While all Performance Standards are applicable to this investment, IFCs 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. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
PS 5 – Land Acquisition and Involuntary Resettlement
PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

This is a category B project, according to IFC’s Policy on Social and Environmental Sustainability, because the limited number of specific environmental and social impacts which it may result in can be avoided or mitigated by adhering to generally recognized performance standards, environmental, health and safety (EHS) general or design criteria as described in the following sections.
There are no Indigenous Peoples in Mozambique and thus PS7: Indigenous Peoples does not apply and PS 8 “Cultural Heritage” has been screened for and none are found on the land for this project. Key E&S risks associated with this investment are: (i) Land acquisition and involuntary resettlement (ii) Labor and working conditions including child labor across litchi suppliers, (iii) irrigation and water use and efficiency, (iv) Soil erosion and conservation, (iv) environmental, occupational health and safety (OHS), food safety and social (including labor) management systems and related procedures for the farm operations and processing unit, including Hazard Assessment and Critical Control Point (HACCP) Principles and Global GAP certification at packing house, including EHS organizational structure and internal technical capacity for effective implementation, monitoring and reporting of the Company’s EHS management system; (v) adherence to Mozambique labor law, working conditions, standards and OHS risk prevention and management, including employees (permanent and casual), contractors and nearby communities;

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

Environmental and Social Policies. Hans Merensky Holdings operates following Global GAP principles and standards as well as local legal requirements. Westfalia has a Long Term Policy including general provisions of its business and environmental sustainability as well as Social responsibility. However, as set forth in ESAP, Westfalia will enhance and disclose an updated version of its policy which apply to all Westfalia subsidiaries, showing commitment in respecting local law, Global GAP principles and IFC Performance Standards,

Westfalia avocado orchard and processing facilities in South Africa are certified under a mix of Global GAP, BRC Food Safety, HACCP, Nature’s Choice, SIZA (Social Initiative ZA) and Fair Trade Standards, according to specific market demands. However, Global GAP is a basic requirement of all fruit products/operations. Westfalia operations have comprehensive EHS management systems in place that include a Policy Statement, Organizational Capacity, Environmental and Social Assessment, Management Programs, Training, Monitoring and Stakeholder Engagement, consistent with IFC PS1 requirements.

Environmental and Social Assessment. Westfalia conducted an initial E&S risk assessment to determine if the Project site is appropriate and the scope of this review included a preliminary assessment of soil fertility, availability of water resources, basic infrastructure, land rights, land title and land disputes, labor aspects, site history and basic impacts of proposed enterprises on adjacent stock/crops and environment. Going forward, as set forth in the ESAP, Westfalia will conduct a more detailed E&S impact assessment covering all potential impacts from its activities, which will include a project description and exploration plan, site location and impacts to local biodiversity, more comprehensive water use plan including water extraction, storage, and efficiency (through implementation of drip irrigation technology), supply chain, land tenure risk assessment and associated social compensation in case of physical/economic displacement.

Organizational Capacity: Westfalia mainly relies on operational staff to handle environmental, health and safety (EHS) aspects of its operations. As set forth in the ESAP for the existing investment (#31557), HMH has committed to enhance its E&S organizational capacity at a corporate level and hired a dedicated Sustainability Manager to be responsible for consolidating, designing and managing E&S programs at the corporate level. Westfalia is currently in the process of recruiting one EHS professional to support the design, implementation and management of specific EHS programs at processing operations and plantations, including at its operations in Mozambique.

Management Programs:

Westfalia’s management programs include site management plans that establish strategies to minimize the E&S risks. Westfalia has formal written Operational Procedures to conduct the work that includes EHS provisi
ons. Existing Westfalia farms have specific waste, wildlife, OHS and energy efficiency management plans and programs. Going forward, WM will develop specific management/monitoring programs for its new development in Mozambique. However, as set forth in the ESAP, Westfalia will enhance its existing environmental and social (E&S) management practices, covering, among others, soil conservation, water use and conservation, integrated pest management, biodiversity conservation, solid waste management, stakeholder engagement plan, resettlement action plan and supply chain issues, in order to incorporate all elements of an Integrated Environmental and Social Management System, consistent with IFC Performance Standards (PS) requirements.

Training: Westfalia has a well-developed and structured training program in its South African operations that includes an Induction Workshop covering basic conditions of employment, disciplinary code, and environmental, OHS, and HIV/AIDS policies and procedures that will be extended to its new Mozambique operations. Westfalia will also provide specific trainings according to workers need that includes OHS, first aid, safe handling and application of chemicals, insect scout and tractor operator, among others.

Monitoring: Westfalia has its own monitoring program since monitoring and recording is a critical component of global GAP framework. Westfalia monitors inputs consumption and efficiency such as water, OHS accident rates, fertilizers, agro-chemicals as well as work demand and work efficiency. Westfalia conducts periodic self-assessment and external due diligences, according to Global GAP standard requirements. Going forward, Westfalia will enhance existing monitoring program including Key Performance Indicators of above mentioned management programs for the Project, such as wastes volume and discharge, summary of soil conservation practices, summary of pests/weeds/diseases and IPM practices, Biodiversity conservation practices.

Reporting: Key E&S indicators are gathered in managerial reports and internally disclosed, as needed. Hans Merensky Holdings (HMH) discloses some E&S indicators to investors in its annual report. HMH is developing an annual sustainability report, with relevant E&S information and indicators, to all stakeholders using the international reporting standard format (GRI - Global Reporting Initiative), which will be available at their website. WM will be an integral part of the corporate HMH reporting cycle and management programs.

Human Resource Policy and Management: HMH has adopted a formal General HR policy and a Code of Ethics, that will be extended to all WM operations, including the proposed one in Mozambique, and cover terms of employment, such as wages and benefits, hours of work, overtime arrangements and overtime compensation, annual and sick leave, maternity, vacation or holiday, non-discrimination, sexual/moral harassment, work/life balance and conflict of interest. All HMH workers are provided with a copy of the terms of employment, in which all relevant information is described, including that referenced above, hiring period, compensation, leave, promotions, salary increases and termination of contract procedures.

Worker Grievance Mechanism: HMH relies on a formal internal grievance procedure, which is part of its general HR policy and includes periodical communication with workers’ committees (OHS, accommodation, industrial), a grievance form and an external phone line to raise complaints regarding the code of ethics. WM will be part of this system.

Worker’s Organizations: As defined by Mozambique legislation, workers have the right to form and join workers’ organizations of their choice. Annual salary increases, sector specific minimum wage, profit sharing and some benefits can be bargained directly with the unions under collective bargaining agreements, but respecting the minimum standards defined by the Federal Administration. At a corporate level, 81% of HMH workforce and 40% of Westfalia’s is unionized. Unions’ representatives work for both HMH and Westfalia and there was no indication that the group restricts freedom of worker’s association. This approach will similarly apply to WM’s activities.

Non-Discrimination and Equal Opportunity: Non-discrimination, equal and fair treatments and general labor rights are defined by Mozambique Labor law, and the Company noted that the employment relationship is based on the principles of equal opportunity and fair treatment. At a corporate level, HMH employs around 1,500 permanent workers (2/3 are male and 1/3 female), which is consistent with the nature of the work and sector benchmarking. WM will rely on approximately 40 permanent workers to manage the farm in Mozambique and approximately 395 temporary workers for seasonal and harvesting operations. Operational workers will be hired locally and no accommodations will be provided, except for the potential expatriate plantation specialist from HMH.

Retrenchment: Not applicable for this investment.

Protecting the Work Force. HMH ensures that no forced or child labor is used at its direct farming and processing operations by directly hiring all workers (no intermediaries) and by strictly following national laws. The minimum worker’s age in Mozambique is 18.

Occupational Health and Safety: As described above, the existing avocado orchard management practices in South Africa include comprehensive operational procedures with clear OHS guidelines, management
programs and means of protection consistent with the local legal requirements, WBG’s EHS sector guidelines and Global GAP standards.

Supply chain: In the formal economy in Mozambique, the minimum working age without restrictions is 18. The law permits children between ages 15 and 18 to work, but the employer is required to provide for their education, training, and for conditions of work that are not damaging to their physical and moral development. Children between the ages of 12 and 15 may work under special conditions authorized jointly by the Ministries of Labor, Health, and Education.

The Ministry of Labor regulates child labor in both the informal and formal sectors. Labor inspectors may obtain court orders and use police to enforce compliance with child labor provisions. However, according to Human Rights Country Report from US Estate Department, enforcement is very limited, especially outside the capital where a majority of the abuses occurs, and there are no mechanisms in place for submitting complaints about hazardous and forced child labor.

Child labor remains a problem in Mozambique. Although the law prohibits forced and bonded labor by children, it is a common problem, especially in rural areas. Children, including those under age 15, commonly work on family farms in seasonal harvests and on commercial plantations harvesting cotton, tobacco, or tea and are paid on a piecework basis rather than for an hourly minimum wage. Trade unions indicated that in the northern provinces of Zambezia, Nampula, and Cabo Delgado, adults hired to work in tobacco, cotton, cashew, and coconut plantations routinely had their children work also to increase their income. These children worked long hours and were prevented from attending school.

Although litchi and avocado production are not explicitly mentioned in formal child labor reports in part because of the small size of this business in Mozambique, it does not mean they are not exposed to the same risks as other commercial crops are facing, especially considering it is a labor intensive activity.

As part of this investment, WM expects to develop the supply of litchis from independent farmers in Mozambique, providing them with access to international markets. WM’s orchards and processing facilities will be certified under a mix of Global GAP, BRC Food Safety, HACCP, Nature’s Choice and Fair Trade Standards, according to specific market demands. Global GAP is a basic requirement of all products/operations. Although Global GAP does not have specific control points covering terms of employment or child/forced labor issues, the certification process is characterized by a high level of formalization of business activities and work relationship, which are difficult to reconcile with small/family based production. However, as this investment expects to develop local small/family based suppliers as a local development outcome, WM will develop and implement monitoring and verification systems for its n
on-certified suppliers to confirm adherence to Global GAP control points. In addition, to ensure quality standards across litchi supply, Westfalia will conduct harvesting operations at its litchi suppliers, using its own staff, thereby minimizing the risk of use of child labor across supply chain. Going forward, Westfalia has agreed to develop a specific operational procedure for its supply chain (under its existing management system), requiring suppliers to commit in not using child/forced labor and in not converting natural habitats into fruit production.

Resource Efficiency: The avocado orchards will rely mainly on rain fed water supply (1000 mm/y) with supplemental irrigation during dry season. Water use is regulated in Mozambique and water use permits are required. Westfalia will deploy state-of-the-art technology to optimize water efficiency in irrigation system, including micro-jets and dripping systems, as well as tension-meters to assess groundwater availability and plantation demand. Westfalia will extract water from Revue River that has two hydro-dams close to the project, upstream and downstream of the orchards, which ensure relatively stable flow of water. Westfalia informed that the water extraction needs for 200 ha of orchard will be up to 900 M3/h (0,25M3/s) in driest season, which is consistent with existing water availability (64 M³/s minimum discharge from upstream dam turbine) and river’s ecological flow of 50 M3/s.

Solid Wastes: Currently solid wastes from Westfalia operations follow Global GAP and BRC Food Safety standard requirements and are managed according to a waste and pollution protocol. Organic plantation waste is composted and used in orchards as a fertilizer. Solid waste is segregated and empty chemical/pesticides containers are returned to suppliers for proper disposal/recycling, used oil is delivered to recycling, used tires returned to suppliers for recycling. Non-recyclable domestic waste is collected and burned. Similar practices will be applied at WM’s operations.

Wastewater: Sanitary wastewater from pack house and office are discharged to septic digesters and seepage lines, and pit latrines are available for field workers. No significant discharges of wastewater are expected from the Project. Water used in fruit washing bath is re-used in closed washing system. Eventual small amounts of discharge will be driven to septic pits.

Air emissions: No significant air emissions are expected from this project. The project is connected to the public electricity grid and will rely on it for its operations, with the option of using backup generators to keep the packhouse and storage cooling operating in critical times should a power cut happen.

Pesticide Use and Management: Westfalia relies on a small number of chemical products to control fruit pests, disease and weeds. Orchards are monitored and control decisions are based on field infestation, economical level of control and on prescriptions by a qualified agronomist. Westfalia does not use pesticides that fall in WHO pesticides hazard classification system class I(a) or I(b).



Hazardous materials management and safety: Westfalia chemical stores are available at all orchards units and they are consistent with WBG EHS Guideline requirements and Global GAP. Facilities are equipped for dealing with spillages and the appropriate personal protective equipment is available when chemicals are used. Diesel tanks have secondary containment to avoid spills and empty chemicals containers, liquid and solid non-organic
wastes, including fuel and oil are disposed in an environmentally appropriate manner at off-site locations. WM will adopt similar approach in Mozambique by the adoption of a Hazardous materials management procedure.

Emergency preparedness and response: Following Global GAP requirements, Westfalia sites have emergency plans, covering different possible scenarios such as fires, chemical spills, medical emergency as well as emergency contact numbers and communication procedure, emergency equipment and execution of emergency response procedure. WM will adopt similar approach in Mozambique.

Security Personnel: Westfalia relies on own non-armed security personnel to watch its properties/assets and to prevent wood/fruits robbery in the fields. The farm will be properly fenced to further protect the assets. The security strategy is based on monitoring (cameras) and communication technology to contact public security forces, when response is needed. Westfalia conducts periodical meetings, with communities representatives as well as with workers, where grievances can be raised. A similar approach will be adopted in Mozambique.

Transportation: The fruits produced at the WM facilities are intended for export. They will be packed on site and transported by refrigerated trucks through the border crossing with Zimbabwe and onwards to South Africa, or to Beira and further on from there with ships. WM has contact with international trucking operators using high quality vehicles and the transport does not affect local villages before it enters well maintained roads in the Beira – Zimbabwe corridor.

Food Safety: Since Westfalia’s avocado orchards and packing/processing facilities are certified under global GAP scheme, the client has to identify and assess threats to food security in all phases of operations, and assure that all inputs are safe and from secure sources.

Protection and Conservation of Habitats: The project is located in a modified habitat landscape and proposed farm development was previously converted to agriculture approximately 5 years ago. No conversion of habitats are expected in this project.

Sustainable Management of Living Natural Resources: As mentioned above, avocado plantations will take place in already converted land. Westfalia manages its plantations in a sustainable manner following agribusiness/food industry good management practices and following international standards of production such as Global GAP, Nature’s Choice, SIZA (Social Initiative ZA) and Fair Trade Standards.

Supply chain: Westfalia will rely on approximately 200 suppliers of litchi in Manica province, and although the region mainly consists of a landscape of modified habitat, originally formed of Savanna assemblies, Westfalia has agreed in developing a specific operational procedure for supply chain (under its management system), requiring suppliers to commit in not using child/forced labor and not convert natural habitats into fruit production.

Stakeholder Engagement:
At a corporate level, HMH has a community liaison officer that manages a team of social workers dedicated to local communities that actively engage and communicate with them mainly on monthly based meetings with community committees. As part of the new recruited Corporate Sustainability Manager role, and as set forth in the previous ESAP (#31557), HMH has developed a stakeholder engagement policy/program to disseminate existing best practices across all business units and consistent with IFC PS1 requirements.
Going forward, as set forth in the attached ESAP, WM will further develop a site specific stakeholder engagement policy/program consistent with that of HMH and IFC’s PS1 requirements to address specific issues encountered during the risk assessment phase of the proposed Mozambique operations.

Zac Bard, Managing Director
Westfalia Limited – Hans Merensky Holdings
PO Box 52288
Saxonwold 2132
South Africa
Phone: +27 (0) 11 381 5753
Email: mailto:zacb@westfalia.co.za

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Westaflia to conduct a Rapid Risk Impact assessment for the new farm development according to provided TOR	06/30/2014
Westfalia will enhance and disclose an updated version of its policy which apply to all Westfalia subsidiaries, showing commitment in respecting local law, Global GAP principles and IFC Performance Standards	07/31/2014
Westfalia to develop following management programs: (i) Soil conservation program; (ii) Water use and conservation program; (iii) integrated pest maangement program, (iv) biodiversity conservation program, (v) solid waste management program	07/31/2014
Westfalia to develop a training program according to workers need that includes OHS, first aid, safe handling and application of chemicals, insect scout, tractor and chainsaw operators, among others.	12/31/2014
Westfalia will enhance existing monitoring and reporting practice with apropriate performance indicators and covering all management programs such as wastes volume and discharge, summary of soil conservation practices, summary of pests/weeds/diseases and IPM practices, Biodiversity conservation practices.	12/31/2014
Westfalia will Develop a cadaster (registar) of land tenant members interested in working for the Company	06/30/2014
Complete a Socio-economic Baseline Survey and gather information about the adults in the family to identify who might be eligible for training and employment. (Suggest this should be done sooner than later – by June 2014.) Submit Report to IFC for review.	12/31/2014
Westfalia will report on number of identified adults who have been hired by the company. Names and numbers of individuals employed from affected families.	12/31/2014
Westfalia will complete a Resettlement Audit of the resettlement and livelihood restoration process and commit to corrective actions as identified to meet requirement of PS5. Include total numbers of resettled adults employed by the company at that time. Submit Report to IFC for review.	03/31/2015