Sociedad Agricola Viru S.A.

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Project Number: 
PE-L1168
Expected Consideration Date by the Board: 
06/07/2016
Date Posted: 
04/26/2016
Company: 
Sociedad Agricola Viru S.A.
Sponsoring Entity: 
Not applicable
Financing Requested: 
Cross-Booked Amount of Transaction: IIC A Loan Up to US$8 million; IDB A Loan Up to US$40.5 million
Sector: 
Agricultural Products
Country: 
Scope Objective: 

Company Description
Sociedad Agricola Viru S.A. (“Viru” or the “Company”) is one of Peru’s leading agro-exporting companies that ranks within the country’s top three exporters of processed asparagus, artichokes and peppers. The Company began operations in 1994 as a processor of asparagus and has achieved greater product diversification (artichokes, peppers, sauces lines) during its 20 years of business operations. It conducts its agricultural operations on approximately 6,190 hectares (ha) of land (owned and leased) certified under Globalgap, employs approximately 7,500 people, and provides technical assistance to approximately 300 small farmers in its supply chain to ensure high quality food products.

Project Objective and Description
IIC proposes to provide a senior secured corporate loan to Viru to finance the deployment of new technologies to expand its vegetable processing export business and conduct its operations in a socially inclusive and environmentally sustainable way. These actions are expected to strengthen Viru’s competitiveness. The investment plan includes: i) increase agricultural output by developing additional asparagus, avocado and other plantations; ii) increase the application of technologies to conserve water on irrigated land, improve food quality, and reduce production costs; iii) improve its financial structure by refinancing an existing loan; and iv) finance working capital  and a gender equality certification (collectively, the “Project”).

Environmental Review: 

This is a category B project according to the IIC’s Environmental and Social Sustainability Policy.  The primarily environmental and social risks relate to agrochemical contamination or misuse, poor waste management and treatment of effluents, over use of local water resources, possible impacts on surrounding natural habitats or cultural sites, as well as possible labor, health and safety impacts.  These risks and impacts are deemed to be minimal to moderate and can be avoided or mitigated by following generally recognized performance standards, guidelines, or design criteria.  The IIC has agreed with the client to implement a series of mitigation measures to address these potential risks.  These have been defined in an Environmental and Social Action Plan and agreed with the client.

Environmental and Social Action Plan:

Action

Terms

Responsible

Corrective Measures

Follow-up Actions

1

Full compliance with the agricultural sector environmental licensing standards to  complete the regularization  under the Executive Decree No. 019-2012-AG (Agricultural Sector Environmental Management Regulations), and, if required, the appropriate and timely development of any outstanding PAMAs for the respective farms.

36 months

Viru

1.Determine any mandatory legal requirements to be met.

2.If needed, implement any relevant PAMAs through the consulting firm authorized by MINAGRI.

1.Identification of any statutory requirements to be met.

2.Implementation of the relevant PAMAs.

2

Design and implement the industrial effluent treatment system for Viru industrial facilities in order to met the Environmental Quality Standard for Class III (DS-002-2008 MINAM), pursuant to agreement with the DGAA under the environmental licensing process framework.

36 months

Viru

1.Full annual monitoring of effluents from the Viru industrial facilities.

2.Design of a treatment plant for   industrial effluents.

3.Implementation of a treatment plant for industrial effluents.

1.Monthly assessment of effluent monitoring results.

2.Establish terms of reference for consulting agreement for the design of the effluent treatment plant.

3.Implementation of a treatment plant for industrial effluents.

3

Implement an adequate wastewater treatment system for the cleaning process of agrochemical-contaminated equipment with a wide ranging scope so as to cover all agricultural operations of the Company.

18 months

Viru

1.Improve the wastewater treatment system of the existing agrochemical equipment cleaning process.

1.Optimize the existing wastewater treatment system.

2.Review the treatment system effectiveness.

4

Propose a set of objectives, goals and indicators for monitoring the effective use of resources, namely the water use in the industrial plan processes, to meet the water use ratios recommended by the IFC Guidelines -- Environmental, Health, and Safety Guidelines - Food and Beverage Processing.

18 months

Viru

1.Identify water use assessment issues in industrial facilities.

2.Establish corrective measures in water use.

3.Design objectives, goals and indicators to check water use effectiveness.

1.Monitor any identified water use.

2.Monthly review of planned objectives, goals and indicators.

5

In terms of SIG, establish objectives, goals and indicators to monitor the incidence of occupational diseases of any kind, incidents with acute and/or chronic intoxication resulting from agrochemicals, the effectiveness of any ergonomic management actions being currently implemented, and any other that the Company may deem relevant for monitoring any significant dangers/risks to occupational safety and health.  Based on the results from these indicators, propose any preventive or corrective actions that may be deemed appropriate.

12 months

Viru

1.Annual update of the IPER, including objectives, goals and indicators.  

1.Annual review of the IPER, including goals and indicators.

 

6

As for claims, keep a grievance system, registering every complaint received (whether internal or external), any resolution and relevant dates.

Disbursement

Viru

     

1.Annual review of complaints and resolutions to assess any potential areas for improvement.

7

Show the effectiveness of using PPE for workers who are exposed to occupational noise above the permitted levels, through indicators of hearing loss to be established based on the annual hearing tests.

12 months

Viru

1.Identify any occupational groups who are exposed to occupational noise.

2.Implement hearing assessment tests for such occupational groups at risk.

1.Keep records of any occupational groups at risk.

2.Annual review of hearing assessment tests for such occupational groups at risk.

8

Upgrade facilities and the use of PPE in the agrochemical product storage areas, with exhaust fans, emergency showers, eyewash and other appropriate upgrades.

12 months

Viru

1.Reinforce the adequate use of the PPE, and provide training in PPE use.

2.Assess facilities and the use   of PPE in the areas where agrochemical products are stored.

3.Implement improvement in   the facilities.

1.Evaluate the PPEs of any occupational groups at risk.

2.Keep records of assessment of facilities and the use of PPE in the areas where agrochemical products are stored.

3.Ongoing assessment of any implemented improvements or upgrades.

9

Develop an Ergonomic Management Plan, as part of the Company´s Annual Plan of Occupation Safety and Health, as relevant to agricultural and industrial operations, and aligned with OSHAS 18001 standard, that may continuously reduce the incidence rate of ergonomic disorders.

12 months

Viru

1.Updating records of ergonomic disorders.

2.Check the incidence rate of any ergonomic disorders resulting from agricultural and industrial activities.

3.Review and update of the Ergonomic Management Plan.

1.Record of the incidence rate of ergonomic disorders.

2.Monthly checklist of the Ergonomic Management Plan compliance progress.

10

Based on best efforts, secure legal opinion of the Ministry of Culture on any required actions to ensure that all farms of the supply chain that have been converted/planted before the CIRA requirements are duly updated as per the current legal framework, and as appropriate in each case.

12 months

Ministry of Culture

Viru

1.Review of any applicable legal regulations and their impact on the Viru units. 

2.Record of any applicable legal regulations.

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