The key EHSS issues for this project are: EHSS and food safety management systems, including full implementation of the agreed upon ESAPs at initial investment; environmental and social analysis of the proposed expansion of operations and compliance to environmental planning and permits required by the Zambia national authorities; air emissions and noise impacts during expansion and operational phase; OHS during expansion and operational phase; working conditions and terms of employment, including farm worker accommodations and layoffs related to acquisitions; supply chain management, including child labor; resource efficiency related to water and energy consumption; hazardous materials transportation, storage and use; community relationships, community health, safety and security issues, including bio-safety protocol and use of transport; and implementation of Good Agricultural Practices (GAP).
PS1: Social and Environmental Assessment and Management System
Assessment and Management Program: The Company ensures that all projects are subjected to an Environmental and Social Impact Assessment (ESIA) or environmental screening in order to identify and assess positive and negative impacts and propose mitigation factors as per the requirements of Zambia national legal and regulatory framework. A number of environmental project briefs were approved since the initial IFC investment in 2009 by the Zambia Environmental Management Agency (ZEMA) (formerly the Environmental Council of Zambia - ECZ). These include the Mumbwa abattoir, Lusaka wholesale, Masterpork abattoir and processing plant, Kalundu dairy and Zamleather projects. Potential environmental and social impacts of all the operations undertaken by Zambeef are therefore identified, assessed and tabulated, and for each impact, a series of recommended enhancement or mitigation actions and timetable are proposed.
Zambeef is committed to continuously improve its environmental and social management in its pursuit for achieving national and international environmental and social management standards. The Company has adopted an environmental policy in June 2009 which states, amongst other commitments, that it is committed to provide a safe and healthy work place, protect the environment, and being a responsible corporate citizen within the communities where it operates. The next phase of Zambeef’s road map to full compliance with international and national requirements is the actual implementation of international standards as regards to Food Safety, especially ISO 22000 Food Safety Management System (FSMS). Zambeef’s corporate E&S management system will be based upon requirements from ISO 9001, ISO 22000/HACCP, ISO 14001, OHSAS 18001, SA 8000, IFC Performance Standard 1 and ILO conventions. A draft work plan for this exercise, which implementation is expected to be completed by December 2014, has been developed and currently under internal review. The Company is in discussion with a second Development Finance Institution (DFI) for Technical Assistance to part fund this phase.
Organizational Capacity: The Environment, Food Safety, and Technical Services department manager, who is supported by two environmental specialists, reports directly to an executive director. One of the specialists is responsible for farming operations whilst the other is responsible for manufacturing operations. The department is in the process of recruiting a food science specialist to replace one that recently left the company. The food science specialist will focus on food safety issues and will be responsible for food processing activities and the retail outlets. In addition, there are EHS officers at each of the Company’s processing plants. There is a Public Relations and Corporate Social Responsibility Manager also reporting to the same Executive Director. There is also a corporate Human Resources (HR) manager overseeing HR issues of the Company.
Training: Zambeef has embarked on a continuous training program for its staff. The training has so far included introduction to HACCP, as a pre-requisite for the implementation of a Company-wide ISO 22 000 Food Safety Management System. This training is aimed at minimizing contamination of the final products, thereby ensuring food safety. Other training modules included fire drills and basic first aid, food hygiene, customer service, pre-slaughter care and customer service and marketing. Training curriculum will be extended, in the near future, to include Good Agricultural, Manufacturing and Hygiene Practices, Food Legislation and Environmental sanitation as pre-requisite for the implementation of HACCP.
Monitoring: Effluent discharges and air emissions are monitored regularly for the different operations, in accordance with Zambian regulatory requirements. Cases of non-compliance, particularly at Huntley, have drastically been reduced compared to the previous visit due to the installation of stabilization ponds and improved practice related to effluent management – see wastes below. Monitoring results reviewed during appraisal confirmed this improvement.
Microbiological testing and monitoring of the quality and safety of food and water, including disease surveillance in livestock, continue to be routinely carried out. Independent quarterly Salmonella tests for all of the Company’s poultry houses are also undertaken. These tests have yielded negative results. Zambeef is establishing a microbiological laboratory at Masterpork. The laboratory will greatly enhance the frequency of monitoring of products along the production line in order to ensure food safety.
Zambeef’s ESAP implementation progress has been routinely audited by independent consultants. The last audit was undertaken in November 2011. In addition, IFC environmental specialist visited the Company’s Nigerian operations for project supervision purposes in September 2011. Zambeef also provided regular updates to IFC on progress made in implementing the ESAP of the previous investment.
Reporting: The Environment, Food Safety and Technical Services department produces a progress report on the corrective action plan every three months and submits same to the responsible Executive Director. In addition, Zambeef produces a corporate environmental and social responsibility report. The report forms part of the annual report. The 2011 Annual Report which is published on the Company’s website –www.zambeefplc.com – provided an overview of progress made in implementing the ESAP which was approved by Zambeef Senior Management in 2009 as part of its loans with DEG and IFC. The report also highlighted its worker welfare initiatives, including HIV/AIDS programs, such as training peer educators, voluntary counseling and testing, and training of HIV/AIDS awareness for key personnel which was carried out during the reporting period. The report further highlighted Zambeef’s Corporate Social Responsibility activities for poverty alleviation.
In future report, Zambeef will increase the amount of EHSS information, including OHS statistics at corporate and operational level, resource efficiency and GHG emissions. Zambeef compiled and submitted to IFC the Annual Monitoring Report for the previous investment. The report which covers the period 1st October 2010 – 30th September 2011 contains good aggregate coverage of key EHSS indicators. The Company was also required to provide various E&S documents, including policies on E&S, permits, emissions and effluent monitoring results, etc. as part of its listing on the London Stock Exchange. Zambeef also compiles and submit reports to ZEMA on solid waste generated and disposed and effluent emissions biannually, and air emissions and hazardous waste once in a year.
Supply Chain: Zambeef continues to grow and remain a highly integrated entity. This integrated structure makes it possible for Zambeef to be self sufficient in raw materials markets and, as such, minimizes E&S risk exposure from sourcing from other primary suppliers. For its Zamanita plant requirements, the Company purchases the palm oil from a certified and supply chain member of the Roundtable on Sustainable Palm Oil (RSPO). The Company’s Zamplam project is still in pilot phase and is unlikely to be producing crude palm oil for at least another 2-3 years. Once the Zamplam project is successful and progresses to production phase, the Company will apply to become members of the RSPO followed by certification. As a result, no supply chain issues such as child and forced labor and/or conversion of natural and critical habitats leading to biodiversity loss were identified during appraisal. In addition to this and as part of the integrated food safety management system which will be fully implemented by 2014, Zambeef will implement procedures to ensure compliance of suppliers and out-growers with the IFC PS’s requirements for supply chain (PS2 and PS6).
PS2: Labor and Working Conditions
Human Resources (HR): Zambeef’s overall total labor force increased significantly from 3 718 during IFC’s initial investment to 5 474 employees currently. This includes 1 879 women – a 73% increase from the previous figure of 1 089. Less than a percent (38) of the total labor force are expatriates.
The Zambeef HR Department is now fully established and has since developed a Group-wide HR policy. There is a recognized labor union in place as well as a Zambia Ministry of Labor and Social Security approved collective bargaining agreement. There have been no major labor disputes or industrial action in the Company’s development to date and the Company views its relationship with its employees and union as harmonious.
The HR policy outlines company values (e.g. non-discrimination and equal treatment), personal code of conduct and procedures for selection, hiring, training, promotion, resignation, retrenchment and firing. It specifies the terms of employment for different categories of appointments and employee’s working conditions (e.g., working hours, training, and salary scale) and benefits (gratuity, retirement, medical aid and repatriation). The policy also makes reference to the Group’s Disciplinary and Grievance Code. Zambeef assesses on individual senior employee performance annually. All policies, procedures and guidelines are made available to employees and comply with Zambian labor laws.
Non-Discrimination and Equal Opportunity: Zambeef is an equal opportunity employer and does not discriminate employees on the basis of age, disability, race or sex. The HR policy clearly specifies that same work shall attract equal pay. Zambeef does not employ child or forced labor in its operations, as National Registration Cards (NRCs) are used to verify age at the time of recruitment.
Retrenchment: In response to its decision to cease the Jatropha Project at Mpongwe Farms immediately after acquiring the farm, Zambeef informed all affected employees of this development through meetings addressed by HR and later by the Union General Secretary. The affected employees were issued with letters of notice to retrench, explaining the situation and what payments were due to them. The Company made efforts to absorb as many employees as possible into other departments within Mpongwe Farms. Due to these efforts, 36 employees were eventually terminated against an initial 103. Fifty-seven employees were absorbed back in the system and 10 found employment with the mines in North Western Province. IFC is satisfied that the retrenchment process was conducted in line with PS2 (2006) requirements. No further retrenchment is anticipated.
Occupational Health and Safety: Zambeef, through its Health and Safety policy which forms part of the Staff Manual, is committed to take all practical steps to ensure health and safe working environments. Workers welfare is further enhanced by ensuring that canteens, change rooms with sanitary fittings, and personnel protective equipment (PPE), are provided. Medical surveillance for workers exposed to chemicals and medical examinations for food handlers are timely done. Disease surveillance of those diseases with a potential to affect staff exposed to coal dust (Zamanita) and chromium (Zamleather) has continued to register results within acceptable levels. Work place incidents/accidents are recorded in accordance with the provisions of the Factories Act and reported to the Ministry of Labor. In the meantime, the Environmental, Food Safety and Technical Services department, in collaboration with HR, are currently devising a robust Group wide system of monitoring and recording incidents. No significant OHS events occurred during the year and there were no fatalities.
Zambeef finalised the development of its HIV/AIDS policy during 2009 and is being successfully implemented. The policy, which is designed to cover employees at all levels is based on a number of principles which include, commitment to promotion of equality and fairness with respect to all employees regardless of their HIV/AIDS status and recognition that continuous education and information on HIV/AIDS will promote a better understanding, respect and tolerance within the workplace. To this end, HIV/AIDS programs, such as Training Peer Educators, Voluntary Counselling and Testing and Training of HIV/AIDS Awareness to focal persons are continuously undertaken.
PS3: Pollution Prevention and Abatement
Wastes: Zambeef, in line with its large and varied operations, produces a wide range of wastes which mainly includes:
Solid waste: (manure and carcasses (rare) from feedlots and abattoirs, scrap metal from workshops, bleaching earth from chemical refining of palm oil at Zamanita, pesticide containers, sewage, and sludge from water neutralization at Zamleather).
Liquid waste: effluent from abattoirs and leather processing at Zamleather.
Hazardous waste: used oil, used batteries and soap stock and spent acids from chemical refining of palm oil. Zambeef will also embark on a major refurbishment and replacement program to replace old Asbestos Cement (AC) bulk pipelines at its recently acquired Mpongwe farm within the next five years.
Air emissions: particulate matter – dust – from processing plants, volatile organic compounds – VOCs – from Zamanitha and Odor - sharp and pungent odor from Ammonia gas (NH3) produced from manure.
There is significant improvement of environmental management at Huntley Farm. The farm had by far the most pressing environmental issues at the time of the initial investment. Effluent produced from abattoirs was generating pollution problems due to the high content of animal fat, manure, blood and cleaning detergents. Two new Effluent Treatment Plants (“ETPs”) and stabilization ponds have since been constructed and commissioned at the farm. The Company will follow this model and equip all its production centers where effluent is generated with ETPs - stabilization ponds are currently under construction at Masterpork and Zamanita.
Chicken manure is rich in nutrients, particularly nitrogen, phosphorus and potassium, and serves as a soil amendment by adding organic matter and increasing the water holding capacity of the soil. For this reason, chicken manure from Huntley Farm is currently being agitated and used as fertilizer for the grass feed fields and soya farm sections. In future, any chicken litter not used for fertilizer will be treated in the Rendering Plant (currently under construction) together with other broiler house and processing plant waste which will include blood, feathers, rejects and heads. The Rendering Plant will process and turn these wastes into by-products that will be used at the Company’s piggery. Cattle manure at the farm is currently being composted on a trial basis.
The Company now applies project specific pollution prevention and control and waste management techniques that are consistent with good international industry practice at all its new projects. As highlighted above, Zambeef compiles and submits to ZEMA a report on type of solid waste generated, associated quantities and method of storage, handling and/or treatment, every six months.
Resource Conservation: Zambeef has outlined Terms of Reference for a Technical Assistance (TA) with a DFI focusing on sustainable agriculture, biodiversity management, community engagement and labor for its farming operations. The main objective of the TA is to further improve the Company’s environmental and social performance in line with the applicable E&S requirements, namely IFC Performance Standards and others such as Global Gap, and to address specific and appropriate items of the ESAPs developed for the initial investment with assistance from DEG. The TA, which is estimated to run for three years, will consist of four modules (Module A – D). Modules A and C relate to resources conservation and biodiversity, as outlined below.
Module A, to be implemented at Sinazongwe and Mpongwe farming operations, will mainly focus on addressing stress on water resources, soil erosion and loss of productive capacity, pesticide use, eutrophication of aquatic environments, (general) biodiversity impacts, crop residues and other solid waste, and atmospheric emissions. Module C, to be implemented at Chiawa will focus on biodiversity. The Company has since left a large middle portion of the Chiawa farm undeveloped in order to enhance biodiversity, as per the initial recommendations by DEG. This section of the farm has been recognized as an important corridor for game movement. Although all four Modules are farm specific, they will be developed with a view to be transferred to the other farm operations, where applicable.
Zambeef’s cereal row cropping operations (maize, soya beans and wheat) consist of approximately 8 350 Ha irrigated and 8 650 Ha rain-fed land available for planting each year. These cropping activities consume large volumes of water. Zambia receives good rainfall ranging from 800mm to 1,400mm annually, making it suitable for a broad range of crops and livestock. All operations have in place approved water rights issued by the relevant Water Boards.
To demonstrate its commitment to sustainable use of water in its cropping operations, the Company commissioned an independent consulting company to investigate surface water hydrology and groundwater availability immediately after acquiring Mpongwe Farm. The study, a copy of which was provided to IFC, delineated and characterized the dolomitic aquifers in the area, including groundwater recharge and discharge processes, and groundwater flow of the project area, in the local and regional context. The study concluded that the aquifers can sustain the current abstraction program and the envisaged expansions, including during a five-year drought period, without impacting negatively on other water users in the area.
Energy Use and Efficiency: The majority of Zambeef operations tap their power supply from the national grid and no energy efficiency implementation has yet taken place. Zambeef is considering using biogas to generate electricity for its own use in the long term.
Hazardous Materials: Related to the transportation, storage, and use of bulk quantities of acids, alkalis, solvents, and hydrogen during extraction and refining at Zamanita. Zamanita uses the hexane extraction process to produce oil. Zamanita has a license to import and store hazardous chemicals. Zamleather stores and uses sulphuric acid in the leather tannery whilst the farms use pesticides which are licensed by ZEMA. As a standard for the Group, used oil is recycled via the oil suppliers and used batteries are recycled via ZEMA approved collectors. The soap stock and spent acids from Zamanita are sold to soap making companies.
The Asbestos Cement bulk water pipelines referred to above measure about nine kilometers will be replaced with either Glass-reinforced polyester (GRP) or Polyvinyl chloride (PVC) pipes. In addition to the pipes posing a major risk as they are now in the region of 30 years old and there are reports of frequent bursts and outages, the aging AC materials also pose a potential health hazard. Zambeef will commission a ZEMA registered and licensed Company to remove and deposit the AC material at a designated landfill site near Lusaka. Zambeef will report to IFC annually through the Annual Monitoring Report progress made in AC replacement program.
Emergency Preparedness and Response: Following the initial investment, Zambeef adopted Zamanita’s comprehensive emergency preparedness and response plan which complies with the Zambian laws and regulations at corporate level. The Company is in the process of modifying this plan in line with potential risks at the different sites, and implementing the modified plan at other operations, as appropriate.
Greenhouse Gas Emissions: As noted above, Zambeef is required to report on its industrial air emissions at least once yearly. To this end, the Company, through independent consultants, performs annual monitoring for COx, SOx and NOx at Zamanita and the recently commissioned Novatek plant. Zamanita plant has two coal fired boilers whilst Novatek has one coal fired boiler. The boilers are used to generate steam for the respective plants. The latest report (December, 2011) on gas, dust and noise measurements indicates that CO and SO2 were above the Zambian Maximum Acceptable Concentration (ZMAC) at Zamanita whilst only SO2 exceeded this standard at Novatek. This exceedance could be attributed to the type of coal being used and/or incomplete combustion. The Zamanita plant is currently undergoing refurbishment which is scheduled for completion by the end of June 2012. Zambeef will investigate the exceedance and implement appropriate corrective measures as part of the refurbishment exercise. The Company expects to extend the COx, SOx and NOx monitoring to its vehicular fleet starting this year.
Pesticide Use and Management: Since the initial investment and to address pesticide management as cited in IFC’s supplemental ESAP, Zambeef has been systematically recording all its pesticides and using the WHO guidelines to classify them. At the recently acquired Mpongwe farm, the exercise is undertaken in conjunction with the relevant authorities. Part of the exercise at Mpongwe aims to identify pesticides that have expired and agree on their disposal with the authorities. Once this is completed, the pesticides will be re-arranged in the storage area according to type and expiry date. At Huntley, the pesticides will be stored in a new and bigger facility. Purchasing of pesticides for the Group operations has been centralized and Zambeef continues to use pesticides that are registered with ZEMA. The proposed Module A TA for sustainable agriculture to be developed at Sinazongwe and Mpongwe will also focus on pesticide use. Finally, the company will complete the development of an Integrated Pesticide Management (IPM) in line with IFC guidelines on crop production and WHO pesticide classification system for implementation by the end of 2012.
PS4: Community Health, Safety and Security
The five main identified issues from Zambeef operations include those related to food safety, the spread of animal diseases, traffic related with large transport fleet with excess of 200 vehicles, life and fire safety, and security personnel.
Food safety: Zambeef does not have in place a certifiable food safety system. However, as noted above, the next phase of Zambeef’s road to compliance with international standards is the implementation of international standards as regards food safety that will culminate in implementation of ISO 22 000 Food Safety Management System by the end of 2014. The Company has produced Good Manufacturing Practice manuals that are currently being implemented across all the relevant Group operations. In addition, Zambeef has effectively implemented all the corrective actions related to food safety which were identified as high risk by DEG during its 2009 appraisal.
The Group continued its upgrade program for all its operations, in order to meet E&S applicable requirements, including Zambia’s legal and regulatory requirements, IFC’s Performance Standards and WBG’s general and sector-specific EHS Guidelines, and at the same time win consumer confidence. So far, 28 retail outlets have been rehabilitated and the program is still on-going. Microbiological testing and monitoring of the quality and safety of food and water, including disease surveillance in livestock and independent quarterly salmonella tests for all the Company’s poultry houses, continue to be routinely carried out and corrective action implemented, as appropriate. The establishment of the microbiological laboratory at Masterpork will greatly enhance the frequency of monitoring of products along the production line in order to ensure food safety. Medical examination for food handlers in all retail outlets have been conducted in compliance with the Food Legislation since the initial investment and produced negative results.
Bio-security: Bio-security is mainly breached by trucks, people, feed and pests. With some of the facilities being old, their original designs did not emphasize bio-security considerations. However, disinfectant barriers for vehicles and people are in place. Perimeter fencing to maintain separation is also in place, where required. Additionally, Zambeef is currently re-assessing bio-security measures, as part of the development of the Food Safety Management System, in order to minimize the risk of disease infection and transmission at its production facilities. This includes, among other things, keeping multi-site farming or separation, constructing security fencing to prevent unauthorized access, disinfecting vehicles entering production areas and constantly monitoring the health of livestock.
Fleet management: Zambeef has initiated a system to check, review and record incidents and accidents at all its sites and plans to implement specific incident reports for vehicles starting from the second quarter of 2012. In the meantime, all fleet drivers are issued with a General Register for Factories in which they are required to record any incidents and/or accidents.
Life and Fire Safety (L&FS): Zambeef’s L&FS management forms part of the Safety Policy and is managed by the Environment, Food Safety and Technical Services Department. The L&FS management program includes fire prevention, fire extinguisher maintenance and training, fire suppression, emergency evacuation planning and the reporting of fire alarm activations. The program is also responsible for ensuring that all regulations and guidelines are followed in all company buildings, including but not limited to fire drills. The company submits and obtains approval from the planning authorities for all its new buildings in accordance with national legal and regulatory requirements on L&FS amongst other aspects. In addition to the requirement for statutory approval for all new developments (including significant upgrades), the Company’s premises are inspected on an annual basis by respective local fire authorities which issue an annual fire certificate. The fire certificate is a prerequisite for the annual business permit renewals.
Security personnel: Zambeef employs over 500 security guards for its internal security. The central command for the security is at Huntley. According to the head of internal security, 15 guards are recruited and trained every two/three months. The key requirements for recruitment are the completion of Ordinary level of education and to be aged between 25 – 35 years old. Some of the recruited guards are retired policemen. The guards undergo basic three week security training after which they are deployed and undergo a further three weeks deployment training which is specific to the point of deployment. Some of the guards are armed in certain areas, depending on risk level and type of business. Background checks are carried out on individuals who will carry arms. The firearms are licensed to Zambeef and are transferable. The firearms are controlled by the Group Security Officer who decides on which area and guard receives a firearm based on identified risk, and makes sure the licenses are renewed when due. No incidents have been recorded to date since the adoption of guns (over 12 years ago) by Zambeef security. Zambeef also has external security arrangements with a number of security companies.
