Union Agroindustrial de Caeros S.A. ("UNAGRO" or the "Company") owns the second largest of six sugar mills operating in Bolivia, with a milling capacity of 3.1 million tons of sugar cane per year. IFC documentation states that the loan "will support the Company's investment plan started in 2011 of approximately US$51 million consisting of: (i) an increase in sugarcane processing capacity from 12,000 tons/day to 24,000 tons/day; (ii) an increase in distillery capacity from 100,000 l/day to 250,000 l/day and (iii) financing of working capital needs." The company and project are located in Minero, 80 Km to the North of Santa Cruz de la Sierra, Bolivia.
APPLICABLE SOCIAL AND ENVIRONMENTAL STANDARDS:
IFC states that the location of the sugar cane plantation is within long-established agriculture areas in Santa Cruz which have been developed since the early 1900's, requiring no conversion of natural and/or critical habitats in the vicinity of UNAGRO lands, leading to biodiversity loss, rendering PS5 inapplicable. An Integrated Biodiversity Assessment Tool analysis showed that the nearest protected area, the National Park of Amboro, is 60 Km away from the boundaries of UNAGRO.
IFC also finds that there is no presence of indigenous people or prior cultural asset history in the project area, thereby rendering PS7 (indigenous peoples) and PS8 (cultural heritage) as inapplicable to this project.
ENVIRONMENTAL AND HUMAN RIGHTS RISK ASSESSMENT
Annually, Bolivia produces over 6 million tons of cane. According to the ILO, sugar cane production is associated with major safety and health hazards to workers including: injuries from machetes, musculoskeletal injuries from repetitive movements, long term injuries from pesticides, high levels of sun exposure, respiratory problems from smoke, snake and insect bites,and long working hours and stress. Further, the Solidariad Network in Bolivia reports that about 60% of the sugar cane harvesters are temporary migrants from Bolivia's poorest areas, living in very bad conditions, mostly in shacks, with no hygiene and no privacy.
The UNAGRO operation has 940 permanent employees as of November 2013, with women representing about 5% of the workforce. The IFC states that the harvesting at UNAGRO is 100% mechanized, but a due diligence review found that the OHS management at the UNAGRO mill requires overhauls in protective guards for moving parts of machinery, repairs of unfastened stairway railings, general housekeeping, etc., to eliminate workplace hazards. Additionally, the IFC notes that the mill Lost Time Injury Frequency Rate is higher than the industry benchmark. IFC further requires that UNAGRO update its ventilation and air exchange, as well as carry out analysis of metals in process water in order to mitigate risks to workers. Additionally UNAGRO must conduct an OHS audit at the Roberto Barbery sugar mill, in accordance to international recognized standards (i.e. OSHAS 18001) and the World Bank Group's General and Sugar Manufacturing Environmental Health and Safety Guidelines. IFC states that the review and remediation should focus on the workplaces and processes most commonly associated with accidents and near misses, materials losses, etc. Any hazards not properly managed could result in death or significant injury to local employees.
Child labor has been rampant in Central and South American sugarcane operations. Specifically, the Department of Labor has found that children in Bolivia have been engaged in the worst forms of child labor, including in hazardous activities in agriculture and mining. Specifically with regards to sugarcane production, children commonly carry heavy loads, work long hours, and use dangerous tools that could cause injury, such as machetes. Some Bolivian children from rural areas seek work as domestic servants in urban, third-party homes under circumstances and conditions that could be considered indentured servitude.
IFC states that UNAGRO's human resources policy has a clear mandate to observe ILO Conventions 138 on Minimum Age and 182 on Worst Forms of Child Labor in its direct operations contractors and its sugar cane suppliers. The apprenticeship programs must comply with applicable local and ILO requirements. As such UNAGRO must engage with NGOs, government initiatives, and use certification procedures to prohibit any incidence of child labor, and conducts field audits that will be systematized. Currently about 70% of all third-part sugarcane is delivered by shareholders of UNAGRO. A mix of mechanical and manual harvest of cane takes place at each of the supplier's fields. IFC states that the Company must formalize field audits and follow up procedures to ensure adoption of PS2 requirements and that there will be no events involving child labor in their sugar cane supplier operations (in compliance with ILO Conventions 138 on Minimum Age, and 182 on Worst Forms of Child Labor).
The following questions may be relevant in determining whether you or your community has suffered a violation of your labor rights due to UNAGRO's operations:
Sources: Department of Labor Report of Child Labor in Bolivia; ILO Safety and health fact sheet for sugar cane, Towards a more sustainable sugar cane production in Bolivia; IFC environmental documentation
Right to Health
In addition to all the health hazards documented above (machete injuries, musculoskeletal injuries, sunstroke and heat exhaustion, pesticide poisoning, and respiratory problems from smoke), sugar cane workers have been plagued by a chronic kidney disease ( CKD), referred to by the IFC as "Chronic Renal Insufficiency" (CRI). The IFC states there has been no occurrence of CRI among UNAGRO employees and "no trace of knowledge of the disease in any sugar can operation in Bolivia." However, workers in Nicaragua on a project previously financed by the IFC have been battling CKD/CRI, and these problems have also been documented in El Salvador, Costa Rica, and Guatemala. Although the cause of the disease is unknown, many believe it is related to the chemicals applied to the cane or the working conditions that are prevalent to sugarcane fields.
Moreover, although the IFC contends that "UNAGRO intends to continue to maintain strong relationships with local communities by sponsoring schools, and other services within its area of operations. UNAGRO maintains and expands its social projects to economic vulnerable groups, children, to address immediate social and economic problems and improve the infrastructure within the rural areas where UNAGRO operates," research in the area of Santa Cruz has reported that medical attention for laborers in the area is deficient, as only 9% declare having received care in the encampment in which they live during the harvest. Children and women especially suffer from a lack of healthcare. Any health problems created by labor conditions or chemicals used in the sugarcane process may place increased stress on an already weak healthcare system and pose a risk to the health of workers.
The following questions may be relevant to assessing whether you or your community's right to health has been impacted by UNAGRO's operations:
Source: What is killing sugar-cane workers across Central America?; The CKDu Public Health Epidemic; Bolivia: Sugarcane production in Santa Cruz; ILO health and safety fact sheet sugar cane production; IFC environmental documentation
Right to Water
According to the World Wildlife Fund, silt from eroded soils and nutrients from applied fertilizers used for sugarcane operations often foul local water supplies. Although the IFC states that it is theoretically satisfactory to apply treated effluent to clay-rich soils, without the potential for contamination of aquifers, any discharge or leakage may pose a risk to the local groundwater supply, and consequently, community health.
The following questions may be relevant to determining whether you or your community's right to water has been violated by UNAGRO's operations:
Source: World Wildlife Fund, IFC environmental documentation
Right to Healthy Environment
According to the World Wildlife Fund, in addition to the impacts from production, there are a number of environmental problems associated with sugarcane mills in the form of wastewater, emissions, and solid waste. Wastewater includes the water used to wash all incoming cane, water from the boiler house used to concentrate the sugar and evaporate the water, and water from cleaning all the equipment. WWF notes that "the release of massive quantities of plant matter and sludge often absorb all the freshwater oxygen as they decompose in freshwater bodies, which in turn leads to massive fish kills." Additionally, according to the World Wildlife Fund, sugar processing harms the soil as well, "gradually reduces fertility and forces growers to rely increasingly on fertilizers to replace it. The removal of plant matter from the fields makes the production of sugarcane unsustainable, as it is traditionally practiced."
Communities are located within some 2 - 4 km of the limits of the UNAGRO field and processing operations in the city of Minero, and there are approximately 940 permanent employees exposed to UNAGRO's activities. With regards to waste, IFC states that the main waste categories at UNAGRO in tons per month are: paper and cardboard-8 tons; plastic-4 tons; ashes from boilers- 490 tons; and metal waste-10tons. Solid wastes from sugar processing emanating from sugar mill operations include stack emissions scrubbers, juice clarification (cachaza or press mud), boiler ash and others that are all diluted with effluents and sent to the agricultural fields as organic fertilizer. IFC further states that wastewater from the sugar mill operation is treated in a series of 20 large oxidation ponds or lagoons. If not properly diluted, this could result in soil contamination. A set of 12 ponds perform an initial treatment, supplemented by a set of 8 ponds as polishing ponds to provide additional biochemical oxygen demand (i.e. amount of oxygen need to break down organic material in a body of water overtime) removal and suspended soil removal. IFC holds that it is theoretically satisfactory to apply such treated effluent to clay-rich soils, without potential for contamination of aquifers. As outlined in the environmental and social action plan, UNAGRO must assess water quality at the point of discharge of the ponds, and compare against the regulatory standards for Bolivia, applicable World Bank Group Environmental Health and Safety guidelines for soil discharge, and report to IFC. However, in the event of any leakage, contamination of the aquifer would pose a risk to the environmental health of employees and local communities.
Additionally, IFC documentation states that UNAGRO uses a mix of physical, biological, and chemical applications to control pests, including some World Health Organization Category 2 pesticides, which includes moderately hazardous chemicals. One of the main causes of CKD is believed to be the chemicals involved in pesticide management. If sound chemical management is not practiced, pesticide use at the project could pose a risk to both environmental and human health of employees and local communities.
The following questions may be relevant to determining whether you or your community's right to a healthy environment has been violated by UNAGRO's operation:
Source: World Wildlife Fund, IFC Environmental Documentation, What is killing sugar-cane works across Central America?
Total UNAGRO project cost is estimated at US$67 million. The total IFC investment is up to US$15 million in the form of an A Loan.
An "A" loan for IFC's own account means the IFC provides a direct loan for the project from its own funds, and keeps that debt on its books until the sponsoring company repays in full, again directly to IFC.
UNAGRO's majority shareholder is Corporacion Unagro, which is owned by the Barbery family as well as approximately 1,300 sugar cane farmers.
Mr. Marcelo Fraija
Ingenio Unagro S.A.
Minero Santa Cruz, Bolivia
Telephone: +591 3[924 6044]
Fax: +591 3[924 6044]
IFC documentation states that UNAGRO is known in Santa Cruz to be reliable in following through with promises made to the community and that UNAGRO intends to continue to maintain strong relationships with local communities by sponsoring schools, and other services within its area of operations. IFC also pledges that UNAGRO maintains and expands its social projects to economic vulnerable groups, children, and intends to address immediate social and economic problems and improve the infrastructure within the rural areas where UNAGRO operates.
With regards to the project, IFC holds that UNAGRO has conducted a stakeholder analysis as part of the environmental and social impact assessment and public consultation has taken place as part of applicable requirements for the environmental and social impact assessment disclosure. IFC states that currently, UNAGRO has informal procedures for engagement with the surrounding communities aimed to only responding to community concerns. However, these procedures are not in compliance with the PS requirements. IFC states that this is being addressed in the Environmental and Social Action Plan for the project.
ACCOUNTABILITY MECHANISM OF IFC
The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/