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.

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 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

The appraisal for this assessment confirmed that there are no impacts related to PS 5 – Land Acquisition and Involuntary Resettlement as AdecoAgro ARG’s transactions entail acquisition of existing, large scale farms involving neither physical nor economic displacement. There are no impacts related to PS 7 – Indigenous Peoples as none of the operations are located in areas that would impact communities of Indigenous Peoples and there are no impacts related to PS 8 – Cultural Heritage given the location of the existing farms. Although these performance standards are not applicable to current operations or planned expansions, the client is committed to apply them in the event they do become applicable in the future.

The project is an A category project as some of the farms are located in Critical Habitat. The Critical Habitat designation is triggered by the presence of significant concentrations of endangered, restricted range, migratory and congregatory species (mostly birds and some mammals). In addition, Critical Habitat is also triggered due to the presence of unique and highly threatened ecosystems in some of the farms. Several of AdecoAgro ARG’s farms are also within or nearby internationally recognized areas for biodiversity. These include, Important Bird Areas designated by BirdLife International and Key Biodiversity Areas, designated by Conservation International. Given the globally recognized value of these areas, the extent of past transformation and current agricultural activities, the impacts are potentially diverse and significant. Some project areas may overlap with unique and threatened vegetation communities thereby impacting other critical habitat areas.

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.

The IFC appraisal team conducted a detailed assessment of AdecoAgro ARG’s Corporate Environmental and Social Management system (ESMS). The team determined that the system incorporates the nine (9) mandatory elements prescribed by PS1, and further defined the maturity of each of these elements. The ESMS program and environmental affairs in general are the responsibility of AdecoAgro ARG’s Manager of Technical Development and Environmental Affairs. Overall effectiveness of the program would benefit from a person fully dedicated to managing Environmental Affairs given the size of the operations and with measurable KPIs related to achieving the objectives of the environmental program. The client has therefore committed to assign a full time E&S Officer reporting to Technical and Environmental Manger. This is addressed in the ESAP, item 1.

The Management System is based on the structure of ISO 14001 and OHSAS 18001. The E&S Policy signed by senior management in 2011 outlines the key commitments and objectives of the company, identifies and provides a framework for managing environmental and social impacts and is judged to be aligned with IFC’s requirements.

AdecoAgro ARG has obtained Roundtable on Responsible Soy Association (RTRS) certification for 49 farms in Argentina. The certified farms comprises of a total area of 90,241 hectares (ha) and 48,971 ha of cultivated land for soy production out of a total of 77,000 ha of soy production. Although some land is not eligible for certification as land has been cleared after 2009 AdecoAgro ARG’s is managing these plantation in line with the RTRS criteria. The RTRS initiative promotes sustainable soybean production, processing, trade and use. The standard has twenty-one criteria and five principles: Legal Compliance; Good Business Practice; Responsible Labor Conditions; Responsible Community Relations; Environmental Responsibility; and Good Agricultural Practice.

AdecoAgro ARG’s management systems include nascent food safety programs in the rice mills. Franck, Mercedes and San Salvador mills have implemented Good Manufacturing Practices (GMP), which are required prerequisites to develop hazard analysis and critical control point food safety plans for manufacture and sale of food. GMPs are currently certified to GMP Codex Alimentarius requirements. These three mills also implemented the 5S method, which is oriented to effective workplace organization and procedures to improve safety, quality, productivity and, employee attitudes. These achievements and intermediate certifications at AdecoAgro ARG’s rice mills align with the objectives of several IFC Performance Standards and good agricultural practices promoted in industry-specific EHS Guidelines.

As part of its risk and impact identification approach AdecoAgro ARG has commissioned independent EAs or environmental assessments for several of their operations including San Joaquin rice production, Franck Rice Mill, Ita Caabo Irrigation dam
s and Doña Marina Rice Production. These assessments focus on impacts related to environment and biodiversity. In order to strengthen the risk identification process AdecoAgro ARG has committed to include the assessment of social risks and impacts as part of their corporate risk and impact assessment process and to conduct risk and impact identification for all farming/industrial operations on a regular basis through risk screening and prioritization of amelioration tasks. AdecoAgro ARG will ensure that the mitigation measures from the EAs and those stemming from additional risk assessments are implemented by including them in the management plan for each farming operation or industrial facility. This requirement is addressed in the ESAP, item 2 and 3.

AdecoAgro ARG has developed a land acquisition policy; this requires that all potential land acquisitions be screened for legal status, soil quality, water sources and proximity of water bodies, biodiversity, social conflict and availability of local workforces. The land acquisition policy will be updated to ensure screening includes an assessment of Land Acquisition and Involuntary Resettlement (PS5), Biodiversity Conservation and Sustainable Management of Living Resources (PS6); Indigenous Peoples (PS7), and Cultural Heritage (PS8). This is addressed in ESAP item 5. The company’s last land transactions took place in 2011.

Existing weaknesses related to organizational capacity and competence at the site level of farming operations have resulted in partial implementation of management programs needed to mitigate issues identified through the risk and impact identification process, especially in relation to biodiversity. AdecoAgro ARG has committed to strengthening the E&S program to ensure full implementation of defined environmental and social mitigation measures and further maturation of management programs targeted in the ESMS.

AdecoAgro ARG employs several professional agronomists in its Technical Advisory Group (TAG) and ensures that decisions made by this group are communicated to field staff and to subcontractors through continuing training programs. On-the-farm staff is trained on their defined roles and duties and in occupational health and safety matters as defined in ESMS procedures. AdecoAgro ARG’s subcontractors, who are responsible for application of all farm inputs, are trained extensively to ensure that technical decisions and methodologies are implemented according to design.

AdecoAgro ARG has developed an emergency preparedness and response plan for the rice mills at San Salvador and Mercedes. AdecoAgro ARG will develop similar procedures for the Franck rice mill. For the Pehuajo sunflower seed plant, which is a joint venture with CHS Argentina, AdecoAgro ARG will work with their joint venture partner to ensure that an emergency preparedness and response plan commensurate with the potential risks is implemented. Farms and dairy facilities will also develop emergency p
reparedness and response plans ensuring that there is adequate preparedness for emergencies and planned response capability. In addition emergency preparedness and response plans and incident response training will be extended to include potentially affected communities. This is addressed in ESAP item 4.

Monitoring and Reporting systems are well developed and cover OHS (see PS 2 below) as well as energy, water consumption and effluents (see PS 3 below) from rice cultivation. AdecoAgro ARG’s centralized management of the ESMS and responsibility for aggregation of data and reporting is well developed but there is limited reporting on biodiversity, grievances and contractor management.

Although none of the EAs have identified any cultural heritage, AdecoAgro ARG will develop a chance find procedure that will be disseminated among employees and contractors to ensure that all employees involved in earth movement understand the process to be followed in case of a chance find of cultural heritage. This requirement is addressed in the ESAP, under item 6.

AdecoAgro ARG has 1319 direct employees; of these 118 work at the corporate offices in Buenos Aires, 818 are involved in the rice operations while the remaining 383 employees are involved in other agricultural activities, dairy farms and cattle operations. AdecoAgro ARG also relies on an average of 224 small scale contractors with approximately 896 employees for most machinery work done at the farms. Employees are typically from neighboring communities; either transportation is provided to them on a daily basis or, where this is not feasible due to longer distances, housing is provided during the working week. This housing, and all meals, is provided free of charge. AdecoAgro ARG has developed standards for employee housing which all housing provided by AdecoAgro ARG is audited against on a regular basis.

AdecoAgro ARG has outlined their commitments for management of human resources and the obligations of their employees in the Código de Convivencia (Coexistence Code) which outlines working conditions and terms of employment and AdecoAgro ARG’s commitments to avoid discrimination, forced labor and child labor. Employees are encouraged to raise their grievances directly with their managers or human resources representatives. In addition to this practice, the client will enhance the employee grievance mechanism and implementing procedures. This is addressed in the ESAP under item 9.

The work force is deployed in 8 hour shifts; two daily shifts at farms and three daily shifts at the free stalls and industrial facilities (sun flower seed plant and rice mills) which reduces the need for overtime.

Employees are free to unionize and current field employees’ union participation stands at 55% with Union Argentina de Trabajadores Rurales y Estibadores (UATRE) and 14% with Sindicato de Trabajadores de Industrias de la Alimentación (STIA). As part of the ESAP under item 10, AdecoAgro ARG will incorporate a written commitment to freedom of association in the Codigo de Convivencia.

All employees and contractors have to be above the age of 18 years to work for the company. AdecoAgro ARG has established an intern program developed in coordination with local schools (Ministry of education) for children above 16 years of age. The intern program is a short term program (maximum duration of six months) and there are procedures to ensure that interns are not involved in any hazardous work and that the program does not interfere with their ongoing access to education.

Contractors consist mainly of individuals located near the farms that own the required machinery or trucks and are hired on an as-needed basis. Relationships with the contractors are generally long term and are governed by a comprehensive contractors’ management plan ensuring full compliance with labor regulations, OHS standards and environmental performance criteria. These requirements are monitored/audited on a yearly basis.

Management of contractors is governed through the ‘Normativa para
Contratistas’ (Contractor Rules and Regulations) which is fully in line with IFCs requirements for working conditions and terms of employment for contractors as well as requiring a grievance mechanism for contractors’ employees. AdecoAgro ARG will ensure that workers engaged through third parties, to perform work related to the core business processes of the project, have access to a grievance mechanism. AdecoAgro ARG may include workers engaged through third parties in the scope of the AdecoAgro ARG employee grievance mechanism.

For the delivery of raw materials to the rice mills and sunflower seed facilities, third party truck owners/operators are utilized. The quality of the trucks as well as required insurances are verified upon entry to AdecoAgro ARG’s operations.

Water is provided on all the farms to employees, contractors and truck drivers; the water is tested on a regular basis to ensure compliance with national standards for human consumption. In cases where the water does not comply with these standards bottled portable water is provided. Access to adequate sanitary facilities is also provided.

Occupational Health and Safety

AdecoAgro ARG’s Human Resources’ methodology for monitoring impacts to individual employees starts with a mandatory pre-employment physical examination for prospective employees. A file is developed for each new employee allowing subsequent physical health assessments and monitoring results to be compared to the baseline throughout the employee’s term of service.

AdecoAgro ARG’s Occupational Health and Safety Management System (Seguridad y Salud Ocupacional [SYSO]) is a well-developed, systematic approach to ensuring safe working conditions for employees, subcontractors, and third parties performing work for AdecoAgro ARG.

Routinely, SYSO staff conduct job hazard analyses for field operations and processing plants. Using collected information, employees are informed of existing hazards in their workplaces and trained on precautionary measures required to prevent accidents and incidents. If workplace monitoring demonstrates that employee exposures exceed allowable limits, affected employee(s) are rotated out of the implicated work area and SYSO staff investigate root cause(s). Subsequently, operations personnel in conjunction with SYSO staff either apply engineering controls to reduce the risk, eliminate it or avoid it by reviewing the adequacy and appropriateness of PPE in use and, if indicated, modifying needed equipment or providing supplemental training for proper use to enhance PPE effectiveness.

In the AdecoAgro ARG/SYSO procedure entitled Classification, Investigation and Reporting of Incidents and Accidents, all AdecoAgro ARG staff whether employees of the operating entity, subcontractors or third parties providing services for the firm involved in a work incident are required to report the incident. Mandatory reporting helps to ensure continuous improvement of measures to achieve zer
o incidents and lost time accidents.

In support of these programs, Technical Assistance Group (TAG) members collaborate monthly to formulate and agree on farming inputs such as fertilizers and pesticides use. Selection of personal protective equipment (PPE) is based upon job hazards analyses and on exposure limits stated in material safety data sheets (MSDS). The company will supplement the material MDSDs with the International Chemical Safety Cards (ICSCs) to provide additional guidance for personnel and subcontractors responsible for application of fertilizers and pesticides.

Collected occupational and health statistics are reported to central management system staff in Buenos Aires and analyzed. AdecoAgro ARG’s consolidated reporting in 2013 and 2014 shows positive results from employee training and efforts to identify and reduce job hazards. The International Standard Industrial Classification (ISIC) incident rate, including near misses and lost time accidents for the sector is 82.7. The cumulative index for AdecoAgro ARG Agropecuaria SA from January 2014 to December 2014 is 47.0; Pilaga S.A. for the same period is 63.2; and, the rate for the entire AdecoAgro ARGAgro Group is 54.0. The cumulative index demonstrates the effectiveness of SYSO.

Resource Efficiency and Water. AdecoAgro ARG’s primary resources for high productivity agriculture include quality soils and favorable agro-climatic zones. Additionally, for flooded rice cultivation in San Joaquin, Santa Fe province and Doña Marina as well as Ita Caabo in Corrientes province, water is a critical resource. AdecoAgro ARG’s agricultural operations are characterized by precision farming. Routine practices include no tillage of soils, direct planting of seeds; return of organic agricultural waste to the fields once harvesting has been completed; soil sampling and analysis to define field characteristics and limiting nutrients and therefore fertilizer needs; selection of appropriate crops for agro-climatic zones and soil types; and, crop rotation to replenish soils. These activities contribute to achieving highest productive capacity of farming lands.

AdecoAgro ARG’s agronomists collaborate through monthly meetings of the Technical Advisory Group (TAG) to solve problems and to ensure application of scientific practices in agriculture operations. Integrated pest management and selection of fertilizers are scientifically based. Prior to new plantings, soil samples are collected and analyzed to define mineral fertilizer requirements to ensure balanced nutrition for crops; and, subsequently, fertilizer formulations are applied to achieve balances to reduce costs, avoid excesses and runoff to surface waters.

AdecoAgro ARG’s TAG defines the specifications for input applications. In this manner, agronomists define what is to be applied, application timing and how it is to be applied. Additionally, AdecoAgro ARG purchases all farm inputs thereby ensuring that inputs are professionally specified, purchased and applied. Purchased materials are stored in AdecoAgro ARG’s facilities and issued to contractors under controlled conditions including requirements for triple rinsing and puncturing spent chemical compound containers to prevent reuse. The “Regulations for Contractors” procedure defines required contractor behavior, OHS, training, management of fertilizers and pesticides, labor management and other obligations while providing services on AdecoAgro ARG’s farms.

AdecoAgro ARG’s rice cultivation technique in San Joaquin, Ita Caabo, and Doña Marina employ Nivel 0 or Zero Level (flat), engineered fields, where topography permits and contour ridges where topography is less favorable to reduce water demand and flow rates to the lowest possible levels. After the fields are flooded, the only additional water added is to make up for evapotranspiration losses. This technique reduces water demand through essentially zero water flow except for makeup, which reduces siltation of flow-through water into Saladillo Dulce Creek and to and to Arroyo Santa María that are, respectively, the receiving waters in San Joaquin and Doña Marina rice farms.

The same techniques are used in Ita Caabo with the benefits of reducing accumulation of silt i
n Ita Caabo’s water impoundments. Flooded rice cultivation in San Joaquin and Doña Marina operate on regulatory agency-permitted hectares of rice cultivation and associated water abstraction permits

AdecoAgro ARG annually collects water samples upstream and downstream from rice operations in San Joaquin and Doña Marina and submits collected samples for laboratory analyses to determine impacts from usage. Analytical parameters include pH, nitrites, nitrates; phosphorus, sulfate, ammonium, BOD5 and COD. On a biannual basis water samples are analyzed for heavy metals (lead, mercury and arsenic) and pesticides including Endosulfan, which has not been used for many years; 2,4-D (herbicide), diverse other chlorinated hydrocarbons, and glyphosate. These sampling routines are alternated with soil sample analyses to determine required nutrients for balanced soils.

Upstream and downstream water sampling at San Joaquin rice farming operations from January to June 2013 demonstrated that there is little difference in upstream/downstream water quality. For example BOD5 was measured at 60 and 62 mg/l; COD increased slightly from 98 to 208 mg/l; pH increased slightly from 7.20 to 7.29. And, for a broad range of pesticides the upstream and downstream values were equivalent at the limit of detection. Arsenic increased slightly from 0.01 to 0.05 mg/l; the local soil content of arsenic is consistently measured at 0.05 mg/l. Similarly, upstream and downstream levels of phosphates and nitrates were equivalent.

January 2014 to June 2014 sample collection and analysis showed similar results with BOD5 increasing slightly from 42 to 46 mg/l; COD decreasing from 83 to 70mg/l; ammonia, sulfate, phosphorus were all equivalent. Nitrates increased slightly from 1.3 to 1.8 mg/l.

January to June 2014 surface water sampling results from Arroyo Noe (upstream) and Arroyo Santa María (downstream) at Doña Marina rice farm were impressive. Analytical results indicated potential deposition of solids from upstream water into flooded fields. The pH decreased from 7.48 to 7.21; BOD5 dropped from 68 to 58 mg/l; COD dropped from 92 to 73 mg/l; sulfates from 74 to 68 mg/l; phosphorus remained static at 5 mg/l; and, nitrates dropped from 7 to 6.8 mg/l. In this case, rice farming appears to have had a positive impact on water quality.

Ita Caabo rice farm in Corrientes Province uses an interconnected series of four (4) water impoundments to harvest rainwater for the cultivation cycle. These hydraulic components ensure harvesting, application and recycling of scarce water in this arid area. Construction of the fifth impoundment has been completed. Its role is to collect all irrigation discharge water from rice cultivation fields and pump it back to the four northern interconnected reservoirs for reuse and to ensure that adequate water is available for the next cultivation cycle.

Free Stall dairy farm operations employ local ground water to move collected animal m
anure through de-sanding and various stages of solids separation. Collected and treated animal waste liquids and solids are reapplied to the agricultural fields as bio fertilizer; there are no discharges to surface water. Local ground water concentration of arsenic is measured consistently at 0.05 mg/l. The water is acceptable drinking water for dairy cows but not for potable purposes. Accordingly, bottled portable water is provided for employee consumption and food preparation.

Accumulated raw milk at Free Stall Dairy 1, El Carmen, and FS2 is collected twice/day. These two dairies produce ~80 million liters of raw milk/year. All raw milk is currently sold to processing and packaging companies. Prior to collection by processing plants, raw milk is chilled in on-site refrigerated tanks. The purchasers provide their own trucks and are responsible for cleaning. Local chilling of raw milk entails the use of HCFC-22 also referred to as R-22 refrigerant that is being phased out due to its Global Warming Potential (GWP).

The Montreal Protocol mandates incremental decrease HCFC consumption and a complete HCFC phase-out in 2030. Continued use of refrigerant already in place in refrigeration machinery is permitted, although good practice mandates minimization of leakage. AdecoAgro ARG reports R22 leakage and these fugitive air emissions should be minimized. Zero ozone depleting potential alternatives are commercially available, have supporting infrastructure and are preferred to HCFCs. Accordingly, AdecoAgro ARG will inspect, maintain and eliminate HCFC-22 leakage for the short term and will replace HCFC-22 refrigerants with zero ozone depleting refrigerants in accordance with the schedule in the ESAP, under item 12 and 13.

Hazardous Materials and Pesticide Use and Management. Pests are controlled through Integrated Pest Management (IPM) managed by AdecoAgro ARG’s agronomists who are responsible for specifying and managing pest management techniques including adequate storage and controlled distribution of pesticides to application contractors. This process ensures that only approved materials and application rates are used. Moreover employees and contractors are afforded appropriate training and protection as needed. The program entails weekly monitoring (scouting) of fields for the presence of pests of economic significance and recording the type and density of pests present and their natural enemies. Chemical control of identified pests is performed with Chamber of Agricultural Health and Fertilizers (CASAFE)-approved materials. CASAFE is a trade association promoting pest management according to economic significance thresholds, thus avoiding excessive use of pesticides.

AdecoAgro ARG does not employ WHO Class Ia or Ib pesticides respectively, extremely and highly hazardous materials. Glyphosate herbicide (Roundup) is commonly used for crops although company agronomists rotate chemicals and crops, employ different herbicide
formulations, and continually seek to make glyphosate and other herbicides more effective.

GHG Emissions. AdecoAgro ARG produces >25,000 tonnes of CO2 equivalents (GHGs) from diverse activities in which the company is engaged. These include beneficial use of bovine waste at the dairy farms, ~180,000 ha cultivated farming lands, use of offsite generated electricity for rice and sunflower seed mills; use and leakage of R-22 (HCFC-22) refrigerant for chilling raw milk prior to collection by processing companies, hydrocarbon fuels for tractors, vehicles and other farming equipment, among others. HCFC replacement is discussed above.

Dairy operations use animal manure for crop bio fertilizer through separation of liquids and solids, facultative wastewater pond digestion of liquid fractions and then application of liquid and solid fractions to fields employed predominantly for growing cattle feed. All treatment ponds are lined with the exception of one pond at Tambo 1, which is in the process of being lined. In addition, bovine digestive tracts normally produce large volumes of methane which has a Global Warming Potential (GWP) twenty-one times greater than CO2. However, the combination of scientifically balanced, high fiber diet, limited movement and Free Stall accommodations significantly reduce methane emissions from dairy cows’ alimentary tracts.

Construction of the proposed bio digestion facility to remove the energy from organic bovine waste and convert methane to carbon dioxide will significantly reduce climate-affecting emissions. After digestion solid and liquid fractions will continue to be applied to the fields, but will have considerably less impact because uncontrolled, in-field digestion of waste and methane production will no longer take place.

There are existing, multiple mitigating climate impacting factors in place including no till agriculture, direct planting, leaving all organic waste on the fields to enhance organic carbon and aerobic microbiological activity, water retention, Free Stall housing, balanced nutrition, and the reduction of hydrocarbon consumption due to no till practices. All of these are mitigating factors are being implemented to reduce CO2 equivalent production mandated by PS3.

Pollution Prevention. AdecoAgro ARG agronomists and the TAG collaborate through monthly meetings to discuss and jointly solve problems. Specification, purchase and precise application of farm inputs ensure that fertilizers and pesticides are used appropriately to resolve specific issues.

Air Emissions and Ambient Air Quality. Wind erosion from farming lands leading to air contamination with soil particulates is reduced by leaving crop harvest trash on the fields. Additionally, these organic residuals aid in the enhancement of soil carbon, retention of moisture and growth of beneficial microorganisms to further enrich soils.

Sunflower seed processing operations in Pehuajo, Buenos Aires Province and the rice mills i
n Santa Fe province are the sole stationary sources of potential air contaminants. Although the sunflower seed mill is equipped with a dryer, it has not yet been operated to date because received sunflowers are adequately dry for processing. Additionally, the dryer has <3 MW thermal input thereby eliminating the applicability of IFC’s Small Combustion Plants Emissions Guidelines found in the General EH&S Guidelines. The Franck, San Salvador and Mercedes rice mills collect and sell all products and sub products emanating from rice processing. There are no point source air emissions as dust, hulls and low quality rice grains are all collected and sold.

Wastewater Treatment. Neither rice nor sunflower industrial processes generate industrial effluent requiring treatment. Dairy cow manure from the Free Stall cow barns is evacuated with water. Sand employed for bedding is removed and several unit processes are employed to collect solids from the waste stream to reduce the impact on effluent treatment lagoons. Segregated solids are subsequently applied to agricultural fields to support growth of forage and other inputs for dairy cow feed. The liquid fraction is treated in an anaerobic lagoon to reduce organic load and then polished in two facultative treatment lagoons and then applied to agricultural fields as bio fertilizer. Use of these organic residues reduces the need for mineral fertilizer and contributes to soil organic carbon and water retention. There are no effluents from agricultural fields resulting from liquid and solid fractions application. Future, projected organic waste management from dairy operations will entail use of an anaerobic bio-digester to reduce the organic content of manure and generate methane (CH4) for combustion or use in internal combustion engines to generate electric power. The existing waste treatment system and field application of organic residues generates methane and ethylene as wastes break down. Anaerobic digestion and use of bio methane produces carbon dioxide (CO2), which is many times less damaging than methane

Solid Waste Management. Solid wastes from crop rearing are applied to agricultural fields to increase soil carbon, eliminate wind erosion, retain moisture and enhance beneficial growth of beneficial microorganisms. All solid wastes from sunflower and rice processing are collected and sold as byproducts and/or animal feed.

Other wastes are segregated, recycled or beneficially used elsewhere to the degree feasible.

The Social Assessments for San Joaquin and El Ombu did identify limited risks and impacts to neighboring communities from aerial spraying and also from traffic. Social assessments for the other farms are still pending but the potential risks and impacts are expected to be similar to the ones already identified.

Regarding aerial spraying, the company prohibits this practice within 500 meters of communities and surface waters and when employed, makes considerations for wind direction and other environmental factors that could negatively affect safe and effective pesticide application. For those farms in close proximity to schools (such as San Joaquin) aerial spraying is only permitted during the weekends when schools are closed.

To minimize risks from traffic, the company has developed and implemented corporate requirements for vehicle operation that include speed limits for vehicles and safe driving requirements including prohibition of use of cellular phones when driving. These requirements are also applicable to contractors and are included in the Normativa para Contratistas. Mitigation measures adopted at the Franck Rice Mill include adequate signage and avoiding transit through neighboring communities through use of alternative routes.

AdecoAgro ARG’s rice plantation at Ita Caabo (22,894 ha), Corrientes Province, is in an arid area where water use and conservation are critically important. Ita Caabo’s cultivation techniques include zero leveling that requires minimal water for makeup once the rice fields are flooded. Water resources for rice cultivation necessarily involve water harvesting and recycling exclusively. Ita Caabo employs an interconnected series of four (4) water impoundments to harvest rainwater for the cultivation cycle. These hydraulic components function in a closed cycle for harvesting, application and recycling of scarce water in this arid area. Construction of the fifth impoundment was completed in 2015. This dam was technically evaluated through an Environmental Impact Assessment as required by local legislation and close scrutiny of dam design by regulatory agencies. Each is a clay-core, earthen dam with stone riprap on internal and external slopes (wet and dry faces) of the dam. Permits for each of the five (5) dams were obtained through this process. Once permitted each dam is subject to periodic physical and safety inspections and recertification each five (5) years. The role of the fifth impoundment is to collect and hold all irrigation discharge and pre harvest water from rice cultivation fields, which is subsequently pumped back to the four northern interconnected reservoirs for reuse and to ensure that adequate water is available for the next cultivation cycle. As required by national law AdecoAgro ARG conducted a public consultation on the project design for relevant stakeholders in coordination with the local authorities. There are neither residential communities nor settlements in the area th
at could be affected by these water storage and recycling impoundments.

Since 2002, AdecoAgro ARG have acquired approximately 183,000 ha of land for agricultural production (mainly rice, soya and corn) in Argentina. Although the majority of this land was already in use for agricultural purposes for many years and qualifies as Modified Habitat, approximately 64,000 hectares consist of natural or semi-natural areas of forest, with various intensities of cattle grazing. Some of the land was located within or in proximity of Important Bird Areas (IBAs) or associated with highly threatened ecosystems in the El Chaco region.

As part of the appraisal, AdecoAgro ARG undertook a Rapid Biodiversity Assessment (RBA) to determine which of their holdings are located in Critical Habitat as defined in PS6 and identify associated mitigation measures. In addition, the RBA assessed the area of Natural Habitat remaining in each of the farms.

The RBA concluded that seven of AdecoAgro ARG’s farms are located in Critical Habitat. Of the seven, three are located in the Espinal ecorregion, two in El Chaco Seco, one in El Chaco Húmedo and one in Esteros del Iberá. The RBA also undertook a prioritization of the farms in terms of their conservation importance for the purposes of targeting conservation efforts on AdecoAgro ARG’s part. The farms located in El Chaco Húmedo and Esteros del Iberá were found to have the highest conservation value and their conservation importance was significantly higher than the other farms assessed.

The RBA identified the following Critical Habitat triggers within AdecoAgro ARG’s farms:

One Criterion 1 and Tier 1 EN frog species: Argenteohyla siemersi pederseni and 8 Criterion 1 Tier 2 bird species: Sporophila palustris, Sporophila hypochroma, Gubernatrix cristata, Alectrurus risora, Sporophila cinnamomea, Crax fasciolata, Harpyhaliaetus coronatus, Sporophila cinnamomea

Three Criterion 2 EN mammal species (Chacodelphys formosa , Ctenomys argentinus) and one EN bird species (Laterallus spiloptera)

Five Criterion 3 migratory bird species (Tryngites subruficollis, Sporophila ruficollis, Dolichonyx oryzivorus, Polystictus pectoralis)

The presence of highly threatened ecosystems (Criterion 4) in four of the farms including: highly threatened forest types, savannahs, grasslands



AdecoAgro ARG have established ‘set asides’ at one of their farms as required by the EIA for that agricultural project. Non-cultivated areas which qualify as Natural and Semi-natural Habitat remain in all other farms assessed in the RBA and include areas that are important to the Critical Habitat triggering species. Some of the non-cultivated areas are legally protected under Argentina’s Forest Law although the requirements of the law are applied differently according to the provinces in which the farms are located.

In line with PS6 requirements for clients operating in Critical Habitat and as required in the ESAP, AdecoAgro ARG will implement a Biodiversity Action Plan (BAP) that will detail the required mitigation to achieve N
et Gains. Recommendations for mitigation measures are provided in the RBA report and these will form the basis for the BAP. The requirements of the BAP will be incorporated into the site specific Environmental and Social Management Plans.

Appropriate management and control measures for each farm will be defined, including species-specific measures (e.g. control of hunting), preventing the spread of invasive species, and establishing limits to the numbers of grazing animals in high value areas. Relevant biodiversity mitigation measures that are identified in existing and future EIAs, additional risk assessments, internal and external audits and in the various biological monitoring reports will be included in the Environmental and Social Management Plan (ESMP) for each farm. Particular attention will be given to the Set Asides and other natural habitat areas remaining in AdecoAgro ARG’s farms and maintaining their integrity and connectivity. Mitigation and management measures will be prepared in consultation with regional experts and will be implemented by personnel at each site.

An associated monitoring plan will be prepared by the Client as required in the ESAP item number 15 with defined indicators to track progress towards Net Gains. The Monitoring, Audit and Evaluation Plan will be developed in collaboration with regional conservation experts, when appropriate. The Monitoring Plan will include indicators, defined objectives and targets.

The RBA identifies which among the natural and semi-natural habitats within each of AdecoAgro ARG’s farms are a priority for conservation. Although the IFC financed project does not include additional land acquisition or land transformation these recommendations will be taken into account in the planning of all future development of their agricultural activities within the farms assessed as required in the ESAP

With regards to the acquisition of new farms, AdecoAgro ARG have a land acquisition policy and a screening process for new sites, which includes a requirement not to develop areas of woodland that are legally protected in Argentina through the 2010 Ley de Bosques (Forest Law). AdecoAgro ARG will expand this screening process to ensure that in the future any conversion in areas of critical or natural habitat complies with PS6 requirement and demonstrates that the Mitigation Hierarchy (avoid, minimize, restore, offset) has been applied as required in the ESAP. The commitment to comply with PS6 requirements will apply to all land acquisition. AdecoAgro ARG also has a portfolio of approximately 60 leased sites, which have a lease term of approximately one year. AdecoAgro ARG will apply the same biodiversity requirement of PS6 compliance to the leased sites as defined for land acquisition.

AdecoAgro ARG will also develop a land use policy that will set out which types of land use are compatible with maintaining biodiversity in different habitats as required in the ESAP. This will include, for insta
nce, establishing sustainable levels of cattle grazing for sites that are leased for grazing and including enforcement of those limits through the lease contracts.

Any new activities undertaken by AdecoAgro ARG, including increasing the amount of grazing cattle per hectare either within their own farms or by third parties through leases will be preceded of a risk assessment to assess impacts upon biodiversity as required in the ESAP. The risk assessment may be undertaken through the EIA process or as a separate assessment. The results of the risk assessment, which will be undertaken by qualified biodiversity specialists, will be used to define sustainable use of the sites and adequate mitigation measures. A risk assessment will also be undertaken for existing activities that were not the subject of an EIA.

The Client will prepare a biodiversity monitoring plan for each site where significant potential biodiversity impacts have been identified to assess the effectiveness of mitigation measures as required in the ESAP. The monitoring plan will be prepared in consultation with biodiversity specialists. AdecoAgro ARG undertook biological monitoring (mammals, birds and flora) between 2009 and 2012 at San Joaquin, Carmen, el Meridiano, el Ombu and Ita Caabo. The monitoring reports showed that these sites and in particular the set aside areas within them generally provided good quality habitat for the taxa surveyed. That said, monitoring was not continued for the longer-term and improvement can be made. Monitoring plans moving forward will include defined objectives and targets.

With regards to ecosystem services, AdecoAgro ARG complies with all relevant water abstraction permits. In addition, the Client will establish and maintain the legally required flows for all water bodies they abstract from for irrigation of their rice production as required in the ESAP under item number 16. As noted above in section on PS3, water quality is monitored upstream and downstream of AdecoAgro ARG’s farms and no adverse impacts have been identified. Lastly, and as also noted above, AdecoAgro ARG’s agricultural practices, including no till, are designed to conserve soil as a regulating ecosystem service.

Concerning their supply chain, the client acquires sunflower seeds for their processing plant in Pehuajó and rice for some of their mills. As required in the ESAP under item number 17 the Client will conduct an assessment to determine if the primary suppliers produced in regions where there is a risk of significant conversion of natural and/or critical habitat. Based on the results of the assessment, the client will develop procedures to screen these risks as part of the environmental and social management system and adopt measures to avoid impacting natural and critical habitat. The ability to fully address these risks will depend on the level of management control or influence over primary suppliers.

Stakeholder Mapping and Engagement
The majority of AdecoAgro ARG’s operations are located in rural areas that are sparsely populated and at a distance from communities. However, there are some farms, such as San Joaquin, with adjacent communities. And at some operations such as the rice mill in Franck, traffic from AdecoAgro ARG’s operations have been cited as an impact by surrounding communities. At the request of these communities, risk assessments have been conducted by the company to assess delivery of raw materials, product dispatch and arrival and departure of employees.
AdecoAgro ARG has conducted stakeholder mapping which includes identification of risk and impacts for project affected people for three of their farms: Doña Marina in Corrientes, El Ombu in Formosa and San Joaquin in Santa Fe provinces. Moreover, AdecoAgro ARG is planning to conduct stakeholder mapping and identification of risks and impacts to local communities for Ita Caabo. For other farms and industrial operations, AdecoAgro ARG will conduct similar stakeholder mapping and identification of potential risks and impacts. Based on the mapping exercise and the risk assessments, a comprehensive Stakeholder Engagement Plan will be developed outlining the engagement strategy for the different farms and operations commensurate with identified risks and impacts. The engagement plan will include reporting to directly affected communities regarding identified impacts and with issues identified through the grievance mechanism on a timely basis. This is addressed in the ESAP under item 7.
In addition to the stakeholders within the project area of influence, AdecoAgro ARG will identify other relevant regional, national and international stakeholders and define an engagement strategy for these groups.
The stakeholder mapping for San Joaquin identified that about 80 families of the Mocovies Indigenous Peoples are living alongside mainstream community members in the communities of San Javier (20 Km from the farms and whose populations totals 16,449 inhabitants), Colonia Francesa (5 km from the farm with ~1000 inhabitants) and Colonia Mascias (5 km from the farm with 1,128 inhabitants). The Stakeholder Mapping for Ombu identified an Indigenous community Comunidad Naranjito with 30 families of Toba origin 9 km from the project site. None of these communities are directly affected by the project activities but AdecoAgro ARG is already including some of these in their ongoing stakeholder engagement.
AdecoAgro ARG has developed a Grievance Mechanism. However, effective dissemination is required to ensure that communities are aware of its existence and procedures. Additionally, the ESMS should include procedures to ensure that the root causes for grievances are identified and addressed effectively on an ongoing basis. This is addressed in the ESAP under item 8.

Rafael Aguilar
Fondo de la Legua 936
Martinez (B1640EDO)
Argentinainfo_ar@adecoagro.(+5411) 4836 8600

Information Disclosed

The following documentation regarding AdecoAgro has been released to the World Bank Infoshop:
A Rapid Biodiversity Assessment .
Environmental Impact Assessment for San Joaquin 2008 (Executive Summary)

Broad Community Support is not applicable for this project

S.no	Description	Anticipated Completion Date	Status
1	1. ESMS Organizational Capacity and Competence. The client will strengthen the E&S capacity of the Company by appointing a full-time qualified E&S Officer with sufficient authority, budget and organizational influence to implement the ESMS. The E&S Officer that will report directly to the Technical and Environmental Manager and manage an adequate number of environmental and social staff at the level of the farms and the industrial facilities to effectively implement the environmental and social management system and associated programs.	06/30/2016	Completed
2	2. ESMS Implementation Enhancement. For existing operations, the client shall identify risks and existing gaps in compliance with IFC Performance Standards, applicable IFC EHS Guidelines and GIIP and close identified gaps.	12/31/2016	Completed
3	3. ESMS Implementation Enhancement. The client will develop environmental and social risk and impact assessments in line with the requirements of IFC Performance Standards for all new developments with the objective of achieving sustainable development. The related mitigation measures from the EIA assessments and additional risk assessments are to be implemented through including them in the management plan as Action Plan tasks with allocated responsibilities for task completion, defined completion dates for each farming operation or industrial facility. The management procedures will include adequate reporting from the individual farms to the senior management level in Argentina.	06/30/2017	Completed
4	4. Develop Emergency Response Plans and Procedures. Modify the existing emergency response procedure for all industrial facilities including the Franck rice mill. And review procedures for the Pehuajo Sunflower seed plant to ensure adequate, effective emergency preparation and response readiness. Emergency response procedures commensurate with potential risks shall also be strengthened for all farming operations. Emergency preparedness and response plans will include provisions and communication protocols for potentially affected communities	12/30/2016	Completed
5	5. Adjust Land Acquisition and Lease Procedures. The client will adjust existing land acquisition and lease procedures to ensure screening against and application of the IFC Performance Standard requirements related to Land Acquisition and Involuntary Resettlement (PS5), Biodiversity Conservation and Sustainable Management of Living Natural Resources (PS6), and Indigenous Peoples (PS7).	09/30/2016	Completed
6	6. Develop a Chance Finds Procedure. Consistent with the requirements of PS8 develop and implement a ESMS procedure to guide field operations, provide contact details for local expertise for field staff as needed in the event that cultural heritage remnants are encountered during earth movement, in field work or development of new areas.	12/30/2016	Completed
7	7. Stakeholder Engagement Plan. Complete stakeholder mapping exercises for all operations (like the ones already done for Doña Marina in Corrientes, El Ombu in Formosa and San Joaquin in Santa Fe). Based on the mapping exercise, develop stakeholder engagement plan and implementing procedures outlining the engagement strategy for the different farms and operations commensurate with identified risks and impacts. The engagement plan will include reporting to directly affected communities regarding impacts, risks and risk management at least on a timely basis.	12/31/2016	Completed
8	8. Enhance Grievance Mechanism. Enhance the existing grievance mechanism and implementing procedures. The mechanism shall clearly define how grievances can be submitted both anonymously and otherwise, how grievances will be evaluated and responded to and follow-up actions will be achieved. The grievance mechanism shall be effectively disseminated within the area of influence of the project. AdecoAgro will integrate the assessment of the grievances into the ESMS to ensure that root causes are addressed consistently.	10/31/2016	Completed
9	9. Enhance the employee grievance mechanism. A grievance mechanism for employees will be enhanced to ensure that employees are able to submit grievances including anonymous grievances without repercussion	10/31/2016	Completed
10	10. Adjust Human Resources Policies and Procedures. Formalize the commitment to Freedom of Association in the Human Resources Policies and Procedures.	08/30/2016	Completed
11	11. Contractor Management. To ensure that workers engaged through third parties to perform work related to the core business processes of the project have access to a grievance mechanism, include an assessment of the available grievance mechanisms and require ongoing reporting on grievances received, how they have been resolved as well as the timeline for the process. Note: it is also an option to include contractors in the scope of the Adeco employee grievance mechanism.	12/31/2016	Completed
12	12. Minimization of R22 Leakage. Adeco shall in the near term minimize R22 leakage from owned refrigerating equipment at the Dairies.	09/30/2016	Completed
13	13. Replacement of Refrigerants. Adeco shall replace R22 refrigerants on a defined schedule with zero ozone depleting alternatives.	12/31/2018	Completed
14	14. Biodiversity Action Plan An initial BAP has been prepared based on the recommendations included in the RBA report. The BAP details the mitigation measures that will be implemented at each property with significant biodiversity value. For properties in Critical Habitat, the BAP details how Net Gains will be achieved for Critical Habitat values. Adeco will operationalize the initial BAP and ensure relevant mitigation is included in the site specific ESMP.	12/31/2016	Completed
15	15. Biodiversity Monitoring Plan – a Biodiversity Monitoring, Audit and Evaluation Plan will be developed in parallel to the BAP. It will include an auditing program for biodiversity related management controls (with cross-references to other existing processes e.g. soil practices, water management), taxonomic monitoring and monitoring of habitat quality. The monitoring plan will be prepared in collaboration with regional experts.	12/31/2016	Completed
16	16. Management of Ecological Flows. Adeco will establish ecological flows for water abstraction to ensure that their activities do not impact other water uses	04/30/2017	Completed
17	17. Supply Chain Management. Adeco will assess, the risks of significant conversion of natural and/or critical habitat by primary suppliers of rice, sunflower seeds and potentially milk should purchase of milk become part of the long term supply from third parties. If potential risk is identified, Adeco will develop supply chain screening procedures as part of their Environmental and Social Management System and adopt measures to avoid impacts. The ability to fully address these risks will depend upon the level of management control or influence over primary suppliers.	04/30/2017	Completed