Issues relevant to PS5: Land Acquisition and Involuntary Resettlement are not found because Norson’s farm developments will be on land already owned by Norson and developed as farms.  This land is in remote uninhabited areas and so will not cause any involuntary resettlement or economic displacement.  No adverse impacts on indigenous peoples or cultural heritage are expected from farm development or from expansion of the already well-established industrial sites.

The project comprises expansion of existing processing capacity at established manufacturing sites in industrial zones of Hermosillo, and development of farming in remote and uninhabited areas of Sonora that are distant from any protected areas or priority sites for conservation of biodiversity.  Potential impacts arising from the expansion are very similar to those existing today and are reversible and may readily be addressed through mitigation measures.  This is therefore an environmental and social category B project. 

IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s 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 implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.

Policy

Norson’s approach to sustainability issues is set out in its Code of Ethics and Professional Conduct.  This code was adopted in October 2015 and has been signed by the General Director of the company and by directors for Human Resources; Production, Foods Division; Finance, Farms, and the Commercial Director.  This policy replaces the October 2011 version, and covers the five broad areas of professional ethics; human resources, health, safety and environment; legal compliance and training and education.  Within these overarching subjects however, separate section of the Code address environmental and labor standards in supply chains, human rights as a framework for the human resources policies, environmental standards, food safety and animal welfare.  A Spanish language version of the Code is available on Norson’s website at this link:

http://www.norson.net/codigodeeticanorson.pdf

and is disclosed with this review summary.

Identification of Risks and Impacts

Full legal compliance is one of the requirements of Norson’s ethics code.  The expansion project, therefore, has been planned in full compliance with local regulatory requirements and Norson is in the process of applying for Environment Licenses from the appropriate authorities for the new investments.  Existing operations already have appropriate environmental licenses. 

Norson maintains a register of applicable federal, state and city regulatory requirements, and manages its operations in a manner that brings about complete and continuous compliance. In the environmental area, applicable regulations include the general law of ecological equilibrium and environmental protection, with additional regulations covering prevention and management of waste and the law on national waters. The working relationship is covered by the Federal Work Law, and federal consumer protection regulations are also applicable.  Farming operations are required to be compliant with the Federal Law of Animal Health and the general heath law.

Management Programs and Organizational Capacity

Norson’s sustainability management structure comprises one environment and regulatory (E&R) manager reporting to the Chief Financial Officer, supported by two (E&R) supervisors.  One environment maintenance manager, 5 environment technicians and one environment auditor cover the farms and report to the Farms Division Services Manager.  In addition, there are four Health and Safety supervisors, one each for the Farms Division and Foods Division then with a further four staff covering the three manufacturing sites.  Occupational health and safety reporting is to the Director of Human Resources.

Improvement in environmental performance, such as reduction in specific use of energy and water is brought about by project teams from the operation and engineering departments. This continuous improvement work is supported by reporting of Key Performance Indicators (KPIs) related to, for example, utility use, feed conversion, and occupational accidents and lost time incidents.   Environmental investments have been undertaken in accordance with an environmental master plan; an example investment is the lining of farm lagoons that has been undertaken since 2012. Norson is in the early stages of implementing an occupational health and safety management program SIPA (from the Spanish Sistema Integral para las Prevención de Accidentes).

SIPA was launched upon the realization that Norson’s lost time incident frequency exceeded Smithfield benchmarks.  SIPA is applied within all Norson’s farms, the feed mill, slaughter and food plants and transport, and is based upon the risk mitigation hierarchy of eliminate the risk, materials substitution with lower hazard materials, engineering controls, administrative controls and then personal protective equipment to protect against residual risk, all following from a robust risk assessment and evaluation process, and formation of a culture of accident prevention based on training, communication and continuous improvement.  Almost 3,000 hours of safety training was provided in 2015.  All incidents are followed up, with written reports prepared and acted upon.  A safety suggestion scheme PIGS (Peligro Identificado en Gestión para Solventarse) has been launched to seek to enhance employee participation in safety matters, and regular audits are undertaken.

Emergency Preparedness and Response

Norson’s manufacturing sites have emergency response brigades.  These brigades undergo regular training in basic first aid including CPR and fire response.  Norson has identified that a large scale ammonia leak at a food processing facility would be its most severe risk and has specially trained teams equipped with breathing apparatus and protective clothing stored outside areas susceptible to an ammonia leak available to address such an event.

Workplaces are well lit, with exit routes clearly marked. Periodic evacuation drills are undertaken.

Norson’s corporate Code of Ethics and Professional Conduct includes sufficient coverage of issues of labor and working conditions, that it can be considered to constitute  the elements of a Human Resources policy.  The human resources-related policy statements are based upon Norson’s expression of support for fundamental human rights, prohibition of child labor and acting legally and in a socially responsible manner.  The Code explicitly states that Norson does not discriminate against an employee or applicant for employment on the basis of race, color, religion, ethnic origin or nationality, gender, sexual preference, age, disability or military status.  The Code further commits Norson to providing a non-discriminatory and harassment-free work environment, and forms of verbal, physical, visual and sexual harassment that are breaches of its code.

Norson’s has a corporate policy requiring 100% compliance with law at all time:  compliance with Mexican labor law does bring about compliance with the labor and working conditions requirements of Performance Standard 2.

Occupational Health and Safety

Norson’s management of occupational health and safety was described earlier in this review, and is based on risk identification, elimination, control and then use of personal protective equipment.   PPE varies according to work station, but in the cutting rooms where most injuries are reported, workers do already use protective gloves, and chest protectors.

IFC’s reviews of Norson’s processing plants identified some areas where engineering revisions would enhance OHS.  These were all discussed with Norson’s engineering staff when observed.  Issues include the need for greater rigor in guarding bandsaw blades (most guards were in use but some unguarded blades were observed), adoption of two-handed controls at a machine that inserts a wooden skewers into pieces of meat to form a satay-stick like serving, prevention of routine access to areas adjacent to explosion relief panels on feed mill conveyors and control of legionella risk in the Plant 3 hand washing water supply system.

Supply Chain

The Code of Ethics and Professional Conduct requires that suppliers shall (i) not permit corporal punishment, any form or harassment or abuse of power; (ii) eliminate all forms of child labor; (iii) eradicate any form of forced labor or coercion; (iv) avoid discrimination; (v) respect established maximum working hours and minimum salary levels; (vi) ensure that employees observe safety and hygiene standards; (vii) respect the rights of employees to associate, organize bargain collectively without sanction; (viii) obtain and maintain environmental permits and monitor, control and treat wastes as legally required; (ix) adopt a precautionary approach to environmental protection; (x) avoid any cases of corruption, extortion or bribery; (xi) identify and correct any breaches of the above; and (xii) if any breaches are identified, inform Norson and at the same time present a schedule for correction of these breaches.

The requirements of the Code are incorporated into suppliers’ contracts.  These requirements are clearly explained to new suppliers who are invited to join induction training in key issues that may be relevant, such as security and occupational health and safety.  Norson is permitted by contract to inspect clients to ensure that the requirements of the Code are observed, and does make such visits.  Any Code non-compliances if observed will be discussed with suppliers and either remedied or contracts are terminated.

Resource Efficiency

Norson’s energy use is dominated by use of electricity in its farms, abattoir, feed mill and processing plants.  The single greatest users of electricity in the farms are infra-red bulbs used to provide heating for very young piglets, while LPG is used for seasonal heating.   The greatest electricity use in processing is for process refrigeration and cold storage and room cooling.   The process plants and feed mill use gas for water heating and steam raising substantially for pelletizing respectively.

Energy and water use at Norson is included within Smithfield’s corporate targets which aimed for 10% reduction in specific consumption of energy and water between 2008 and 2014.  Norson has used consultants to undertake several energy efficiency reviews of its operation over the years, and the most recent work done in 2016 suggests opportunities to make efficiencies in use of refrigeration, with longer payback options related to co-generation of heat and power, digestion of processing plant waste and solar (especially for farms) all technically feasible.  Norson is currently assessing and prioritizing the consultant’s recommendations and will implement those that meet business objectives.  Benchmarking energy use is not readily feasible due to the divergence of processing activities (slaughter, cutting, value-added processing, blast freezing and cold storage) at the single site.

Water

Norson has implemented the most obvious water efficiency measures, but specific consumption remains over benchmark.  To the extent cost-effective, Norson shall install additional submeters to enhance its understanding and control of water use. 

Liquid Effluent Management

At most farms, pig excreta are collected and transported by water circulation systems to large effluent lagoons.  The lagoons are made by excavation and compacting of earth, in compliance with local regulations, and historically were not lined. Norson has measured soil infiltration from these lagoons and detected little loss to the ground, and the lagoons are not considered to present any threat to ground water which is several hundred meters deep.  Nevertheless, Norson embarked upon a program to line all lagoons at all farms as the major component of its master environmental plan. Work has already started and is scheduled for completion in 2016.  Several farms use straw bedding for the pigs.  At the end of the cycle, the used bedding is composted.  This type of farm does not generate liquid effluents.

Lagoon levels are managed at a level of not less than 18 inches below the sides.  The lagoon walls are raised above the surrounding land which means that storm water collecting on such land will not flow into the lagoons. There is no effluent discharge from the farms, water loss is by evaporation from the lagoons which matches water use in all cases.  Norson no longer recirculates water from lagoons to the pig houses, since it considers that this practice increases the risk to bring infection from uncontrolled lagoons into the biosecure animal houses.

Liquid effluents from Plant 3, which meet local regulation are discharged to the municipal sewer.  Combined liquid effluents from Plant 1 (slaughter) and Plant 2 (value added processing) are pre-treated by sieve, homogenization and dissolved air flotation, before liquid effluents are discharged to the municipal sewer for further treatment.  Liquid effluents do not meet normal city acceptance criteria, but the company does have a permit to discharge these effluents.  Further treatment by digestion then beneficial use of biogas will be further reviewed by Norson.

Air Emissions

Plant 1 has two steam boilers and two direct-contact process water heaters, while the feedmill has one steam boiler.  All are natural-gas fired, and energy use data shows that all are below the 3 MW_th heat input threshold of monitoring as indicated by the World Bank Group General EHS Guidelines.  IFC observed no significant odor at the processing plant.

GHG Emissions

The annual GHG emissions from Norson’s expanded operations on completion of the project are estimated to be around 60,000 tonnes per annum CO₂ equivalent. This figure accounts for energy-based emissions in the feedmills, farms and processing, transport energy and emissions from livestock.

Solid Waste Management

Each farm has a composting area for dead animals some way from the main farm operations.    These are pits:  carcasses are bisected, placed in the pit and limed, then covered temporarily with straw.  When the pit is full it is filled with earth and the process repeated.  The composting areas is fenced to prevent access by scavenging wild animals.

At the processing plant, slaughterhouse pen wastes are firstly sieved, collected in a tank then are sent to the landfill.  Inedible offal, blood, rejected meat and carcasses are collected in tanks and sent daily to a licensed rendering plant. Sludge from the wastewater pre-treatment plant is collected and sent to an authorized landfill.  

Both the feed mill and value added processing plant have well established waste minimization programs to minimize waste generation and maximize recycling potential. Used cardboard boxes, metallic wastes, damaged wood pallets are recycled with licensed providers.  Hazardous materials such as used lights and maintenance wastes are disposed of by a licensed contractor in an authorized hazardous material landfill. All waste carriers provide receipts, enabling Norson to track carriage of its waste from its sites to the authorized disposal points.

Pesticides

Norson contracts with a licensed pest-management company for control of insects and rodents at the farms.  A list of pesticides employed has been reviewed:  all are commonly used Class II or Class III substances.

Norson has a HACCP-based food safety management system in its processing plants, with full food traceability and recall procedures in place.  Norson has the Safe Quality Food certification SQF-2. 

The company also has comprehensive systems of biosecurity at the farms. The main threats to bio-security are breaches by trucks, people, feed, pests and cleanout.  During the appraisal disinfectant barriers for vehicles entering and leaving the farms and feed mill were evident - with perimeter fencing to maintain separation.  Employees pass through disinfection and are required to shower when both entering and leaving a farm.  Within the farm, clean clothes are provided – the employees’ or visitors’ “street clothing” does not enter the secure area within the farm. 

Norson transports pigs and feed with its own designated fleet of trucks that are subject to intensive washing requirements. 

In addition to the audit by the Mexican government, Norson conducts its internal bio-security audit on a quarterly basis. Every farm holds an environmental license and is under obligation to perform up to the licensing standards.

Norson places high emphasis on animal welfare both in its own operations and in those of its outgrower suppliers, and has an Animal Welfare Policy and Procedure manual that is part of the company’s training manual and must be read and signed by each employee. All new employees receive an induction in humane animal treatment.  Norson’s animal welfare policies consider the basic needs of the pigs (water, shelter, feed); good husbandry practices; timely medication treatments; euthanasia procedures; humane treatment during transport and contingency planning for any accidents fires, etc.  At the end of 2015, 57% of sows were in group accommodation, which represents a considerable increase from 30% group housing at the time of IFC’s first investment. The program to implement full conversion from stalls to group housing remains ongoing and is expected to be completed by 2018.

Norson’s farms, transportation and live animal handling operations observe Smithfield’s worldwide animal welfare standards which are based on the North American Meat Institute’s (NAMI) Recommended Animal Handling Guidelines and Audit Guide.

The farms are within around 120 km of Hermosillo, but in areas remote from communities, the better to promote biosecurity.

The feedmill and processing site are located separately on industrial estates within Hermosillo, without close proximity to any stakeholders, except other users of the industrial park. 

Disclosure documents may be viewed at:

SECRETARIA DE ECONOMIA DEL ESTADO DE SONORA

Comonfort y Paseo del Canal, Centro de Gobierno, Edificio Sonora, ala sur, tercer nivel

Hermosillo, Sonora, México. C.P. 83280

COPRESON (Consejo para la Promoción Económica en Sonora)

Blvd. Solidaridad #335-A, Local 1, planta baja

Hermosillo, Sonora, México. C.P. 83246

For inquiries and comments about the project contact:

Maria Magdalena Alvarez Figueroa

Ariel Alberto Amavizca Gutierrez

Tel. +52 (662) 259-5800

info@norson.net.