The company confirms that they are not acquiring or leasing new land parcels and plan to use fallow lands for increasing production of tomatoes and other crops. Thus PS5: Land Acquisition and Involuntary Resettlement is not considered applicable. The existing facilities and farms are not located in the vicinity of sensitive environmental areas, nor within known historical and/or cultural heritage areas. Therefore PS6: Biodiversity Conservation and Sustainable Management of Living Resources and PS8: Cultural Heritage, are not applicable. There are no indigenous people in the project area, thus PS7: Indigenous Peoples, is not triggered.

Other PS may become applicable in the future should any new IFC investment in this project have impacts beyond the ones hereby identified.

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

  This project has been classified as a Category B project in accordance with IFC’s Policy of Environmental and Social Sustainability as the environmental and social (E&S) risks and potential impacts are expected to be limited, generally site specific, and can be avoided or mitigated by adhering to generally recognized performance standards, procedures, guidelines or design criteria.

Key E&S issues include Agrofusion’s continued implementation of quality, environmental, health and safety management systems, pesticide and fertilizer management, implementation of food safety programs; water and energy use efficiency programs; labor and working conditions, preparation and implementation of stakeholder engagement plans and traffic management plans and provision of resources for E&S activities. Air emission control and waste/wastewater management are of lesser concern and no major issues involving agricultural operation aspects are to be expected.

 Environmental and Social Assessment and Management System:

According to local regulations, the company was not required to conduct an EIA study. Nevertheless, the company was regularly audited as per its operational licenses and environmental permits. Furthermore, the company has been regularly audited by its international customers and has also successfully complied with a Sedex audit in 2016; the next audit is scheduled for 2019. The company received organic certification for all stages of production in 2017 and confirms the status of Sustainable supplier to Unilever in accordance with the Unilever Sustainable Agriculture Code and Scheme Rules and compliance with URSA (Understanding Responsible Sourcing Unit)

https://certifications.controlunion.com/en/certification-programs/certification-programs/ursa-understanding-responsible-sourcing-audit. The combination of compliance with regulation, successful completion of a variety of customer audits, along with meeting the requirements of several recognized international standards ensures the company continues to assess the risks and impacts typical of its operations.

In summary, Agrofusion has an environmental health and safety (EHS) management system aligned with IFC PS1 requirements and consisting of a corporate level EHS policy and site level procedures for the identification and management of environmental, social, occupational health and safety risks and impacts; emergency preparedness and response; and monitoring and reporting of EHS performance. All processing plants, including greenhouse complexes, have quality assurance management systems certifications compliant with FSSC 22000 (food safety) and ISO9001 (quality) management systems. The existing management system has been enhanced since IFC’s first investment in the company. Agrofusion renewed certification of compliance with previously acquired ISO 14001 (environmental management) and OHSAS 18001 (occupational safety and health) management systems for both farming operations and processing and storage facilities in 2017. The company also has a GMO policy which follows the local legislation and the Cartagena Protocol for Biosafety.

Organizational Capacity and Competency

The company has experienced and well qualified Quality, OHS and Environmental Managers at headquarters and respective technical personnel and agronomists in each of the processing and farming facilities, who are responsible for EHS performance. In addition, the Project Coordinator’s job description includes environmental duties at the corporate level.

Agrofusion has established a training program to provide necessary induction and periodic training on EHS issues for all direct and contractor employees.  The training program is based on the skills matrix and requirements of GMP (Good Manufacturing Practices) principles. Training subjects include PPE (Personal Protective Equipment) usage, job-specific trainings, food safety and hygiene trainings. The company records and reports all training activities, including participants, and revises the plan according to the training needs analysis and according to the outcomes of the training evaluation mechanism. A safety rules booklet is given to all employees and safety rules explained to any visitor/ contractor before entering to the plant site. All relevant staff have been trained on Global GAP and have participated in various workshops .

Emergency Preparedness and Response

Agrofusion has developed a documented emergency preparedness and response plan appropriate to the operational risks and implemented such at each facility including conducting periodic trainings and evacuation and fire drills.

Monitoring and Review

As part of the environmental and safety management system, monitoring, supervising and auditing activities inform the management review of the E&S procedures and performance. Both factories regularly monitor effluent discharge, air emissions, solid waste generation, energy and water consumption, lost time accidents, customer complaints, in compliance with the EHS management system and Ukrainian regulatory requirements.

Reporting of EHS key performance indicators is done as per the requirements of the corporate environmental and safety management system. Agrofusion facilities undergo regular audits within the context of the environmental licensing process and external reporting with regards to EHS activities is provided to relevant national regulatory agencies. The company regularly submits to IFC an Annual Monitoring Report on Environmental and Social Performance prepared in accordance with the IFC’s Performance Standards and WBG EHS guidelines

  Working Conditions and Management of Worker Relationship

As of end of 2017, Agrofusion employed approximately 1124 workers including administrative, technical (processing plants) and support (contracted) staff. As part of its expansion plans, the company will hire ~50 employees from rural areas in the Mykolaiv region. The nature of agricultural production results in the need for additional staff at certain times of the year. The company hires additional workforce on a limited term contract between July and October (4 months) which constitutes approximately 65% of the total plant and field staff. These term contract workers are subject to the same working conditions and terms of employment (including salaries, benefits such as pension and health insurance)  as direct employees as stipulated by the labor legislation and the collective bargaining agreement and receive OHS training periodically. Agrofusion has also implemented a grievance mechanism that applies to direct and contract employees.

The average age is 40 years , with ~30% of the workforce being women, and 20% of women in managerial positions.

Agrofusion employees work in three shifts for two months processing period and overtime work is paid in accordance with the local legislation. For workers, Agrofusion guarantees more than the minimum wage, 5200 Ukrainian hryvnias (~200 USD) per month, and pays more than the average of the regional salaries for the industry. The company also provides other benefits including employee housing, education and health support to its employees including seasonal workers.

Human Resources Policies and Procedures
 

There is a Human Resources (HR) policy at the corporate level aligned with IFC PS2 requirements and each factory has its own human resources procedures in place. Agrofusion operates in accordance with the Ukrainian Labor Code, which covers workers’ working conditions, worker and employer rights, working hours and overtime, benefits, retrenchment, leave, minimum wages, disciplinary practices, the relationships between workers, companies and unions, and other labor issues. These policies and procedures are communicated to all workers and included in the hiring and induction process.

Workers’ Organization

Agrofusion management has stated that there is no prohibition or discouragement of freedom of association and although currently there are no unionized employees; worker’s representatives are selected and a collective bargaining agreement (CBA) is implemented at all facilities. These CBAs cover all workers, including term contract workers, and negotiations are conducted annually.

Non-discrimination and Equal Opportunity

Agrofusion is an equal opportunity employer, and does not make employment decisions on the basis of personal characteristics unrelated to inherent job requirements. The company also complies with the national labor law requirements for non-discrimination and employs a certain number of disabled people as required by the law. Furthermore, the company will prepare and implement a non-harassment policy, including sexual harassment, which is communicated to all workers as per attached ESAP action #1.

Grievance Mechanism

The company has adopted an open-door policy and, as reported; employees can directly communicate their concerns to their respective supervisors and managers. Employee representatives are periodically elected by the entire worker force; these representatives also have established a systematic communication mechanism. The company has placed a number of suggestion boxes at locations throughout the facilities, to allow employees to submit suggestions or complaints.  Grievances are reviewed jointly by the HR department and the worker representatives and follow up is provided for each case. Specifically, for harassment cases, the company will ensure the HR team have expertise to deal with this type of issues and a specific procedure has been implemented as indicated at ESAP action #1.

Protecting the Work Force

Agrofusion’s HR policies prohibit the use of forced or child labor for direct workers, contracted workers and suppliers. As part of the hiring process, HR verifies the age of new employees. For contractors, the company includes specific HR requirements in the contracts asking contractors to verify workers age and ensure  no use of child or forced labor.  The minimum age of employment is 18 years at all plants and agricultural divisions.

Occupational Health and Safety

The company has an a functional OHS system; which is integrated into the quality management system and certified in line with OHSAS 18001 management system.

The company keeps records of incidents in their accident log system and a root cause identification system is in place to take relevant corrective actions effectively when needed. A Permit to Work system has been implemented and is functional for hot works and working at heights and will be extended to electrical works and confined spaces working in July 2018. The company has posted warning signs and implemented other effective means to inform employees of areas defined as confined spaces. External service providers monitor workplace conditions specific to dust, noise (at pump and welder station) and other potential employee exposures to ensure compliance with national and WBG EHS guideline requirements.

Agrofusion’s facilities have detailed maintenance programs for production lines as well as equipment such as forklifts, pressurized vessels, and boilers. Preventive maintenance programs are in place and regularly tracked. Maintenance chemicals, cleaning agents and hazardous materials are labeled and stored appropriately with relevant material safety data sheets (MSDSs).

The company has its own fire department and a fire safety plan has been established according to national legislation. Well trained fire-fighting teams are accessible in every shift. Smoke detectors and fire extinguishers are adequately available. Emergency exits are specified throughout each site and fire drills are performed periodically.

OHS and fire safety trainings are provided to all employees periodically. The company also holds specific seminars on safe handling and use of crop protection products for its suppliers. Outsourced truck drivers receive training for safe driving, speed limits, safe loading/ unloading and safety rules. Medical examinations of the employees are carried out at intervals defined by Ukrainian state legislations. The company closely monitors accident statistics at all its operations covering all workers, including term contract workers. There were no lost time accidents reported in the past year.

Supply Chain

Agrofusion cultivates approximately 25,000 ha of irrigated land. The land is leased either from the government (1%) or individual farmers (99%) on a long-term basis. At present the company has approximately 5.000 signed agreements with individual small farmers; rental prices are set by the relevant state legislative authorities. Approximately 80% of the lands are within a 30-50 km perimeter of the processing plants and nearby the irrigation channels. In 2017 Global GAP certification has been obtained for agricultural units and greenhouse complexes as required by project # 32322 ESAP.

  Resource Efficiency

All facilities benchmark energy and water use.

The company has executed water studies to identify options for reducing water consumption in growing and processing, considering water reuse and recirculation opportunities. Drip irrigation systems have been installed for 100% of the tomato fields. Water is directly delivered to the root system of the plants to provide maximum water update and efficiency by minimizing run off and evaporation. Irrigation water volumes fluctuate between 4600-5000 m3/ ha depending on the soil conditions and rainfall, which are measured and analyzed regularly.

As a result of these efforts it consumes about 1 liter of water per kg of tomato produced, which is acceptable within the industry benchmark; overall water consumption has been reduced by 63% compared to 2011 figures.

Water used in the process is obtained from the municipal network and wells (on one of the processing factories) and treated with reverse osmoses and ultraviolet filtration systems.

The company consumes about 5.53 GJ and 183 kWh per /ton of product (1% less compared to 2016), which also accounts for agricultural activities. Agrofusion aims to continuously improve with regards to energy consumption; projects such as installing frequency converters, improving electricity infrastructure, recuperation of the heat of exhaust air, using gas burners with oxygen control, upgrading economizer of steam boilers from analogue to digital (2% natural gas saving), use of state of the art condensate drainage returns to provide inputs to the steam boiler are all either in place of under consideration.  The company will continue to research potential opportunities for both factories to further reduce its specific consumption.

GHG Emissions

Agrofusion uses the Cool Farm Tool, a tool developed by the Cool Farm Alliance and corporate entities such as Unilever, to estimate the GHG from its operations https://coolfarmtool.org/. Based on the data provided by the company, Agrofusion operations generated in 2017 an approximate total of 54,820 tons of equivalent CO2 from the following sources: electricity, and fuel consumption for transportation. The company has reduced its equivalent CO2 emission per ton of production by 5.2% since 2012.

Air Emissions

The company operates four well maintained natural gas fired steam boilers for both facilities. NOx measurements are compliant with both Ukrainian regulatory limits and WBG EHS guideline requirements (Maximum measured NOx= 120.7 Nmg/m3). Emissions measurements are performed every five years according to local legislation. 

Wastewater Treatment

All tomato processing facilities have state of the art biological waste water treatment plants; sanitary waste water and industrial waste water is treated separately. All parameters follow Ukranian regulatory limits.  Since the treated process waste water is used for irrigation of the fields, WBG EHS Guideline for Food and Beverages Processing waste water discharge limits to surface waters does not apply.  .  (Maximum measured pollution parameters; BOD (Biochemical Oxygen Demand, COD (Chemical Oxygen Demand) and TSS (Total Suspended Solids) 28 mg/l ,75 mg/l, 46 mg/l respectively)

Solid Waste Management

Solid non-hazardous waste and hazardous waste management at both Agrofusion factories visited are in general adequate, involving measures to reduce waste generation and ultimately waste segregation. Non-recyclable waste produced on site is temporarily stored by type, capacity and physical state in the appropriate containers or barrels and treated in accordance with the provisions set under the regulations on the disposal of waste from production processes. Tomato residue is used as fertilizer in the fields. The company reached 95.5 recycling ratio in 2017. Hazardous waste includes used accumulators, fluorescent lamps and waste oil are handled and disposed separately in line with local legislation. 

Pesticide Use and Management

The company has a well-managed Pesticide Management Plan for field operations which covers areas of pesticide selection and handling, application and storage, staff training, safety requirements, and disposal, consistent with national laws and regulations and World Health Organization (WHO) technical guidelines. Pesticides classified as WHO Class 1a (extremely hazardous) and 1b (highly hazardous) are not used in any of the company’s fields. During the irrigation process, mineral fertilizers are applied through the irrigation system (fertigation) choosing the optimum rate of fertilizers depending on the soil and growth conditions. In addition to online weather/ soil communication devices, the company started to install pilot weather observers to improve field management capacity.

  Community Health and Safety

There are no immediate households or neighbors in the vicinity of either of the facilities. The potential community health and safety impacts associated with Agrofusion’s operations include food safety, emergency preparedness and response. Aspects related to food safety management and emergency response and preparedness plan have been discussed under PS1.

Security Personnel

The company employs licensed and unarmed security personnel at all sites contracted from a private company, who are regularly trained and certified as per the Ukranian requirements.

Raw materials and finished products are delivered in bulk via outsourced trucks. The company uses a logistic control IT program to control trucks from field to the factories. Furthermore, as set forth in the ESAP (item #2), the company will ensure that adequate internal controls are in place to ensure that vehicles and trucks entering and leaving company facilities are well tracked and in good condition. The company will ensure that traffic rules and vehicle maintenance periods are strictly followed by its outsourced distribution fleet.

 Agrofusion engages in ad-hoc and informal community engagement through various social responsibility projects, one of which is a Social Partnership Program for the Community which is a voluntary agreement with community members in the project locations. Within the scope of this program, the company financially supports local communities and land owners (from whom plots are leased) in case of a family health emergency or specific scholarship needs.

Agrofusion, in line with the ESAP will continue to develop and formalize its current activities into a Stakeholder Engagement Plan (SEP). This SEP will support Agrofusion’s strategic engagement with relevant stakeholders through the identification of key stakeholders and more proactive communication. The SEP will also include the readily available external grievance mechanism mentioned below. The SEP will be reviewed periodically during implementation and will be updated as necessary to ensure effective ongoing engagement.

External Communications and Grievance Mechanisms

Agrofusion has an active grievance mechanism for customer complaints and regularly monitors the number and root cause of complaints and under the scope of GMP and food safety management system. Traceability practices and product recall procedures are available in case of any need. As stated in the ESAP #3, the company will broaden the scope of this grievance mechanism to allow communication with other relevant stakeholders and communicate its existence.

  Farm Enterprise “Integrated Agrosystems”

25 Moskovskaya Street., Gola Prystan

Goloprystansky  region, Khersonska oblast

75600, Ukraine

Anna Markovskaya
Project Coordinator, Agrofusion
a.markovskaya@inagro.ua
T/F:+380512 587901 (1118)

www.inagro.ua