NCH Farming

complete

Financing of pre- and post-harvest working capital needs of farms majority owned by NCH New Europe Property Fund L.P. (“Fund”) in Ukraine. The Project is aimed to assist the farms in achieving higher efficiency and ultimately better crop yields. The Project is expected to enhance the competitiveness of the Ukrainian primary agriculture through the following: significant improvements in the efficiency and productivity of operations of the Fund's farms on the existing agricultural land and development of cultivation on previously fallow land, introduction of international expertise and modern farming technologies at the Fund’s farms, demonstration of efficiency and technological improvements in agriculture, knowledge transfer to employees and other farms, generation of above average yields, and the application of the Warehouse Receipts System (when operational) by the Fund’s farms. NCH New Europe Property Fund L.P. is a property fund, which is fully invested in a mix of real estate assets and farming companies in Eastern Europe and the former Soviet Union. The Fund owns, via its majority stakes in three Ukrainian joint ventures (the “JVs”), 35 farms and elevator companies in Ukraine. Up to USD 50 million long-term revolving loan. Working capital needs are estimated to amount to USD 70-100 million. Environmental classification and rationale According to EBRD's Environmental Policy and Procedures (2003) this project has been categorised B/1. EBRD due diligence was structured to understand current environment, health and safety ("EHS") impacts of the Fund’s farms and issues associated with the current operations of the three JVs and the potential future impacts associated with bringing more land back into production. Information reviewed during the environmental appraisal The Fund submitted information to the Bank on its current policy for the promotion of good agricultural practices and the development of more sustainable agriculture. The Bank retained the services of a third party environmental consultant to undertake a review of those policies, to gain an understanding of how those policies are applied at the JV and farm level, to review the current range of environmental and social issues on the farms, and to propose an environmental and social action plan ("ESAP"). Key environmental issues and mitigation The review identified a number of areas that require attention, including worker facilities, handling of agricultural chemicals, infrastructure and health and safety management. These issues will be addressed by implementing the recommendations contained in the ESAP. Environmental and social opportunities The Fund is aware of the benefits of improving agricultural practices and is already committed to implementing actions which improve social and cultural improvements, local infrastructure and assisting local communities in Ukraine. Such actions include continuing to support local schools, kindergardens and cultural events, and contributing to the improvement of roads and solid waste collection /management. The Fund could also contribute towards improving awareness of environmental issues in local rural populations. The introduction of improved environmental practices and modernisation works could improve the environmental performance of the JVs and the farms while involving local people. Better public information and efforts to raise awareness could contribute towards this. Summary of Environmental Action Plan The ESAP has been prepared and includes actions at the Fund, the JV and the farm levels. The ESAP aims to ensure compliance with Ukrainian and EU environmental and social standards and requirements. A two-stage approach will be adopted to achieve this, with the ESAP providing recommendations for improvements at the Fund level, and the Fund then being responsible for implementing its policies at farm level. Disclosure of Information and Consultation The Client will carry out its activities in accordance with national requirements for public disclosure and consultation. Additionally, the Client is disclosing this summary of key environmental issues locally, in accordance with EBRD requirements, prior to the EBRD's final management review of the project. Monitoring and Reporting The Client will provide the Bank with an annual environmental report and immediate notification of any material incidents or accidents likely to have an effect on the environment or worker and public safety. Funds are being sought to establish post-investment sustainable farming programme at selected Fund's farms in Ukraine. Michael Bertram, Head of NCH Ukraine E-mail: michael@nchadvisors.kiev.ua tel. +38044 2843688 NCH Advisors Inc. representative office in Ukraine: 5th floor, 28, Kominterna str., Kiev 01032