PROJECT

Projects

Environmental & Social Review Summary

Project Number

44471

Company Name

AGFLOW VENTURES

Date ESRS Disclosed

Feb 1, 2021

Country

Ethiopia

Region

Africa

Last Updated Date

Mar 8, 2022

Environmental Category

B - Limited

Status

Active

Previous Events

Approved : Mar 29, 2021
Signed : Jun 9, 2021
Invested : Feb 25, 2022

Sector

Poultry Farming

Industry

Agribusiness and Forestry

Department

Regional Industry - MAS Africa

Project Description

  Established in 2010, EthioChicken (the “Group” or “AGP Poultry PLC” or “EC”) is the largest day-old-chick (“DOC”) and feed producer in Ethiopia focusing on selling these poultry input products to rural farmers. In 2019, EC sold 20M DOCs and 42K tons of poultry feed to 4 million farmers nationwide through 6,200 rural sales agents (typically youth entrepreneurs). The agents grow the DOCs for 6-8 weeks and sell the young chicken primarily to rural households who grow the chicken further to produce meat and eggs.

 

Currently the Group has eight (8) poultry breeder farms (Mekelle, Andasa, Gubre, Attat, Holeta, Sodo, Werabe and Emdibir), four (4) hatcheries (Adama, Mekelle, Gubre and Andasa) and two (2) feed mill plants (Gelan and Burayu) in four regions of Ethiopia (Tigray, Amhara, Southern Nations, Nationalities and Peoples' (SNNP), and Oromia regions). Half of the farms were regional poultry multiplication centres under Bureau of Agriculture in their respective regions. They represent 38% of total parent stock placement capacity. In 2018, IFC Advisory started engagement with EC on (i) farm/hatchery productivity improvement; (ii) capacity building of rural sales agents; and (iii) strategy for regional expansion resulting in significant improvements.

 

IFC is considering a USD 10 million loan to support further growth in its business. This includes investment in two (2) breeder farms, adding 120,000 bird capacity, and a hatchery to support regional sales growth. The project also includes the financing of additional breeder parent stock to support the capacity increase. (the “Project”). EC has identified two suitable sites: Blue Nile farm in Amhara and Sodo II farm in SNNP regions.

                                                 

Overview of IFC's Scope of Review

 The project was considered eligible for virtual appraisal in the midst of COVID-19 pandemic, and Environmental and Social (E&S) appraisal was conducted between 2–11 November 2020 and included (i) a virtual meeting with the EC management team, including the Managing Director and Directors for Environmental Health, Safety and Social, Business Development, Human Resources, Feed Production, Sales and Marketing, Finance, Logistics and Procurement; and third-party suppliers for maize and soya. No site visits could be conducted by the IFC team considering the current travel restrictions due to COVID-19 pandemic. However, a national consultant was recruited to conduct an EHS audit, including assessment of working conditions, interview small scale maize farmers, review EC’s land acquisition procedure, visit the proposed greenfield breeder sites and review the biosecurity, animal welfare and use of antibiotic manual. IFC will visit the Company’s assets as soon as the COVID travel restrictions are lifted.

 

Review of key documents provided by EC, including detailed responses to the IFC’s E&S appraisal questionnaire, environmental, occupational health and safety (EHS) policies, Standard Operating Procedures (SOPs), and EHSS weekly updates; EC Contractor EHS compliance Contract Agreement; Emergency preparedness and response procedures; internal Human Resource (HR) management policy and procedures, including contract with employees; energy and water consumption and efficiency, hazardous materials and spill management plan, land acquisition / leasing procedure, Global GAP certificates for some operational facilities, bio-security manual, Humane Culling Procedure, Welfare Audit for Broilers Breeders and Welfare Standards for Hatchery and Breeders, and Stakeholder Engagement, Communication and Grievance Management Plan.

 

The proposed two new breeder farms will be on land previously used for animal grazing, considered modified habitat without significant biodiversity value, with no known historical and/or cultural heritage sites. An IBAT analysis was carried in September 2020 for Sodo II and Blue Nile farms. Sodo II farm is categorized as modified habitat. The site is close to Maze protected area and 30 km away from Chebera-Churchura National Park, a Key Biodiversity Area. An ESIA was commissioned in November 2020 and the draft ESIA report describes the site as a continuum of modified habitats, given the predominance of non-native floral species, secondary species attempting to recover, low species diversity and the footprint of previously fragmented habitats. The ESIA also concluded the project will unlikely have an impact on ecological biotic environment. The Blue Nile farm is categorized as modified and natural habitat. The site is situated near three Key Biodiversity Areas (KBA) (i) Fogera plains, an Important Bird Area (IBA) of importance for four bird species; (ii) Little Abbai River, an Alliance for Zero Extinction site as is contains the whole known population of the Ethiopian amphibious rat - Nilopegamys plumbeus; and, (iii) Lake Tana, designated as an IBA of importance for 22 bird species. Based on the analysis, the small footprint of this farm is very unlikely to have an impact on any of these three KBAs.

                                                  

E & S Project Categorization and Applicable Standard

Environmental and Social Mitigation Measures

Broad Community Support

Environmental & Social Action Plan