This is a Category B project according to IFC’s 2012 Policy on Environmental and Social Sustainability. IFC’s review concluded that E&S risks and impacts associated with this project are limited, site-specific, and can be readily addressed through generally accepted mitigation measures described in this document and the ESAP. The E&S risks and issues are: (i) implementation effectiveness of GXYX’s EHS and HR management systems at the targeted four pig farms and feed mill, including legally required ESIA studies and mitigation measures as defined in the ESMP for solid, liquid (manure) waste, and transportation to and from sites; (ii) organizational capacity for implementing, monitoring and reporting on company’s Environmental Social Management System (ESMS), including targeted facilities; (iii) labor and safe working conditions of direct employees and contractors, including occupational health and safety (OHS) standards; (iv) emergency preparedness and response; (v) compliance with applicable national EHS/HR requirements; (vi) monitoring of EHS parameters (air emissions, effluents, water and energy efficiency); (vii) supply chain of raw material sourcing for the feed mill; (viii) animal welfare and bio-security management practices; (ix) stakeholder engagement and community grievance mechanism.

Identification of E&S Risks and Impacts.

GXYX identifies and manages E&S risks and impacts associated with its pig farm and feed mill operations through compliance with applicable Chinese standards and E&S regulatory permits. The company has also developed an African swine fever (ASF) infection risk management as part of the company’s iron barrel biosecurity initiative, including their contractors. The company’s contract farm management includes siting selection criteria for potential farms, E&S risks and impact identification and management practices. The company’s performance-based E&S requirements also include IFC PS and relevant sections of the WBG EHS Guidelines (General and Mammalian Livestock Production). Environmental and Social Impact Assessment (ESIA) and public consultations are conducted as required by local regulatory requirements. GXYX received approvals from the local Environmental Protection Agency (EPA) for the additional facilities targeted by this investment in March 2016.

E&S management systems and programs.

GXYX adopted and implemented EHS policies and an ESMS at the corporate level as part of the previous ESAP agreed upon with IFC. This ESMS is aligned with IFC PS1 requirements and applied to all its subsidiaries and its 1,000 contract farms.  GXYX has been certified with ISO 9001 (Quality) and ISO 14001 (Environment) management systems in 2017. The company also received Chinese Good Agricultural Practice (GAP) certificate since 2014 for its pig farming operations. The certificates cover the facilities under this project and confirmed to be effective as of February 2023. The corporate ESMS includes EHS policies and Manual of Standard Operations Procedures (SOPs), including among others: (i) Environmental and Occupational, Health and Safety (OHS) risk identification and assessment, including biosecurity; (ii) emergency preparedness and response; (iii) monitoring and reporting; (iv) internal audit mechanism. All EHS and HR policies and procedures are available on GXYX’s IT based information system and accessible to all employees and applicable to contract farms.

Organizational capacity/competency.

GXYX established corporate/facility-level Environmental Protection Unit (EPU) composed of 140 staffs, including 20 manager level positions, which oversees the effective implementation of the corporate EHS policies, risk management and quality control at all the operations, including contract farms. Each pig farm has one dedicated EHS officer in charge and more EHS officers are allocated depending on the size of the farm. EPU’s function is responsible for the ESMS implementation during operation phase including the monitoring of E&S parameters outlined in the WBG EHS Guidelines for Mammalian Production: wastewater (pH, COD, BOD, ammonia, Suspended Particulates, and total nitrogen and phosphorous); surface and ground water (pH, COD, BOD, ammonia, total phosphorous, and fecal coliform); dust and noise level at feed mills; and OHS (fatalities, non-fatal injuries, lost workdays and vehicle collisions). EPU ensures that all project buildings implement their specific SOPs in line with corporate EHS policy requirements and provide EHS training to all the employees.  GXYX conducts environmental, safety, and fire inspections every quarter, and no major E&S issues have been reported for the project facilities, as of February 2023.

Emergency Preparedness and Response.

As part of its corporate E&S risk management, GXYX has developed an emergency preparedness and response procedure for its feed mill operations and preparedness plans exist for different scenarios including fire, dust explosions, vehicle collision, accidents related to work, describing processes and decisions applicable to the project. The roles and responsibilities for various teams responsible for evacuation, rescue, first-aid etc. are clearly defined. Similar procedures for pig farming operation are also in place, covering emergencies related to fire, physical injuries/fatalities, food safety and contagious disease outbreaks. Fire drills and safety training are conducted, as required per regulations, and implemented at every project site.

EHS Monitoring & Reporting.

GXYX has established a corporate monitoring and reporting E&S dashboard, including Key Performance Indicators (KPIs) – e.g., lost-time accidents, labor compliance (working hours, overtime payment, grievances), energy and water consumption/efficiency, wastewater quality, surface/underground water quality, workplace dust and noise, solid and hazardous waste management, animal welfare – and monitors all its operations against these, during construction and operation including contract farms. KPI and annual targets are set against regulatory limits and WBG EHS Guidelines and reviewed monthly by the EPU at corporate and operation-level. All incidents are discussed in monthly meeting. EPU undertakes a root cause analysis and implements corrective actions. Annual environmental monitoring report is submitted to local environmental protection bureaus which are aligned with local regulatory and WBG EHS Guidelines. Monitoring parameters and frequencies are set out in the approved ESIA for all facilities. The company conducts periodical internal EHS audits and receives a third-party audit in relation to worker’s occupational safety protection.

Supply Chain Risk Assessment and Management.

GXYX’s pig farms are supplied from its own feed mill products. These feed mills source corn, soybean meal and other feed grains, from a variety of local and international suppliers. Corn is main feed ingredient and is mainly purchased from large grain trading companies, such as COFCO and imported mainly from United States and Ukraine. Feed grains and soybean meal are mainly imported from the United States (sorghum) and from France, Australia, and Ukraine (barley) and from Brazil and the United States (soybean meal).

The company has a centralized procurement management system coordinated with subsidiaries and has service and supply procurement control procedures and performs a comprehensive assessment of the suppliers, including their raw materials source, quality control systems and some OHS risks. GXYX has updated its supplier assessment procedure to include E&S related screenings covering PS2/PS6 risks and impacts. GXYX introduced procedures to ensure that primary suppliers within its sourcing operations are not exposed to PS2/PS6 issues, such as a supplier site inspection and review guideline for raw material suppliers.

Going forward, GXYX will establish a Supplier Code of Conduct (CoC) to prohibit forced, or child labor and significant occupational health and safety risks; and potential conversion of natural/critical habitats in its sourcing operations including information on persons in charge of CoC enforcement, means to implement the CoC including monitoring and reporting mechanisms as well as key performance indicators (KPIs) to verify implementation effectiveness. (ESAP#1).

As per ESAP #2, by 2027, the company will achieve a sourcing target of 15% of GXYX’s total annual soymeal procurement volume coming from soymeal suppliers which will meet IFC PS2-PS6 supply chain requirements. GXYX will provide verifiable evidence based on disclosed information from primary soy suppliers.

GXYX had 8900 employees, as of December 2022, at corporate level and across all its operations. The gender split of staff is 70% male and 30% female. All workers are directly employed. Around 200 workers are outsourced (cleaning staffs, loading staffs) through service providers.

HR Policies and Procedures, Non-discrimination, and Equal Opportunity.

GXYX has implemented a set of human resources (HR) policies and procedures which include employee benefits, working hours and occupational health safety, social insurance, etc. in line with applicable Chinese labor regulations and PS2 objectives. GXYX has a hiring policy which stipulates that the minimum hiring age is 18. The company has a non-discrimination and equal opportunity policy, including for gender while prohibiting child and forced labor. Same policies applied to contractors, including contract farms. The corporate safety management team and development center oversee contract farms together with relevant departments such as pig farming division. The company has updated its corporate HR related policy to include specific policies on prevention of sexual harassment and a grievance mechanism for purposes of sexual harassment in line with PS2 requirements.

Working Conditions and Terms of Employment.

GXYX’s employees are given a permanent or a fixed term position after a probation period, with written appointment letters which explain their employment terms and conditions. Salaries paid are higher than the minimum wage. Overtime payment are aligned with the requirements of national labor regulation. Overtime work is not commonly required, and it needs prior agreement with each unit manager. All employees receive social insurances in addition to their regular salaries. GXYX provides free worker’s accommodations with modern amenities, including internet access at pig farms. Free meals are provided in the canteen

Workers’ Organization & Grievance Mechanism.

GXYX does not restrict workers from freedom of association. The representatives of workers hold monthly meetings with managements, mainly focusing on corporate policies updates, employee benefits, attendance recording, trainings and agreement by signing on the documents. There is no collective bargaining agreement (CBA) and no major labor disputes with the assigned representatives to date.

GXYX has a corporate grievance handling procedure which has been updated as part of agreed upon ESAP from previous IFC investment. As per the procedure, all employees can raise grievance through following channels: i) direct communication to department head; ii) express concern to HR department during semi-annual interviews through regular face-to-face meetings; and iii) through company hotline with mobile application tool to reach designated personnel. No significant E&S related grievances or court cases were noted by the company. There is an anonymous grievance mechanism functional via IT based reporting system.

Occupational health and safety.

GXYX has developed a corporate OHS policy and SOPs stating key operating safety principles and requirements applicable to all GXYX operations, including among others, safe driving, electricity usage, life and fire safety management. Each farm/plant manager at pig farm and feed mill is directly responsible for daily OHS supervision. Safety meetings are organized monthly at all operations. OHS trainings are mandatory to all workers, including life and fire safety. The electric engineer team investigates all the systems and verified procedures for all electric devices and periodical safety inspections are conducted. All employees undergo annual health checks. GXYX has strict disease prevention and control system, and pig farm workers are required to follow strict quarantine procedures when accessing the farms to comply with bio-security procedures. OHS statistics (fatalities, incidents records) are monitored monthly by the corporate EPU and HR department. The number of incidents indicate a decreasing trend in the past three years. The lost time incident frequency rate (LTIFR) in 2022 has been less than 1.0 being much lower than the industry benchmark.

Workers Engaged by Third Parties.

GXYX hires third-party workers through construction’ contractors and for loading staffs for finished feed packages at the feed mills. It established policies and procedures for managing and monitoring the performance of third-party employers in relation to applicable local OHS/labor requirements. GXYX’ corporate development center oversees managing contractors, including addressing complaints and providing hotline to contract farms. GXYX has detailed procedures on safety management at construction sites. Construction contractors are selected based on their previous safety records. Safety management requirements are included in construction contract. GXYX safety management team and development center conduct periodical monitoring, including monthly inspection.

Supply Chain.

As described under PS1 section, soybean meal procured for feed mills are primarily sourced from countries in Latin America (e.g. Brazil). This sourcing can be exposed to potential PS2 risks including child and forced labor practices and precarious unmitigated work safety conditions. GXYX has updated its supplier procedure in May 2022 to assess such risk including supplier site inspection and review guideline. As described above, GXYX will establish a Supplier CoC articulating its commitment to prohibit child and forced labor and significant occupational health and safety risks in its sourcing operations including its implementation, monitoring and verification of effectiveness. (ref. ESAP#1).

Resource efficiency (water/energy).

The company assesses its pig farm and feed mill operations for alignment with corporate level KPIs, especially energy and water efficiency target which are reviewed and updated each year. Energy and water efficiency has been continuously improving since IFC first investment by reducing GHG emissions intensity of feed mill, enhancement of manure management and energy efficiency improvements. EPU monitors monthly electricity/water consumption at each breeding farm and feed mill and continuously looks for resource efficiency/cleaner production opportunities. Some resource efficiency initiatives implemented so far include, among others, the installation of temperature controlling system with water circulation and floor heating, effective ventilation, and air exchange, water recycling to clean pig house flooring. 

GHG Emissions.

Based on GXYX’s energy consumption record, the expected GHG emissions are approximately 13,100 tons CO2 equivalent per year for the four pig farm buildings and a feed mill under the project.

Air Emissions and Odor.

Electricity is sourced from the local grid for all pig farms and feed mills, and no major air pollutant emission occurs from the operations. A standard back-up genset system is installed in case of power outage. Diesel gensets are also installed at breeding farms, but their use is not common. The farms utilize ventilation system for odor control at the pig breeding buildings, allowing purified air to flow into the building to maintain clean air condition and released from top of the pig farm buildings through odor treatment system.

Water Consumption.

For the four pig farming operations in Yaji mountain area targeted by this project, water is drawn from two reservoirs and treated through a water purification system. The water quality testing center inspects water quality after the treatment and the results have been found to be compliant with applicable permit conditions. The annual water consumption of four pig farm buildings and a feed mill under the project is 25,600 m3 per year. Drinking water for employees is provided by public water supply system.

Wastewater.

Wastewater including animal manure, cleaning water, and cooling water from the pig farm operations is collected and pumped into the on-site wastewater treatment (WWT) plants through pipelines. After the separation of solids, the wastewater is treated into different processes for anaerobic and aerobic digestions, in line with Chinese regulations. The treated wastewater is tested against permitted water quality parameters and discharged to adjacent artificial water pond lined with geotextile and high-density polyethylene layer at the bottom. Treated wastewater is used for irrigation in the neighboring forest area of GXYX through pipelines. The volume of treated water has been kept within the local regulatory requirement (six tons per ha). Sludge is transferred to an organic fertilizer plant adjacent to the WWT plant for further treatment. GXYX has enough capacity of WWT plants for its current operations (1,800t/day) installed for the buildings under the project. EPU regularly monitors effluent parameters from WWT plants. All the contract pig farms are required to have on-site WWT plant meeting Chinese regulatory requirements. The testing results in 2022 was in compliance with Chinese national standards and WBG EHS guidelines, including surface water and ground water quality (as described in PS1 section above). Environmental protection agencies regularly verify that effluent discharge requirements are met.

Waste (hazardous / non-hazardous waste).

GXYX has waste management procedures, including manure, animal carcasses, and used syringes with a system of appropriate handling, storage, and disposal. This is consistent with applicable legal requirements in China. Separated manure effluent and sludge are transferred to an organic fertilizer plant adjacent to the WWT plant and processed for organic fertilizers. Animal carcasses are disposed through GXYX’s own incinerator. At the contract farms, they are treated by own incinerator or by specialized agency depending on the farm size. Used syringes and medical materials are separately stored, collected and disposed of by qualified third-party waste disposal agency. Used packaging materials at feed mills are collected and sold to waste collection companies for reuse/recycle.

Hazardous Materials and Pesticide Use Management.

All hazardous materials are properly labelled and stored in the designated room at sites. The diesel storage has secondary containment. GXYX uses professional pest control companies for pest control at its farms and feed mills mainly for rodents and fly. For contract farms, market-available pesticides are provided by GXYX. There is no use of World Health Organization (WHO) Class Ia or Ib chemical products.

The pig farm buildings under this project, breeding farms and contract farms in Yaji mountain area are isolated from major settlements and structurally designed to prevent ASF, including separate entrance of pig and workers and strict quarantine procedures to access the farms. The company has also built its own access roads to its pig farms due to biosecurity.

Life and Fire Safety Management.

GXYX has developed and implemented a set of fire safety procedures describing actions to be taken at pig farms and feed mills, mechanisms for fire detection and prevention, such as sprinkler, fire alarms, fire extinguishers, evacuation procedures including emergency lines, emergency exit signs, and roles and responsibilities of the various staffs. These are reviewed regularly. The company conducts fire drills and trainings, as per regulatory requirements. The local fire safety authority inspects fire-fighting system on an annually basis. The corporate engineer team also inspects fire-fighting system regularly. There have been no known fire incidents in the last three years.

Traffic safety management.

GXYX developed and implemented a road safety management system as part of the transport of the animals and feed. It does not own a transportation fleet but requires third-party truck operators to comply with its corporate requirements, including that related to road and driving safety procedures as well as confirming driver’s licenses and driving records. Biosecurity and animal welfare are provisioned in the transport of pigs. GXYX has standard procedures for drivers during pig transportation, including disinfection, transport route setting, not allowing direct contact with pigs, etc. Transportation company has a fleet with built-in air conditioner to maintain appropriate living conditions during the transport. Daily safety performance is monitored and no major traffic incidents or complaints from local people in the past three years have been reported.

Security.

A small number of security officers without arms are employed to control access to farms in Yaji mountain. There have been no known security incidents in the last three years.

Animal Welfare.

In accordance with the IFC Good Practice Note (GPN) on Improving Animal Welfare in Livestock Operations (2014), IFC’s scope of appraisal included verification of compliance of GXYX’s animal welfare management practices with OIE (World Organization for Animal Health) Guidelines. Based on a completed animal welfare survey during this appraisal, GXYX complies with these guidelines including provisions of adequate nutrition and water; living environment condition control; diseases prevention control; staff trainings on animal welfare; and internal auditing. GXYX’s facilities under this project are all certified to the animal husbandry standards under China GAP certification. GXYX has certified its animal husbandry/welfare management practices against a recognized certification standard benchmarked against GIIP for all farms under the project. Going forward, GXYX will maintain their current certification status across all farm production units under the project facilities in line with Global GAP for livestock (ESAP#3).

Supply Chain.

As described in PS1 and PS2’s supply chain sections above, there is a potential for feed mill sources to come from production areas in Brazil which might have involved conversion of natural and critical habitats into soybean plantations, resulting in significant adverse impacts on high biodiversity values. GXYX has updated its assessment procedure covering supply chain PS6 risks and impact including supplier site inspection and review guideline. As described above, GXYX will establish a Supplier CoC articulating its commitment not to buy raw materials having led to significant conversion of natural/critical habitats. (ref. ESAP#1); and by 2027, achieve a sourcing target of 15% of GXYX’s total annual soybean meal procurement volume coming soybean suppliers which will meet IFC PS2-PS6 supply chain requirements. GXYX will provide verifiable evidence based on disclosed information from primary suppliers. (ref. ESAP#2)

As per the environmental permitting process, the draft project EIA is being shared for public consultation and stakeholders, including public/local community, can raise concerns during the process. GXYX has a stakeholder engagement policy, including community grievance mechanism and communicate with local communities by visiting regularly. There have been no material complaints received over the last three years. GXYX conducts community engagement activities for students and local people, including donations, provision of medical supplies, and training for farmers.

Contact Person: Mr. Qing Xu

Company Name: Guangxi Yangxiang Co., Ltd

Address: Yangxiang Headquarters, Jiangnan Industrial Park, Gangnan District, Guigang 537100, China

Email: star-xu@139.com