC and WBG safeguard policies and guidelines. - Logistics and transport. The company operates a barge and transshipment facility at Porto Velho on the Madeira River and at Itacoatiara on the Amazon River. These facilities have obtained all required local environmental permits. With implementation of the corrective actions agreed in the first IFC investment, these facilities have enhanced occupational, health and safety practices, employee training and accident prevention awareness. Environmental and occupational health and safety performance is being evaluated following completion of all improvements and the findings will be submitted to IFC in second quarter 2004 as part of the Annual Monitoring Report. Amaggi has a fleet of trucks that is used for product transport and for delivery of diesel fuel to its installations. To prevent accidents, Amaggi is developing a Safe Transportation Program that will be submitted to IFC fro review and implemented in accordance with the attached Corrective Action Plan (CAP). - Corporate Environmental and Social Management Capacity. As part of the first IFC investment, the company committed to develop and implement an environmental and social management system (ESMS) to strengthen its environmental management capabilities. The company has made significant efforts to date to develop and implement the ESMS and to enhance the system’s ability to assist the company maintain compliance with Brazilian regulatory and IFC policy and guideline requirements. An important objective of the ESMS is to formalize and improve Amaggi's capacity to manage environmental and social issues in their own operations and on farms with which the company has prefinancing contracts. Currently the ESMS addresses environmental and social affairs management, occupational health and safety issues associated with farming, crop financing, transport, and processing operations. Additionally, the ESMS includes training and monitoring of key parameters to assess levels of performance. The company established an Environmental, Health and Safety Department that is principally responsible for ESMS implementation; this department reports directly to senior management and is currently staffed with twelve professionals. As part of the second investment the company will develop supplemental procedures to guide and direct additional environmental and social activities and obtain ISO certification of the management system. The existing ESMS incorporates a conflict resolution system; the company encourages stakeholders to utilize this mechanism to obtain or clarify information and to resolve disagreements. Conflict Resolution Contact Information: Ocimar Vilella, Environmental Coordinator; Telephone: 66-411-3105; E-Mail: meioambiente@grupomaggi.com.br; Website: www.grupomaggi.com.br. - Environmental and social issues associated with prefinancing contracts. Currently Amaggi provides crop prefinancing to approximately 520 farmers. These producers are located in the area covering the southern portion of Rondonopolis, Sapezal area, and Sorriso/ Horizonte do Norte in the State of Mato Grosso. Amaggi was the first producer in Brazil to use pre-financing contracts and Brazilian title documents or the Cedula de Produtor Rural (CPR) (essentially a perfected security) to assist in enforcement of IFC and WBG policies and guidelines for the 2003-2004 harvests for all its farmers with pre-financing contracts. Each farmer is required to complete an environmental questionnaire (ficha de cadastramento) that seeks data on compliance with land preservation and deforestation regulations, pest management policies and guidelines, labor issues, and other related activities. The questionnaire is required of each producer by the Amaggi ESMS in order to assure the company that soy is grown on appropriately developed and permitted lands and in accordance with IFC/WBG safeguard policies and guidelines. The company commissioned a field audit of all pre-financed farms this season to verify the validity of questionnaire data. The results of this audit, which will serve as the environmental baseline for each pre-financed farm, will be submitted to IFC at the end of June 2004 and will also be published on the company’s Internet website (http://www.grupomaggi.com.br). As part of Amaggi’s continuous effort to implement sound procedures to manage its operations, and in addition to the regular training programs conducted to date, Amaggi will develop a specialized environmental training program for the personnel dealing directly with pre-financed farmers. - Community Development Initiatives. Amaggi is developing an overall structure for its community development work so that social expenditures can be monitored for effectiveness. The Andres Maggi Foundation in Rondonopolis will play a role in the evolving social focus of the company. Amaggi gives a high priority to local hiring and a majority of company employees are drawn from local communities. The company continues to support a range of benefits for employees and the local communities in which the company’s operations are located. In Itacoatiara and Sapezal, the company is the largest private employer and the most active local corporate citizen. Programs for workers include: salaries that are at least 10% above wages paid for similar work in the area, health care coverage for employees and dependents, support to own/build their homes, improve sanitary conditions, and continue their education. Other benefits include transport services; canteen meals supervised by nutritionists; and arrangements with local supermarkets and pharmacies that allow workers to pay for purchases at the end of the month. Amaggi’s community development activities include: support for local municipalities, including assistance with construction and equipping of hospitals, schools, and community churches, infrastructure construction, donation of vehicles and fuel for local civil groups, and food donations to child care facilities for poor children. In Itacoatiara, the company also generates employment through local outsourcing of food preparation and sewing company uniforms. The Amaggi Foundation’s plans for the current year include provision of free soy milk to poor communities in Rondonópolis, Sapezal e Itacoatiara, support for nurseries established for poor segments of society, a cultural theater in Rondonopolis, and purchase and equipping of a floating school for poor riparian communities in Itacoatiara. - Other Stakeholder Initiatives. During the last year, Amaggi started a process of engaging with the Brazilian NGO community and other stakeholders. One of the principal objectives of this engagement is to establish a dialogue on elucidating issues related to soy production and defining soy best management practices (BMPs). Amaggi has also established on-the-ground partnerships with universities, research, organizations and NGOs (e.g. Associacao Rondonopolitana de Protecao Ambiental (ARPA)) to develop initiatives related to soy management in the areas where Amaggi operates. The open dialogue, which started in early 2004 with a round table discussion with several NGOs, is continuing and a second meeting will take place later in 2004. During the second meeting, as agreed at the first, the company will present its ESMS and describe plans for strengthening the ESMS to achieve sustainable soy production.

The following supporting documents provide further details of environmental and/or social issues and ameliorative activities: Table 2 Conservation Areas on Amaggi Farms (referenced above) and the Corrective Action Plan (CAP).

Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

IFC will evaluate the project's compliance with the applicable environmental and social requirements and the ESMS during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: - the status of implementation of any measures contained in the Environmental and Social Corrective Action Plan and - ongoing performance of project-specific environmental, health and safety and social activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.