Agroguayabito S.A.

completed

- 3 - International Finance CorporationA Member of the World Bank GroupInternational Finance CorporationA Member of the World Bank GroupEnvironmental Review Summary (ERS)Project Name: Peru: Agro GuayabitoRegion: Latin America and CaribbeanSector: Food and AgribusinessProject No.: 0089291. This project involves expanding the Company’s agribusiness operations along the Peruvian coast north of Lima. Specifically, Agro Guayabito is expanding its asparagus and tomato production plantations by 1200 ha, developing new sugar cane plantations of up to 800 ha, constructing related infrastructure and irrigation canals, and developing on-farm and industrial infrastructure and worker housing including a tomato paste production plant and an asparagas production plant. Total project cost is US$30 million of which IFC will provide a loan of US$7 million and an equity investment of US$1 million. 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. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s Agribusiness Department staff. The following potential environmental, health and safety impacts of the project were analyzed: · land use in agriculture expansion areas and presence of environmentally-sensitive areas and critical natural habitat;· agricultural practices and pesticide use, including impacts on soil, water air and human health;· air emissions, wastewater effluents and solid wastes from asparagus and tomato processing facilities;· irrigation water source and impacts on groundwater levels;· storage and handling of agricultural chemicals; and· general worker health and safety.The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.3. Agricultural expansion will take place on presently unused land adjacent to existing farmland in the vicinities of the towns of Chancay, Huacho and Barranca, located between 80 to 200 km north of Lima along the Peruvian coast. The land to be developed is desert land with scrub vegetation characteristic of this area. There is one protected area in the vicinity of Barranca, the Lachay National Reserve, which consists of a 400 ha reserve plus a surrounding buffer zone of 5000 ha to protect the ecological integrity of the reserve. Agro Guayabito’s farms are located outside the buffer zone and will have no impact on the Reserve.4. Agro Guayabito applies integrated pest management and environmentally sound control technologies on all of its farms. Agro Guayabito operates its own entomology laboratory and has a successful program for identifying, capturing and breeding beneficial native insect predator species for re-release into the fields. The company is advised in its agronomic and biological control programs by leading university reseach agronomists in Peru, and the technical staff regularly participate in technical training courses abroad. Pesticide use is integrated into the pest control program and pesticides are only used as needed. Only pesticides approved by the USDA are used. All pesticides are appropriately labelled, stored and handled to ensure worker safety. The project will fully comply with the World Bank Group guidelines on pesticide use and pest management.5. Water use rights in Peru are managed by the government to ensure that supply is adequate for all authorized users. Agro Guayabito has authorization from the Ministry of Agriculture to use one liter/sec per hectare for its farms. Agro Guayabito has been developing and applying techniques for drip and microspray irrigation to conserve water. Water supply for the expansion at the Barranca farm will be from the Pativilca River. There is adequate flow in all seasons to meet the project needs. The expected rate of water withdrawal will not have any impact on groundwater supplies.6. Power supply for all sites is from the national electrical grid. The tomato paste plant has two small boilers of less than 3 MWe capacity which have appropriate pollution control equipment installed. No significant air emissions are anticipated. Any new boilers installed in the processing facilities will meet World Bank Group guidelines.7. Water is used for washing in the asparagas and tomato paste processing plants. This water receives mechanical treatment for particulate matter and grease removal, and is subsequently reused for irrigation purposes. The sponsor has committed that any water discharged off site will meet the World Bank Group guidelines. 8. Organic wastes from the processing plants are recycled as poultry feed or for fertilizer.9. Agro Guayabito also operates a chicken rearing operation on ten farms in the Chancay region. Chickens are raised intensively under strict USDA feeding and sanitary standards. There are no significant air emissions or liquid effluents from these facilities, and all solid wastes (manure) are used as fertilizer. The chickens are sold to other packers, and there is no meat processing facility as part of this operation.10. Agro Guayabito is providing worker housing at the Barranca farm which will be provided with electricity and treated water and appropriate facilities for liquid effluent treatment and solid waste disposal.11. IFC will monitor ongoing compliance with World Bank environmental, health and safety policies and guidelines during the lifetime of the project by evaluating reports submitted annually to IFC by the sponsor and by conducting periodic supervision.12. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that Agro Guayabito’s proposed project will meet World Bank environmental, health and safety policies and guidelines and host country requirements.L:\wpeu\PNEAME\PERU\agroguay.ers.docMay 13, 1998 6:01 PM