Environmental & Social Review Summary
Project Number
9528
Company Name
Sociedad Agricola Drokasa S.A.
Date ESRS Disclosed
Feb 5, 2010
Country
Peru
Region
Latin America and the Caribbean
Last Updated Date
Jan 2, 2017
Environmental Category
B - Limited
Status
Completed
Previous Events
Approved : Oct 19, 1999
Signed : Dec 2, 1999
Invested : Jan 14, 2000
Sector
Fruits and Vegetables
Industry
Agribusiness and Forestry
Department
Gbl Ind, Manufact, Agribus & Services
Project Description
International Finance Corporation
A Member of the World Bank Group
International Finance Corporation
A Member of the World Bank Group
Environmental Review Summary (ERS)
Project Name PERU: Agrokasa
Region Latin America and Caribbean
Sector Food and Agribusiness
Project No. 009528
1 This project involves the development of an integrated horticulture operation in Ica (300 km south of Lima), for the production of asparagus and grapes. The project includes expansion of the cultivated area of an existing farm at Santa Rita and the development of a new farm at La Catalina (from 195 to 1391 ha in total), construction of two packing houses, and development of an integrated feeding center for 1,500 head of cattle. This is a category B project according to IFC''s environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
2 Key environmental, occupational health and safety issues which were of potential concern in this project include:
· land acquisition and prior land uses;
· sustainability of irrigation water supply;
· impacts on environmentally-sensitive areas;
· use of Integrated Pest Management and pesticide use;
· impacts of air and wastewater emissions and solid wastes;
· general worker health and safety.
Appraisal of this project consisted of review of material provided by the sponsor (Environmental and Social Questionnaires) as well as site visits and discussions with the sponsor. Information provided about how these issues and potential impacts have been addressed in the development of the project are summarized in the paragraphs that follow.
3 Land acquisition and prior land uses: The company has acquired two farm sites near Ica. One of which (Santa Rita) was formerly owned by a cooperativa. A 1995 legal judgement forced the sale of this farm on grounds of bankruptcy and an affiliated company of Agrokasa acquired the entire estate. The sponsor recognized the sensitivity of their acquisition and immediately met with the cooperativa members. Although it was not required as part of the purchase, the sponsor provided a compensation package to the former owners who unanimously transferred land possession. The process of consultation and compensation has been documented and details of the process are presented as a resettlement plan attached to this ERS. The La Catalina site (1,196ha) was formerly desert and has been improved through deep ploughing, irrigation systems and fertilization by the sponsor. This site was not previously used with the exception of occasional cultivation of crops when flooding brought water to the site during periods of heavy rain.
4 Sustainability of irrigation water supply and acquisition of water rights: Ground water rights are allocated by the Ministry of Agriculture’s department for natural resources (INRENA) who are also responsible for monitoring groundwater levels. A number of groundwater studies have been undertaken in the area (1968, 74, 84 and 92) and since 1995, INRENA has been undertaking long term monitoring of ground water levels in the valley (3 monthly sampling). There is some uncertainty over the long-term impacts of pumping however, INRENA staff have indicated that levels have been more or less stable over the past 20 years.
INRENA has restricted development of new wells in the valley and is confident that it can control demand and sustainability of supply.
5 The sponsor has determined short term sustainable flows from each well based on test pumping at various abstraction rates and examination of the draw down cone. The company policy is to identify a 10% margin and only to pump 90% of short-term sustainable flow. The company uses high tech drip irrigation systems throughout and – in terms of effective use of water resources- is extremely efficient.
6 Agrokasa has acquired 22 of 24 wells that it plans to buy in the valley, all of which were constructed before the period of agrarian reform. Four are in the Santa Rita farm and were acquired as part of the land title acquisition described above. Of the remaining 20, 18 are located to the north of the La Catalina site and have been acquired piecemeal through willing seller/willing buyer contracts. Only three of these wells were in active use at the time of acquisition, (the remaining wells had fallen into disrepair) and all wells required rehabilitation as part of the project. In the three instances where operational wells were acquired, vendors kept other wells for their production needs or were assisted by Agrokasa in the development of new wells for their own use. Agrokasa will acquire 2 more wells in the same area where it already bought the first 18 .The majority of local farmers (who farm small 1-2ha plots) obtain surface water from the adjacent Rio Ica and do not access ground water. These farms are irrigated once or twice annually by flooding via a series of irrigation channels from the river and the impact of groundwater abstraction will not have a significant impact on access to water. The sponsor has a well-documented record of the methods by which water rights were obtained and this material forms part of a resettlement plan attached to this ERS.
7 Impacts on environmentally-sensitive areas: The Santa Rita farm is a long established farm and contains no sites of ecological importance. The La Catalina site comprises an area reclaimed from desert and did not contain areas of ecological significance. Neither site is near to any protected areas or areas of ecological significance. The Santa Rita farm contains 2 pre-Inca burial mounds (huaca''s) which are numerous and widely scattered in the Ica valley. The sites that lie within the Santa Rita farm have been assessed by the Instituto Nacional de Cultura and have been retained and protected within the farm in accordance with Peruvian requirements.
8 Use of Integrated Pest Management and pesticide use: The sponsor is developing an integrated pest management system that includes management, biological and chemical control systems. However, the sophistication and scale of the farming system that is being developed requires that even with IPM, a range of potential agrochemicals will be used on the farms. Of this menu of chemicals, the company currently uses two pesticides that are on the World Health Organization''s list of extremely or highly hazardous chemicals (Temic, and Metomyl). The sponsor will replace the use of Metomyl with Agrosan (an organic pesticide) and will replace Temic with Vydate. Vydate is still classified as a highly hazardous chemical but there are no suitable alternatives to its use. The sponsor has confirmed that all use and management of agrochemicals will conform with relevant World Bank Group guidelines and IFC will require detailed annual monitoring information on the use, storage and of all agrochemicals.
9 Because of the size of the farms, application methods will include aerial spraying and this will be undertaken in a professional manner in accordance with national and international standards. The volumes of pesticides that are held on site is minimized and those that a present are kept in secure areas. Empty containers are currently stockpiled in the center of the La Catalina site. In the longer term the company expects to develop a contract with a private waste firm (Relima) for removal and safe disposal.
10 Impacts of air and wastewater emissions and solid waste: The company does not generate power and there are no significant emissions to the atmosphere except for methyl bromide which will be used as a fumigant for grapes in the proposed packing plant. Methyl bromide will be used in compliance with US requirements for imported grapes and the use of this ozone depleting substance will be phased out in accordance with international requirements of the Montreal Protocol and replaced with acceptable alternative fumigant.
11 Wastewater will come from washing facilities (potential significant contaminants will include chlorine) and septic waters. The sponsor is discussing options for the treatment of process wash waters with consultants and commercial waste water treatment suppliers and has confirmed that treatment will achieve WBG requirements. Septic waters will be discharged to on site septic tanks.
12 Solid waste includes used pesticide containers (addressed above), paper card etc and organic material. Paper and card are collected and disposed of at a municipal landfill. To reduce the volume of waste organic matter and requirements for fertilizer application, the sponsor is developing a small cattle lot (500 head rising to 1500). Cattle are fed surplus organic material and manure is applied to the land.
13 General worker health and safety: At the Santa Rita site, the company will employ approximately 180 full time staff rising to up to 600 during harvest. Additionally, Fundo La Catalina will employ from 390 permanent employees rising to 1,400 during the harvest season. The company has an occupational health and safety plan and provides appropriate training for all employees.
14 IFC will monitor ongoing compliance with World Bank Group environmental, health and safety policies and guidelines during the lifetime of the project by evaluating reports submitted annually to IFC by Agrokasa and by conducting periodic supervision. In particular, IFC will require annual reporting on:
· ongoing compliance with WBG and national requirements;
· the use and management of agrochemicals at both sites (this to include details of formulations and volumes used, application methods and security of use and disposal of containers as well as efforts to reduce use).
15 Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that Agrokasa''s proposed project will meet World Bank Group environmental, health and safety policies and guidelines and host country requirements.
Sociedad Agrícola Drokasa S.A.
Fundo Santa Rita
ICA-PERU
Annex: RESETTLEMENT PLAN
Fundo Santa Rita
ICA-PERU
Annex: RESETTLEMENT PLAN
1. Brief project description
The project is located at two sites or ‘FUNDOS’ (Santa Rita and La Catalina), both located in Ica, 312km south of Lima, Peru and involves the cultivation of grapes and asparagus at both locations. Because the project involved the transfer of land and relocation of houses, a resettlement plan was required by the International Finance Corporation in accordance with World Bank Group policy''s. The relevant document in this instance is OD 4.30 Involuntary Resettlement which describes circumstances (including those relating to economic displacement) in which a resettlement plan is required..
During the period of agrarian reform, the Fundo Santa Rita (195ha) was allocated to the Cooperativa Agraria Santa Rita which failed to accomplish technical, economic and social sustainability and resulted in the Fundo''s bankruptcy. This resettlement plan (RP) describes the process and compensation arrangements which occurred between 1994 - 1995 when land and water rights relating to Fundo Santa Rita were acquired during a legal auction - promoted by private banks - when the former owners lost their property rights in the Peruvian Courts. The RP also documents the social improvement and compensation provided to affected people in their labor and day to day activities.
Agrokasa''s plans include (i) on-going agricultural development of the plantation of table grapes (95Ha.) and asparagus (73Ha.), (ii) expansion of irrigation capacity and efficiency from four existing wells (240 l/s) through an integrated state of the art drip irrigation system. (iii) the installation of a packing facility in an existing building. (iv) maximizing efficiency in the use of energy (electricity), water resources and (v) integration of cultural and technological practices well accepted by local communities, farmers and authorities.
2. Affected persons and assets. Compensation arrangements.
When the company decided to purchase the land and water rights inherent to Fundo Santa Rita, it had a clear commitment to address social and economic issues and to prove its willingness to bring progress and development to the community. The former owner - Cooperativa Santa Rita - had already lost all its assets long before Agrokasa The original purchaser of land and wells at Santa Rita was Comercial Venecia, a company affiliated with Agrokasa and Corporacion Drokasa - the group''s holding company. Due to specific legal regulations approved in 1997, the Santa Rita and La Catalina sites are now owned by Agrokasa
acquired the land, (i.e. the real owner was a private bank - by registered mortgages) and several other creditors were trying to collect their money by different means. Thus, individually or collectively the campesinos had no legal assets. Additionally their Social Security was canceled by a local government agency (ESSALUD) which meant that they had no health care provision. Even though legally the company was not obliged to compensate the affected people, as a result of the company’s social concern an open and transparent communication policy was developed to bring all parties to a consensual agreement. After 2 public audiences held on site, the leadership of campesino representatives - including prominent woman’s participation - and Agrokasa''s directors, the 40 members unanimously agreed The agreement was signed (May 3, 1995) in presence of the local Justice and become part of the land title that gave the legal property to the Company.
on the following, in order to comply with its legal obligation to give the possession of Fundo Santa Rita to the new owners: The Company:
· would give the Cooperativa Santa Rita US $ 27,188 to compensate for the loss of recent agricultural work and pay the value of existing crops (pallar or lima beans);
· gave each Cooperativa member US $ 2,333 to help them cover urgent family needs;
· agreed to provide a parcel of land (37,596 m2 - approximately 9.4 acres) to enable the 40 campesino families to build new homes adjacent to the Pan American highway, next to the Fundo’s entrance. The company also provided legal and technical support in this process;
· agreed to wait until the end of the crop season to allow members of the Cooperativa sell the products in the market;
· purchased old agricultural machinery at market prices;
· gave legal assistance to campesinos to help them deal with several outstanding court cases. The company also guided and paid the legal fees in a case brought by Cooperativa Santa Rita against other solitary or common debtors. The legal action finally resulted in a positive extra-judicial deal which provided each Cooperativa member US$ 3,175 in compensation.
All these obligations have been completed by the company The only pending issue relates to the normalization of their private property rights. The owners have asked Agrokasa to delay the registration of their rights until all former Cooperativa members concluded old legal processes aiming at precisely the execution of personal guaranties by their creditors. Even though their rights are legally secured by the private agreement referred in foot note No.2. This situation also means that the company pays the land property tax related to the 7.5 acres transferred to said beneficiaries.
. Furthermore, additional compensation arrangements with other stakeholders such as local government, the local school and church received help in kind to address community needs which have included provision of:
· water and energy supply to the local school;
· teaching materials; and
· help in the organization of local festivities, including religious and sporting activities.
Even though the Company did not agree in writing to hire all campesinos, it was conscious that there was an opportunity to provide long term social benefit through employment. As a result, 26 of the original 40 Cooperativa members were hired and 20 of them remain (almost 4 years since the transference of land) on its pay roll. The company also assisted campesinos in the construction of their homes, provided construction materials, and still provides for water and energy supply. Still, the main positive impact is the labor factor: the company brought direct working opportunities to the community giving stable jobs to a minimum 180-200 workers at all seasons and up to 500-600 during the harvest season.
Regarding occupational health and safety issues, two social assistants administer worker’s needs while every Thursday a doctor visits the company''s medical facilities to check cases and monitor the public health system. All workers have free access to hospital and medical assistance, including basic medicines and the company''s private medical system also provides assistance to workers families, which represents a very important social asset for the local community.
3. The consultation process Please see La Catalina´s RP consultation process for description of the activities that will be held in Ica to make publicly available this and all relevant project information through a public audience.
In this section we describe how the company addressed communication and consultation with affected people.
Between April - May 1995, three company Board members – accompanied by a local engineer (recognized by the community for his leadership and social commitment) - consulted and presented the company’s development plans to all 40 Cooperativa members in several formal and informal meetings that took place in Fundo Santa Rita We refer to James Bosworth, Jorge Caillaux and José Chlimper (Agrokasa’s Board members) and to Oscar Camino, local leader and present company’s General Manager.. When District Justice visited the farm to legally give us possession of the land the 10th of May 1995, both parties had already agreed in the compensation package referred above (see note 3 and pictures of meetings).
The outcome was really impressive and communication brought more dividends than expected. In only two days an agreement was signed and peaceful transfer of the land was completed. With close scrutiny by District Justice Buenaventura Huamani Cueva, the company took hold of the premises and began to develop its first investment in the agricultural sector.
The reconstruction process proved to be a great experience in terms of transference of technology and capital to a rural area, historically abandoned by the private sector since the agrarian reform of 1968. The consultation process has been fully documented in video film and can be accessed with no charge by sending a note to our Environmental Officer Mr. Jorge Caillaux at: Mariscal Miller 2170, Lince, Lima 14, PERU; phone (511) -470-0721/ 470-1111; e-mail: jcaillaux@drokasa.com.pe
4. Timetable and budget
In this section we provide information on the value of the investments related to the acquisition of the land and water rights.
· The company paid US$ 534,000 for the land, including existing wells. This payment was collected by the Cooperativa''s creditors (mostly private banks).
· The Cooperativa received directly and/or through their 40 members a total amount of approximately US$ 130,000 (see direct payments to the Cooperativa and to its members as well in section 2 and 3).
· The company invested approximately US$ 30,000 in river basin defenses to prevent flooding by El Niño and protect the land and property of other farmers in the vicinity.
· Land value transferred to the Cooperativa members at acquisition amounted to US$ 10,295
5. Conclusion.
The company experience in this project was positive. In a country like Peru with considerable comparative advantages in the agricultural sector (in terms of climatic conditions, land and environmental elements), the private sector is only recently returning to the rural areas after 30 years of inactivity. Agrokasa has been an example of the positive rapport that a policy of good will and transparency can have with rural communities, institutions, farmers and campesinos. A win-win social responsibility policy proved to be a steppingstone for future common investments.
Finally, this experience gave us all - company directors, managers and all workers - sufficient confidence to address a bigger challenge: the development of adjacent uncultivated land at Pampa de los Castillos which is now a reality and the object of the Fundo La Catalina project which is described in a separate Resettlement Plan.
April 21, 1999.
Environmental and Social Mitigation Measures
Broad Community Support
Related SII
