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 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
PS 5 “Land Acquisition and Involuntary Resettlement,” PS7 “Indigenous Peoples,” and PS8 “Cultural Heritage” are not expected to be encountered during the course of this Project, as Agrofertil’s distribution centers are all located in industrial zones or rural centers; and have all received appropriate approvals from the Paraguayan authorities. Sites for the operations are not located in protected areas, areas with sensitive natural habitats or indigenous territories.

If IFC’s investment proceeds, IFC will periodically review the project’s ongoing compliance with the Performance Standards.

This is a category B project in accordance with IFC’s Policy on Environment and Social (E&S) Sustainability. Based on information reviewed by IFC, this investment will have limited adverse E&S impacts that are few in number, site-specific, and largely reversible and readily addressed through mitigation measures, as outlined in this review summary. The key E&S issues include: (i) Agrofertil’s capacity to provide systematic and consistent management of E&S issues across its operations; (ii) compliance with local permits and licenses for operation, transportation and distribution of products and services; (iii) handling, storage, distribution and transportation of hazardous materials, (iv) compliance of the portfolio of products with WHO hazards class (e.g. exclusion of Ia and Ib products) and FAO’s International Code of conduct on the distribution and use of Pesticides; (v) pest control management strategy and professional guidance to the clients in the use of the products distributed; (vi) labor and working conditions, including occupational health and safety; and (vii) Agrofertil’s internal process to ensure that any new clients or those existing clients expanding their land usage don’t source any crops for repayment to Agrofertil in critical and/or natural habitat areas of the country, as to comply with IFC PS 6 supply chain requirements.
Issues related to PS5: Land Acquisition and Involuntary Resettlement, PS7: Indigenous Peoples, and PS8: Cultural Heritage were not identified, as Agrofertil’s distribution centers are located in industrial zones or rural centers; and have all received the approval of the Paraguayan authorities.

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 Assessment and Management System and Policy: Agrofertil currently has a fully established and operational Environmental and Social Management System (ESMS) with its functioning components The company’s ESMS is in compliance with IFC PS 1. Within its ESMS, Agrofertil has policies and procedures to manage human resources, products management, safe transportation of materials, occupational health and safety, emergency response, and environmental permits, among others.



Identification of Risks and Impacts and Management Programs: The company has successfully been identifying and managing the main social and environmental impacts of its operations, and addressing the issues in full compliance with Paraguayan law. Agrofertil has presented to the Paraguayan authorities the required Basic Environmental Questionnaire (Cuestionario Ambiental Basico - CAB) and the Environmental Control Plans (Plan de Control Ambiental) for all its distribution centers and silos; and the company has obtained the respective licenses. Such plans and questionnaires define existing controls to mitigate potential environmental and occupational health and safety risks. The company provides regular reports and updates to the local regulators as defined in the granted permits. The availability of the environmental control plans have been disclosed locally through newspapers in compliance with local regulations.



All products distributed by Agrofertil, including fertilizers, seeds and agrochemicals have been approved by the Paraguayan authority SENAVE (Servicio Nacional de Calidad y Sanidad Vegetal y de Semillas). The transportation of products is also authorized by SENAVE and DINATRAN (Direccion Nacional de Transporte Terrestre). Agrofertil reported to have all the licenses and permits required by local law up to date. In addition, the company has assessed its level of compliance with the Food and Agriculture Organization’s International Code of Conduct on the Distribution and Use of Pesticides and it is in full compliance. Agrofertil does not develop or manufacture new products, its role is limited to distribution of products already approved to be used in Paraguay.



Organizational Capacity and Competency: E&S management structure is coordinated by the Administrative Manager with the support of two staff members with the direct EHS responsibilities: the main EHS competency lies with an Environmental, Social, Health and Safety Manager (Operational Safety Chief; Jefe de Seguridad Operacional), whose role includes environmental, social and occupational health and safety components of the overall company’s operations. The other person directly working with the related operational E&S matters is helping with the registration, systems and other administrative matters (Encargada de Registro y Medio Ambiente). The heads of silos and distribution centers report to the ESHS Manager on related matters. The Manager is available 24/7 and his work phone number is
one of the organizational emergency phones available to every employee. The Manager is solely committed to the role and has no other responsibilities within the company. Apart from operational environmental and OHS aspects, the social portion of the ESHS manager’s responsibilities also includes organizing an environmental month (annually), carrying out regular social events for employees and surrounding communities, and developing educational events (Green Expo, etc.).

The main workers’ training (under an annual set schedule) is related to operations: safety, personal protective equipment, first aid, confined spaces, lifting machines operations, working on heights, among some others. The ESHS Manager carries out a number of related training for Agrofertil workers (e.g., training on pesticides deposit and operational safety) some others are carried out by external experts (e.g., hazardous materials transportation). Personnel with specific responsibilities in the transportation of hazardous materials are further trained and licensed by the local authorities to transport agrochemicals, specifically, all truck drivers possess a special driving license for transporting hazardous materials issued by Dinatran and valid for 5 years. Agrofertil has strict rules for the drivers: each has a three day induction course that includes defensive driving, hazmats operations and emergency response. During the site visit, there was evidence of empowerment and responsiveness towards environmental and social issues at distribution centers and throughout the company.



Emergency Preparedness and Response: Agrofertil has trained its employees and contracted drivers to prevent and react in case of accidental spills. All the distribution centers have emergency contact numbers available and elements to control spills such as sand and containment tanks. The company performs periodic drills covering fire, evacuation, management of hazardous materials among other topics. A fire drill in each silo and distribution center takes place once a year. The distributed agro-chemicals are confirmed not to be stored on site and typically to be distributed during maximum of 6 months.

Agrofertil has in place emergency response plans for all its facilities. Contracted drivers are trained on management of emergencies; the documentation on the materials being transported is provided and a kit for emergencies with protective personal equipment is placed in all vehicles.



Stakeholder Engagement: Agrofertil’s operations involve rural as well as urban areas where storage of inputs and offices are located. Local communities and farmers living in the proximity of distribution centers and silos are informed on the safety and emergency response matters via training given by the company. Agrofertil also keeps a robust and continuous grievance mechanism throughout the life of the project.



Community Grievance Mechanism: Agrofertil has established a formal external grievance mechanism with an i
nternal system for logging grievances and their follow-up. The mechanism is easily visible and retrievable at the company’s website and it includes: an online form, an email address, and a phone number.



Monitoring and Reporting: As part of its ESMS, Agrofertil monitors related to its operations environmental and social impacts according to the IFC Performance Standard 1 and to the Environmental Control Plans presented to the local authorities. Operational controls and monitoring include licenses and local compliance, occupational health and safety, training, grievances (internal and external), the use of utilities and fuels, verification of use of Personal Protective Equipment (PPE), presence of spills, drills, extinguisher inspections, among other things. Agrofertil does periodic inspections through checklists to ensure proper environmental and safety conditions. The company has a tracking system for the status of licenses and permits for its facilities and products distributed. Documentation and monitoring data were readily available. Company’s monitoring system collects enough indicators to successfully report to IFC in a form of E&S Annual Monitoring Report.

Human Resources Policy and Working conditions and terms of employment: Agrofertil has a suitable code of ethics that covers key elements of PS2. The code makes explicit reference to issues such as non-discrimination and equal opportunity, grievance mechanisms to employees, protection of the workforce, and respect for human rights. The code is communicated to all employees. New employees receive a Human Resources folder (“Legajo de Recursos Humanos”) which contains: vision and mission of the company; code of ethics; internal workplace code; housekeeping policy; working contract in which wages, benefits and overtime compensation are described; roles and responsibilities; information on corporate social responsibility; and internal procedures among other documents.



Agrofertil had a steady growth during the last years in number of employees, having currently 357 direct employees (with about 12% of female workers). In addition, the company hires near 90 temporary employees during the harvest period to operate the silos. Conditions of employment are defined in the contracts and in the internal workplace code which are aligned with local regulations. The minimum salary paid in Agrofertil is the legal minimum Paraguayan salary; the company has a defined salary scale by grade. Agrofertil does not hire workers under18 years as required by local law. There is no evidence of child labor or forced labor in Agrofertil’s clients. Agrofertil has a formal internal grievance mechanism in place to address and register workers grievances.



Workers Organizations: Agrofertil employees do not belong to workers organizations or unions, and there has not been such request among the employees. The management team of Agrofertil confirmed that they would not prevent employees to organize or participate in workers organization. There is a formal internal grievance mechanism in place and an alternative mean, such as to raise concern directly with a worker’s manager.



Retrenchment: No retrenchment is anticipated, moreover, Agrofertil estimates that the workforce will continue growing slightly, mainly on the administrative side.



Non-Discrimination and Equal Opportunity: Agrofertil has explicit codes regarding non-discrimination aspects in its operations; the company applies the principles of Equal Opportunity. There is no evidence of discrimination based on personal characteristics or gender (the female employees account for about 12% of the workforce, this is mainly due to the characteristics of the agricultural sector). Fair treatment is observed at the company, including processes of hiring, promotion and termination of employment.



Grievance Mechanism for workers: Agrofertil has an established employee grievance mechanism that allows for workers to express their concerns and also to provide suggestions for improvement with line management staff. Due to the relative small size of the teams, communication is quite direct and employees can raise concerns directly t
o Human Resources or to their management.



Workers Engaged by Third Parties: Agrofertil’s day to day activities are mostly conducted by direct employees; however some transportation services are performed by third party companies, as well as specialized tasks such as maintenance and security are sub-contracted. The company has in place the Code of Ethics which provisions apply to all contractors, including safety measures, access to facilities and legal compliance with labor laws and IFC Performance Standard 2.



Occupational Health and Safety: For the past two years, Agrofertil has been a zero lost time accident company. In case of an accident, the recording would be part of the corporate HR electronic system, where an investigation and corrective measures would be too captured. The company’s main OHS principle is to prevent vs. to correct; where it is striving to innovation, e.g., a successful recent one is protective helmets coloration (green, white, yellow) to differentiate who is on site. The main workers’ training (under an annual set schedule) is related to operations: safety, PPE, first aid, confined spaces, lifting machines operating, working on heights. Overall OHS controls are defined in the Environmental Control Plans presented to local authorities and enforced through periodic walkthroughs and inspection of the Chief for Security and Silos. The distribution centers are well designed with functional eye and body washers, containment kits, and natural and forced ventilation systems. Systematic use of PPE and control in the access to deposits and silos were observed. A fire drill in silos / centers takes place once a year. Silos are well maintained with proper housekeeping conditions and the operational confined space procedure.

Resource Efficiency: Agrofertil’s activities are restricted to commercialization of products and grain collection as a mode of payment from farmers; therefore, the use of natural resources is limited. The activities do not require water use, other than for sanitary purposes. The silos have drying operations only during the harvest season; therefore, silos operate five or six months during the year. The dryers use wood, which is purchased from authorized vendors with Paraguayan permits for commercialization of wood (the only widely available combustible to dry grains in Paraguay is wood). Total annual use of wood is near 7,000 tons per year (in 2015) for all the operations. The company has been reforesting its own areas in Santa Rosa, starting from 2010, to provide part of the wood in a sustainable manner.



Electricity is used to force air into the silos to maintain the optimal temperature to ensure the integrity of the grains and for lighting purposes in all the facilities.



Air Emissions: Air emissions are derived from the distribution fleet, vehicles used for sales purposes and dryers on the silos. The company renovates periodically the distribution fleet and the automobiles. Agrofertil has a preventive maintenance program to ensure proper operation of vehicles, including combustion processes and safety operation. The dryers using wood as fuel are quite small (40-60 metric ton/hr) and operate only during the 5-6 months of the harvest period for 4-5 hours per day; no air emission control is required by Paraguayan law for the dryers or vehicles.



GHG Emissions: Greenhouse emissions of the operations are associated with electricity consumption, the use of wood for the dryers and fuel for the fleet used to distribute the products and for technical assistance. The GHG emissions of the current operations have been estimated as 14,000 tons of CO2 equivalent, most of which are derived from wood use; electricity contribution is minimal, due to its hydroelectric origin.



Pesticide use and management: Agrofertil stores and transports fertilizers and agrochemicals in compliance with local and international regulations. All products are approved by the local authorities (e.g. SENAVE) and have the Paraguayan permits required to import and distribute the products. As of 2015, the company does not have in its portfolio and does not store any of the Class Ia or Ib; it is also committed to avoid future distribution of any products containing WHO class Ia or Ib ingredients.



Near 60% of agrochemicals sales of Agrofertil correspond to products containing active ingredients that are unlikely to present acute hazard in normal use (Class U) or are slightly hazardous (Class III); based on the classification of active pesticide ingredients from the World Health Organization. Currently, the company does not have in its portfolio or storage any products of Class Ia or Ib (they were all phased out by 2014 as part of the previous project with IFC). For products
with active ingredient Class II, Agrofertil has reviewed the technical and economic feasibility to replace them with less hazardous materials; considering alternatives such as cultural practices, biological, genetic. Agrofertil provides proper training to its clients on topics such as: facilities to handle and store the products, equipment and conditions of application, and disposal of residuals.



Products classified in the red zone, under Paraguayan law, require the prescription by an accredited agronomist, without that prescription Agrofertil does not sell the product. For an agronomist to prescribe the application of one of these products, the agronomist will assess the need of the product and ensure that it is critical for the crop.



Technical service is provided by qualified and authorized professionals (agronomists), Agrofertil has in place controls to ensure quality in the service and retention of its clients, which includes a proper guidance in the use and application of the products. In addition, the client usually has its own agronomist to advise on specific products. There was no evidence that Agrofertil is overselling its products by suggesting additional application.



Elements such as registration, labeling, packaging, and storage of chemicals were observed in accordance with international codes. The company ensures compliance with the Food and Agriculture Organization’s International Code of Conduct on the distribution and Use of Pesticides or other good international industry practice. Agrofertil is aware of trends and benefits of Integrated Pest Management (IPM). It has been following national recommendations and has been proactive in offering to its clients pesticides containing less hazardous active ingredients. Agrofertil will continue promoting IPM among its clients.



Solid Waste Management: Waste generated from the operations is basically domestic waste. Direct use of agrochemical products is limited to the farms for seed production and the demonstrative parcels, in which cases products’ containers are tripled washed and punctured. Organic material from the seeds’ farms and the demonstrative parcels are reincorporated into the soil to increase soil fertility. Reuse of bags and cardboard is done by the company. Agrofertil is committed to the agricultural empty containers recycling. It educates its clients via the dedicated program SegEV (seguro envasos vacios) about the importance of empty containers and plastic bags recycling. Until 2013 there was no system in Paraguay to actually recycle agricultural empty containers and the chemicals producers are not allowed to reuse them. Since 2013, they can be recycled by a new dedicated plant built in Villeta, Paraguay. Agrofertil has dedicated collection points at each distribution center. Currently only about 7 % of the containers sold by the company are being returned and recycled to Agrofertil collecting points; but the company is committed to increase this number in the n
earest future by awareness raising campaigns and farmers motivation.

Hazardous Materials Safety: Agrofertil stores and distributes agrochemicals in accordance with local law, which requires proper authorizations and documentation of the products, deposits and vehicles. All distributed products authorized by local authorities, are labeled according to local requirements, indicating hazards, emergency contacts and proper disposal. In addition, the company provides technical assistance to its clients on proper products application. The distribution centers have been approved by SENAVE and have controls, such as drainages with collection tanks, eye and body washers, containment kits and fire suppression equipment. Access to the deposits is restricted to authorized personnel. Agrochemicals are only transported on enclosed vehicles authorized by DINATRAN. All drivers have been trained and have the permit to transport hazardous materials.



Emergency Preparedness and Response: Agrofertil has emergency manuals for depositing and transporting its products. Training has been provided to the employees in distribution centers. All drivers are trained on management of emergencies and phone numbers are available to report events. In addition, the vehicles have a tracking and communication system that would facilitate response in case of emergency. Agrofertil has periodic fire drills and includes hazardous materials safety and silos safety within the emergency drills. Local communities (farmers) that are located in the proximity to Agrofertil’s distribution centers and silos are aware of the emergency response via training carried out by Agrofertil on the topic of safety.



Security Personnel: Agrofertil contracts security guards through three different recognized security companies, the guards are armed. The security companies trains the employees to guarantee adequate use of the arms and follow up of the procedures. There have not been complaints or reports regarding abusive behavior or improper use of the arms.

Agrofertil does not cultivate directly any crop aside from small areas that are used as demonstrative parcels at some distribution centers. In some cases crops are collected from the farmers as a form of payment (instead of cash). As indicated above, the main business model of Agrofertil is input distribution and agronomic services (not crops purchasing and trading).

The project does not include expansion of the cultivated area and under no circumstance will the company clear natural forest. Nevertheless, farming in Paraguay brings a risk of supporting illegal farming, deforestation, and associated loss of biodiversity. However, as the company currently knows with certainty and confirms, that all crops collected as payment are not sourced from any regions with significant conversion of critical or natural habitats, or protected areas of Paraguay. During its due diligence, IFC has also confirmed that Agrofertil’s current silos and distribution centers locations are indeed remote from known critical and/or natural habitats.

So far, Agrofertil developed and implemented procedures to confirm that the farming that it supports is not on illegally cleared land, by documenting that farmers provide confirmation of land title registration at the Paraguay Public Property Registry, commercial and financial references. Environmental licenses and/or de facto approvals based on elapsed time from the date of the license request are also currently documented by the company for eligible farmers, as defined by IFC. Agrofertil expects its clients to comply with the national environmental legislation (no illegal land clearing).

In order to ensure supply chain requirements under PS6 are addressed, Agrofertil will implement internal systems and verification practices to identify whether its new clients and those existing clients expanding their land usage, source any crops for repayment in regions where there is a risk of significant conversion of critical and/or natural habitats in Paraguay. If this would be the case, Agrofertil will not work with such farmers, or will advise the existing clients that they cannot collect any crops for repayment in critical and/or natural habitat areas of Paraguay. Also, going forward, Agrofertil will include a clause in the contracts with new clients or those existing clients expanding their land usage to prohibit collection of crops for repayment in critical and / or natural habitats of the country.

Agrofertil will continue verifying environmental licenses of new clients and existing clients expanding their land usage.

Agrofertil’s sponsor funded a civil society association: “CETEDI: Centro Tecnologico de Desarrollo e Investigación” aimed to integrate social, environmental and technological aspects into the activities of the Agrofertil and other partner companies. The association has implemented programs on health, education, capacity building and sustainable development in Paraguay and specifically in areas where Agrofertil has operations. The company has periodic meetings with local farmers to introduce products, to provide training on proper use of the products and to promote environmental and social initiatives. The company has initiated the promotion of proper disposal of the containers and will work to facilitate the collection and proper disposal of the used containers, which is currently not a wide practice in Paraguay. The company has a formal external grievance mechanism (an online form, an email address, and a phone number) to address complaints or concerns in a systematic manner.

Agrofertil communicates to the communities (farmers) in the vicinity to its silos and distribution centers during training, including on safety and emergency response. Disclosure of the ESRS for the previous project occurred on Agrofertil webpage.

This ESRS constitutes formal public disclosure of information related to Agrofertil environmental and social performance. It will be available for review and comment at the following location:

Agrofertil S.A.
Casa Matriz – Av. San Blas esq. Pablo Neruda,
Km 6.5 – Ciudad del Este,
Alto Paraná – Paraguay
Tel. +595 (061) 572871

The Company will make adequate public disclosure of this transaction in the Paraguayan business and trade press

To contact the project company, please write to:

Adilson B. Antonio Junior / Carlos Manuel Duarte
Av. San Blas esq. Pablo Neruda,
Km 6.5 – Ciudad del Este,
Alto Paraná – Paraguay
Tel. +595 (061) 572871

Adilson B. Antonio Junior – mailto:adilson@agrofertil.com.py
Carlos Manuel Duarte – mailto:carlos@agrofertil.com.py

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Define an internal system and verification scheme to confirm that Agrofertil’s new clients and those existing clients expending their land usage would not provide for repayment any crops sourced in areas where there has been recent significant conversion of critical and / or natural habitats of Paraguay	05/31/2016
Implement the internal system and verification scheme to confirm that its new clients and those existing clients expending their land usage would not provide for repayment any crops sourced in areas where there has been recent significant conversion of critical and / or natural habitats of Paraguay	11/15/2016
Agrofertil will include a clause in the contracts with new clients and those existing clients expending their land usage to prohibit collection of crops for repayment in areas with significant conversion of critical and / or natural habitats of Paraguay	11/15/2016