AD'ORO Alimenticia E Comercia LTDA.

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Project Number: 
BR1111A-01
Expected Consideration Date by the Board: 
12/12/2000
Date Posted: 
11/14/2000
Company: 
AD'ORO Alimentícia e Comercial Ltda
Financing Requested: 
Sector: 
Agricultural Products
Location: 
Country: 
Scope Objective: 
Project Description: The two main reasons for the IIC to participate in this project are: i) more than 50% of IIC's funds (US$3.4MM) will be used to finance more than 230 small growers; and ii) the project will have an important environmental component, with around US$1.0MM to be used to finance environmental upgrades.
Environmental Review: 
The site appraisal was performed in October, 2000. This project is categorized as III, because it consists of expansion projects at already operating sites at which there are potential impacts that are known and have well defined solutions. The areas of concern related to this project are the following: (1) liquid effluent treatment; (2) odors emanating from the rendering plant; (3) solid waste management; (4) occupational health and safety; (5) food safety; (6) fire safety and emergency response; and (7) labor issues. The following summary is based on information received from the client, a site visit, and opinions from the technical consultant.

The project consists of the expansion and consolidation of the chicken processing facilities located in Varzea Paulista, from 135,000 to 185,000 birds per day, upgrading the feed mill located in São Carlos; and of upgrading 335 chicken grow-out facilities located between the feed mill and the processing plant. The expansion of the processing facility will enable the consolidation of all processing at one site. The production expansion will also be acompanied by the expansion of the water treatment facilities and the implementation of a biological odor reduction plant. The project will add 100 new contract farmers to the existing 235 and provide them with state-of-the-art wind tunnel equipment to improve bird health and coop densities. The feed mill will also be upgraded to improve the quality of the food and hence improve the feed conversion ratio.

Compliance with National Laws: The legislation and enforcement of the environmental, occupational health and safety, food safety, and workers rights in the state of Sao Paulo in Brazil is well developed. Environmental issues are managed by CETESB, the Ministry of Agriculture manages food safety, and labor standards are enshrined in local and national laws. ADÓRO is in good standing with the relevant state and local authorities and has received CETESB approval to proceed with its expansion project.

Liquid Effluents: The company currently treats its liquid effluents to a level that is acceptable for discharge into the municipal system. For the expansion project, however, the company intends to upgrade its water treatment to the level where it is able to discharge into a neighboring stream. This action is motivated largely by the cost of discharging current and potentially higher loads into the municipal system. The new water treatment system will also include the capacity to reduce nutrient levels, ammonia and phosphorus, which is not currently possible. The requirement to meet strict nutrient discharge levels is a requirement of the IIC and is also consistent with the recent changes in the CETESB requirements with respect to these criteria. It is important to note that the company has engaged in several modifications in its process to reduce point loads and water use in its plant. Additionally, the company is currently experimenting with a new U.S. Food and Drug Administration (USFDA) approved flocculating agent that will allow it to recycle sludges in its rendering operations, thereby further reducing loads that must be treated as well as increasing the production of saleable products. The proposed water treatment system will enable the company to achieve Sao Paulo state, IIC, and internationally acceptable water quality discharge standards.

Odors: The company will install a biological filter capable of removing the odors emanating from its rendering operations. Biological filters are currently used successfully at other rendering operations in Brazil and offer the advantages of relatively low capital and operating costs.

Solid waste management: Solid waste management is good both at the grow-out facilities and hatcheries, and on the farms and at the processing facility. At the grow-out facilities the solid waste, consisting of bedding impregnated with feces, is managed by composting by the farmers, who use it as animal feed. Dead birds are incinerated or buried in septic pits with quicklime. The discarded eggs from the hatcheries are crushed and sold to nearby orchards as fertilizer and a source of calcium. At the chicken processing facility, very little solid waste is generated since almost all of the raw material input is converted into saleable products. The process organic sludge that is currently generated is sold to other agricultural enterprises as fertilizer. The other solid wastes generated from packaging materials, etc., is separated and placed in marked containers and sold to recycling material collectors. The company is investigating the use of USFDA approved flocculating agents to enable them to render the floc from their primary water treatment plant and hence further decrease solid wastes.

Occupational health & safety: Health and safety standards at the company's facilities are good. The issues related to OH&S at the company's facilities include exposures to noise, low and high temperatures, moving equipment, and wet floors. There is a good level of occupational health and safety awareness at the company's facilities; adequate working and safety equipment is provided and was observed to be worn by workers. Additionally, via modifications in certain work areas and training implemented in 2000 there has been a significant reduction in the number of accidents. In May of this year the company hired an external consultant to study the work environment in all parts of its processing plant with respect to parameters such as lighting levels, temperature, noise levels, etc. The report makes a series of recommendations for improvements that the company is implementing.

Food safety: Food safety at AD'ORO is in compliance with the requirements of the state of Sao Paulo. There is a "Serviço de Inspeção Federal" inspector with an office provided by the company at the compound, and a number of assistants at critical points in the processing plant. The inspectors make observations and take samples to assure food safety. There is good separation of areas in the plant between the different steps of the processing of the birds, which helps prevent the transfer of bacteria and other contaminants from one work area to the next. The expansion project contemplates additional separation of the processing phases to enable the company to achieve the standards required for the export of food. The company has implemented a 5-step quality system that applies five criteria of quality selection, organization, cleanliness, health, and discipline to each aspect of their process. This system is managed by a quality engineer, is also applicable to general occupational health and safety, and is a good forerunner to an ISO type system. Sanitation is generally very good in the processing plant, however, the company has been advised that area over the chiller entrance needs to be better cleaned, and the ceiling near the blast freezer tunnel needs to have the insulation sealed so as to avoid the possibility of harboring bacteria.

Fire safety and emergency response: The project contemplates the improvement of the fire system at the processing facility by installing a water network and hydrants. All of the company's facilities are currently served by fire fighting equipment located at strategic points. There are well-marked exits and directional signs. The company has training programs for its employees and keeps records of the subjects and participants. There is a first aid facility at the processing plant and a nurse on duty for each shift as well as daily visits by a doctor.

Labor: The company employs about 530 workers, about 60% of whom are production workers at the processing facility. Most of the production workers are members of the Sindicato dos Trabalhadores nas Indústrias de Alimentação. The average wage of the production workers is more than two times the minimum wage, and the cost of the benefits (retirement, retrenchment, health, etc.) represents an additional 48% to the wage. At the processing facility the company provides subsidized meals. Chicken is sold to employees at a reduced price, and food boxes are also provided as an incentive for good attendance. Other than safety and job related training, the company has initiated a literacy program with two hours of instruction on a daily basis.

Monitoring and Annual Reporting: The sponsor will develop an Environmental Management Plan (EMP), which will include a schedule for the implementation of environmental projects and a monitoring and reporting program to ensure that their facilities are complying with national laws and IIC's environmental guidelines. The EMP will also include an Environmental Management System (EMS). The EMS will describe who will be responsible for monitoring the implementation of environmental activities. The sponsors will submit an annual report summarizing the monitoring data related to occupational health and safety, fire safety, accident reports, air emissions, wastewater discharge, solid waste disposal, food safety and quality control, and labor related issues.