26535 - Pronaca Expansion

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Environmental & Social Review Summary

Project Number

26535

Company Name

PROCESADORA NACIONAL DE ALIMENTOS C.A. PRONACA

Date ESRS Disclosed

May 27, 2008

Country

Ecuador

Region

Latin America and the Caribbean

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jul 2, 2008
Signed : Jul 16, 2008
Invested : Aug 18, 2008

Sector

Animal Slaughtering and Processing

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Procesadora Nacional de Alimentos C.A.-PRONACA (Pronaca or the company) is a fully integrated poultry and pork processor and one of Ecuador’s leading agro-industrial companies. Pronaca has been an IFC client since 2003. Pronaca has four plants located in the Quito, Santo Domingo, and Guayaquil regions of Ecuador. With this investment, the company will focus on key maintenance investments and financing permanent working capital, for an estimated total project cost of $52.5 million.

Overview of IFC's Scope of Review

IFC environmental and social review staff performed a physical evaluation of the project and environs, conducted relevant interviews, and reviewed company and government documentation.

E & S Project Categorization and Applicable Standard

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 Resource Management

No issues involving Indigenous Peoples or Cultural Heritage were identified, and these Performance Standards do not apply at this time.

This is a category B project according to IFC’s procedure for Environmental and Social Review of projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. Pronaca is an existing IFC client and has made significant progress in upgrading its environmental and social performance during the first investment. All of the issues identified can be readily addressed and the client has committed to comply with all relevant performance standards. A “B category” for this investment is therefore appropriate.

Environmental and Social Mitigation Measures

Environmental, Health and Safety, and Social (ESHS) Assessment and Management Systems:

Pronaca maintains compliance with Ecuador Law and regulations. Twelve of the company’s operations have HACCP quality assurance systems for food safety. Pronaca is ISO 9001:2000 certified for the fisheries processing plant, and has obtained ISO 22000:2005 for Frimaca (pork processing plant). Four of their plants have obtained BPM certifications (Good Manufacturing Practices). The company has a very strong bio-security culture and disease is not a problem. The poultry operations include broilers, turkeys, and egg production.

ESHS management at the company takes place without benefit of a formal ESHS management system. The company agrees that it needs to upgrade their corporate management system to formalize and include social and environmental affairs, and occupational health and safety issues associated with poultry and pork operations, and meat processing operations. In accordance with the attached Environmental and Social Action Plan (ESAP), Pronaca will implement a corporate integrated environmental and social management system (ESMS) covering all relevant aspects of IFC’s performance standards.

- Environmental and Social Impact Assessment (ESIA):

Pronaca has developed Environmental Impact Assessments for each of their operations, in order to comply with the Ecuadorian environmental regulations. The EIAs have provided the basis for an investment plan, currently being implemented to improve the Company’s environmental performance. Pronaca will provide to IFC an ESIA for any new processing plant constructed, or any expansion of poultry or pig operations.

- Labor and Working Conditions:

All employment relationships are in compliance with Ecuadorian national labour law. PRONACA is the leading private sector employer in Ecuador, and the Company has approximately 6500 direct employees.

Human Resources Policy: Pronaca is a non-discriminatory and equal opportunity employer and the Human Resources Policy is made available to all employees in Spanish which is the language of the workforce. OHS issues are managed following Ecuadorian regulations and corporate standards and are available to all employees. Pronaca has updated the Company’s Corporate Human Resources Policy which includes safeguards to ensure that child labor and forced labor is not used directly or through contractors in their supply chain, and will submit the policy to IFC for review.

Grievance mechanism: an informal mechanism is in place to address workers grievances, but it will be formalized by Pronaca at the corporate level, and a dissemination plan for the grievance process will be developed.

- Pollution Prevention and Abatement:

The main sources of emissions to the environment and the risk of environmental contamination come from the processing plants and from the poultry and pig operations. These include process liquid effluents, organic waste, sanitary discharge, and solid waste. The appraisal mission found that Pronaca has appropriate storage of hazardous materials. Good practices for solid and hazardous waste management were observed at Frinaca and Aveproca Plants. To improve management of organic waste at the pork rearing facilities, Pronaca has implemented the “deep bedding” system (rearing beds made of rice husks) that eliminates the use of water, reduces odor to negligible levels, and produces organic fertilizer for Pronaca managed farms.

Effluent quality: The company is in the process of constructing new effluent treatment plants for their meat processing operations in Santo Domingo, Bucay and Yaruqui. These are designed to meet Ecuadorian norms for surface water discharge. Treated water is either used for irrigation on Pronaca’s managed farms, or is discharged to surface waters at some locations. Pronaca will evaluate these new plants as they come on line, to identify any financially-viable upgrades which would provide further improvements in water quality.

Air emissions: Pronaca obtains all power supply from the national grid. Potential air emission sources from Pronaca facilities include diesel-fueled generators which provide contingency power to the facility. Usage of generators is limited to a few hours per year, and emissions from the generators are checked on an annual basis.

4.0 Community Health, Safety and Security:

Pronaca operations are not expected to exacerbate community exposure to diseases, since most facilities are located away from populated residential areas and far from schools or any established social gathering places.

5.0 Land Acquisition and Involuntary Resettlement:

According to legal documents presented by the company, all their land acquisitions or rentals are done within a willing buyer-willing seller framework.

6.0 Biodiversity Conservation and Sustainable Natural Resource Management:

Natural or critical habitat or endangered species: According to certificates provided by the Ministry of Environment in Ecuador, there are no legally protected areas where the processing plants or poultry and pig operations are located. The Company operations do not involve modification, conversion, or degradation of any critical habitats.

Stakeholder Engagement

The company carries out a large number of educational investments through its San Luis Foundation. Pronaca is well ahead in the private sector in Ecuador on social investments to help education efforts in rural communities located near production centers. At the San Juan de Bucay and at Santo Domingo de los Colorados educational Centers, Pronaca provides 15 scholarships for children (altogether Pronaca educational investments support 442 students in Bucay, and 147 in Santo Domingo). 161 company workers benefit from the adult educational program “Nunca es tarde para aprender” (“Never too late to learn”), that helps workers complete their elementary or high school education.

Pronaca has developed joint strategic partnerships with maize farmers, and has in place company policies to encourage the development of medium and small farmers’ suppliers. The company provides technical assistance in best agricultural practices and purchase of products at competitive prices. This effort benefits nine regions: Quevedo, Mocache, Ventanas, Balzar, Palenque, El Empalme, San Carlos and Valencia. In addition, each month, Pronaca provides food aid to 5,500 individuals.

The ESRS will be disclosed in the juntas parroquiales of the towns of Durán, Puembo, Valle Hermoso, and Bucay. The ESRS will be available in the company’s administrative offices:

- Quito:

Los Naranjos #4415 y Ave. De Los Granados
Telephone: (593-2) 226-3651

- Guayaquil:

Centro Comercial El Terminal, Bloque F
Telephone: (593-4) 229-7100

- Santo Domingo de los Colorados:

Avda. Tsáchila y Río Baba, frente al Monumento de Julio Jaramillo
Telephone: (593-2) 275-4857

- Bucay:

Km. 2 1/2 vía Bucay Naranjito, Campamento Ave Guayas – PRONACA
Telephone: (593-4) 272-7266

Client Documentation

File Name	Actions
Pronaca Expansion - FINAL ESAP May 27.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

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