PS5 Land Acquisition and Involuntary Resettlement is not applicable as no land acquisition process was undertaken and no involuntary resettlement was identified during the appraisal. Future land leasing for distribution centers will be conducted under market-based transactions. Agrotec’s distribution centers occupy small parcels which are leased or purchased under willing seller-willing buyer process.

PS7 Indigenous People and PS8 Cultural Heritage are not expected to apply to this project as Agrotec’s distribution centers consist of small parcels located within rural areas close to urban centers. Agrotec’s facilities   have received the approval from the Paraguayan authorities.

    This is a category B project in accordance with IFC’s Policy on Environment and Social Sustainability. Based on information reviewed by IFC and information and observations made during the site visit, this investment will have limited adverse E&S impacts that are few in numbers, site-specific, and largely reversible and readily addressed through mitigation measures, as outlined in the Environmental and Social Action Plan (ESAP). Key E&S risks and issues associated with Agrotec’s operations include the following: (i) handling, storage, distribution and transportation of hazardous materials, (ii) Pest control management strategy and professional guidance to the clients in the use of products sold to farmers and cooperatives; (iii) labor and working conditions, including occupational health and safety; and (iv) Agrotec’s responsible sourcing policy to preclude business with clients operating without environmental licenses or in areas that were recently converted from natural habitat to farmland.

    Environmental and Social Assessment and Management System
 

Since the first IFC investment in Agrotec in 2010, the company has implemented an Environmental and Social Management System (ESMS) appropriate for the company’s operations and activities. Agrotec’s ESMS includes a sustainability policy, identification of risks and impacts, management programs, emergency preparedness and response, monitoring and review, and stakeholder engagement. The company’s ESMS is updated to reflect new regulations, corporate procedures and IFC’s requirements, as needed.

Policy

Agrotec’s E&S policy states Agrotec’s E&S approach to management of E&S risks and impacts and sets the company’s E&S objectives. This policy is communicated to management, staff, clients, contractors and other stakeholders. Specific environmental and social issues addressed in the policy include the objective to minimize the operational risks associated with labor, working conditions, occupational health and safety, spills of agrichemicals to the environment; compliance with national E&S legislation; and continuous community engagement.

Identification of Risks and Impacts and Management Programs

Agrotec has identified the main social and environmental impacts of its operations and addresses the issues in compliance with Paraguayan law and alignment with IFC Performance Standards. Agrotec submits an annual compliance report to document implementation of the Environmental Control Plan (Plan de Gestion Ambiental) at each distribution center. The annual reports are reviewed and approved by the Secretariat of Environment (SEAM - Secretaria del Ambiente). Through the submittal and approval of these documents, the company obtains the respective environmental licenses for each facility. The Basic Environmental Questionnaire and the Environmental Control Plans present mitigation measures for potential environmental and occupational health and safety risks. The company provides annual reports and updates to the local regulators as required by conditions of the licenses. The availability of the environmental control plans has been disclosed locally through newspapers, in compliance with local regulations. Main environmental, health and safety plans include solid waste management, effluent management, storage, handling and transportation of hazardous materials, emergency preparedness and response, and defensive driving, among other EHS plans.

Products distributed by Agrotec are approved by local authorities (e.g. SENAVE - Servicio Nacional de Calidad y Sanidad Vegetal y de Semillas [National Service for Quality and Sanitation of Produce and Seeds]) and for transportation by the National Department of Transportation (DINATRAN - Direccion Nacional de Trasporte). Agrotec has a department dedicated to process and obtain the local registration for all the products the company trades. In order to acquire these authorizations, Agrotec submits toxicological studies by approved laboratories, physicochemical analysis and other required assessments. In addition, the company achieved full compliance with the United Nations’ Food and Agriculture Organization’s (FAO’s) International Code of Conduct on the Distribution and Use of Pesticides.

Organizational Capacity and Competency

Agrotec has a qualified environmental, health and safety (EHS) coordinator who manages the environmental and occupational health and safety programs for the company. The EHS coordinator has trained staff at each distribution center. There is a human resources manager who coordinates HR operations and works in close coordination with the EHS coordinator and the administrative department. Environmental and Social responsibilities are shared with the local managers at each distribution center. This model has proven to be effective for the company and there is evidence of empowerment and responsiveness towards environmental and social issues at each distribution center and throughout the company.

Emergency Preparedness and Response

Emergency preparedness and response plans are prepared, implemented and maintained at each facility in line with local laws. All facilities are equipped with life and fire safety (L&FS) equipment commensurate with the types of L&FS risks and hazards. Agrotec has trained its employees and contracted drivers in defensive driving and in chemical spill response. Agrotec has emergency response plans at all distribution centers. At each distribution center there are emergency contact numbers and spill response equipment such as sand and containment as well as personal protective equipment (PPE). The company performs periodic fire and evacuation drills and trains personnel on management of hazardous materials. Agrotec’s field staff provide training to farmers handling agrichemical and all products sold to clients are accompanied by material safety data sheets (MSDS), along with written instructions for the application of agrichemicals. Deficiencies in the storage and easy access to the emergency response kit and PPE were identified. As per action #1 of the ESAP, Agrotec will train staff to maintain the spill kits and PPE in good order and to ensure easy access to these materials. 

Monitoring and Review

Agrotec has developed EHS management plans that include monitoring of key EHS performance. Some specific environmental and social indicators have been established and monthly reports developed for training provided to staff, audits conducted at the distribution centers, total volume of paper recycled and empty containers of agrichemicals, number of accidents with lost time, emergency drills conducted annually and consumption of fuel and electrical energy.  IFC has identified opportunities for improvement in the company’s monitoring and review process. Therefore, as per action #2 of the ESAP, Agrotec will improve its process of monitoring and reporting on EHS performance. Improvements include: (i) EHS management procedure to analyze data and recommend corrective measures, as necessary; (ii) monthly management review of EHS performance indicators; and (iii) submittal of monitoring data to IFC through the AMR.                                               

      Human Resources (HR) Policy

Agrotec’s personnel consists of technically competent professionals with strong customer-service skills. As of March 2018, the workforce consisted of 262 employees, of which 65 were women and 197 men. The HR Manager works in close coordination with directors to ensure that the company offers good benefits, training and opportunities for advancement to maintain qualified staff. Agrotec has adopted a Human Resources Policy to address human resources affairs that ensures compliance with Paraguayan labor laws and IFC PS2 requirements. The HR policy covers relevant issues in relation to protecting worker’s rights and to providing acceptable working conditions, as well as good practice in HR management (non-discrimination, no child labor, no forced labor, freedom of association, grievance mechanism, and occupational health and safety matters). The policy outlines rights and responsibilities of the employees and those of Agrotec. All HR procedures are compiled in a manual that is communicated and available to employees.

Working Conditions and Terms of Employment

Agrotec has two types of contracts with its employees (i) services contracts and (ii) direct contracts. Compensation and benefits differ between the contracts depending on the function and grade of responsibility. Services contracts are used for part of the management team and sale representatives. Direct contracts are usually for operational staff (including some coordinators and managers) and entitle contribution to the Paraguayan Social Security in addition to Agrotec’s benefits. All employees are granted private health plans partially paid by the company, in compliance with local legislation.

Conditions of employment, including compensation and benefits, are defined in the employees’ contracts. The minimum wage paid by Agrotec is higher than required in Paraguay and benefits, such as health care, also exceed in-country requirements. The company conducts annual salary surveys to ensure that Agrotec pays competitive salaries and benefits. Working conditions comply with labor regulations, including no hiring of people under 18 years of age. The company has procedures to requires that its clients have provisions to prevent child and forced labor practices.

Workers’ Organizations

The employees of Agrotec do not belong to workers’ organizations or unions and there have been no efforts by employees to create such organizations. Agrotec’s policies ensure that employees have the right of free association and can participate in workers’ organizations.

Non-Discrimination and Equal Opportunity:

Agrotec applies the principles of Non-Discrimination and Equal Opportunity. There is no evidence of discrimination based on personal characteristics or gender. Fair treatment is observed in the company, including processes of hiring, promotion, and termination of employment. Agrotec has a periodical performance assessment with 360-degree evaluations, which is considered important among the company’s employees.

Grievance Mechanism

Human resources procedures include an employee grievance mechanism that allows for workers to express their concerns and to provide suggestions for improvement with line management. Due to the relatively small size of the teams, communication is direct and employees can raise concerns directly to Human Resources or to Management staff. The grievance mechanism allows for anonymous complaints.

Workers Engaged by Third Parties

Agrotec’s operations are conducted by direct employees; however, transportation services, as well as specialized tasks such as electrical maintenance or construction works are subcontracted. Agrotec has procedures for contractors, including work permits prior to start of work, verification of certifications/qualifications, occupational health and safety requirements, and evidence of compliance with labor law and PS2 requirements.

Occupational Health and Safety (OHS)

Since the first IFC investment in Agrotec, the company has strengthened its procedures to improve safety at the work place. For instance, Agrotec conducts job hazard analysis to identify potential risks associated with each task and to ensure that safety mitigation measures are in place as well as the use of necessary PPE. Agrotec also focuses on training its employees to understand their duties, exposure to risks and hazards associated with specific workplaces (e.g., handling and transportation of agrichemicals) and the proper way to wear PPE. Agrotec also records and investigates accidents with lost times. Moving forward, and as a requirement of the ESAP (ESAP #3), Agrotec will record and investigate all accidents, including accidents without lost time and near misses.

Agrotec’s main occupational health and safety risks are associated with the handling, storage and transportation of agrichemicals. Agrotec has safety procedures including procedures for emergency response during storage and transportation of chemical substances; investigation of accidents; and site inspections among others. The distribution centers are equipped with eye and body washers, spill kits, and natural and forced ventilation systems. The company has reinforced its OHS procedures related to work permits, transportation of hazardous materials, confined spaces, work at height and recordkeeping. The overall OHS performance is considered good. For instance, Agrotec’s lost time incidence frequency rate (LTIFR) for 2017 was 3.03, which is within the sector LTIFR of 8.5.

Training

Employees receive proper training based on their duties and responsibilities. Employees at distribution centers have been trained on handling and transportation of hazardous materials, use of PPE, chemical spill response and on the use of fire extinguishers. Personnel with specific responsibilities in the transportation of materials are further trained and licensed by the local authorities to transport agrochemicals. Regarding drivers’ safety and qualification, Agrotec developed a specific program for its drivers that now hold certifications issued by the company. The company also provides trainings on other occupational health and safety procedures such as cardiopulmonary resuscitation (CRP) and first aid, confined spaces and work at heights.  

     Resource Efficiency

Agrotec operations do not require intense use of natural resources. The distribution centers use natural illumination and do not require water use other than for sanitary purposes. The use of energy at the distribution centers and at the headquarter office is provided by the national grid, which is supplied by hydroelectric plants.

Agrotec’s greenhouse gases emissions are associated with the distribution fleet and vehicles used for sales purposes. The fleet used for distribution of products is modern as the company renews its vehicles every four years. Therefore, company’s vehicles are in good working conditions because they are generally new and serviced through a preventive maintenance program. At the Pedro Juan Caballero seeds plant, during processing and storage of seeds, a dryer unit uses lumber from sustainable sources certified by authorities, and the plant operates approximately four months per year.

Greenhouse Gas Emissions

Greenhouse gas (GHG) emissions of the operations are associated with electricity consumption, the use of wood for the grain dryer at the seed plant, and fuel for the fleet used to distribute the products and for technical assistance. Annual GHG emissions of the current operations have been estimated at less than 5,000 tons of CO2-equivalent, most of which is derived from fuel for transportation purposes; electricity contribution is minimal, due to its hydroelectric source in Paraguay and the use of lumber is null as this is a renewable source.

Pesticide Use and Management

Agrotec distributes fertilizers, agrochemicals and seeds. The company stores and transports the materials according to local regulations and international requirements, aligned with FAO’s International Code of Conduct on the Distribution and Use of Pesticides. All chemical substances are accompanied by material safety data sheets (MSDS) and other documents required by law, such as registration and permits required to import and distribute the products. In addition, Agrotec provides technical assistance to its clients on how to handle, store and apply the products, including the use of PPE. The company has been actively involved in national initiatives for the safe management of pesticides. Over the past two years, Agrotec has also been active in promoting proper disposal of empty agrichemical containers among its clients.

Sales of agrochemicals account for approximately a quarter of the company’s business. Almost 80% of agrochemicals sold by Agrotec contain active ingredients that are unlikely to present acute hazard under normal use (WHO Class U) or are slightly hazardous (WHO Class III), based on the classification of active pesticide ingredients from the World Health Organization (WHO). The company only distributes products approved by SENAVE and follows the local requirements for product distribution. Agrotec does not trade, store or handle WHO Class Ia (Extremely Hazardous) or Ib (Highly Hazardous) products and is committed to avoiding the sale or distribution of any product containing Class Ia or Ib ingredients. Agrotec is committed to using less hazardous materials and encourages its clients to use good practices such as biological control, crop rotation, and the company sells pre-treated seeds to minimize exposure of clients to chemicals. Agrotec is aware of the benefits of implementing Integrated Pest Management (IPM) approaches, and the company trades biological products as key components of IPM strategy. Agrotec will continue to promote IPM among its clients.

Solid Waste Management

Waste generated from the operations is basically domestic waste. Reuse of bags and cardboard is done by the company. Agrotec has also recycled office paper. Agrotec recommends and promotes the triple rinse and puncture of containers to reduce the risk of these being re-used by the clients or their workers. In addition, Agrotec provides training and guidance to its clients regarding the proper procedures for empty pesticide container disposal, in accordance with requirements from SENAVE.                                              

        Agrotec exercises proper care to minimize potential exposure of its clients and communities to the products the company distributes. The distribution centers have been constructed near urban centers, but not in the heart of communities. The volume of products stored at the distribution centers is minimized by coordinating the purchases with the direct delivery to clients. The 12 distribution centers are fenced, which prevents community members access to the warehouse where products are stored. All distribution centers have fire protection (e.g., hydrants and fire extinguishers) and drills are conducted twice a year.

Hazardous Materials Management and Safety

As described previously, warehouses and the vehicle fleet have the infrastructure required to prevent potential safety incidents. Drivers have been trained on emergency response and all vehicles transporting agrochemicals have information regarding the products being transported. Transport procedures are aligned with FAO’s International Code of Conduct on the distribution and Use of Pesticides.

Security Personnel

Agrotec contracts security guards for all facilities: distribution centers, the seeds plant and the headquarters office. The guards are contracted through a licensed security company and are armed. The security company has ethics manuals, and trains the employees in appropriate use of firearms. Agrotec has dedicated guards that must be approved by the company. Guards cannot be changed without the previous approval by Agrotec. There have not been complaints or allegations of improper behavior by security personnel.                                           

     Agrotec provides services and products to local farmers in Paraguay and some of the loans are paid in grain production. Agrotec does not own or operate farmlands. Thus, the proposed project does not include acquisition or management of farmland. However, the company’s support to farming in Paraguay could indirectly be associated with the risk of loss of biodiversity, in the Chaco region as well as other areas where agricultural activities are increasing and there is the potential for conversion of natural habitat to farmland. In addition, in some cases Agrotec receives payment from its customers in the form of grains. Consequently, supply chain responsibilities, as described in PS6, apply to Agrotec’s operations, which are described in the paragraphs below.

As part of the second investment of IFC in Agrotec, IFC and Agrotec developed the definition of an “Eligible Farmer” as being a prospective customer with which Agrotec could develop or continue business because they operated in compliance with in-country requirements and had not converted natural habitat in the Chaco Region. Moving forward, as per the ESAP #4, Agrotec will develop an internal procedure to verify that Agrotec’s new clients and existing clients expanding their farmland would not provide repayment with crops sourced in areas where there has been conversion of critical and/or significant conversion of natural habitats, in any region of the country. As per ESAP #5, Agrotec will keep records and evidence of verification of farmland of new clients and existing clients that are expanding their farmland, including submittal of maps that clearly show clients’ properties in relation to natural habitats, legally protected areas, areas of great biodiversity conservation values and areas recently converted from natural habitat to farmland. In addition, as per Action #6 of the ESAP, Agrotec will include a clause in the contracts with new clients or those existing clients expanding their farmland to prohibit collection of crops as repayment if such clients have farms that are located in critical and/or natural habitats in Paraguay or had significant converted natural habitat after May 2009.                                              

     Agrotec’s community relations are focused on the farming communities that are served by the company. An initiative that the company has championed is the awareness training on the proper storage and disposal of empty agrichemical containers, which are no collected and recycled in Paraguay. This initiative aims at the protection of human health and the environment. The company has agreements with local universities to provide trainee opportunities for those who study agricultural engineering and other fields focused on crop production. In addition, the company sponsors voluntary work by employees to help neighboring communities close to the regional distribution centers. Agrotec discloses the Environmental Control Plans, as required by national laws as well as the Environmental and Social Review Summary (ESRS) and the Environmental and Social Action Plan (ESAP) from previous IFC investments.                                              

Alcides Ramon Fariña

Km. 4 - Supercarretera a Hernandarias
Ciudad del Este, Alto Paraná – Paraguay
Telefono: + 595 61 571900
mailto: Alcides.farina@agrihold.com

http://www.agrotec.com.py