The key EHSS issues for this project are: management of environmental and social due diligence of identified contract farming operations with respect to their compliance to environmental planning and permits required by South Africa national authorities and implementation of Good Agricultural Practices (GAP); working conditions and terms of employment, including farm worker accommodations and assurance of fair, safe and healthy working conditions for all workers; supply chain management, including child labor and use of labor brokers, and conversion of natural and critical habitats; hazardous materials transportation, storage and use and air emissions related to the fertilizer operations and pesticide use; resource efficiency and pollution prevention related to water and energy consumption, and wastewater treatment and discharge, and solid waste disposal; community relationships, community health, safety and security issues.
PS1: Social and Environmental Assessment and Management System
Assessment: Farmsecure is committed to conform to the relevant and well enforced South African national legal and regulatory requirements. A number of acts such as NEMA, National Water Act, Conservation of Agricultural Resources Act, Occupational Health and Safety Act, and Labor Relations Act, are used to guide practice, as well as various international best practice standards which are in line with IFC’s Performance Standards. The Company ensures that Environmental Impact Assessments (EIA) are undertaken where required as stipulated by NEMA, in order to identify and assess positive and negative impacts and propose corrective measures as appropriate. As part of its acquisition of Kynoch Fertilizer, Farmsecure commissioned independent consultants to undertake environmental and social due diligence at 16 blending sites located in different provinces of South Africa. The consultants recommended remedial work to address identified deficiencies, such as those related to the possibility of the release or escape of contaminants into the environment, soil and groundwater contamination, etc, at each individual site. Timeframes for remedial work were proposed for each element of the corrective action plan, based on the perceived level of risk. This majority of this remedial work has since been completed with some outstanding items to be completed during 2012
As set forth in the attached Environmental and Social Action Plan (ESAP), to demonstrate and strengthen its commitment to the above requirements, Farmsecure appointed a Safety, Health, Environment, Risk and Quality (SHERQ) Manager to implement the Company’s SHERQ policy, and to establish and implement an integrated management system for all Group’s companies. The SHERQ manager will also use the Coastal & Environmental Services environmental and social due diligence report as a baseline to develop and implement a robust and auditable Environmental and Social Management System (ESMS), based on the ISO 14001 standards framework. The ESMS will incorporate a comprehensive environmental and social due diligence procedure to evaluate prospective farming operations to ensure their compliance with applicable host country environmental and social national legal and regulatory requirements, IFC’s Performance Standards and relevant WBG EHS Guidelines.
Two (Thweewaterskloof and Chennels) of Farmsecure’s three fruit farms, and their associated packhouses (Novo and Chennels), are certified under the GLOBALG.A.P. (EUREPGAP) process. Certification for the recently acquired Maswiri farm in Limpopo province is underway. The GLOBALG.A.P. (EUREPGAP) is a prerequisite for exporting fruit to major overseas retail groups. Certification is achieved by complying with the requirements set out in GLOBALG.A.P. (EUREPGAP) Control Points and Compliance Criteria, Integrated Farm Assurance (GGAP 2007/09), which sets out a framework for Good Agricultural Practices on farms, and which defines essential elements for the development of best practice for the global production of crops, livestock, and aquaculture, acceptable to the leading retail groups worldwide.
Management Program and Organization: Of the Group’s operations, Kynoch has the most developed and comprehensive set of SHERQ and Human Resources (HR) policies and procedures. Observations during site visit to the dry blending plant in Paarl indicated a high level of adherence to the requirements of occupational health and safety. The plant is operated in strict compliance with all applicable national regulations, and Kynoch collaborates with relevant authorities who routinely perform air emissions monitoring. In this spirit, the Company appointed a SHERQ Manager in October 2011 with the main responsibility to adopt the Kynoch policies and procedures, with appropriate modifications, and ensure implementation of the SHERQ policy at all Farmsecure operations. The SHERQ Manager was also tasked with the development and implementation of an integrated management system appropriate for all of Farmsecure’s operations which would ensure consistency of EHSS management across the entire Group. In addition, there are EHS officers at each of the Company’s blending plants. The Human Resources Manager is part of the senior management team and has also appointed two Health and Safety Officers primarily for Farmsecure Fruit. There are also officers at operations level within each division. The manager is also responsible for Corporate Social Investments programs.
Training: Farmsecure is committed to creating opportunities for the development, education and training of its employees to enable them to realise their maximum potential and to develop their skills, knowledge and abilities to inspire them to attain success throughout their working careers. A Training and Development division has been established as part of the Group Human Resources function and a Training and Development Manager has been appointed to drive the Company’s training needs and at the same time maximise on opportunities available within the SETA’s (Sectoral Education and Training Authorities) created by Government for the utilization of Skill Development Levies paid annually by companies. The Company has also developed an Education, Development and Training Framework which outlines the principles, scope and application and procedures for training, etc. The content of learning under the framework covers technical and non-technical fields, capacity building, legal compliance as well as general employee training (such as Occupational Health and Safety, Life-skills and Adult Basic Education and Training). Initial training and refresher courses are provided to all labor in respect of all operational procedures, including firefighting.
Monitoring and Reporting: Farmsecure, through its Human Resources Department, prepares and submits to the Company’s Board of Directors a report on social development needs related to its fruit farms on an annual basis. The social development needs are identified through ongoing consultations with Farmsecure management, farm owner/manager and the affected community. The report contains an implementation plan for the identified needs (e.g. healthcare, sanitation, accommodation, youth and adult skills), including a timeframe and proposed budget. As part of IFC’s investment, the Company will monitor and report on the implementation of the ESMS and of the Environmental and Social Action Plan (ESAP), in the annual Environmental and Social Annual Monitoring Report (AMR) that will be submitted to IFC. Farmsecure will also increase the amount of EHSS information, including OHS statistics, environmental incidents, and community grievances at corporate and operational level, including issues arising from its supply chain, and will include same in its annual report.
Supply chain assessment: Farmsecure makes use of seasonal and casual workers which are sourced from the farming communities or through the use of labour brokers for sourcing purposes only. Regardless of where the seasonal workers are initially sourced, all seasonal workers are contracted by Farmsecure as its own employees and paid via the Company’s payroll system to ensure compliance with sectoral wage agreements and statutory obligations. All seasonal workers have written contracts of employment with Farmsecure and are managed in terms of Farmsecure conditions of employment which includes its grievance procedures. In the sourcing of seasonal workers, Farmsecure deploys a comprehensive identification checking system to ensure no workers are below the legal working age. 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.
Farmsecure, through its Farmsecure Enterprise Development, aims to contribute to the development of contract growers in agriculture among emerging (previously disadvantaged) farmers by developing and implementing structured contract grower projects in accordance with Farmsecure’s business model. A number of projects in Eastern Cape and Kwazulu Natal (grain), Limpopo (beef and fruit), Western Cape (fruit packing) are currently at different phases of implementation.
As part of IFC’s investment, and as outlined in the ESAP, Farmsecure will be required to develop and implement a formal system to deal with external queries, concerns, and grievances for contracted farms and operations as part of its ESMS.
PS2: Labor and Working Conditions
Human Resources and Management: The Farmsecure group has a total workforce of 2 940 (as of December 31, 2011) inclusive of management (106). About 74% of these are –permanent seasonal workers whilst women constitute about 37%.
The Group has a Human Resource Policy which applies to all - employees on the approved staff establishment of Farmsecure. The policy does also cover contractors and seasonal workers. The Policy specifies the terms of employment and employees’ working conditions (e.g., working hours, training, and remuneration) and benefits (e.g. transportation, mobile phone allocation, pension and leave). The Company assesses and reports on individual employee performance on a regular basis. The policy clearly defines seasonal/temporary employees (fixed term contract for employees to complete a specific task over a specific period of time); and casual employees (contract to employ a person for a short period of time that will not exceed more than 4 weeks). All policies, procedures and guidelines are made available to employees and comply with South African labor laws.
The Group’s Human Resources Manager manages the policy’s implementation and all HR related activities. There is no restriction on freedom of association and the HR policy stipulates the rights of trade unions in respect of access to the workplace and other rights in compliance to the Labor Relations Act. There is a specific provision in the HR Policy for dispute settlement procedure. The Company also recently (January 2012) successfully completed and submitted to the South African Department of Labor employment equity reports for 2011 for Farmsecure Fruit and Farmsecure Grains for the first time. The reports satisfy requirements of the Employment Equity Act. The main purpose of the Employment Equity Act is to achieve equity in the workplace by promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination and to implement affirmative action measures to redress the disadvantages in employment by designation groups to ensure their equitable representation in all occupational categories and levels in the workplace. There is no forced and/or harmful child labor that is involved in the Farmsecure’s activities.
Occupational Health and Safety: Farmsecure, through its Safety, Health, Environment, Risk and Quality (SHERQ) Policy, is committed to progressively strive to achieve best practice within the framework of OHSAS 18001. The policy also states that the Company will make available and communicate the SHERQ Policy to all employees, as well as to interested parties as and when required. Observations at the visited facilities (Kynoch Fertilizer dry blending plant, Novo Fruit Packhouse and Theewaterskloof Fruit Farm) indicated a high level of adherence with the requirements of occupational health and safety legislation with regards to visitor induction, provision and use of personal protective equipment, signage and availability of material safety data sheets, where appropriate. Occupational health and safety issues on the fruit farms and the packhouses are managed in accordance with the requirements of the GLOBALG.A.P (EUREPGAP) criteria (GGAP 2007/09).
The Ministry of Labor’s labor inspectors actively and routinely visit farms to assess employers’ provision of protective clothing, availability of clean drinkable water, and induction of workers on how to use machinery, and general health and safety, amongst other aspects. Noise, illumination, dust and ventilation assessments are performed by Department of Labor-approved Occupational Health & Safety Inspectors, and municipal Health & Safety officials. Work place incidents/accidents are recorded in accordance with the provisions of the Labor Relations Act and reported to the Department of Labor.
PS3: Pollution Prevention and Abatement
Wastes: Farmsecure, in line with its large and varied operations, produces a wide range of wastes either directly or indirectly via its contracted farmers. Some of the waste generated by Farmsecure’s activities include off spec fertilizer products, sludge, crop residues, plastic pipes and plastic chemical containers, hydrocarbons, domestic waste and domestic sewage, etc. As much as is possible, this waste is sent off for recycling, and what cannot be recycled is collected by registered companies and sent to registered landfill sites depending on facility location. The Company only uses licensed waste management companies for transfer of waste, and ensures, through waste collection contractual agreements, that all waste collected from any of its facilities is deposited at appropriate landfill sites. Waste and pollution issues within the Group are handled in accordance with relevant South African legislation.
Water use: Water use in South Africa is principally governed by the National Water Act (No 36 of 1998). The Act, which regulates all aspects of water use, contains comprehensive provisions for the protection, use, development, conservation, management and control of water resources. The Act gives the Department of Water Affairs and Forestry the tools to gather the information needed for the optimal management of water resources and the registration of water use is one of these tools. The process of acquiring a water use licence is linked to the EIA process and is applicable to all water users who do not receive their water from a service provider, local authority, water board, irrigation board, government water scheme or other bulk supplier, and who are using water for such purposes as irrigation, mining, industrial, and feedlots. To this end, Farmsecure checks for availability of a valid water use licence during its due diligence for prospective contract farmers. Its own fertilizer plants have valid water use licences in areas where the blending plants do not obtain water from local authorities. In addition to this, Farmsecure only works with farmers who subscribe to its precision farming techniques which requires adherence to sustainable environmental practices with respect to the use of natural resources, such as soil and water.
Energy use and efficiency: All of Farmsecure operations, including contract farms, tap their electricity supply from the national grid run by Eskom. Electricity consumption is closely monitored and energy audits have been recently commissioned via independent consultants at Theewaterskloof fruit farm and Zamdam Cheese. These audits identified a number of opportunities to reduce energy consumption at the two operations. Some of the initiatives currently being implemented with the group include use of solar panels, replacing fluorescent with light-emitting diodes (LED) lamps, insulation, heat recovery etc. A trial was reported to be in progress at Theewaterskloof on carbon sequestration using biochar. The newly rebuilt Novo Packhouse has been designed to minimize electricity usage via optimized natural lighting and ventilation, and the use of efficient insulating cladding. The Company is also considering use of roof-mounted solar panels for the future.
As highlighted above, Farmsecure Carbon currently has a portfolio of more than 20 waste-to-energy projects, including processing of by-products into fertilizer, in various stages of development. These projects are located all over Sub-Saharan Africa and range between feedlots, dairies and piggeries to sawmills as well as fruit and vegetable processing operations. All these projects are in the process of being registered as Clean Development Mechanism (CDM) projects. For some of these projects licence applications have also been submitted to ESKOM and the National Energy Regulator in South Africa (NERSA). The Company aims to implement the first phase projects in 2012 and will feed its generated electricity into the national grid in line with tariffs announced by NERSA. The Company also plans to generate electricity to meets its requirements from its own operations once its operations reach a critical mass in waste production.
Hazardous materials: The main hazardous materials in Farmsecure operations are ammonia, nitric acid, ammonium nitrate, and hydrocarbons. Farmsecure operations comply with the South African Hazardous Substances Act (No. 15 of 1973) which provide for the control of substances that may cause injury or ill-health to, or death of human beings, including their importation, manufacture, sale, use, transport, application and disposal. Hazardous waste is further classified according to the South African National Standards - SANS Code 10228 which specifies minimum requirements for the handling, classification and disposal of hazardous waste. Transportation and disposal of any hazardous material associated with Farmsecure operations is undertaken by certified contractors.
Emergency preparedness and response plan: Potential environmental incidents that could result in environmental emergencies have been identified at all Farmsecure fertilizer plants and plans and procedures have been established to ensure that there will be appropriate and adequate response to any emergency incident. These potential incidents include petrochemical/chemical spillages, fires, and untreated effluent discharges. Emergency drills are scheduled regularly and conducted to identify potential areas for improvement. Records of these drills are kept. Some of the emergency related procedures at the fertilizer blending plants are: maintenance activities, breakdowns and emergency cleanups, spill management, and Emergency Preparedness and Response. All employees and contractors are responsible for reporting any emergency incident to their supervisor or the responsible person of the area.
Greenhouse gases (GHG): GHG emissions from the various Farmsecure direct and contracted operations are currently not accounted for. As set forth in the ESAP, IFC will require that the Company account for and report their GHG emissions annually. It is however important to note that Farmsecure, through its Carbon Company, is in the field of mitigating greenhouse gas emissions and developing renewable energy in the agricultural sector and farm level. The Farmsecure Carbon team has started the process to determine the group’s carbon footprint. This process should be completed within the next 3-6 months.
Pesticide use and management: Farmsecure, through its Farmsecure Agri Science, a Company in the Farmsecure Technologies group of businesses, uses precision agriculture to enhance soil and plant health which leads to strong plant immune system which in turn reduces the need for crop protection chemicals. Whilst contracted farmers are required to adopt best farming practices (including pesticide application regimes), the Company is in the process of strengthening its contract documents to ensure compliance with relevant legislation is explicit.
PS4: Community Health, Safety and Security
The most significant community health and safety issues associated with Farmsecure operations include management, storage and shipping of hazardous products (ammonia, nitric acid and ammonium nitrate), and disposal of off-spec products and sludge, related to the fertilizer activities. In addition to this are community health and safety issues related to crop production which include potential exposure to pesticides and improper disposal and use of packaging containers, and exposure to pathogens and obnoxious odors associated with the use of manure.
The Kynoch Paarl operation was observed to operate in accordance with the relevant provisions of the WBG EHS guidelines for Nitrogenous and Phosphate Fertilizer Manufacture/Production, particularly with regards to the management and transport of incoming materials and outgoing products, and the disposal of product-related wastes including air emissions. This compliance is satisfied by Kynoch’s adherence to its robust operational policies and procedures which are consistently implemented across the other facilities. The facilities are also audited on an annual basis by different government departments and none are in breach of set national standards and national legal requirements.
As noted above, all the Company’s Fruit Farms (except the recently acquired Maswiri) and packhouses are certified under the GLOBALG.A.P. (EUREPGAP) process for which part of the requirements which relate to worker safety and welfare apply equally to the workers’ families who also live on the farms.
The Company does not used armed guards, instead relies on rapid response security companies.
