27378 - May Seed

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Environmental & Social Review Summary

Project Number

27378

Company Name

MAY-AGRO TOHUMCULUK SANAYI VE TICARET ANONIM SIRKETI

Date ESRS Disclosed

Dec 5, 2008

Country

Turkiye

Region

Central Asia and Turkiye

Last Updated Date

Feb 26, 2017

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 29, 2009
Signed : Jun 9, 2009
Invested : Jul 2, 2009

Sector

Diversified Edible Agricultural Crops Production

Industry

Agribusiness and Forestry

Department

Regional Industry MAS MCT

Project Description

The proposed IFC investment in Mayagro Seed Co, a family-owned, second-tier company active in agricultural seed sector, is in line with IFC’s strategy in Turkey to:

- support emerging and viable second-tier companies to become more competitive;
- expand private sector’s reach to less developed parts of the country;
- target equity investments, especially in creditworthy high-growth second-tier companies; and
- explore co-investment opportunities with IFC’s private equity funds.

IFC proposes to invest up to 20% of Mayagro’s capital. In addition to the proposed IFC equity investment, Eurasia Capital Limited (“Eurasia” or the “Manager”), a new IFC private equity fund manager client currently launching Eurasia Capital Partners L.P., a private equity fund targeting Turkey.

Overview of IFC's Scope of Review

IFC staff visited the offices of Mayagro Seed Co in the outskirts of Bursa, Turkey, and met with management and staff responsible for key business operations, including environmental and occupational health and safety issues and human resources. IFC staff reviewed existing management systems (where available); and visited the seed plant and warehouse operations in Bursa. Information of the operations in Antalya and Adana were made available in Bursa. The IFC team reviewed diverse company documentation including annual reports and business plans. There was formal documentation that detailed environmental and occupational health and safety issues for review. In addition a human resources manual was available for review.

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 Systems,
- PS 2: Labor and Working Conditions,
- PS 3: Pollution Prevention and Abatement,
- PS 4: Community Health, Safety and Security, and
- PS 6: Biodiversity Conservation and Sustainable Natural Resources Management.

This is a Category B project under IFC’s Policy on Social and Environmental Sustainability because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized good international industry practices, guidelines, design criteria, local regulations and industry certification schemes. Development and distribution of agricultural seeds, such as vegetable, corn, and sunflower to farmers in the domestic market has limited environmental, health and safety impacts. Production is done in own plantations and through contracted production with farmers. Land acquisition has been done on a willing buyer-willing seller basis, and there is no involuntary displacement of any people. There are no indigenous peoples’ ancestral lands in the area. The company is working to actively upgrade its environmental protection capabilities, and will ensure that its operations meet international standards for the sector. As a result, the Category B designation is appropriate.

Environmental and Social Mitigation Measures

The company has presented information which indicates that the proposed project will be developed to comply with IFC’s environmental and social requirements, including host country laws and regulations and IFC’s Policy and Performance Standards on Social and Environmental Sustainability, and the applicable environmental, health and safety guidelines. The information about how any potential impacts will be addressed by the Project is summarized in the paragraphs that follow.

- SOCIAL AND ENVIRONMENTAL ASSESSMENT AND MANAGEMENT SYSTEMS

Management System: At the corporate level, responsibility for environmental and social issues lies with the Quality Manager in Bursa, supported by information provided by Plant Managers at the plant or business unit level. The company started the process of preparing for ISO 9001 certification in 2002, encountering some delays due to lack of necessary financial and human resources. The company will review their current policies and procedures and implement an integrated environmental and social management system within an agreed timeframe. This management system will include assessment of suppliers and contractors.
Community engagement: Mayagro understands the importance of having good relationships with their neighboring communities and are have implemented some outreach programs. However, Mayagro will review their community engagement approach and present a plan to be proactive on this issue. The current system for handling grievances needs to be further formalized to ensure adequate and prompt handling of complaints.

Relationship with farmers: Mayagro produce seeds on their own land dedicated for seed production and through contracts with 377 (figures 2008) farmers dedicated for seed production, research and development operations and trials. Mayagro main responsibilities with farmers are to

- provide quality stock seed;
- provide planting, cultivate and harvest machinery for farmer usage;
- provide technical information and monitor the fields by engineers;
- supply fertilizer and approved pesticides; and
- provide finance for operation and labor cost.

Mayagro does not charge an extra cost or interest for any of their technical assistance or machinery rental. The company also provides a purchase guarantee if the produced seed meets Mayagro standard. As specified in their contract, farmers have the responsibility of

- soil preparation;
- accept and follow Mayagro policies and procedures in all production stages;
- crop husbandry;
- crop safety; and
- attend seed education program.

Mayagro is also beginning to offer a long term seed production contract to the best performing farmers with some advantages.

LABOR AND WORKING CONDITIONS

Human Resource (HR) Policy and Management: Mayagro employs approximately 300 permanent and 111 temporary workers in their plantations and field operations, 35% of which are women. The company has a Human Resources Policy which needs to be updated to include non-discrimination and freedom of association provisions. In addition, review of the Human Resources policy and related procedures will include improvements such as the formalization of a grievance mechanism for workers, and monitoring of contracted labor in all their operations.

Occupational Health and Safety: The company has health and safety procedures for their industrial operations, and will review their procedures for their plantations. In general, the plant visited is clean, organized, and well maintained. A health and safety committee (including workers and management) is in place. Some areas need further improvement, especially agrochemicals in plantation activities, ensuring the proper use of PPE (Personal Protective Equipment) and providing periodic training. Better documentation and monitoring of incidents and accidents is necessary, especially for contracted labor in the plantations.

POLLUTION PREVENTION AND ABATEMENT

Pollution Prevention, Resource Conservation and Energy Efficiency: Air emissions generated by the company’s operation are principally from stationary power sources which run on natural gas for all their operations. Mayagro does not monitor stack emissions and will be required to do so for all their operations. The company will upgrade its sampling program for NOx for stack emissions and will bring all facilities into compliance with national regulations and IFC guidelines according to an agreed schedule.

Solid wastes are handled focusing on the recovery and reuse of materials. Plastics and cardboard packaging is recycled, and rejected products are grinded and sold as organic product.

Mayagro seed do not at present have an Emergency Preparedness and Response Plan. The risks this plan should address include, at a minimum, those of fire in the plants and plantations (affecting worker health and safety) and spills of diesel (affecting surface and groundwater quality). GHG emissions can come from combustion of fuels but this is considered minimal.
Water Sustainability: Water management at Mayagro aims to optimize crop yield while conserving the quality of the crop. Irrigation is applied during the production cycle depending on the crop needs and weather conditions. Mayagro applies irrigation through drip and simple sprinkler systems. Water resources are monitored and consumption varies from 3,000 liters per hectare to 8,000 liters per hectare. The company irrigates approximately 439,7 ha of Corn, 479,1 ha of Sunflower, and 188,2 ha of Bean (figures are for year 2008). Water comes from wells and consumption is monitored closely to ensure only the appropriate dosage is used.

Pesticide Management: The company is committed to develop a formal Pesticide Management Plan which will cover the areas of pesticide selection and handling, application and storage, staff training, safety requirements, and disposal, consistent with national laws and regulations, IFC policies and guidelines and WHO guidance. The company will immediately suspend the use of all pesticides that are listed in the Stockholm Convention and as class Ia and Ib by the WHO, and properly dispose of any remaining stocks.

COMMUNITY HEALTH, SAFETY AND SECURITY

Community Health and Safety: All of Mayagros operations are surrounded by small, agricultural communities. Impacts on community health and safety are limited but need to be analyzed and mitigated more systematically. In general, grievances are related to dust, and any agrochemical use in plantations.

BIODIVERSITY CONSERVATION

Mayagro’s plantations are planted on already converted land that was previously dedicated to other agricultural uses. Similarly, good agricultural management will be developed and applied for all crops.

Genetically-modified organisms (GMOs) are considered alien species. Any new introduction of such organisms should be assessed in a manner consistent with the existing host country regulations and in compliance with the Cartagena Protocol for Biosafety.

Stakeholder Engagement

Mayagro engage in ad hoc and informal community engagement through various channels; e.g., working with local entities, and providing technical assistance to small suppliers. Mayagro is advised to have a specific point of contact for community relations, such as a community liaison officer (CLO). Assigning a responsible person will assist local communities to have better understanding of the company’s operations and a good relationship with Mayagro Seed. An appropriate management of grievances if and when they arise will allow the company to more suitably demonstrate their actions are in accordance with local views and opinions.

The technical content of the ESRS and the ESAP will be translated into local language and utilized to convey assessment and remedial measures to the local community as part of stakeholder engagement program. Local disclosure of the information will be in publicly accessible place and company premises. Additionally, Mayagro will publish notification of the availability of these documents in a local newspaper.

Further information about Mayagro projects, the company and other considerations may be obtained from the following individuals.

Client Documentation

File Name	Actions
Turkey_May Seed_27378_ESAP.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).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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