UPDATE RELATED TO ADDITIONAL INVESTMENT UNDER COVID-19 RESPONSE FACILITY:
E&S Performance and COVID-19 related Impacts:
Briefly describe the company’s E&S Performance during the past years:
This represents IFC’s 3rd investment in Agrofertil. In 2011, IFC committed a US$15 million working capital facility to Agrofertil (project #30278 -
https://disclosures.ifc.org/#/projectDetail/ESRS/30278) to support the pre-harvest financing needs of its network of farmers. The loan was structured as a 5-year facility (with an annual clean-up) secured by a guarantee trust. In 2016, IFC’s completed its 2nd investment in Agrofertil (Project #37602 -
https://disclosures.ifc.org/#/projectDetail/ESRS/37602), which consisted of providing Agrofertil with (i) an up to US$15 million short-term working capital facility to be cleaned-up and re-committed annually up to four times and (ii) an up to US$10 million 5-year loan with the same as the current facility, collateral structure but without clean-up. The proposed investment (Project # 44215) consists of increasing the fifth short term tranche amount. Total IFC exposure with Agrofertil will be $30mn including i) $5mn Long Term Loan (maturing in May 2021) and ii) $25mn fifth short term tranche.
The company’s E&S performance continues to be satisfactory. Agrofertil operates in alignment with good international industry practices (GIIP) and is materially compliant with applicable at-approval requirements under the active investment. This follow on investment, under the COVID-19 response facility, does not result in any new material E&S risks. The company’s management of existing E&S risks and impacts continues as described in the ESRS disclosed on 02/25/2016:
https://disclosures.ifc.org/#/projectDetail/ESRS/37602.
Comment on ongoing compliance with at-approval requirements (existing ESAP):
Agrofertil’s operations are conducted in alignment with GIIP, with continuous improvement of the environmental and social management system (ESMS) to keep plans and procedures up to date with Paraguayan regulations and IFC’s Performance Standards requirements. The company has implemented the ESAP, as agreed upon, and submits annual monitoring reports in the format agreed with IFC, in a timely manner.
Confirm that there are no new material E&S risks and impacts due to COVID-19 that cannot mitigated under existing ESRS and ESAP:
The company is headquartered in Ciudad del Este, Paraguay, and currently operates 23 collocated silos and distribution centers for agricultural inputs, with a total capacity of 506,000 tons of grain storage. The nature of Agrofertil’s operations, risk profile and geographies have not changed. There are no new E&S risks associated with this new transaction.
Scope of IFC’s Appraisal:
Describe about the meetings, document review conducted as part of virtual appraisal:
IFC’s E&S due diligence for this follow-on investment built upon E&S and OHS information reviewed during a site supervision visit (SSV) conducted in November 2019. In addition, in May 2020, IFC’s E&S specialist held meetings with the company’s senior management, EHS and HR teams via video conferences to understand the impact of COVID-19 pandemic on the company’s operations, particularly on its workforce, and any contingency measures. IFC also reviewed written information provided by the company via e-mails, the 2019 AMR and documents shared by the company as well as its own records of the company’s E&S performance over the years. As part of this investment, IFC has also carried out a contextual risk assessment, which did not uncover any recent negative information regarding the company.
After COVID-19 related travel restrictions are removed, IFC will visit the client, as part of the regular portfolio monitoring activities.
Response to COVID-19 Pandemic:
Client actions considering COVID-19 impacts (e.g. worker retention, retrenchment, infection prevention/social distancing and emergency response).
Impact on Employment:
The company reports a workforce of 484 in its operations. Agrofertil confirmed that it has not laid off any workers due to the pandemic. In alignment with good practices and local regulations, the company adopted home-based work for administrative staff. For workers considered essential, the company adopted various procedures including: a) daily temperature measurement, b) use of hand sanitizers, c) sanitizers at building entrance for disinfecting shoes, d) social distancing, e) during meals, one person per table, f) mandatory use of face masks, g) constant cleaning of surfaces, among other measures, and a hotline to provide support to workers. The company confirmed that all employees are receiving their full salaries and that the company honors all contracts with suppliers and contractors
Agrofertil does not have migrant workers or workers accommodation facilities.
Health Impact of COVID:
As a condition of this follow-on investment, the company will continue to implement a COVID-19 infection prevention, control and response plan, consistent with the provisions under PS2 and PS4 Interim Advice for IFC Clients on Preventing and Managing Health Risks of COVID-19 in the Workplace.
Moreover, the company will ensure ongoing compliance with IFC Performance Standards – especially provisions under PS2: Labor and Working Conditions and PS4: Community Health Safety and Security.
It is noted that, as of June 29th, 2020, Paraguay reports a total of 15 deaths and about 2,000 COVID cases.