SUSTAINABILITY REPORT 2016
1
PAYC O S . A . - PA R A G U AY
05
I. Introduction
06
II. Letter from the C.E.O.
09
III. Governance
24
IV. Economic dimension
SUSTAINABILITY REPORT 2016
32
V. Environmental dimension
55
VI. Social dimension
66 VII. Index
70
VIII. Abbreviations
PAYC O S . A . - PA R A G U AY
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SUSTAINABILITY REPORT 2016
I. INTRODUCTION1
PAYCO presents its Sustainability Report for the third time, which runs from January 1 to December 31, 2016. The last Report, covering the same period of the previous year, was published in August 2016. During the preparation of the content of this annual publication, a process of consultation of various interest groups has been carried out. The purpose was to validate or expand the relevant issues identified by these parties before including them in the report. This way, from the previous edition, we included consultations to locals of the surrounding communities, as well as to contractors. In addition, we carried out interviews to the staff, members of the Board and shareholders. This report presents essential level content according to the Global Reporting Initiative (GRI) G4 version. In addition, we identify actions that are aligned with the regulations proposed by the International Financial Corporation (IFC). The point of contact for further information is Gloria Helman, Sustainability Coordinator of the company.
Enquiries Sustainability Department +595-21-527 891/2 +595-972-100 503 gbhelman@payco.com.py
1
G4-3, G4-18, G4-28, G4-29, G4-30, G4-31, G4-32
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PAYC O S . A . - PA R A G U AY
II. LETTER FROM THE C.E.O.2
I’m happy to present PAYCO’s third Sustainability Report through which we evaluate our business performance in the economic, environmental and social dimensions during the year 2016. We can assert that this year we registered a recovery, although still moderate, from the effects of climate on last year’s operations. The agricultural performance improved in most of the areas and the rice farming area increased 50%. These are the main aspects that contributed to the upturn of the operating profit. A milestone worth mentioning in the agricultural sector is the Round Table Responsible Soy (RTRS) certification for the sustainable production of soy in the Golondrina farm, this way consolidating our desire to adopt good agricultural and socio-environmental practices. In forestry production, we added 338 ha to the work area, reaching a total of 5.758 ha in 6 operating units that are property of the company. In addition, the sustainable management of the native forest started its second cycle of utilization, after the last forestry intervention 12 years ago. The monitoring indicated that these forests bounced back and they presented indicators with minimal differences in comparison to a virgin forest. This way we confirm the effectiveness of the forestry production model we are adopting in PAYCO, an experience that we are pleased to promote locally, and which allows us to contribute to the global efforts towards the preservation of forest resources and the biodiversity that they safeguard. On the other hand, with regards to the livestock sector, in this report we mention that we register a slight retraction of the herd, the decrease is mainly due to the reduction of the area destined to this production line in the Lomas farm. Regarding the environmental performance, during this year we strengthened our efforts to evaluate in 4 establishments the areas of High Conservation Values (HCV). We are seeking to identify these areas with precision and to establish monitoring indicators that improve our operation and that collaborate with the conservation of the ecosystems and their services. In this same field, I highlight the constant monitoring of the quality of surface water and groundwater developed in 9 operating units with high demand of this resource, and the management of hazardous solid waste, which grew from 1 to 5 establishments during this year. To develop further knowledge about the impacts of our activities over biodiversity, at the end of the year we started an impact evaluation study of the irrigation system of the agricultural fields on the Ypetî reserve forests. This study will be carried out by a multidisciplinary team of specialists led by the Moisés Bertoni Foundation and we hope to share it with you in the next report.
2
6
G4-DMA, G4-1
SUSTAINABILITY REPORT 2016
A milestone worth mentioning in the agricultural sector is the Round Table Responsible Soy (RTRS) certification for the sustainable production of soy in the Golondrina farm. Throughout 2016, we continued to give priority to the certification processes because they strengthen our continuous improvement. Following this path, we installed a more efficient monitoring system that encompasses our value chain, facilitates the follow-up and control of the work conditions, and eases this evaluation. In terms of Health and Work Safety, we increased the procedures for the control of work conditions of the in-house staff and outsourced staff, and we improved the infrastructure conditions. The social security coverage increased 10% for outsourced staff of the forestry, agricultural and service sectors. Regarding the neighboring communities, we also find ourselves strengthened. At PAYCO we want to positively impact the communities where we work and to promote inclusive development. Just to mention a few examples, there was an increase in the scale and scope of the Forestal Outgrower Scheme Program, which went from 19 to 41 farmers involved and almost doubled the plantation hectares, and the “Environmental, social and economic strengthening of the Ypetî Private Natural Reserve and its area of influence” project was started, in cooperation with the Fund for the Conservation of Tropical Forests, the ARP and Unique Wood Paraguay. This initiative will provide continuity to the experience of yerba mate production with the indigenous communities of this Reserve and it will expand the forestry program previously mentioned. I especially appreciate the effort of our employees, contractors, clients and neighboring communities. I also acknowledge the constant support of Unique Wood, a strategic partner in the forestry business. Finally, before I share all the information we gathered with you, I would just like to reaffirm our commitment to continue working in this regard: to improve our management and production, heading towards sustainable development. Thank you for your interest.
Luis Enrique Arréllaga C.E.O.
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PAYC O S . A . - PA R A G U AY
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SUSTAINABILITY REPORT 2016
III. GOVERNANCE 3.1. Institutional Profile Paraguay Agricultural Corporation S.A. or PAYCO Paraguay, is a company in the Eastern and Western Regions of Paraguay that operates in the areas of agriculture, beef livestock and forestry3. 100% of PAYCO Paraguay shares are owned by PAYCO Luxembourg, a company that is in the hands of Euro American Finance and Deutsche Investitions und Entwicklungsgesellschaft mbH (DEG), a German financial institution that is subsidiary of KfW Bankengruppe. The origins of PAYCO Paraguay go back to 1976, with the acquisition of the Sociedad Agrícola Golondrina, a 23.911 hectare estate located in the Department of Caazapá. The acquisition of Ganadera Corina Campos y Haciendas, in 1997, resulted in a substantial increase of the land surface and it was the beginning of the livestock activity of the company. The last property incorporated in the portfolio was the Carandayty estate, in 2012. In October 2014, the merger of Sociedad Agrícola Golondrina S.A., Ganadera Corina Campos and Haciendas S.A. gave birth to Paraguay Agricultural Corporation S.A. (PAYCO Paraguay). PAYCO Paraguay has an administrative headquarters in Asuncion and it carries out its activities in fourteen productive establishments. Six of these establishments are of direct ownership, while the remaining eight properties are leased for forestry and livestock activities. A total of 262 employees and 328 subcontracted staff work at PAYCO S.A. Of all the employees, 88% have an open-ended contract4.
3
G4-3, G4-4, G4-5, G4-6, G4-13
4
G4-10, IFC-PS2
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PAYC O S . A - PA R A G U AY
Mission We are a Paraguayan company dedicated to agroindustry, the agricultural and forestry production. We efficiently produce food, seeds and timber, applying modern technologies, preserving nature and always focusing on continuous improvement for clients’ satisfaction and shareholders’ remuneration. We work attending the needs of the people that collaborate in the company’s objectives and we contribute to the environment as part of our social responsibility.
Vision To be a leading company recognized nationally and internationally for the quality of its products and the provision of environmental services. To be the provider of agricultural biotechnology of proven safety meeting the needs of the clients and the development of the country. To look for a profitability that allows the integral development of the officials, the fulfillment of the social responsibility and the satisfaction of the shareholders.
Values • Honestidad • Honesty • Responsibility • Efficiency and reliability • Team work • Mutual respect • Respect for nature • Innovation and continuous improvement
INFORME DE SOSTENIBILIDAD
Production sites5
Production sites and characteristics
5
G4-8, G4-17 11
PAYC O S . A . - PA R A G U AY
Land usage (in ha)
3.2. Scale of the company 6 Total Turnover US$ (in 000)
Operating Profit US$ (in 000)
6
12
G4-9
SUSTAINABILITY REPORT 2016
Human Resources
Production (in 000)
13
PAYC O S . A . - PA R A G U AY
Forestry Activity PAYCO develops forestry activity under two modalities: Management of Native Forests and Plantation of Eucalyptus to obtain biomass and quality timber.
Management of Native Forest The Management of certified Native Forests is carried out over 5.650 hectares of the Ypetĩ Private Natural Reserve, located in the Golondrina farm (Caazapá). In 1991, when this Private Natural Reserve was established, a part of its area was classified as a section of sustainable use to be managed under strict social and environmental standards, making PAYCO the first certified forestry company with the stamp of the Forest Stewardship Council (FSC® C009811) in Paraguay. The forest management is carried out according to a plan approved by the National Forestry Institute (INFONA). Every year we determine a sustainable rate of forestry utilization that guarantees that the sustainability of the resource is determined. This rate is approved through the issuance of guidelines that allow the legal movement and transportation of the harvested timber. Nowadays we produce an average annual volume of 9.000 to 10.000 cm3 of quality timber, and the same volume of timber for energetic use, supply for the local market.
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SUSTAINABILITY REPORT 2016
Forestry plantations Since 2011, PAYCO has decided to expand its forestry operations, investing in forestry plantations to produce biomass and quality timber. The ambitious objective is to have 13.500 hectares of forestry plantations by 2020. The project has been continuously growing since 2013, encompassing for the year we are reporting a total surface of 5.758 ha, distributed between 6 operation units and directly employing 141 people, according to the calculation formula of the Full Time Equivalent (FTE). Since 2014, it works according to the FSCÂŽ certification standards for forestry plantations (FSCÂŽ C117138). When we reflect on these numbers, the scope of the forestry plantations project goes beyond the objective of producing biomass and timber. It also represents a responsibility and an opportunity to generate environmental and social value. In this spirit, PAYCO seeks to integrate environmental and social values into the forestry plantation business, to assume social responsibility, as well as to measure the environmental performance based on good international practices. This way, the company produces high quality timber in the well-drained sites, while biomass is produced in lower sites with clay and heavy soils. On a small scale, we also plant species of native trees with the goal of ecologic restoration. The cycle of quality timber production takes around 12 years, during which appropriate forestry interventions are carried out, such as pruning and thinning. On the other hand, the biomass production takes place in 7-year cycles, subject to the stem management after a clear cut. According to the data projection, the Mean Annual Increment (MAI) of quality timber reaches 35 m3 per hectare per year, and around 22 m3 per hectare per year for the biomass production. The company produces high quality timber in the well-drained sites, while biomass is produced in lower sites with clay and heavy soils. It is worth noting that all the plantations are included in a production monitoring system through which we carry out systematic measurements and inventories, continuously developing and adjusting the growth and performance charts.
Forestry production per establishment
Forestry production per year
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PAYC O S . A . - PA R A G U AY
Livestock PAYCO develops livestock activities in 10 establishments, out of which six are owned, one is leased and three are of capitalization, covering the different stages of production (capitalization, rent and use), raising and breeding (complete cycle), selection of breeders for own use and confinement (feed lot). In the capitalization establishments we carry out the fattening and termination of livestock. By the end of 2016, the company had 36.408 heads of cattle, including a herd of 1.300 Braford cows with genetics carefully designed for the production of breeders, both for the subsequent breeding as well as for sale. This group is duly registered in the Rural Association of Paraguay and the Paraguayan Association of Braford Breeders.
Livestock production per establishment
Livestock Production Per Year (heads of cattle in 000)
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SUSTAINABILITY REPORT 2016
Agriculture In the Golondrina and Lomas farms we develop agriculture activities. The main markets of the company are: soy, wheat, corn and rice. With the objective of achieving production sustainability, we implement the good agricultural practices criteria, mainly in Golondrina. These are, mainly, direct sowing, crop rotation, the use of adapted varieties, the substitution of nutrients and the integrated management of plagues. In 2016, the acquisition of the RTRS (Round Table on Responsible Soy) certification for soy production has been a significant milestone that increases the efforts of PAYCO to maintain a responsible production. The RTRS accreditation increases the scope and scale of the environmental and social management system of the company, ensuring a soy production that is environmentally correct, socially appropriate and economically feasible.
Agricultural production per establishment (in ha)
17
PAYC O S . A . - PA R A G U AY
Conservation The Ypetî Private Natural Reserve (from now on YPNR), is an area within the Golondrina farm. It was created by Executive Decree Nº 21346 on June 10 2003, with the goal of protecting an important part of the Alto Paraná Atlantic Forest. Ypetî protects a total area of 13.592 ha with more than one type of ecosystem, distributed in 4 areas of usage: Sustainable, Traditional, Restricted and Buffering. The YPNR is one of the most important protected wild areas of the central region of the Alto Paraná Atlantic Forest, not only for the diversity of environments and the species of fauna and flora it protects, but also because it is developing one of the only projects of native forest management, which aims to, under sustainability criteria, generate economic, social, environmental and equity values, from the preserved environmental and cultural heritage. In September 2016, a study led by Moisés Bertoni Foundation was started, it seeks to update and systematize information about the protected biodiversity, and, at the same time, to carry out an evaluation of the current and potential impacts of forestry management over said biodiversity, the final results will be available in 2017.
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SUSTAINABILITY REPORT 2016
3.3. Corporate government7 PAYCO is a limited liability company that operates under the dispositions of the laws of the Republic of Paraguay8. The corporate governance is comprised by Board Members representing the shareholders, meaning, Euro American Finance SA and DEG. This board meets at least once every three months. Among its functions, the members of the Board give the local Board the guidelines to fulfil the strategic actions established by the shareholders. The Board in Paraguay is composed of three members: a CEO, a Deputy Director and a Chief Financial Officer. It is responsible for the decision making in the operational management of the company, following the local laws and provisions and reporting back to the Board. The different departments of the company report to this Board: Production, Commercial and Administrative. In 2016, the Sustainability department (social and environmental) and the Human Resources area merged, to comprise one single management unit that reports to the Board of Directors in Paraguay.
Memberships and associations9 PAYCO has active participation in the different associations:
Agricultural sector • Asociación de Productores de Arroz Cuenca del Río Paraguay - Miembro fundador. • Association of Rice Producers of the Paraguay River Basin – Founding member. • Trust for Sustainable Rural Development – Farming Trustee. • Paraguayan Chamber of Cereal and Oilseeds Exporters (CAPECO) – Member – partner. • Paraguayan Association of Braford Breeders – Member – partner. • Paraguayan Association of Brahman Breeders – Member – partner. • Rural Association of Paraguay (ARP) – Livestock – Member of the Meat and Forestry Committee. • Consortium of Stockbreeders for Agricultural Experimentation (CEA) – Member – partner. • Paraguayan Network of Conservation in Private Lands, Natural reserves – Founding member. • Seed Producers Association of Paraguay (APROSEMP) – Member – partner.
Tourism sector • Paraguayan Association of Rural Tourism (APATUR), Member-partner.
Forestry sector • Paraguayan Federation of Timber Merchants (FEPAMA), Member-partner.
Corporate • Moisés Bertoni Foundation, Council member. 7
G4-34
8
G4-7
9
G4-16
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PAYC O S . A . - PA R A G U AY
Certifications10 FSC® Certification for forestry activity FSC® or Forest Stewardship Council is a non-governmental organization of accreditation and certification which aims to promote the environmentally appropriate, socially beneficial and economically viable management of the world’s forests. PAYCO has its forestry activity certified in two modalities, FSC® C009811 and FSC® C117138, which covers forests management, wood sales in logs, firewood and other products such as coal.
ISO 9001:2008 Certification for Seed production The ISO 9001:2008 is an international standard that develops a quality management system, and PAYCO has the production, benefit, storage and commercialization of seeds in general under this Management Standard.
IISCC Certification for commercial soy bean This international certification system is used to verify the sustainability and saving of greenhouse effect gases produced by fuel, biomass or bioenergy. PAYCO, as a grain supplier of ADM, obtained the Sustainability and Carbon Certification in 2012, with a term of three crop years, culminating with the 2015/2016 agricultural season.
RTRSA Certification for soy bean production The RTRS is a group of principles, criteria (PyC) and indicators that regulate the process of responsible soy production. It ensures that the soy production is environmentally correct, socially adequate and economically viable. PAYCO obtained this certification for the first time in February 2016, a significant event for its productive activity.
Agreement with FCA-UNA The agreement signed in 2014 with the School of Agricultural Sciences of the National University seeks to promote the scientific and technical exchange focused on research, education and outreach in the areas of common interest. It also seeks to support the education and training of students and professionals on issues related to sustainable development and biological conservation, as well as to research development in accordance with the human, financial and technical resources available. Within the framework of this agreement, in 2016 we provided internships to 17 students of Forest and Farming Engineering, with a total of 3.016 hours.
Agreement with INFONA The inter-institutional cooperation agreement aims at providing opportunities for internships in PAYCO’s forest facilities to students of Senior Forestry. In 2016, PAYCO and the National Forestry Institute (INFONA) signed the renewal of this agreement.
10
20
G4-15
SUSTAINABILITY REPORT 2016
3.4. Stakeholders, material aspects and coverage11 In 2014, for the preparation of the first Sustainability Report, we carried out an initial analysis on the company’s stakeholders, considering 5 main aspects: massiveness, negative effect of the company on them, dialogue with the company, power for affecting operations and importance for the company. From this analysis, in 2015 the following stakeholders were identified: shareholders, employees, communities, clients, government organizations and suppliers, to later carry out consultation activities of some of these different audiences linked to the company. In 2016, we developed a revision of topics released as materials, and from this revision we identified IFC standards linked to these material topics, as well as their connection to the GRI G4 aspects and their corresponding indicators. The material aspects are those that reflect the economic, environmental and social impacts of the company that are significant, as well as the issues that significantly influence the assessments and decisions of the concerned parties. These contributions facilitated the aspects that are mentioned below and that are part of this publication.
11
G4-18, G4-19, G4-20, G4-21, G4-22, G4-23, G4-24, G4-25, G4-26, G4-27
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PAYC O S . A . - PA R A G U AY
Material Aspects
22
SUSTAINABILITY REPORT 2016
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PAYC O S . A . - PA R A G U AY
IV. ECONOMIC DIMENSION 4.1. Economic performance12 Compared to last year, the production of the company improved in all the agricultural areas, as well as in forestry production. In the livestock area, we registered a slight decrease in the stock of heads of cattle, because the lands destined to livestock farming decreased to give place to the rice and forestry areas.
Economic value created and distributed in the 2014-2016 period
12
24
G4-EC1
SUSTAINABILITY REPORT 2016
Production 2016 (in 000)
Product Commercialization The company’s revenues in 2016 were positively impacted by the improvement of the commodities prices: soy and rice, and by a higher volume marketed at the end of the year.
Sales (in 000)
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PAYC O S . A . - PA R A G U AY
Financial statements The total assets of the Company by the end of 2016 summed up a USD 97,6 million. PAYCO’s social capital experiences an increase of USD 8 million in contributions from the stockholders, reaching the total sum of USD 60,5 million. PAYCO’s activities pay the following taxes: Value Added Tax (VAT), Tax on Agricultural Activities (IRAGRO) and Tax on Commercial, Industrial and Services Income (IRACIS). The company is a withholding agent of the Value Added Tax (VAT). In 2016, the balance of the company records a payment US$ 191.459 on income tax. The operating profit of the company reached USD 552 mil.
Investments Regarding investments, PAYCO completed the rice investment project this year, and we continued the forestry investment project.
Investments in US$ (in 000)
4.2. Market presence13 Employment generation14 In 2016, PAYCO hired 262 employees, maintaining an average of 258 people directly employed.
Out of this number, 88% of employees had an open-ended contract and 12% a fixed-term contract.
Employees according to type of contract
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13
G4-EC5, G4-EC6
14
G4-LA12, IFC-PS2
SUSTAINABILITY REPORT 2016
Origin of employees 2016 The percentage of employees that come from the neighboring communities of sites where operations are developed is as follows:
100% of the company executives come from the area of the Administrative Headquarters, in the Metropolitan Area of the country’s capital. We consider as influence areas those communities located in a 60 km radio around the operation sites. Besides direct employment, PAYCO used third-party services in the agriculture, forestry and livestock sectors, out of which four are limited liability companies (LLC) and two are limited companies (Ltd.). Among the contractors there are 45 individual companies. Therefore, the work force of third parties that are engaged with PAYCO goes up to 328 people out of which 54% comes from nearby communities. Next, we present the history progression of employment through third-party services:
Third-party Collaborators
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Wages ratio15 In PAYCO, salary is determined by the type of activity, having as a base the legal minimum wage in force nation-wide. The employees who develop equal work have similar rights, social benefits, work conditions, training opportunities and compensation. For agriculture and forestry activities, PAYCO enforces the general minimum wage for unspecified diverse activities, which according to the Law is Gs. 1.964.507, without including meals. In the following charts, we show the legal minimum wage in relation to the average base wage according to activity and gender. We do not include in this calculation bonuses, extra hours and other additional costs.
Wages in agriculture activities (in Gs)
The average wage shown here takes the base wage of workers on the technical and operational level, with openended full-time contracts. We do not include in this calculation the salary of heads of staff, supervisors, board members and managers, because these are positions that have a higher pay scale. In the Women category, the average wage includes only women on the operational level, because the staff in agriculture activities does not have women on the technical level. Likewise, we do not include the wages of workers with open-ended part-time contracts, who are registered as day laborers, receiving a daily payment based on the legal minimum wage. The average wage of men is higher than that of women because of the incidence of the technicians’ wages, which is higher than that of the operational level employees.
Wages in forestry activities (in Gs)
15
28
G4-LA13, IFC-PS2
SUSTAINABILITY REPORT 2016
In the forestry activity, we consider the salary of the operational level. Technicians in the forestry activity belong to the staff of Unique Wood S.A., a strategic partner of PAYCO for forestry activities. There are no women on the operational level in the forestry section. For activities in the livestock sector, PAYCO enforces the Type B minimum wage for the livestock sector, which according to the law is Gs 959.744, free of food and accommodation expenses. The Type B minimum wage for the livestock sector applies when the farm has more than 4.000 heads of cattle. All the livestock establishments of PAYCO are classified in the B category. The relation between legal minimum wage and the average wage base of PAYCO’s livestock staff is shown next:
Wages in livestock activities (in Gs)
This calculation also excludes the wages of the supervisors, administrative staff and managers, because these are positions that have a higher pay scale. In the Women category, the wage average considers only women on the operational level, specifically in domestic activities of the establishments. In the Men category we consider, besides those on the operational level, the foremen and technicians whose base wage affects the average. When the analysis is carried out taking the base wage of men and women on the operational level there are no differences.
4.3. Indirect economic consequences Sustainability16 Since 2014, the year of approval of environmental and social policies, PAYCO has adopted a commitment in environmental and social sustainability, seeking to improve the long-term development opportunities. In the framework of these policies and with the goal of promoting the alignment of the accepted commitment, PAYCO establishes an estimated yearly budget based on the cash generation of operating activities, in addition to the total budget allocated to the Sustainability Department. This way we determine a Budget equivalent to 3% of the net cash generated by exploitation activities during the previous year and the guarantee of a minimum base budget of US$ 120.000 per year. The historic value of the investment in the three years of operation is shown next:
16
G4-EC7, G4-EN31
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PAYC O S . A . - PA R A G U AY
Sustainability investment per year in US$ (000)
4.4. Acquisition practices17 The Company prioritizes hiring local manpower, and the acquisitions are carried out preferably in the areas of impact. Only when there are no services or products available on site, we acquire them from other parts of the country. This mechanism, besides being a good practice, means an optimization of resources. However, this practice does not apply in the employment of consultants, due to the concentration of specialized professionals in the country’s capital. Regarding the historic value of purchases, we observe the following:
Total amount of purchases per year in US$ (000)
The payment to suppliers of the operational activity of the company went up to US$ 11,02 million, representing 66% of the total of cash paid by PAYCO in exploitation activities (other exploitation activities correspond to the payment of employees and other payments and taxes).
17
30
G4-12, G4-EC9
SUSTAINABILITY REPORT 2016
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PAYC O S . A . - PA R A G U AY
V. ENVIRONMENTAL DIMENSION PAYCO has an Environmental Policy that gears its actions towards the conservation and care of the environment. The company carries out regular reviews of the Policy through monitoring and it dialogues with authorities, neighbors and civil society referents. PAYCO’s Environmental Policy is available through the following link: http://www.payco.com.py/wp-content/uploads/2016/05/Politica-ambiental.pdf 18
5.1. Land use and management19 The main change in land use registered in 2016 took place in the Timboty establishment (Department of Presidente Hayes, Western Region), where 218 ha of forests were turned into cultivated pasture.
32
18
G4-56
19
IFC-PS3, IFC-PS5
SUSTAINABILITY REPORT 2016
Satellite map on the change of land use at Timboty Farm
2015
2016 33
PAYC O S . A . - PA R A G U AY
Lomas farm In the Lomas farm there have not been new allotments of pasture fields to agricultural use. In the Capa sector (north of the property) we planted 2.030 hectares, and in Uruguaitรก (south sector) we cultivated around 4.631 ha of irrigated rice. The total of the cultivated surface was 6.661 ha. However, for the forestry Project we have turned 175,5 ha of palm fields into plantations of clone species of Eucalyptus spp., and we have replanted about 190 ha, leaving a total of 1.955 ha of reforestation for this period.
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SUSTAINABILITY REPORT 2016
Lomas farm
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PAYC O S . A . - PA R A G U AY
5.2. Water20 Consumption of surface water In Golondrina we use thirteen central pivots and one mobile one that irrigate four positions, for the irrigation of 1.459 ha of agricultural land, which stock up from rain water stored in reservoirs, and on a lower scale of the contributions of surface water. The consumption of surface water used in the irrigation system was obtained through the millimeter measurements of the pivots and irrigated areas. During 2016 we registered an increase in use compared to the previous year, getting closer to the values obtained in 2014. Said increase is due to the low rainfall registered during the period of crop development.
Water use in the irrigation system of Golondrina, m3 per year
In the Lomas farm, the irrigation of rice crops was carried out by pumping water from the Paraguay River as the only source, which has an average volume of 4.000 m3/s approximately. The total planted area for the 2016/2017 harvest was of 6.661 ha, a wider surface than that reported in 2015, which is the reason for the volume used. The estimated total water consumption was 50.771.029 m3, which corresponds to 7.622 m3 of water per hectare/cycle. This continues representing a consumption below the average amount of water normally used, between 13.000 and 15.000 m3/ha/cycle. The data represents the estimated use, according to the nominal capacity of the pumps installed of 7.000 m3 of water per hour according to the level of the Paraguay River for said period, the surface planted and the time of pumping registered.
Amount of water estimated for the irrigation of the Lomas farm, 2016/2017 harvest (m3)
Water consumption for the irrigation project was calculated taking as a design parameter the consumption of 1,8 liters of water per second and per hectare of cultivated area, being 14,0 m3/s, 50.400 m3/h the maximum amount of extraction foreseen for a minimum period of 120 days, which generally goes from September to December. Subsequently, the water is drained from the field through the draining channels, which unload again into the Paraguay River. We carry out the quality monitoring of the water that returns to the river, ensuring the minimum possible impact on it, considering the parameters established by the environmental guidelines.
20
36
G4-EN8, G4-EN9, G4-EN10, IFC-PS3
SUSTAINABILITY REPORT 2016
La Matilde For the 2015/2016 harvest we kept the planted surface of 2.150 ha of irrigated rice, on a lease modality. The only catchment source is the Tebicuary River. This catchment is regulated by the Secretariat of the Environment (SEAM) due to the great amount of rice production projects in the area, so the production considers water reservoirs for the dry season, which covers a surface of approximately 200 hectares. The consumption was estimated according to the surface planted and the capacity of the pumps installed, 7.000 m3/h, according to the river level and an estimation of the irrigation time21.
Amount of water estimated for the irrigation of the La Matilde farm, 2016/2017 harvest (m3)
Total water collected 2016
Water supply system in Lomas farm The water distribution is carried out through open air channels on elevated grounds, the channels were designed and built according to the pending parameters and the water volume they carry (from 10.000 to 100 liters), and they have locking systems for water control and management. The drainage channels have a depth that does not reach the phreatic level (under 4 m). The project has a complete drainage system that collects the water from the plots and leads it out of the planted area, discharging again in the Paraguay River. This discharge is monitored according to the parameters established by SEAM. The project, as previously reported, has a baseline where we can highlight the complex system of runoff and discharge areas of the water bodies in the area, especially of the Kuarepoti River, which has an atypical behavior, because it is directly affected by the influence of the Paraguay River flooding. For this reason, we established an annual Management and Monitoring Plan, which allows us to minimize the possible impacts that the activity may have on the hydrologic system of the area.
Monitoring of surface water and groundwater quality We carry out regular monitoring, twice per year, to assess physical, chemical, bacteriological parameters and the residues of agrochemicals mainly in the in Lomas and Golondrina. In this chart, we indicate the sample points of surface water, groundwater and atmospheric water, in owned establishments such as Golondrina, Lomas, La Matilde, and in the leased ones for the forestry project Rancho 068, Ocampo Kue, Cerro Verde and Isla YobĂĄi, added in 2016.
21
Uso estimado de las bombas: 12 horas diarias, en un periodo de 80 dĂas.
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Amount of monitoring points per production sites
In Golondrina We continue monitoring a total of 28 sampling point, analyzing them twice a year, in terms of their physical, chemical and microbiological quality. Likewise, in 2016 we have developed the monitoring of the water quality for agrochemical residues of 3 monitoring phreatic wells installed in the agricultural parcels, and 1 monitoring well for chemical delinting. The results indicated that we have not detected any of the 19 active ingredients analyzed22 under the PRO-LRPM-103, developed by the Pesticide and Mycotoxins Residues Laboratory of SENAVE. In a general analysis of the surface sources, the pH average of the last 2 years stays slightly acidic (6 UpH), the water with low levels of mineralization (19 Âľs/cm). Regarding the compliance with the regulation, the parameters out of the allowed levels were fecal and total coliforms, iron, phosphorus, DBO5, ammonium and pH.
Parameters according to regulation
In the same analysis on groundwater, the pH maintained an acidic character with an average value of 5 UpH; the average conductivity was 44 Âľs/cm. the parameters out of range were turbidity and ammonium. Regarding the fecal coliforms, for said period we detected these in 94% of the analyzed wells, and the total coliforms were detected in 100% of the wells.
22
38
Ingredientes activos principales: Acefato, Glifosato, Cletodim, Fipronil, Imidacloprid, Metomil, etc.
SUSTAINABILITY REPORT 2016
Lomas On average in the last 2 years, the conductivity of the natural superficial waterways stayed in 106,76 µs/cm, the average pH was 6,88 UpH keeping a slightly acidic pH. The parameters out of the allowed limits were turbidity, ammonium, arsenic, total phosphorus, iron, DBO5, total dissolved solids, and the fecal and total coliforms. Regarding the average for groundwater in the same period, it showed a value of 5,47 UpH, and the average conductivity was 321 µs/cm. For the deep wells (of water consumption), the parameters out of range were turbidity, nitrate, ammonium, iron total and fecal coliforms.
Parameters according to regulation Lomas
In the monitoring wells we found the electrical conductivity out of range as well as the total dissolved solids, turbidity and the total phosphorus and ammonium.
La Matilde The average pH value of the last 2 years for the superficial waterways was 6,7 UpH close to neutral, which includes the water of the Tebicuary River, channels and reservoirs. The average conductivity was 83 µs/cm, the average content of ammonium (0,11 mg/L) from the baseline was high and so was the total phosphorus, the content of iron, and thereby, the turbidity, as well as the DBO5, whose average values were also found to be above the limit permitted. These values demonstrate the high organic load that the Tebicuary River carries when it reaches the sampling site (low basin). Regarding groundwater, it presents average levels of slightly acidic pH 6,5 UpH, average conductivity of 161,0 µs/ cm, the average content of ammonium and of fecal and total coliforms presents high values (300-490 UFC).
Parameters according to regulation La Matilde
During this period, we developed the analysis of agrochemical residues, analyzing 19 active ingredients under the PRO-LRPM-103 ver01 methodology of SENAVE, we registered the value of an active ingredient called Azoxitrobin, above the detection limit with an average value of 0,05 mg/kg. Due to the agricultural activity carried out in the high and low basins of the river, it is hard to determine the exact source of this element. 39
PAYC O S . A . - PA R A G U AY
Rancho 068 For the superficial waterways, the general average obtained for the last two years was 6,0 UpH, slightly acidic waters, of very low conductivity on average 15,5 Âľs/cm; we do not detect changes in the values of nitrate and phosphorus nutrients. In some waterways, we notice a high turbidity and the presence of coliform organisms. Likewise, for the groundwater the average pH obtained is 5,8, more acidic waters and very low conductivity, and an almost complete absence of coliform organisms, which represents very good potability. In the baseline and in the 2 years of monitoring this farm we have not registered residues of Glyphosate in the waterways, analyzed under 3 different methodologies (AN-MA 02 in the determination of Glyphosate residues by HPLC in oilseeds, Determination of Glyphosate residues, and PRO-LRPM-103 ver01), nor residues of Fipronil in the last year analyzed. The parameters out of range were turbidity, total phosphorus and total and fecal coliforms.
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SUSTAINABILITY REPORT 2016
Ocampo kue The average pH value of the surface water in the last two years was 8,6 UpH, corresponding to more basic waters, of higher average conductivity of 192 µs/cm; the average value of phosphate content was high in relation to the baseline (0,3 mg/L). On average the groundwater presents slight acidic waters (5,9 UpH), the average conductivity is 129,3 µs/cm; we observe high values of ammoniacal nitrogen content in relation to the baseline, 0,4 mg/L, which goes beyond the limit permitted, as well as the content of fecal and total coliforms, which should be absent to allow human consumption. The parameters out of range were phosphorus and pH in surface water, and ammonium and fecal and total coliforms in groundwater.
Parameters according to regulations Ocampo Kue
Cerro Verde On average, for all the superficial waterways sampled the pH presents a value of 6,64 UpH, tending towards more neutral waters, except for the river spring which presents a more acidic value, low average conductivity (60,55 µs/ cm); the average values for the iron and oxygen available in one point are slightly higher than the limits permitted. The microorganisms, although present, are in a very low average (5 and 10 UFCM). The parameters out of range were the total iron, dissolved oxygen, and the total and fecal coliforms.
Parameters according to regulation Surface Water
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Isla Yobái On average, the surface water presents a slightly acidic pH, with a value of 6,2 UpH, average conductivity of 100,2 µs/cm; on average, the ammonium (0,07 mg/L) has a content beyond the range permitted, as well as fecal and total coliforms for one point. The parameters out of range were ammoniacal nitrogen, fecal and total coliforms, and the turbidity for a sampling point (mouth). Regarding groundwater, the pH value is almost neutral at 7,59 UpH, the conductivity is higher 279,0 µs/cm, and total and fecal coliform content is very high (800-2000 UFC). We have not detected agrochemical residues in the baseline for this site.
Parameters according to regulations Isla Yobái
5.3. Biodiversity23 The company establishes mechanisms to mitigate the operations impact on the biological environment, implementing good practices in every productive sector, and developing annual monitoring of fauna and flora, as well as the control over illegal activities in the establishments where the developed projects exercise more pressure. Likewise, in every new operating unit we previously carry out a biodiversity baseline, and we evaluate and identify the High Conservation Values (HCV) to monitor, mitigate and maintain the identified HCV.
23
42
G4-EN11, G4-EN12, G4-EN13, G4-EN14, IFC-PS3, IFC-PS6
SUSTAINABILITY REPORT 2016
Protected areas and high value areas for conservation In Golondrina we find the Ypetî Natural Reserve, an area protected under private ownership since 2003, included in Paraguay’s National System of Protected Natural Areas (SINASIP), within the framework of Law 352/94 of Protected Natural Areas. Ypetî is located in the ecoregion of Alto Paraná, also called Alto Parana Atlantic Forest (BAAPA, in Spanish); it protects 13.592 ha of diverse ecosystems, distributed in 4 areas of well-defined uses, which contain critical habitat for endemic and endangered species. The conservation attributes are given according to size, condition and landscape condition of this area, which is why it was completely validated as a High Conservation Value Forest (BAVC in Spanish). This reserve corresponds to the IV Category of UICN, Area of Habitat/Species Management, and within the SINASIP to the category of Natural Reserve destined to private conservation areas.
Cerro Verde It has been evaluated as an area of High Conservation Value, where we identified 3 main attributes, endemic and endangered species, areas that contain uncommon, endangered or at risk ecosystems, and critical areas for catchment areas (mouths and waterways). The property has an area of 418 ha of continuous forest with the BAAPA ecoregion, which is of importance for habitat conservation because it is one of the last forest remnants of the BAAPA and because it has mainly mouths and waterways.
Areas protected by the operation We include the south of the Lomas farm, within the proposed limit for the area called Sitio PY025 – Streams and Estuaries, within the “Important Areas for the Conservation of Birds in Paraguay” established by the CDC (1990). These Areas are made up of grasslands, floodable palm forests and estuaries of permanent water, and they are important habitats for the fauna typical of grasslands and wetlands. Additionally, included we find habitats established for conservation, and they do not have legal protection, such as the palm forests with vegetation higher than 50%, the wet low forests, and grasslands and wetlands. In the Golondrina farm, in 2016 we started a restoration project of 30 hectares of forests, which were affected by the invasions registered in 2014. This project is financed by the Fund for the Conservation of Tropical Forests. The other establishments have the minimum surfaces required by law, which include forests of legal reserves (25%), forests protectors of water mouths and waterways, which protect species native to each site. Except for the “Cambuchi” farm, all the other establishments are far from the protected area or areas that are important for conservation.
Affected species’ habitat transformation During the last 3 years, the site that has suffered a very significant impact due to the habitat transformation is the Lomas farm. While during 2016 we have not used new areas for rice production in the south sector of the farm, we have identified the species that should be monitored in the baseline, specifically, one species of bird (Alectrurus risora, Strange-tailed Tyrant), which is directly associated with the natural pastures, which is why the impact is negative, direct and permanent, over the population of this species, because it is a population that lives in the area, and is registered in the area of unmodified pastures. Since we registered the species, we have carried out diverse efforts to monitor its resilience or its movement, and we have suggested conservation areas for the species. In the 2016 monitoring we confirmed its presence slightly more to the south of where it was originally spotted. In Golondrina, to mitigate the impacts that the forestry sector’s activity could generate within the area of Sustainable Use of the Reserve, we have adopted management criteria such as minimizing the turning and extraction through a directed turning, have the machines circulate only through the paths and extraction routes, to protect regeneration; and we identify all the trees of future interest, as well as the seed trees; we minimize the dragging distances. To guarantee the minimum impact, we carry out an environmental monitoring process which includes low impact harvest, control to not harvest species identified as endangered, soil compaction and erosion, waste control, illegal activities and monitoring of endangered fauna and flora.
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Non-harvested species within the sustainable use area of the forest
Regarding the results of the monitoring of illegal activities through monthly journeys within the Reserve, which include the forest management areas for signs of squatting, poaching and logging, again during the 2016 period the highest amount of evidence registered corresponds to poaching (75%); we did not register any evidence of illegal logging, and 25% corresponds to squatting with evidence of remains of campfires and tents.
Number of illegal activities registered in the Forest Management Units (FMU)
Lists of Fauna and Flora Next, we present the lists according to the last studies carried out with the number of species included in the Red List of the UICN and in the national conservation listing whose habitats are in areas affected by the operations of PAYCO S.A.
Fauna Golondrina In 2016 we started the study to update the flora and fauna inventory in the Ypetî Natural Reerve. The first results correspond to the preliminary list of birds, mammals, and for the first time we have developed the baseline for the ichthyologic study of the rivers and streams that are part of the Reserve. In total we identified 30 species of fish, 9 endemic to the Paraná basin. On a national level, there are 2 endangered species: Gymnogeophagus setequedas (locally known as acará) and Hypostomus dlouhyi (locally known as vieja, guaiguîngue); one species, in the Vulnerable category: Pseudobunocephalus iheringi (locally known as guitarrita). According to international criteria, the UICN categorizes two endangered species, the Gymnogeophagus setequedas (locally known as acará) and Hypostomus dlouhyi (locally known as vieja, guaiguîngue) (FMB, 2017). Regarding species of birds, to the reported date in a preliminary manner we have added 30 new species for the area, reaching a total of 350 species of birds registered for the Ypetî National Reserve; 58 species are endemic of the Atlantic Forest, which represent 73% of the 79 endemic species of this ecoregion that are mentioned for the country, being this the fourth site in the country with the highest number of bird species registered in the Atlantic Forest (FMB, 2017). The list of mammals of the baseline was corrected, eliminating 11 species, due to the lack of documentation of their presence or because they belong to other ecoregions; we added a new registry, totalizing 42 species for the farm. Three species stand out in importance, and two are predators: the Ocelot (Leopardus pardalis), the spotted cat or yaguarete’i (Leopardus tigrinus) and the puma (Puma concolor). This is a good indicator of the trophic structure of the mammal population in the area (FMB, 2017).
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SUSTAINABILITY REPORT 2016
List of endangered species
Fuente: Moises Bertoni Foundation. 2017. Ecological Monitoring: Sustainable forest management of the native forest, Ypeti Nature Reserve, CaazapĂĄ, Paraguay.
Lomas According to the monitoring carried out by the MoisĂŠs Bertoni Fundation, the results indicated that there were no significant differences in the richness and abundance of species in the 2014-2016 period in the studied sites, both for vegetation of the parcels and for the fauna. Regarding the fauna inventories, these were updated, registering new species in all the groups in 2016, resulting in 21 species of mammals, 202 species of birds and 30 species of amphibians and reptiles. The endangered species of birds were: Rhea Americana (rhea), Alectrurus risora (Strange-tailed tyrant) and Polystictus pectoralis (Bearded tachuri), and four species of mammals, out of which three were documented during field work in 2014 and 2015: Myrmecophaga tridactyla (giant anteater), Chrysocyon brachyurus (maned wolf), while the Tapirus terrestris (South American tapir) was reported by local staff.
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SUSTAINABILITY REPORT 2016
List of endangered species
Source: Moises Bertoni Foundation, 2016. Biodiversity monitoring. Estancia Lomas. San Pedro, Paraguay.
Rancho 068 For the leased forestry farms we adjusted the biodiversity monitoring, which was set with a frequency of two years in BAVC areas, which is why the monitoring was not carried out during 2016. We still have the previous lists for these areas. We had registered two species of birds in the endangered category: one, corresponding to the grasslands, Sporophila palustris (Marsh seedeater) in the “In Danger” category on a national and global level, and another one whose habitat is the native forest, Procnias nudicollis (Bare-throated bellbird), in the Vulnerable category on a global level (UICN), and on a national level (SEAM) it is In Danger. Regarding the reptiles, in the area of influence we registered Eunectes murinus (locally known as mbói jaguar) with the “In Critical Danger” category by SEAM, and Epicrates crassus (locally known as mbói ro’y) of the Vulnerable category by SEAM.
Source: Monitoring of terrestrial vertebrates in Rancho 068, San Pedro. Final report (Cacciali, P; Castillo, H, 2016).
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Cerro Verde In Cerro Verde we keep the registry of 66 species of birds in open habitats, capueras, pastures and crops; four of them are endemic of the Atlantic Fores: mainumby ruguaitĩ or Scale-throated hermit (Phaethornis eurynome), suruku’a or Surucua trogon (Trogon surrucura), kurutû’i or Yellow-fronted woodpecker (Melanerpes flavifrons), mbatara chioro or White-shouldered fire-eye (Pyriglena leucoptera); only one species of bird Pyriglena leucoptera (White-shouldered fire-eye) is within the Vulnerable category (SEAM), and 12 species included in Appendix II of CITES.
Source: Céspedes et al. 2016. Preliminary baseline study of the fauna and flora. Estancia Cerro Verde, Canindeyú, Paraguay.
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SUSTAINABILITY REPORT 2016
Flora Golondrina We currently have 366 species of flora, belonging to 92 botanical families.
Source: Moises Bertoni Foundation. 2017. Ecological Monitoring: Sustainable forest management of the native forest, Ypeti Nature Reserve, Caazapá, Paraguay.
Lomas Regarding flora, according to the monitoring by the FMB, the 116 species of flora registered for the Lomas farm in the baseline of vegetation developed in the 2014-2015 period remains the same, during that period we identified 71 new species distributed in 39 botanical families, registering 116 species of flora, out of which we identified 2 endangered wood species in the “low concern” category according to UICN and 3 species in the “in danger of extinction” category according to SEAM, we included 4 species that are found in Appendix II of CITES.
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List of species of flora in threat categories
Source: Moises Bertoni Foundation, 2016. Biodiversity monitoring. Estancia Lomas. San Pedro, Paraguay.
Cerro Verde The registry of 163 species remains, they belong to 139 genres of 65 botanical families. Among them, four are threatened globally, and seven nationally.
Source: CĂŠspedes et al. 2016. Preliminary base study of the fauna and flora. Estancia Cerro Verde. CanindeyĂş, Paraguay.
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SUSTAINABILITY REPORT 2016
5.4. Energy consumption23
We observe a decrease in the values corresponding to gasoil use in comparison to 2015 in the Lomas farm; mainly, we have reduced the use of fuels because we did not enable access to new areas, meaning, we planted in the areas already available during 2015. Besides, we still do not have information about the fuel consumption of the total machine contractors for said establishment.
Source: The numbers set by the IPCC were used for the conversion.
The total fuel consumption for 2016 corresponds to 4,251.4 tons of CO224 equivalent.
Renewable energy consumption (biomass) In Golondrina, PAYCO uses, additionally, biomass of native species as a source of energy from the sustainable management of the forest. In Lomas farm, it comes from the forest plantations of clone species of Eucalyptos spp. During 2016, we observed an increase in the use of biomass, due to the expansion of rice production and the higher installed capacity in the storage silos. In Lomas we used 1.737 m3 of firewood, and in Golondrina, 924 m3, adding up to a total of 2.661 m3.
Electricity consumption We have registered an increase of 70% in the electricity consumption compared to the 2 previous years due to the operation of the storage plant and dryer of the Lomas farm, and to the greater use of the pivot system for irrigation in Golondrinas, based on the irrigation need in the specific crop stages
5.5. Effluents and residues25 Waste management In Lomas and Golondrina we have implemented the common and hazardous waste management system. In Golondrina we have recycled 294 kg of plastic (PET bottles) and 77kg of aluminum cans; besides, we have also recycled a total of 1.840 kg of polypropylene bags (of big bag).
23
G4-EN3, G4-EN4, IFC-PS3
24
G4-EN15
25
G4-EN23, IFC-PS3
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Environmentally hazardous waste Regarding the amount of chemical products’ containers that were recycled and treated through the SigEVTecnomyl program (Empty Containers Management System) during 2016, we recycled a total of 20.623 kg of empty agrochemical containers, which include 9.130 kg of containers of the products of different characteristics (flexible, cartons and metals), from the Golondrinas, Lomas, Cerro Verde, Rancho and Ocampo Kue farms, registering an increase of 2% in comparison to the previous year. A total of 157 kg of containers without triple wash, because of their physical features (concentrated products) could not undergo the triple wash process, were put under special incineration, in special ovens enabled for that purpose; likewise, we have put a total of 240 kg of empty bags used for treated seed under this treatment.
Amount of agrochemical containers treated in 2016
5.6. Transportation26 The transportation of the grains in Lomas and Golondrinas causes significant impacts, considering that it is done over dirt roads, and in favorable weather conditions they involve an increase of dust generation, risk of accidents, besides affecting the conditions of the road, due to the higher compaction. During harvest seasons, we see an increase in the frequency and number of tracks that go to or from the farm through neighboring communities, causing impacts on the populations. Direct impacts: increase in the consumption of fossil fuels. We have developed strategies to mitigate these impacts, such as the irrigation of the roads during set times and days. As a prevention measure, we have installed warning signs for speed reduction near the schools. Besides, we developed the live barriers or live fences project which aims to mitigate the generation of dust inside the households, in the community of Segunda ReconstrucciĂłn, an influence area of the Lomas farm.
26
52
G4-EN30
SUSTAINABILITY REPORT 2016
5.7. Mechanisms for environmental complaints27 Use of pesticides28 In Lomas, we registered complaints about the aerial spray of agrochemicals. During 2016, we strengthened the procedures for the correct use of agrochemicals by technicians and application contractors. Thanks to the change of the contractor of aerial application, we improved the procedures of previous communication with the community referents regarding the spraying days, of daily communication in the community radio and a complaint system in the case of damage or in case of not respecting weather conditions for the overflight. Regarding the complaints about dust generation, as a first mitigation measure we continued watering the road during the transportation period of commercialized grains. As a preventative measure, we developed the project of live barriers or live fence installation with species of quick growth (inga’i) with all the inhabitants interested in being benefited by this project. We continue to provide technical support for the maintenance of the seedlings in a collaborative manner with each inhabitant. In Golondrina, we registered complaints from the indigenous community regarding terrestrial spraying, and we received complaints of fires registered in low fields. To address the complaint, we implemented a spraying mechanism for the agricultural parcels close to the indigenous communities. We carried out meetings with the leaders and the agricultural officers, training and hosting constant workshops about the measures taken. We established forms of previous written notification for the indigenous community through the resources guard, who communicates to the leaders the work that will be taking place, as well as the installation of informative posters indicating waiting periods (re-entry) in the sprayed areas; likewise, we established live barriers with native species in indigenous households. Due to the fires registered, we took preventative measures, which included staff training on fighting fires in critical areas and meetings with indigenous leaders for them to give notice if they detect burnings in these areas (presence of poachers). Likewise, we perceived the need to promote other non-traditional practices for honey extraction carried out by the indigenous people, this way replacing the use of fire, through constant training on bee management and by providing new boxes to increase the bee colonies for a consistent production of honey.
27
G4-EN34, G4-LA9, G4-HR8, IFC-PS7
28
G4-14, IFC-PS1
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SUSTAINABILITY REPORT 2016
VI. SOCIAL DIMENSION29 The company recognizes the importance and incidence of the social factor in their operations. In line with this approach, through a Social Policy, we define the relation principles with our staff, contractors, neighboring communities, small producers and society in general, approved in April 2014. This Social Policy is available in the following link: http://www.payco.com.py/wp-content/uploads/2016/05/Politica-Social.pdf Within the framework of this policy, we have a Declaration of Good Social Practices, which describes the commitment with fundamental work agreements of the International Labor Organization (ILO), about discrimination, child labor, forced labor, freedom of association, collective negotiation, equal pay, transparent and non-discriminatory hiring procedures, and the complaints mechanism. This declaration is part of the Staff Manual of the company.
6.1. Work practices and decent work31 PAYCO maintains a continuous process of adaptation to the needs of its business and its surroundings; in this sense, in 2016 the company continued to carry out a revision of the general strategy of Human Resources for the next years. The integral development project of the management of Human Resources started in 2015, the main results in 2016 were the revision of the organizational structure and payroll structure and the valuation of positions. The development of the last stage, related to the competency-based management program was temporarily postponed by decision of the local board. By the end of the exercise, PAYCO employed 262 direct staff members, all with contracts under the Labor Code of Paraguay. Out of these, 75% were men and 15% were women While there is a commitment to non-discrimination and tolerance, the highest percentage of male employees correlates with the characteristics of the company’s activities and the geographical distribution of its establishments. The company cannot manage to hire women for the livestock and agricultural fields’ activities located in places far from urban centers.
Staff roster 2016
Distribution according to professional category
29
G4-HR3, G4-HR4, G4-HR5, G4-HR6, IFC-PS2
30
G4-56
31
G4-LA1, G4-LA2, IFC-PS2
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Collaborators according to type of contract
The company does not have the collective agreement modality. All contracts are individual, in their clauses the dispositions and bases of the work agreement are described following the Work Code of Paraguay31.
Collaborators according to age distribution
Staff movement Entries (N°)
Exits (N°)
32
56
G4-11
SUSTAINABILITY REPORT 2016
Turnover Rate
During the year, we registered 149 entries and 139 exits. The turnover rate was 53%33. The high turnover rate is connected, on one hand, to the cyclic nature of the agricultural activity of the company which, to cover the work demand during the harvesting period, hires a group of people for a determined amount of time. On the other hand, it is connected to the site where the company operates: the livestock establishments are in places far away from urban centers, which causes a lot rotation of people who work in other activities. The turnover rate of 2016, which is higher compared to the other two periods, is due to the expansion of the rice farming areas in the Lomas farm, which requires a proportionally higher number of workers, especially during the harvesting season.
Social benefits34 On its Declaration of Good Social Practices, and based on the Paraguayan Labor Legislation, the company expresses that all the employees who perform a work of equal value have similar rights, social benefits, work conditions, training opportunities and salaries. The people hired for the different activities of the company have the same benefits and rights established by the Paraguayan Labor Legislation, without discrimination based on the type of contract. The benefits that each worker has access to are: • Complete medical coverage. • Coverage for total or partial disability (caused by work accidents), 100% coverage from the first day of being insured. • Retirement with medical and financial coverage. • Paid paternity leave (two weeks) from the company. • Paid maternity leave from the social insurance (75%) • Medical benefits extend to direct relatives: minor children, espouses, parents with economic dependence from 60 years old on. Regarding the paid leave, the company follows the dispositions expressed in the Paraguayan Work Code in Article 62, subparagraph j, modified by Laws 3384/2007 and 5508/2015. Likewise, it follows what is expressed in Law 3803/2009, which foresees one paid leave per day to all female workers so they can undergo Pap smear and mammogram tests. During the 2016 period, we granted 2 maternity leaves (98 days) and 4 paternity leaves (14 days). When the leave time was over, everyone was reinstated at work.
33
G4-LA1, IFC-PS2
34
G4-EC3, G4-LA2, G4-LA3, G4-LA4, IFC-PS2
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Health and safety in the workplace35 According to the General Technical Regulations on Safety, Hygiene and Medicine in the Workplace, every establishment that has one hundred or more employees is mandated to create and put into operation an Internal Committee on Accident Prevention, with the mission of accident prevention, professional illnesses and safety in the workplace. In the sense marked by the Regulations, PAYCO does not have any establishments that have 100 or more collaborators in a permanent way. However, it analyzes and monitors the risks of the Lomas and Golondrinas establishments, which have significant and complex operations, especially during the summer agricultural campaign. Based on the risks identified, it carries out improvement actions, it establishes response procedures in the face of emergencies and it plans specific trainings with Health and Safety in the Workplace specialists. Golondrina has three emergency committees: First Aid, Prevention and Control of Fires, and Evacuation, which are annually trained to incorporate their own functions and roles in the establishment.
Total of staff and subcontractors the company is responsible for
In 2016, the number of subcontractors decreased because the construction work in the Lomas farm finished the previous years. During the period that corresponds to this report, we registered 9 work accidents in the staff and 2 in the outsourced group, none of them with severe consequences; out of these, from of the livestock sector, 2 of the forestry and 6 of the agricultural sectors. We did not register any fatal accidents.
Communication of the accidents is carried out according to existing standards of the Social Security Institute (IPS), an entity that provides health assistance, retirement and pension, where the PAYCO S.A. staff has social insurance. In case of accidents, IPS provides medical assistance, rest and payment of leave days or pensions based on medical evaluations and a scale that gathers the criteria to grant leave for accidents or work related illnesses. If an accident occurs, the company communicates the event to the IPS, and after the evaluation mentioned, it determines the type of accidents and the leaves. By providing training modules on the correct use and handling of individual protection equipment and safe work, the company has as a goal to increase the safety of the workers and to reduce accidents. We have improved significantly the correct use and handling of the safety equipment in 2016. After registering a considerable number of workers without the appropriate safety equipment or with damaged equipment during the first months of the year, we implemented another replacement mechanism, achieving a high level of compliance. The use of individual protection equipment increased by 5% in comparison to the year 2015, in the agricultural and forestry operations. In the livestock farms we carried out a study of the need of individual protection equipment and the supply mechanisms. Based on this diagnosis, we planned a supply and replacement mechanism for the protection equipment of the workers for the year 2017. In addition, we provide and supervise the availability of the contents of the first aid kit in the operating points periodically. In the agricultural and forestry units, the replacement mechanism of the first aid kit contents improve significantly in 2016, reaching 100% of coverage. In the livestock farms we planned to take measures for improvement in 2017. We also established supervision procedures to evaluate the life conditions that guarantee the fulfilment of basic health and safety requirements. 35
58
G4-LA5, G4-LA6, IFC-PS1
SUSTAINABILITY REPORT 2016
Training and education36 We thought of the development of a Program on Management by Competencies to face the market changes within the framework of an integral program of human resources management that started in 2015. The development of this stage of the project was planned for 2016, by approval of the Board. However, we later decided to temporarily suspend the implementation of this module, which is why all the subsystems of resources aligned to competencies were affected, among these the program of performance management which is also connected to the training process. The 2016 training plan included 10 training modules connecting them to specific abilities for the job and 5 connected to Health and Safety in the Workplace. This year we carried out 11 extra modules of technical education by request of the staff or due to certification requirements. In relation to the total of training sessions planned for in-house staff, we achieved 80% of execution.
Training according to occupation category for in-house staff
Regarding the training aimed at subcontracted staff, in 2016 we registered 27 workshops. Part of these were dedicated to increase the capacity of firefighting (7 training modules, 26%), followed by relevant topics to increase health and safety, such as first aid (5 training modules, 19%), the correct use of safety equipment (15%) and the proper handling of hazardous products (4 training modules, 15%).
Performance evaluation The program of performance management aligned to the competencies identified within the framework of the project on integral management of human resources aims at installing a management system that allows us to measure objectively the contribution of each person so that we can recognize it and reward it, promoting the improvements that will allow the continuous development of the company. As we mention in other sections, the development of this process is temporarily suspended, and it will be resumed according to the decision of the local board.
36
G4-LA9, G4-LA10, G4-LA11, IFC-PS2
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Evaluation of work practices of the suppliers37 To date PAYCO does not have a policy of suppliers’ management in general. However, it keeps a monitoring system for the service supplies of the agricultural and forestry sectors, through which it evaluates the IPS social insurance, payment of salaries, housing, use of individual protection equipment, complaints and staff satisfaction. In the group of surveyed people and with those in a continuous action of improvement, we still have not included the manual contractors who tend to work on a piecework basis. The plan is to be able to have 100% of the contractors follow the legal requirements and certifications to extend their action of improvement with other suppliers over which we have less control. Regarding the agricultural and forestry contractors, the formalization of work practices is one of the biggest challenges. As a policy, PAYCO has a commitment with the local development, which means giving priority to contractors of the area of influence. While this policy can increase the indirect impact of its operations on a local level, at the same time it brings a series of operational difficulties and difficulties of regulatory fulfilment. The professional suppliers with a higher level of formalization are concentrated in the urban centers and the capital of the country. However, in 2016 we achieved significant advances regarding the formalization and hiring of local workers. The inclusion of the contractors in the forestry, agricultural and services sector in the IPS social security increased by 10%. The workers coming from the area of influence increased from 51% in 2015, to 62% in 2016.
In the livestock area, most contractors are hired on a piecework basis and are manual workers. PAYCO recognizes that it must face a number of improvements in order to make formal work a rule for contractors; however, it prioritizes the contractors with certified activities, and it promotes others to gradually join these work conditions. To promote this improvement, in 2016 we adopted a monthly registry of subcontracted staff, where we entered the basic data about the workers, including information about contracts and social security. This practice allows for a better understanding of the situation of each contractor in the forestry and agriculture sectors. About the results of the information collected we will plan specific measures for 2017. We also registered a significant amount of complaints during 2016, from outsourced personnel about the noncompliance of the terms of the contractual agreements and/or of payment. In all the cases, the complaints are addressed both by the company and the contractor.
37
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G4-LA14, G4-LA15
SUSTAINABILITY REPORT 2016
Complaints mechanisms about work practices38 Since 2015, PAYCO implements a complaints mechanism through the installation of complaints boxes in every site where there are certified and significant activities. Through this specific means we did not receive any complaint in the 2016 period; however, we received a total of 4 complaints presented verbally, 3 of them related to work conditions and 1 related to road safety. These complaints were addressed and solved through the follow-up of the social responsibility actor of the site involved.
6.2. Human Rights39 Prevention of child labor The company’s policy seeks to collaborate with the eradication of child labor in the country. To reach this goal, we do not hire children under 18 years old under any circumstances, and we request by contract that the service providers of the company’s establishments fulfil the same requirement. The fulfilment of this requirement is constantly evaluated and its non-compliance is reason for contract termination with the contractors. In the period corresponding to this report we do not register any event of the hiring of minors in the sites where the company operates. For the children of the staff that lives in the Cambuchi, Lomas and Golondrina residences, the company has schools established by the Ministry of Education to provide basic schooling to these children, and to financially support the education centers where the staff’s children study. Annually, in the corporate social responsibility budget we assign and dedicate an amount to support the schools of the farms and other schools where the staff’s children study.
Forced labor In its declaration of good social practices, PAYCO declares that there is no forced labor. The relatives and dependents have the right to work outside of the company. No employee is forced to live in the company, and those who do not live there are not discriminated. No document of the employees is left under custody of the company. Under no circumstance does the company withhold part of the employees’ salaries without explicit permission of the employee. These declared practices are annually assessed through the different external certification audits, without registering non-compliance.
38
G4-LA16
39
G4-HR5, G4-HR6, IFC-PS2
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Indigenous population40 The Ka’atymi y Tacuarusu indigenous communities settled in the Ypetî Natural Reserve of the Golondrina farm, have been presenting and conducting a claim over the occupied lands within the Reserve, a total of 2.015 hectares. A group of these communities request the titling of the area; another groups wants it to be declared as an indigenous natural reserve. Since 2012, they promote a trial for usucaption, or acquisitive prescription, which is currently in the stage of clarification caused by the passing of one of the chieftains. About this same claim, and by request of the Paraguayan Indigenous Institute (INDI), we had presented an offer letter for the 2.015 hectares, which still has not been answered by the INDI. In 2016, this claim was presented to the National Committee for the Defense of Natural Resources (CONADERNA), an instance of the Chamber of Senators of Paraguay, created by Law 40/1990 to safeguard the preservation of the environment, orienting and coordinating the action of the organisms that develop activities in the defense of the ecosystem. The Board of the company, together with the members of the CONADERNA, participates in a committee to analyze solution alternatives for the lands occupied by the indigenous communities of the Ypetî Reserve. In this work table, PAYCO proposes as possible alternatives to reach an agreement of perpetual use of these lands in favor of the indigenous people and, as a second alternative, to sell these areas to the Paraguayan State to finally transfer them in favor of the indigenous communities through legal and transparent means. It is responsibility of the CONADERNA to follow up with the work table and the alternatives mentioned. The company is greatly interested in providing a solution and a dignified outcome to the indigenous claim.
6.3. Society41 In 2016, the company continues to promote initiatives of positive relations with the society in general, particularly with the local communities where 65% of our work force comes from, between in-house staff and subcontractors. The establishments of the company that generate a greater social impact are Golondrina and Lomas. The sites where we develop forestry activities are also included within the social attention program, due to the social characteristics of the environment and the associated risks.
40 41
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G4-HR8, IFC-PS7 G4-SO1, G4-SO2, IFC-PS1
SUSTAINABILITY REPORT 2016
Local communities PAYCO understands that the management of social impacts in their activities translate into feedback, treatment and continues improvement processes for their actions. With this approach, we have identified 10 communities, between rural and indigenous ones, where we implement long-term and medium-term development actions and programs, serving around 1.000 families.
In the places where forestry activities are developed we start the project with the social characterization of the environment, establishing the baseline, sharing information about the forestry project, identifying the social program to be implemented, putting into action the social measure and its follow-up. However, in Golondrina, the contact with the communities goes back to its origins, employing mainly members of the neighboring area. We started support programs for small producers of the area of influence in 2008, and we have introduced more systematic actions since 2013.
Main social activities according to establishment The main social actions implemented: • Information about the forestry project • Support for the improvement of infrastructure (roads) • Support for schools and health centers • Hiring local services • Hiring local staff • Outgrower Scheme forestry program • Support production projects with fiduciary funds. • Socio-environmental development projects. We describe them briefly below:
Socio-environmental community development: live protection barrier With the co-financing of the Deutsche Investitions und Entwicklungsgesellschaft bank (DEG), in 2015 we started the implementation of a live protection barrier with exotic and fruit species along the access road to Lomas, in the 2a Reconstrucción community, with a total of 1.900 trees in front of 71 households. The project continued throughout 2016 with technical assistance and supervision of the cleaning and growth of trees. We expect this project to contribute to minimize the impact of PAYCO’s activity in this site, and thus improve the relation with the community, because the generation of dust by trucks associated to PAYCO has been the main topic of complaints during the last years.
Outgrower Scheme forestry project This forestry program establishes a long-term commitment and participation with the community. This program is a mechanism of inclusion in the forestry business for small owners of the area of influence of the forestry plantation, where those who have any availability of land and are interested can join PAYCO through a contract and they can implement the project of eucalyptus plantation. They receive all the forestry inputs and technical assistance, in addition to an annual payment per hectare of the opportunity cost. The final benefits are divided by 50% between the company and the beneficiary. In 2016, the scope of the project went from 19 small owners and 26 ha to 41 owners and 57 ha, showing an important increase of its impact.
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Forest nurseries in Lomas In 2016, the three tree nurseries established in Kerambu and 2a Reconstrucción sought to produce a total of 40.000 plants to provide native plants for the ecological restoration in Lomas and Cerro Verde, and tree fruits for the establishment of a live protection barrier in the 2a Reconstrucción community (Lomas). 33% of this amount was effectively extracted and planted in the project areas, which is why in 2017 we are going to explore options for a more commercial focus of these tree nurseries. The tree nurseries receive continuous technical and organizational support from PAYCO and Unique Wood.
Improvement of the family economy in the indigenous communities of Ka’atymi y Tacuarusu Also in cooperation with the Deutsche Investitions und Entwicklungsgesellschaft Bank (DEG), PAYCO started an ambitious project to produce native yerba mate planted in the scrubland with the indigenous communities settled in the Ypetî Reserve in Golondrina. The project, started in 2015, ends in 2016. It has implemented management, harvest and processing workshops of the yerba mate and the support of 14.300 plants. The project brought an improvement of the communication between the indigenous communities and the company.
Apiculture The traditional collection of honey in the forest by the indigenous communities has been identified as a cause for fires in Golondrina. Seeking to avoid these practices, in 2016 PAYCO started implementing the production of honey providing technical assistance (decanting, breeding, harvest, management of beehive), as well as tools and equipment. This project will have a follow-up in 2017, increasing the coverage of beehives in the indigenous communities.
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SUSTAINABILITY REPORT 2016
Environmental, social and financial strengthening of the Ypetî Private Natural Reserve and of its area of influence In order to provide follow-up to the yerba mate production project finished in 2016 with support from the DEG bank, at the end of that same year PAYCO started another project with co-financing from the Fund for the Conservation of Tropical Forests, the executive participation of the Rural Association of Paraguay and Unique Wood Paraguay, which seeks, on one hand, to contribute to the conservation of non-timber forestry resources (yerba mate) through the sustainable management of the forest in the area of traditional use of the RNPY, together with the indigenous communities. On the other hand, it seeks to create actions of sustainable management of the timber forestry resources for the conservation of the forest in the RNPY area of influence, in partnership with the neighboring communities. With the indigenous communities, we seek to create a management plan for the yerba mate that is native and planted in the scrubland, to build two traditional barbacuás to dry the yerba and two storage deposits of processed yerba mate. With the small owners of farms the Reserve area of influence, we seek to implement the Outgrower Scheme program, applying the Law N° 4890/13 of Real Right of the Forest Surface (DRSF), in a total surface of 100 hectares, 75% of the area with exotic species and 25% with native species.
Mechanisms of complaints on social impact42 Since 2014 we develop an accessible feedback methodology of the communities about the company’s operations, through the complaints and suggestions boxes. In 2016 we registered 51 complaints in the 10 communities connected to the company, which represents a significant increase in comparison to previous years, when the complaints were always less than 10. All the complaints received due follow-up through the social monitoring system. Regarding the community meetings, in 2016 we registered 23 meetings, during which different topics were discussed, among them the projects developed, complaints pending resolution and information about the company’s activities.
42
G4-SO11, IFC-PS4
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PAYC O S . A . - PA R A G U AY
VII. INDEX GRI Index
66
SUSTAINABILITY REPORT 2016
67
PAYC O S . A . - PA R A G U AY
68
SUSTAINABILITY REPORT 2016
IFC Regulations Index
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PAYC O S . A . - PA R A G U AY
VIII. ABBREVIATIONS APATUR - Paraguayan Association of Rural Tourism APROSEMP - Seed Producers Association of Paraguay ARP - Rural Association of Paraguay AVC - High Conservation Value BAAPA - Atlantic Forest of Alto Parana BAVC - High Conservation Value Forest CAPECO - Paraguayan Chamber of Cereal and Oilseeds Exporters CDC - Data Center for Preservation CEA - Consortium of Stockbreeders for Agricultural Experimentation CITES - The Convention on International Trade in Endangered Species of Wild Fauna and Flora DEG - Deutsche Investitions und Entwicklungsgesellschaft mbH FEPAMA - Paraguayan Federation of Timber Merchants FCA - Faculty of Agricultural Sciences FIDEI - Trust Fund for inclusive social development FMB - Moisés Bertoni Foundation FMU - Forest Management Units FSC - Forest Stewardship Council ISCC - Sustainability and Carbon Certification (Certificación Internacional de Sustentabilidad y Carbono) GRI - Global Reporting Initiative (Iniciativa de Reporte Global) IBA - Important Bird Area INFONA - National Forestry Institute IPS - Social Security Institute ISCC - International Sustainability Carbon Certification (Sostenibilidad internacional y de Carbono) ISO - International Organization for Standardization (Organización Internacional de Normalización) OMS - World Health Organization RTRS - Round Table on Responsible Soy Association (Asociación Internacional de Soja Responsable) SEAM - National Secretariat of the Environment SENAVE - National Service of Quality and Plant and Seed Safety SigEV-Tecnomyl - Management System of Empty Containers from Tecnomyl UICN - International Union for Nature Conservation UNA - National University of Asunción YPNR - Ypetî Private Natural Reserve
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Head Office in Fernando de la Mora Tte. Rivarola, 840 c/ Florida 00595 21 527 891/2 - 00595 971 150 006 info@payco.com.py
Fact sheet Executive coordinator: Gloria Helman. Collaborators: Laura Duré, Gisselle Villalba, César Riveros. GRI Technical Support / IFC Norm: Daniel Ramírez Brizuela. Design and review: Activamente SRL. / Laura Piñeiro Profesional de Marcas Translation: Grizzie Logan Photography: Archivos de Reserva Natural Ypeti y PAYCO, Mario González, Rafael Ortiz, Alberto Esquivel, José Luis Cartes.