This is a category III project according to the IIC’s environmental and labor review procedure because it could produce certain effects that may be avoided or mitigated by following generally recognized performance standards, guidelines, or design criteria. The main environmental and labor considerations related to the project are environmental management system and third-party certification; quality control and food safety; liquid effluent treatment; solid waste management; air emissions; occupational health and safety, fire prevention and firefighting; and labor practices and social issues.

During the May 2011 environmental assessment visit to Fertisa’s facilities in Guayaquil (fertilizer warehouse, fertilizer plant, and port services terminal) and Reybanpac’s facilities in Quito and Santo Domingo de los Tsáchilas (Sangolquí and Mirador de Ila dairy product plants and wooden pallet factory), an update of the Environmental and Social Action Plan (ESAP) concerning management of the environmental, labor, and social issues related to their operations was submitted to the IIC. The summary describes the actions set out in the ESAP, which include conducting a cleaner production audit and building a new wastewater treatment plant at the Mirador de Ila facility.

Environmental management system and third-party certification. Reybanpac holds GLOBALG.A.P. certification for good agricultural practices in producing, harvesting, and packaging bananas and pineapples, ensuring compliance with sustainable agriculture standards for crops exported to the European Union. Its banana growing operations are also certified under Tesco Nature’s Choice (TNC) standards. Good agricultural practices refer to the entire process of growing, processing, and safely transporting high-quality fruit. To achieve this, priority is given to protecting the environment and human health by following the safest widely accepted environmentally friendly and hygienic methods and using pesticides rationally. The crop plantations only use pesticides approved by the United States Environmental Protection Agency (EPA) and GLOBALG.A.P. Reybanpac also has 4,000 hectares of forest plantations whose sustainable management is Forest Stewardship Council (FSC) certified under the Rainforest Alliance’s SmartWood program.

Fertisa and its port services operation are certified under quality standard ISO 9001. The company is ISPS (International Ship and Port Facility Security) Code certified by Ecuador’s maritime authorities, and it holds BASC (Business Alliance for Secure Commerce) certification.

Quality control and food safety. The food safety and quality of dairy products from Reybanpac’s Sangolquí and Mirador de Ila industrial facilities are ensured by HACCP (Hazard Analysis and Critical Control Points) certification of both plants. This certification encompasses the reception, processing, packaging, and storage of milk and dairy products.

Liquid effluent treatment. The Sangolquí industrial facility has a plant for treating the liquid effluent from processing milk. Treatment consists essentially of biological aerobic treatment with activated sludge, physical-chemical treatment, and filtering to remove dissolved organic contaminants and suspended solids from the water. The treated liquid effluent is discharged into the municipal sewer system, and the sludge is disposed of by an authorized waste manager. The company monitors treatment plant operations by regular sampling and laboratory testing. According to the most recent analyses (September 2010), liquid effluent quality at the Sangolquí treatment plant complies with Ecuadorian discharge limit regulations and the limits established in International Finance Corporation environmental, health, and safety guidelines for dairy processing.

Reybanpac has a wastewater treatment plant that began operating in 2004 to treat the liquid effluent from the Mirador de Ila milk processing facility. Following treatment, the liquid effluent is discharged into a stream. However, the volume and organic load of the liquid effluent from the Mirador de Ila facility have increased since industrial operations were expanded in 2006 to include the manufacture of cheese and yogurt, exceeding wastewater treatment plant capacity. At the time, the company informed the IIC that it would increase existing treatment plant capacity to improve its operations and reduce the high concentration of liquid effluent contaminant parameters BOD5, COD, and suspended solids. The project to improve treatment plant operations has taken Reybanpac longer than expected. According to the company, this is because it has been evaluating solutions proposed by several different consultants, in search of the best possible solution at an affordable cost. In the meantime, the company has taken steps to bring down the liquid effluent contaminant load and improve effluent quality. For example, whey from the production process is no longer discharged into water streams but is recovered and used to make a new product.

Under the ESAP, Reybanpac will engage a cleaner production consultant to audit its industrial facilities with a view to reducing contaminant generation and water and energy consumption rates and optimizing the design of a new wastewater treatment plant, cutting treatment costs by using inputs efficiently. The cleaner production audit is expected to be completed by December 2011; the new wastewater treatment plant is expected to be installed and running in the first half of 2013. The IIC will require that Reybanpac’s new treatment plant in Mirador de Ila meet discharge parameters set by Ecuadorian regulations, as well as discharge limits and international good practices pursuant to International Finance Corporation environmental, health, and safety guidelines for dairy processing.

Solid waste management. Besides the dairy product plant, Reybanpac’s Mirador de Ila facility has a SmartWood certified wooden pallet plant that generates biomass waste (sawdust) that must be disposed of appropriately. The sawdust is now just piled on the grounds of the facility. Reybanpac will therefore use the sawdust instead of fossil fuel (bunker oil) to generate steam, thus reducing the emission of atmospheric contaminants. A new steam boiler fueled by sawdust has been purchased and is being installed in Mirador de Ila.

Air emissions. In order to model the dispersion of gases (mainly carbon monoxide, nitrogen oxides, and sulfur dioxide) and particles from the new biomass (sawdust) boiler, Reybanpac engaged a laboratory accredited by the environmental authorities for assessing fixed-source emissions. The dispersion of atmospheric contaminants was assessed using the AERMOD computer model recommended by the EPA for determining the impact of the biomass boiler on receptors in the area of influence. Contaminant dispersion modeling for January 2011 shows that the expected peak concentrations for the parameters assessed are below the maximum levels allowed by regulations. Emissions from the biomass boiler are not expected to impact air quality in the area of influence. Besides, the boiler will have a gas scrubber to ensure compliance with the standards set in International Finance Corporation environmental, health, and safety guidelines. During the visit to the Mirador de Ila industrial plant, it was seen that the boiler and the gas scrubber are on site and being installed by Reybanpac. After the biomass boiler is installed, the first emissions monitoring is scheduled for this year. It is estimated that the biomass boiler will reduce greenhouse gas emissions by 5,400 tons of CO2 equivalents.

Reybanpac is also working on a plan for using a non-ozone-depleting refrigerant in all of the refrigeration equipment at its facilities. To date this corrective action has been completed at the Guayaquil distribution center. All of the refrigeration equipment at the Sangolquí plant is scheduled to be using the new refrigerant by late 2011. The plan will be in place at the Mirador de Ila plant by December 2012.

Occupational health and safety, fire prevention, and firefighting. During the assessment visit it was seen that Fertisa’s facilities and Reybanpac’s dairy product plants and wooden pallet factory have fire prevention and firefighting systems with a network of fire alarms and extinguishers. There are safety and evacuation route signs. Evacuation and firefighting drills are held regularly. All workers receive occupational health and industrial safety training during the induction period. Workers are provided with the individual protection gear that they need, and the use of the gear is monitored. The Fertisa facility and the port services terminal are equipped with closed circuit television systems for security purposes. All contractors are required to comply with occupational health and safety measures established by the companies.

Labor practices and social issues. Reybanpac and Fertisa comply with International Labour Organization (ILO) core labor principles concerning workers’ rights. Reybanpac’s and Fertisa’s workers receive the benefits established by Ecuadorian labor law. All contractors and independent agricultural suppliers are required to provide their employees with these benefits and comply with occupational health and safety and minimum working age regulations. They must also submit regular compliance reports to Reybanpac and Fertisa. Wong Foundation, an entity related to the companies, runs several environmental and health programs for improving the quality of basic education, especially in rural areas where Reybanpac’s and Fertisa’s agricultural production units are concentrated. Assistance is provided under agreements with Ecuador’s Ministry of Education, supporting thirty-four elementary schools and benefiting 4,000 students. And a tutorial apprenticeship program was set up to offer young and adult farmers, even from the most remote rural areas, the possibility of a secondary education. Since 1998, the Wong Foundation has been in charge of managing and preserving the biodiversity of a biological research station encompassing one hundred hectares of the Río Palenque rainforest that the Ecuadorian government designated as a protected area in 1971.

Oversight and monitoring. Reybanpac and Fertisa will continue execution of their Environmental and Social Action Plan, which includes monitoring and regular reporting to ensure that the companies comply with domestic regulations, IIC environmental and labor review requirements, and international good practices as set out in International Finance Corporation environmental, health, and safety guidelines.