PS6: Biodiversity Conservation and Sustainable Management of Living Resources (to the extent that requirements relate to primary production); other PS6 requirements are not applicable. See below.

PS5: Land Acquisition and Involuntary Resettlement, the remainder of PS6 Biodiversity Conservation and Sustainable Management of Living Resources requirements are not applicable and PS7: Indigenous Peoples, and PS8: Cultural Heritage are not applicable for the following reasons; the farm will be acquired in a willing buyer/willing seller transaction (resulting in the transfer of the Duat from the current owner to WFM), and is devoid of any type of settlement or economic use other than that related to the previous owner’s farming activities; IFC used GIS to map the location of the farm against known International Union for Conservation of Nature (IUCN) Categories I – VI, World Heritage Sites, Ramsar Sites, Key Biodiversity Areas and Biodiversity Hotspots with the result that none of these occur in the area of the Pegacho Farm; PS7: Indigenous Peoples is not applicable as there are no IPs in Mozambique, and PS8: Cultural Heritage is not applicable as the farm has long been used for agricultural purposes and is devoid of cultural heritage.                                               

  This is a category B project according to IFC’s Environmental and Social Sustainability Policy because the project is expected to generate limited and site-specific E&S impacts that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Material E&S risks and impacts include the following: those associated with the management of the labor and working conditions of a large, sometimes seasonal, workforce (estimated at some 300 people at peak production levels) including matters related to Gender and OHS; the efficient maintenance and/or consumptive use of natural resources (including soils, water and other inputs required for plantation agriculture); the need to properly design, build and maintain an earthen dam for the purpose of water storage to be used for irrigation; and, the appropriate provision and management of those involved in security and safeguarding the company’s assets.                                                  

   Policy

HMH has long operated according to Global GAP principles and standards as well as relevant other local legal requirements. Westfalia has long had a policy that referenced general provisions of its business and environmental sustainability as well as social responsibility. As a requirement of previous IFC investments, Westfalia enhanced its policy which applies to all Westfalia subsidiaries, ensuring commitment to respecting local law, Global GAP principles and IFC Performance Standards. Westfalia avocado orchards and processing facilities are certified under a mix of Global GAP, BRC Food Safety, HACCP, Nature’s Choice, SIZA (Social Initiative ZA) and Fair-Trade Standards, according to location of the operation and specific market demands. For example, the operations centered on Zembe are certified to Global GAP. Details on the above, and many other  aspects of the approach to sustainability within the company can be found at https://www.westfaliafruit.com/about-us/our-sustainability-story/

Identification of Risks and Impacts

The feasibility of the Catandica project and the associated risks and impacts, specifically the acquisition of Pegacho farm and its ability to support plantation agriculture envisaged by WFM (soils suitability, water availability and potential for irrigated plantations) was first assessed in 2016. Subsequent reports studied the type and location of the dam to be constructed.

The results of the first assessment are presented in the report entitled Pegacho Farm Preliminary Resource Assessment - Soils, Hydrology and Irrigation (April 2016). The report describes the farm site as being between 606 and 707 meters above sea level, located against the eastern foothills of the Serra Choa, with two small rivers flowing through it (the Nhamburu and the Nhamuca) originating on the east facing slopes of the Serra Choa mountains. Neither river has sufficient year-round flow to support run-of-the-river irrigation, hence the need to construct a dam to impound enough water for irrigation. The Nhamburo River (the larger of the two) has a catchment of 19.8 km2 at the farm’s downstream boundary, giving a potential mean annual runoff (MAR) volume of 3960 ML at unit run-off of 200mm.

Prior to the date of the study, 385 ha, or 40%, of the farm property (total land area of 954 ha) had been cleared by the previous owner to accommodate arable farming and grazing. Clearing exposed gently sloping soils now judged to be capable of supporting plantations. The remaining land was made up of existing small dams, woodlands, scrubland and wetlands associated with the rivers. The project when fully planted will require approximately 530 ha of land (or 56% of the total farm area). Existing dams were judged to be capable of irrigating just 25ha of farm land; hence, the need to construct a larger dam on-site on the Nhamburu river. Development of the planted area will be in phases; phase 1 will develop 100 ha of avocadoes and phase 2 the rest of the developable land. Likewise, the dam will be built in stages; firstly, it will be created in 2020 (to impound enough water to irrigate 200 ha of avocado plantations) and then the dam wall will be raised in 2024 up to a height of 15m. Laboratory analysis determined that water quality is suitable for use in irrigation as it has very low salt levels not expected to cause soil salinity. Fertigation will be employed with fertilizers being added to the main lines of the irrigation system and subsequently applied to the avocado trees along with the water. WFM’s existing avocado plantation at Zembe employs microjet sprayers; Catandica could employ the same or utilize an even more efficient drip irrigation system. Factors such as increased management and oversight of drip as opposed to the more robust microjet system, and the concentration of iron in the water (drip being more sensitive to even slightly elevated iron levels), will determine what system is ultimately employed at Catandica.

Potential impacts upon other water users have been assessed as part of the overall hydrological study and are judged to be absent. The river to be impounded only has a short distance to travel (approximately 750 m) after leaving the farm property before joining another larger river just before it passes under the main road between Catandica and Tete. The land adjacent to the Nhamburu river, as it traverses these 750 meters, is owned by a single landowner who is currently growing maize; there is also a small litchi orchard on their land. Neither of these crops are irrigated. Regardless, as the earthen dam to be built on the farm site will have associated seep, the river will not completely dry up following completion of the dam (as it does now in the dry season). Therefore, the presence of the dam is expected to provide for a small increase in year-round flow particularly in the driest period of the year. The main user of water resources in the area, the town of Catandica, is located to the south of the farm, and obtains its water from separate rivers; as such, the use by the farm of some of the water in the Nhamburu River is not expected to impact any other users. The safety of the dam, and matters related to its design and construction, and the matter of a dam safety management plan, are discussed in PS4 below.

Other infrastructure needs of the project are employee and management housing, a nursery, a workshop, a borehole to provide domestic water and access roads and tracks within the farm. Power will be supplied via a line from the adjacent Electricidade de Moçambique (EDM) 220kVa line and stepped down using transformers to run the irrigation system, and for use in the workshop and accommodations. The property has an intact perimeter fence in place but will be strengthened as part of the project to prevent any movement of livestock in to the farm which would affect the avocados.

Transport from the Zembe farm to the packhouse in Chimoio is undertaken by local transport companies. Transport from the packhouse (internationally, to South Africa) is managed by Westfalia Marketing services. No problems with these arrangements have been experienced at Zembe and similar arrangements have been in place from Chipinge in Zimbabwe for 20 years. The same arrangements will be put in place for the Catandica project.

The company currently complies with all local laws and regulations for its Zembe and Chimoio operations which includes those pertaining to environmental, land, and labor matters. In addition, the Chimoio packhouse is approved by the South African Department of Agriculture, Forestry and Fisheries (DAFF) for supply of avocados and litchis into South Africa. Note: Litchis are sourced from out growers in the Catandica area; see below for more discussion on Litchis and their relationship to this project. Permits required for Catandica will include a water permit from ARA Centro, a dam construction permit and an Alvaro (operating license) for Catandica farm. The Alvaro is required before operations start, and the water license is required before any water can be abstracted (or impounded by the dam).

A risk assessment for both the farm development and the construction of the dam is required as per Mozambique regulation. The investigations, which involved 2 visits to the farm to be acquired, were completed as of Tuesday 26th March; no issues were reported based on those visits and the authorities have indicated to the sponsor that they will be receiving the required certificates in due course. As per Mozambique law, the certificates can only be issued in the name of the current DUAT holder.  Should the certificates be issued as the time of writing this report, they would have been in the name of the current land owner/duat holder. Therefore, the company is waiting until the transfer of the duat is complete and at that time the certificates will be issued in WFM’s name.

Gender and Gender-based violence (GBV) Risk

IFC screened the potential investment using its Gender and Gender-based violence screening tool. This tool combines values for country-level violence, legal context, gender norms and beliefs, national level capacity to respond to Gender-based violence and poverty rate with project specifics such as length of construction associated with the project, levels of labor influx, community consultations, existence of military or private security forces, project location, possibility of female employees working in remote locations and/or in close proximity to male employees with limited supervision. The combination generates a total risk assessment rating. For this investment, the rating was deemed to be moderate. The client will ensure that matters of gender are overseen by senior management and that any change in the project that could have an impact on Gender of GBV are assessed prior to such changes being accepted.

Contextual Risk

Since IFC’s WFM investment in Mozambique in 2014, the country has experienced many challenges. The renewed fighting between Renamo and Frelimo created some security issues in 2016/17, however, the WFM operations were not affected.  A peace agreement was signed in 2017 and has been respected since. Mozambique went through peaceful municipal elections in October 2018 and presidential elections in 2019. Should the political risks increase, the project could be slowed down; however, there have been no signs of politically-related violence in the Manica Province since the death of Afonso Dhlakama (the leader of Renamo and an opposition leader).  Westfalia’s stakeholder engagement with local communities has led to good relations with local communities which the company sees as a key element in mitigating such potential civil/community risks. See also comments below re support to litchi growers.

In summary, the feasibility/risk assessment conducted to date addresses the material risks associated with a farm development project of this type.

Supply chains

There are no supply chains currently associated with this investment as it remains at the earliest of development phases. It is possible in time that a few out growers may supply avocadoes to Westfalia to supplement those grown on their own plantations. They would then be processed at the packing house in Chimoio. If this occurs then the supply chain requirements of the Performance Standards will apply, and Westfalia will manage those accordingly.

With regards to litchis, Westfalia has been helping local farmers since 2015 to develop skills and techniques regarding growing litchis, and then providing a channel for the litchis to be sorted, processed, packed and exported using Westfalia facilities and expertise in fruit marketing. In effect, Westfalia have helped to create a new economic activity in this part of Mozambique and has enhanced livelihoods for many farmers in the region. As part of this effort, Westfalia has worked with the litchi growers and has helped them achieve Global GAP and GRASP certification for litchi production. This promotion of professionalized litchi cultivation has recently been aided in part by a World Bank grant that will support the development of basic, gravity fed (run-of-the-river) irrigation to be installed by Westfalia which will further promote yields from these small holders, as well as expand the cool chain and promote preservation of fruit to attain higher prices in premium markets. Whereas the production of litchis by small holders is not subject to any finance by IFC under this investment (proceeds being limited to the development of the Pegacho farm), the ongoing availability of the packhouse (as supported by IFC’s project #34183) will allow for the overall long-term success of the litchi venture in and around Catandica.

Management Programs

As this project is ostensibly a combination of a ‘brownfield’ and ‘greenfield’ development, i.e. it is the development and planting of avocado trees upon already cleared farmland and the development of an additional approximately 145 ha of as-yet uncleared land within the existing boundaries of Pegacho farm, there is very little currently in place in terms of assets and/or management programs. When IFC visited the Pegacho site in September 2018 (prior to any transfer of the Duat) it was staffed by a few employees, responsible for security of the standing assets, some minor bush clearing/maintenance, etc.; beyond that, there was no meaningful economic activity taking place. When farm development begins, and on through the early days of operations, the activities will be managed by Zembe farm managers and WFM’s GM. In time, as the footprint of the Pegacho farm grows, new management will be required. This is due not only to the size of the proposed Pegacho operations but its distance (some 120km) from Chimoio/Zembe operations.

The current WFM operation at Zembe/Chomoio utilizes Westfalia’s management programs including site management plans, that work to minimize E&S risks. For example, Westfalia has formal written operational procedures regarding management of waste, possible impacts upon wildlife, OHS management, and energy efficiency management plans and programs. Following the first IFC investment in WFM, the company developed and implemented management/monitoring programs specific to the operations in Mozambique. They enhanced practices covering, among others, soil conservation, water use and integrated pest management (IPM), biodiversity conservation, solid waste management, stakeholder engagement, a resettlement action plan (as a few households were to be moved as part of the Zembe farm development) and management of the supply chain. In short, they addressed material elements of an Integrated Environmental and Social Management System, consistent with IFC Performance Standards (PS) requirements.

The efficacy of these operational procedures was seen during the September 2018 visit to Zembe farm and is further demonstrated in the maintenance of certification to Global GAP for avocado production, which addresses many material risks and impacts of such a plantation and processing operation. That September visit included a detailed tour of the plantation, the irrigation system and point of extraction from the Revue River, downstream of the Chicamba Dam, a review of IPM practices, working conditions in the plantation, and chemical storage and application equipment found at the farm warehouse/administrative area. The packhouse and company offices were also visited; meetings were held with key staff and management, including the General Manager for WFM, the Zembe farm manager, those responsible for both HR and oversight of certifications and the supply chain. The combination of the visit and the interactions with the staff confirmed to IFC that the operation was being managed in accordance with the requirements of the IFC PS. The same level of oversight and management will be required of the Catandica operation; this is addressed in the ESAP. For example, both SMETA (https://www.sedexglobal.com/smeta-audit/) and Global GAP (https://www.globalgap.org/uk_en/for-producers/globalg.a.p./integrated-farm-assurance-ifa/crops/FV/) will be applied at Catandica.

Organizational Capacity and Competency

As noted above, Zembe and Chimoio operations are overseen by competent professionals. These individuals will play varying roles in overseeing the initial construction and operation of the Catandica project while maintaining their roles at Zembe. In time, they will either be transferred to the new farm, or their transitional roles replaced by staff and management hired specifically for Catandica. This combination of skills transfer (from Zembe) and new hires will ensure that enough competent individuals are available to develop Catandica to its full potential. Salaried positions needed at the Catandica farm are projected as follows: farm manager, farm manager’s assistant, HR/EHS manager, HR assistant, as well as those responsible for financial matters (such as accounting, etc.). There will also be a need for 8 individuals, on monthly salaries, to provide security.

Specialist technical roles have been outsourced to qualified and competent professionals who have a great deal of experience in their respective roles in the Southern African Development Community (SADC) region of Africa. These include those involved in the hydrological and soils feasibility study and that of dam design and proposed construction.

Emergency Preparedness and Response

Following Global GAP requirements, WFM has put in place emergency plans covering different possible scenarios such as fires, chemical spills, and medical emergencies. Plans include emergency contact numbers and communication procedures, the types of emergency equipment required and steps on the execution of emergency response procedures. Catandica will adopt a similar approach.

Monitoring and Review

Westfalia has its own monitoring program that is responsive to both Global GAP and the relevant IFC PS. For example, Westfalia monitors the consumption of inputs and determines efficiency of such use for water, fertilizers and agro-chemicals (e.g. normalizing inputs against tons of outputs). They also track CO2/tons produced and energy used per tons produced. They also monitor and measure matters related to worker health and safety including OHS accident rates (LTIFR), accident free days and number of days since last recordable injury and staff retention, number of FTEs and/or contractual workers. Other performance indicators are tracked, such as for waste volumes generated, effluent discharges, summary of soil conservation practices, summary of pests/weeds/diseases and IPM practices, and biodiversity conservation practices. Westfalia conducts periodic self-assessment and external due diligence, according to Global GAP standard requirements. See relevant sections below for indicative results.

   Working Conditions and Management of Worker Relationship

Human Resources Policies and Procedures

As part of the IFC investment in WFM in 2015 WFM adopted and adapted the policies of HMH, including a general HR policy and a code of ethics, to their operations to ensure they are responsive to both HMH policies and the requirements of Mozambican labor law and regulation. Such policies cover terms of employment, such as wages and benefits, hours of work, overtime arrangements and overtime compensation, annual and sick leave, maternity, vacation or holiday, non-discrimination, sexual/moral harassment, work/life balance and conflict of interest. All WFM workers are provided with a copy of the terms of employment, in which all relevant information is described, including that referenced above, hiring period, compensation, leave, promotions, salary increases and termination of contract procedures. As such, current HR practices are judged compliant to the requirements of the Performance Standards. The same practice found at Zembe and Chimoio will be replicated and managed at the Catandica operation. This is addressed in the ESAP.

Projections of the number of individuals needed for the Catandica farm vary according to year (as the project develops from greenfield/brownfield to full operations). In the beginning (2019), a total of 66 people will be required (2 permanent/salaried, 64 on term contracts with monthly wages, 0 temporaries); by 2020 those numbers become 3, 81 and 0 (totaling 84). At full operations in 2028, 10, 154 and 136 (for a total of 300) will be employed. Given that Portuguese is not spoken by all, farm managers are required to be fluent in Manican, a local dialect of the Shona language.

Workers’ Organizations

As defined by Mozambique legislation, workers have the right to form and join workers’ organizations of their choice. Annual salary increases, sector specific minimum wage, profit sharing and some benefits can be bargained directly with the unions under collective bargaining agreements, but respecting the minimum standards defined by the Federal Administration. Currently, 47% of HMH workforce and 24% of Westfalia’s is unionized. Union representatives work for both HMH and Westfalia and there is no indication that the group restricts freedom of worker’s association. This approach will similarly apply to WFM’s operations at Catandica.

Grievance Mechanism

WFM has adopted the HMH approach regarding a formal internal grievance procedure. This procedure is a part of its general HR policy and includes periodic communication with workers’ committees (on matters such as OHS, accommodation, etc), provision of a grievance form and an external phone line to raise matters related to the code of ethics. This element of managing worker relations will be extended to those engaged at Catandica.

Non-Discrimination and Equal Opportunity

Non-discrimination, equal and fair treatment and general labor rights are defined by Mozambique Labor law. As noted above, the project when fully operational will employ 300 people. The company is planning to promote qualified workers, who have proven themselves at Zembe, to new positions at Catandica. Temporary workers will be hired locally. Opportunities will be based on ability to undertake the work and nothing else.

Protecting the Work Force

Neither child labor or forced labor will be utilized by the company at Catandica. All workers, including temporary workers, will be hired directly; there will not be any use of intermediaries. Minimum age in Mozambique is 18 and age of potential employees is confirmed before any offer of employment is made. Further, child labor is not permitted by GlobalGap, SMETA and GRASP accreditations. (Details on GRASP, the GlobalGAP Risk Assessment on Social Practices can be found at https://www.globalgap.org/uk_en/for-producers/globalg.a.p.-add-on/grasp/

As such, child labor and forced labor is checked for during audits/assessments associated with the above certifications.

OHS

The HMH Group reported an LFIFR of 2.6 in 2018 (per 200,000 hours worked). This figure is for all Group activities: sawmilling, forestry and agriculture and can be considered slightly on the high side (compare benchmark rates for forestry and logging at 10.5 and fruit and tree nut farming at 11). Westfalia Fruit Africa, however, reported an LTIFR of 2.19 per 200,000 hours worked, equating to 10.95 per million hours worked. This rate compares favorably with benchmarks.

The recent visit to the Zembe farm confirmed that it was being well run; and that the combination of the requirements of the IFC PS and those of Global GAP had led to good performance regarding matters of OHS management. When problems did occur, they were dealt with. For example, incidents of snake bites, experienced in the past by workers in the orchards, had been addressed through use of gum boots. The most recent reporting to IFC from the Zembe operations showed no lost time incidents.

  Resource Efficiency and Pollution Prevention

Resource Efficiency

The client will implement technically and financially feasible and cost-effective measures for improving efficiency in its consumption of energy, water, as well as other resources and material inputs for its core business activities. Details are provided below.

Water Consumption

The plantations will receive both rainfall and irrigation. This part of Mozambique experiences 1580 mm of rain a year. Studies had indicated that Pegacho Farm has the added advantage of reasonably high water-holding capacity soils which increase rainfall effectiveness. Effective rainfall, that being available to the trees, was modeled (using the USDA Conservation Service formula) at approximately 930 mm/yr. Additional measures such as mulching and improving soil structure will increase rainfall infiltration rates and reduce runoff. When the trees do not receive enough water from rainfall, their needs will be supplemented by irrigation. Amounts to be applied will be assessed using tensiometers or their equivalent. That information will be combined with weather data to most accurately determine the amount of water to be applied.

Water demand for avocadoes in this part of Mozambique were modeled in the Preliminary Resource Assessment using FAO cropwat using expected tree density within the plantations. Modeled results indicate peak irrigation need will be in the month of October (when 5mm/day will be required; equates to 50 m3 per hectare per day) and a total yearly need was modeled at 580 mm or approximately 5.8ML/ha/yr (note: 1ML = 1000 m3). To put this need in context, the Preliminary Assessment reports annual irrigation crop water requirement estimates for avocados grown in other parts of the world. For example, those grown in the Nelspruit area of Mpumalanga (South Africa) require between 5.2ML and 6.6ML/yr for Hass and Fuerte varieties respectively. Those grown in Israel require 6.68ML/yr; those grown in the Margret River area of Western Australia need 6.8ML, and those in California, USA 7.78ML/yr. It should be noted that these studies often pre-date advances in modern irrigation scheduling; such innovations have driven down water requirements for growing avocadoes of late in many places in the world. For example, at Westfalia’s own operations in Tzaneen, South Africa, an area that receives less rainfall than that of Catandica, usage is around 2.8ML per ha per year. As can be seen, the expected rate of application in this part of Mozambique compares favorably with other areas of avocado cultivation around the world; those rates will further be enhanced using modern scheduling developed at Tzaneen when combined with efficient technologies used to deliver the water to the trees. For example, microjets, which can deliver between 85-90% of the water to the root zone will be utilized in conjunction with variable speed drive pumps to reduce water and energy needs.

Pest Management

Pest and diseases regarding avocados in Mozambique are currently similar to those experienced in growing avocadoes in South Africa with some variation due to the difference in climate and location. Westfalia Marketing maintains a team of qualified agronomists with a range of expertise who provide services to its fruit suppliers, including WFM. These services include assistance in the management of the pests and diseases, fertilizer recommendations, irrigation scheduling, and matters of general orchard management. The objective of the technical team is to maximize yields of good quality fruit while focusing on the available resources. IFC interacted with members of the technical team while visiting Westfalia operations in Tzaneen and discussed the various practices commonly applied at Westfalia plantations. For example, scouts are used to detect infestations so only targeted applications are required. False Coddling Moth (FCM), one of the key pest species for avocadoes, is controlled through use of a mating disruption pheromone. Fruit flies are controlled using pest traps. Insect counts are digitally collected using iPads; records are interpreted to hone the IPM practice and to feed a farm dashboard to manage the overall IPM process. Such practices were observed during the September 2018 visit to the Zembe farm and will be replicated at Catandica.

When needed, pesticides will be applied by trained operatives. Only a small number of pesticides are used; none fall in WHO pesticides hazard classification system class I(a) or I(b).

Hazardous materials and wastes

WFM stores small amounts of chemicals on the farm; such storage is consistent with WBG EHS Guideline requirements and those of Global GAP. Facilities are equipped for dealing with spillages and the appropriate personal protective equipment is available when chemicals are used. Diesel tanks have secondary containment to avoid spills and empty chemicals containers, liquid and solid non-organic wastes, including fuel and oil are disposed in an environmentally appropriate manner at off-site locations. Such practices were observed at Zembe. Catandica will adopt a similar approach to hazardous materials management.

Energy consumption

Catandica will run its operations using electrical power supplied by EDM. Efficient use of this energy will be ensured through use of good practices, such as those already utilized at Zembe. For example, use of variable speed drive pumps will minimize the amount of energy required to properly distribute irrigation water to the orchards. As part of the farm development to occur at a later date, WFM will consider solar power production which could be used to lessen the reliance upon power from EDM.

Greenhouse gas emissions

The Westfalia Group generated 39,955 t of CO2 equivalent in 2018 equating to 0.003 t/CO2 per4kg of fruit produced. The existing operation at Zembe produced 419 tons equivalent in 2017 (from 250 ha of avocadoes). The operation at Catandica will generate similar levels of GHG. Most of the electrical power generation in Mozambique is from hydro-electric projects; transport accounts for the rest of the GHG produced. Regardless, once the operation has commenced, Catandica will calculate its equivalent GHG and report them to IFC.

Effluent and waste

Zembe and the packhouse manage their solid wastes according to Global GAP and BRC Food Safety standard requirements in conjunction with WFM’s waste and pollution protocol. Organic plantation waste is composted and used in the orchards to supplement soil quality. Solid waste is segregated; empty chemical/pesticides containers are returned to suppliers for proper disposal/recycling, used oil is delivered to a recycling center, used tires are returned to suppliers for recycling. Non-recyclable domestic waste is collected and burned. Similar practices will be applied at the Catandica operation.

Effluents at Catandica will be limited to those from accommodations to be located on the farm. Such effluents will be disposed off using septic fields. There will be no point source air emissions from farming operations. Intermittent use of back-up generators may be required; these generators will be small units, below the threshold that would require monitoring under IFC’s EHS Guidelines. 

  The objectives of this Performance Standard pertain to how a company interacts with local communities and works to anticipate and avoid adverse impacts to them that stem from project activities. It concerns how a company designs and operates their project as well as how a company makes arrangements regarding security in order to protect their assets.

Although the Catandica farm is in a more remote part of Mozambique than Zembe, the farm is not isolated. The farm is on the main tar road which leads from Chimoio to Tete (referred to as the Tete road) and is within 2 kilometers of the town of Catandica. South of Catandica, the Tete Road was subject to some security issues in 2016.  No further issues have been experienced since March 2017. The rule of law prevails in Mozambique, and WFM management believes land invasions is a low risk.

WFM’s current operations rely on their own non-armed security personnel to watch over their properties/assets and to prevent wood/fruit robbery from the orchards. This issue is not expected to be a problem in Catandica given the existence of a perimeter fence. The security strategy will incorporate monitoring (use of cameras) and communication technology to contact public security forces, if needed. As noted elsewhere in this document, WFM conducts periodic meetings with community representatives as well as with workers, where grievances can be raised. Catandica will adopt the same approach.

The fruit to be produced at Catandica is intended for export. They will be trucked to Chimoio and then put on refrigerated trucks to be driven to South Africa. Westfalia Marketing has long worked with international trucking operators using high quality vehicles that are operated in a way as to not impact communities. The same arrangements will be utilized form fruit originated at Catandica.
 

Food Safety

Mozambique as a country of origin is allowed to export its avocados to Europe. For each shipment a Certification of Origin, Phytosanitary Certificate, and Customs inspections are required, among others. The fruit is required to be certified to Global GAP and SMETA which provides assurance regarding food safety.

Dam design and safety

The potential site, type and size of the dam to be constructed as part of the farm development was first assessed as part of the feasibility study. Based on those initial results, a Zimbabwe-based consulting company that reports itself having over 30 years of experience in the design and construction of small to medium-sized dams, reservoirs, irrigation schemes, pump stations, and hydro-electric power schemes was hired to further assess the design and location of the dam.

The preliminary dam design report states that the best solution to irrigation supply is a single dam to be constructed in two phases. Phase one will impound enough water to irrigate up to 230 ha (from a yield of 900ML). This would result in a dam that is 9m deep (i.e. a small dam). Phase two would raise the dam wall to allow for a yield of 2300ML to irrigate up to 530 ha. This would result in a dam that is 15m deep.

As noted above, a water permit for usage and storage agreements will be required from ARA Centro. This risk assessment, and where they company is in obtaining it, is described under PS 1 above.

To ensure the safety of the dam, and life and property downstream of the dam, the company shall engage an external expert to assess the safety of the proposed design of both phase one and phase two of the Catandica farm project dam against Good International Industry Practice (GIIP). The assessments will use risk-based criteria, drawing as necessary from those listed in Annex A of Guidance Note 4 (dated January 1, 2012) and will include model analysis, as a basis for developing a dam safety action plan for both phases. This is addressed in the ESAP. 

  The primary production/sustainable management of living natural resources requirements of this PS apply to this investment. WFM will therefore implement sustainable management practices to one or more relevant and credible standards as demonstrated by independent verification or certification. Zembe is certified to Global GAP; as such, it is expected that operations at Catandica will likewise be certified once operations are at a suitable state. This is addressed in the ESAP.

  Westfalia has mapped its stakeholders. Categories include management, employees, government, customers, customers-foundations, suppliers, partners, communities, the general public, industry bodies and accreditation bodies. Responsibility for managing these relationships has been designated, as has the frequency of interaction, what form that interaction may take (monthly meetings, calls, emails, etc.), what related information and/or documents may be produced and shared with stakeholders and what underpins the organizations objectives vis a vis the different categories of stakeholders.

Specific actions undertaken by WFM include engaging in technical matters regarding better farming practices as well as monthly meetings on general matters. They provide packing and marketing services to litchi smallholders. They also perform farm visits and provide technical advice on fertilizers and all other aspects of growing avocados, free of charge. WFM has also trained and assisted smallholders, allowing them to obtain the accreditations required for exports to Europe (e.g. Global GAP), also at no cost.

In Mozambique it is a legal requirement to have monthly meetings with community and political leaders. Minutes of the meetings are kept as well as records of any complaints and issues raised. The minutes are signed. This is undertaken by WFM’s HR Officer and overseen by the production manager and general manager.

Concerns about the commercial impact of the new farming operation at Catandica on the local communities were raised at one of the litchi growers meetings. Members of the local community were concerned that Westfalia would plant litchis at Pegacho farm that would compete with their own product. WFM management explained that commercial planting of litchis is not part of the farm development plan; if it were to occur in the future, it would only be done to ensure suitable volumes are being produced in the Catandica area that would allow for full commercialization of the product (i.e. meeting minimum amounts to ensure transport is efficient and affordable). The local communities were also consulted on the WB grant which will be used to fund irrigation schemes for the litchi growers.

Westfalia regards that relations with surrounding communities is one of the most important aspects of operating successfully in Mozambique (see note on contextual risk above).

 Zac Bard 

Executive manager 

9 Eton road, Parktown,

Johannesburg 

Zacb@westfaliafruit.co.za

Www.westfaliafruit.com