47335-001: Greenhouse Agricultural Development Project · ABBREVIATIONS . ADB - Asian Development Bank AESPR Annual Environmental and Social Performance Report CNY - Chinese Yuan

Annual Environmental and Social Performance Report Project Number: 47335-001 February 2016

PRC: Le Gaga Holdings Limited Greenhouse Agricultural Development Project Prepared by Le Gaga Holdings Limited for the Asian Development Bank This environmental and social monitoring report is a document of the borrower. The views expressed herein do not necessary represent those of ADB’s Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “Terms of Use” section of this website. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgements as to the legal or other status of any territory or area.

Name of Organization Le Gaga Completed by Chen Hang Position in Organization General ESMS Manager Date: 16 February 2016 Reporting Period From: 05 December 2014 To: 31 December 2015

ABBREVIATIONS

ADB - Asian Development Bank AESPR Annual Environmental and Social Performance

Report CNY - Chinese Yuan EIA - Environmental Impact Assessment EPB - Environmental Protection Bureau ESMS - Environmental and Social Management System ESU - Environmental and Social Unit IEE - Initial Environmental Examination TSP - Total Suspended Particles PB - Production Base

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TABLE OF CONTENTS A. Introduction ................................................................................................................................................................ .. 3

B. Environmental and social management system (esms) ........................................................................ 3

C. Information on Subprojects Utilizing ADB Funds ...................................................................................... 6

Appendix 1: Roles and Responsibilities for ESMS Implementation .................................................... 16

Appendix 2: On-site Environmental Checklist EXAMPLE ........................................................................ 19

Appendix 3 EMP Monitoring Results ................................................................................................................... 21

Appendix 4: Environmental Permit ....................................................................................................................... 26

Appendix 5: Special Issues of Social Safeguard Implementation ........................................................ 29

appendix 6: Photos at Construction Sites ......................................................................................................... 32

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A. INTRODUCTION

Le Gaga Holdings Limited (hereafter “Le Gaga”), is a holding company incorporated in Cayman Islands. Le Gaga specializes in modern greenhouse farming with focus on applying advanced horticultural know-how cultivation to better control crop cycles and harvest schedules. Le Gaga has sought financial loan from ADB and other participating commercial banks to expand modern greenhouse facilities in Guangdong and Fujian provinces.

The purpose of this Annual Environmental and social Performance Report is to report on Le Gaga’s compliance with relevant environmental and social regulations of the Peoples Republic of China (PRC), and Asian Development Safeguard Policy Statement (ADB SPS, 2009) and other social requirements. .

B. ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM (ESMS)

Policies & Processes Yes/No Confirm if ESMS is being fully implemented in your current operations.

Yes Le gaga developed and adopted an ESMS i which is compliant with ADB SPS 2009 and applicable national and local rules and regulations related to environment and social safeguards and other social requirements, the since 1st February 2015.

What are the main challenges to meet host country’s safeguard requirements?

Le Gaga’s business activities do not involve any permanent land acquisition and house demolition. Land is leased from the farmers based on negotiation. ADB financed 3 bases in 20151. The land lease contracts for those 3 bases were signed in 2014. Le Gaga has prepared 3 Social Compliance Audit Reports and all are cleared by ADB. By December 2015, the leased land for Dayang Base is increased to 1016.9 mu, with additional 16.9 mu. The procedures followed during leasing negotiations were compliant with national laws and local guidelines. The construction and operation of new production base is classified as Category B/C projects according to PRC’s Guideline on Environmental Impact Assessment Categorization for Construction Project (Ministry of Environmental Protection, 2015). Le Gaga’s project development team is familiar with the state and local E&S procedures and requirements. Certificated third-party E&S institutes are hired to support Le Gaga in the E&S assessments.

What are the main challenges to meet ADB’s requirement for

The ESMS is a new concept and requirement to Le Gaga. It is a quite challenge to introduce implementation of the ESMS to all production

1 For Beigao base, there is no disbursement in 2015.

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ESMS establishment and implementation?

bases and related staff. Le Gaga has hired two external ESMS consultants, who developed the ESMS for Le Gaga and conducted trainings to the E&S General Manager and E&S Coordinator (corporate level), 2 regional E&S managers and 9 E&S Managers (farm level) on 9 March 2015. Other 12 staffs (mainly are HR E&S officer at different levels) with E&S responsibilities have been trained by E&S general manager during daily operation as at the report date.

Please describe how you ensure that your subsidiaries and their subprojects are operated in compliance with the national laws and regulations and applicable ADB’s environmental and social requirements.

At corporate level, an Environmental and Social Unit (ESU) has been set up. The ESU is composed by E&S General Manager, E&S coordinator and HR E&S officer. The E&S coordinator and HR E&S officer are female. During the subprojects identification stage, the ESU will work with production base planning division to do the initial E&S impact assessment to check if the candidate subprojects comply with ADB’s SPS 2009 and other social requirements and national laws and regulations. If there is any non-compliance identified, the E&S general manager will report to the president and corrective measures will be proposed. During subprojects preparation and implementation stage, ESU will be responsible for oversee environmental and social issues. The subsidiary manager/project base manager has been appointed as E&S manager at local level to be responsible for daily management of environmental and social matters and report to ESU.

Please give details of any material social and environmental issues associated with subsidiary companies and their subprojects during the reporting period in particular?

There are no significant environmental issues with the production bases established in 2015. 3 Social Compliance Audit Reports are cleared by ADB. By December 2015, the leased land for Dayang Base is increased to 1016.9 mu, with additional 16.9 mu. There is no impact on ethnic minorities. The procedures followed during leasing negotiations were compliant with national laws and local guidelines.

In case the existing ESMS is not fully functional, what is the action plan being implemented by the company?

The existing ESMS is fully functional in 2015 -year of monitoring.

Is there a need to update or revise the current ESMS to address present operations? If

No

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yes, what elements (policies, procedure, capacity and reporting) of the ESMS are required to be updated/revised? Capacity Yes/No How many staff members are designated in the implementation of the ESMS?

There are 14 staffs involved in the management and implementation of the ESMS. For details, please refer to Appendix 1: Roles and Responsibilities for ESMS Implementation

Do the staff members assigned to implement the ESMS perform other job functions/responsibilities? If yes, please enumerate other job functions/responsibilities.

Yes The staff members assigned to implement the ESMS also performs other job functions, such as other administration and HR affairs. However, the E&S implementation is their most important assignment and enough time will be provided. Please refer to Appendix 1: Roles and Responsibilities for ESMS Implementation

Are these staff members long-standing employees of the company? Or are they new employees?

Yes The ESMS are staffed with senior management team of the Group and production bases (subsidiaries). One new female employee was hired in June 2015 as E&S coordinator at corporate level to strengthen the capacity of ESU.

Are there external environment and social consultant/s assisting you to deal with technical issues of the subprojects?

Yes Two individual ESMS consultants are hired to assist to prepare the IEE and Social Compliance Audit Report for Dayang Base, and the 2015 Annual Environmental and Social Performance Report (AESPR).

What was the budget allocated to the ESMS and its implementation during the year?

Budget allocated to the ESMS includes: training cost, salary for the external consultants and monitoring cost.

Monitoring Yes/No Do you receive environmental and social monitoring reports from subsidiaries for their subprojects?

No The E&S Construction Manager conducts a periodic check within the site to ensure that mitigation measures are properly implemented. Please refer to Appendix 2: On-site Environmental Checklist. By the end of each quarter, the general E&S managers, the regional E&S managers, and the E&S managers at the farm level will have a call conference to check if there is any E&S issue. This is kind of internal monitoring.

Do you have external monitoring reports covering environmental and social issues?

Yes External environmental impact monitoring were undertaken in line with the requirements defined in environmental management plan (EMP) of subproject IEE. The monitoring results for two production bases ADB financed under construction during this reporting period were presented in Appendix 3. As there is no IR impact induced by the subprojects, external resettlement monitoring is not required.

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Project bases under operation/construction by 31st December 2015 are described in the table below.

Table 1: Information of Bases

Production Base Name

Area (mu) 1 ha=15 mu

Status (operation/construction)

Components financed by ADB

Guangdong Province Huidong Operation since 2005 Upgrading facilities to

soil-less plantation model on existing farm

Boluo Operation since 2009 No Fujian Province Zhangpu Operation since 2008 Upgrading facilities to

soil-less plantation model on existing farm

Huian Operation since 2011 Upgrading facilities to soil-less planation model on existing farm

Quangang Operation since 2008 Upgrading facilities to soil-less planation model on existing farm

Huating Operation since 2014 Upgrading greenhouse and irrigation system

Longhua Operation since 2013 NO Duwei Operation since 2012 Upgrading facilities to

soil-less planation model on existing farm

Zhongshan-Xinlian

Operation since 2012/expansion

New Xinlian production bases construction

Dayang Construction New base Beigao Construction New base Fuqing Operation since 2011 Upgrading facilities to

soil-less planation model on existing farm

Zishan Operation since 2006 NO Sanming Operation since 2012 NO

C. INFORMATION ON SUBPROJECTS UTILIZING ADB FUNDS This section summarizes environmental and social performance of projection bases involving construction of new greenhouse facilities and land leasing, including:

− Zhongshan-Xinlian Production Base − Dayang Production Base − Beigao Production Base

The environmental and social compliance audit reports for Huian, Huating, Fuqing, Zhangpu and Huidong Base are ongoing and will be reported in the succeeding reporting year. For

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Quangang and Duwei base, environmental and social compliance audit was conducted during the corporate level audit period (2014).

Table 2: Zhongshan-Xinlian Production Base

Name of Subproject Company Linong Agriculture Technology (Xianyou) Co. Ltd.

Name of Subproject Zhongshan-Xinlian Production Base Subproject location Zhongshan Town, Xianyou County, Putian

Municipality, Fujian Province, PRC Total Subproject Cost Total Financing from ADB by end of 2015 Safeguard Category Environment: B

Involuntary Resettlement: C Indigenous Peoples: C

Were environmental and social due diligence undertaken by your organization?

Yes. The subproject was screened against the REA checklist and IP/IR at the first beginning.

Any environmental assessment report (including environmental management plan), or audit reports reviewed by your organization?

The simplified environmental impact report prepared by local EIA institute was reviewed by E&S General manager, E&S regional manager and E&S manager of production base.

What were the main environmental, involuntary resettlement and indigenous people issues associated with this subproject that were identified through due diligence conducted by your organization, and how were the issues dealt with?

No major environmental and social issue as disclosed in the IEE and social compliance audit report of Zhongshan Production Base.

For each subproject, did (project/borrower’s staff responsible for implementing the ESMS) assist the subsidiary company to comply with the applicable environmental and social safeguard requirements and their implementation?

Yes. The results of the simplified environmental impact report prepared by local EIA institute, IEE and social compliance audit report were circulated to the Production Base Planning Division. The ESU in conjunction with the Projection Base Planning Division will oversee the compliance with safeguard requirements and provide guidance as necessary.

For category B subprojects, were safeguards related documents such as EIA/IEE report or audit reports made publicly available, in addition to posting on ADB’s website?

Yes. The IEE is accessible at: http://www.adb.org/projects/documents/prc-greenhouse-agri-devt-project-zhongshan-xinlian-production-base-jun-2015-iee The domestic environmental impact assessment document is disclosed at the website of Xianyou EPB on 25th November 2014: Http://www.Xianyou.gov.cn/huangbao/govinfo/permit/webinfo/2014/1416819321789689

http://www.adb.org/projects/documents/prc-greenhouse-agri-devt-project-zhongshan-xinlian-production-base-jun-2015-iee



http://www/

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Xianyou County EPB undertook a second round disclosure on approval of the project during 2nd to 8th December 2014: Http://www.Xianyou.gov.cn/huangbao/govinfo/permit/webinfo/2014/1417440600800765 The Social Compliance Audit Report is accessible at: http://www.adb.org/projects/documents/prc-greenhouse-agri-devt-project-zhongshan-xinlian-base-jun-2015-scar

Were any conditions or covenants related to environmental and social issues made along with the investment?

NA

Does the subproject comply with applicable government requirements?

Yes. Please refer to the environmental clearance by Xianyou County Environmental Protection Bureau as Appendix 4. The social compliance audit report concluded that the procedures and contract for land lease is comply with applicable government requirements.

Does the subproject comply with applicable ADB safeguard requirements?

Yes.

Does the Borrow comply with the following ADB’s social protection requirements? Do not employ child labor or forced labor; Carry out activities consistent with the intent of ensuring legally permissible equal opportunity, fair treatment and non-discrimination in relation to recruitment and hiring, compensation, working conditions and terms of employment for its workers (including prohibiting any form of discrimination against women during hiring and providing equal work for equal pay for men and women engaged by the Borrower); Not restrict its workers from developing a legally permissible means of expressing their grievances and protecting their rights regarding working conditions and terms of employment;

Yes.

Does the subproject engage contractors and other providers of goods and services: (i) who do not employ child labor2 or forced labor;3

Yes. After the establishment of ESMS, the contract added the new provisions that the contractor’s performance should be

2 Child labor means the employment of children whose age is below the statutory minimum age of employment in the relevant

country, or employment of children in contravention of International Labor Organization Convention No. 138 ‘Minimum Age Convention” (www.ilo.org).

3 Forced labor means all work or services not voluntarily performed, that is, extracted from individuals under threat of force or penalty.

http://www.xianyou.gov.cn/huangbao/govinfo/permit/webinfo/2014/1417440600800765



http://www.adb.org/projects/documents/prc-greenhouse-agri-devt-project-zhongshan-xinlian-base-jun-2015-scar



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(ii) who have appropriate management systems that will allow them to operate in a manner which is consistent with the intent of (A) ensuring legally permissible equal opportunity and fair treatment and non-discrimination for their workers, and (B) not restricting their workers from developing a legally permissible means of expressing their grievances and protecting their rights regarding working conditions and terms of employment; and (iii) whose subcontracts contain provisions which are consistent with paragraphs (i) and (ii) above.

consistent with national laws on labor, gender and children, and other social safeguards issues.

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Table 3: Dayang Production Base

Name of Subproject Company Putian Licheng Linong Agriculture Technology Co., Ltd

Name of Subproject Dayang Production Base Subproject location Dayang Zhen/ Hanjiang District/Putian City Total Subproject Cost Total Financing from ADB by end of 2015 Safeguard Category Environment: B



Yes. The subproject was screened against the REA checklist and IP/IR checklist at the beginning of the project


The simplified environmental impact report prepared by local EIA institute was reviewed by E&S General manager, E&S regional manager and E&S manager of production base.


No major environmental and social issue as disclosed in the IEE and social compliance audit report of Dayang Production Base.


Yes. The results of the simplified environmental impact report prepared by local EIA institute, IEE and social compliance audit report were circulated to the Production Base Planning Division. The ESU in conjunction with the Projection Base Planning Division will oversee the compliance with safeguard requirements and provide guidance as necessary.


Yes. The IEE is accessible at: http://www.adb.org/projects/documents/prc-greenhouse-agricultural-development-project-dayang-production-base-apr-2015-iee The domestic environmental impact assessment document was disclosed on the website of Hanjiang District EPB on 3rd December 2014: http://www.pthjhbj.gov.cn/bmdt/gggs/hpspgggs/20141203/642900001.shtml Hanjiang District EPB undertook a second round disclosure on approval of the project during 23rd to 31st December 2014 http://www.pthjhbj.gov.cn/bmdt/gggs/hpspgggs/20141222/199600001.shtml.

http://www.pthjhbj.gov.cn/bmdt/gggs/hpspgggs/20141203/642900001.shtml




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The Social Compliance Audit Report is accessible at: http://www.adb.org/projects/documents/prc-greenhouse-agri-devt-project-dayang-production-base-mar-2015-scar


NA


Yes. Please refer to the environmental clearance by Hanjiang District Environmental Protection Bureau attached as Appendix 4. The social compliance audit report concluded that the procedures and contract for land lease is comply with applicable government requirements.


Yes.


Yes

Does the subproject engage contractors and other providers of goods and services: who do not employ child labor4 or forced labor;5 who have appropriate management systems that will allow them to operate in a manner which is consistent with the intent of (A) ensuring legally permissible equal opportunity and fair treatment and non-discrimination for their workers, and (B) not restricting their workers from developing a legally permissible means of expressing their grievances and

Yes. After the establishment of ESMS, the contract added the new provisions that the contractor’s performance should be consistent with national laws on labor, gender and children, and other social safeguards issues.




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protecting their rights regarding working conditions and terms of employment; and whose subcontracts contain provisions which are consistent with paragraphs (i) and (ii) above.

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Table 4: Beigao Production Base

Name of Subproject Company Putian Licheng Linong Agriculture Technology Co., Ltd

Name of Subproject Beigao Production Base Subproject location Beigao Town, Licheng District, Putian

Municipality, Fujian Province, PRC Total Subproject Cost Total Financing from ADB by end of 2015 Safeguard Category Environment: B



Yes. The subproject was screened against the REA checklist and IP/IR checklist at the first beginning.


The simplified environmental impact report prepared by local EIA institute was reviewed by E&S General manager, E&S regional manager and E&S manager of production base. The ESU in conjunction with the Projection Base Planning Division will oversee the compliance with safeguard requirements and provide guidance as necessary.


No major environmental and social issue as disclosed in the IEE and social compliance audit report of Beigao Production Base.


Yes. The results of the simplified environmental impact report prepared by local EIA institute, IEE and social compliance audit report were circulated to the Production Base Planning Division.


Yes. The IEE is accessible at: http://www.adb.org/projects/documents/prc-greenhouse-agricultural-development-project-beigao-production-base-iee The domestic environmental impact assessment document is disclosed at the website of Licheng District EPB on 4th December 2014: http://www.ptlc.gov.cn/hbj/tabid/306/ctl/InfoDetail/InfolD/48620/mid/836/Default.aspx?ContainerSrc=%5bG%5dContainer%2f_default%2fNo+Container Licheng District EPB undertook a second round disclosure on approval of the project during 12 to 18 December 2014:

http://www.adb.org/projects/documents/prc-greenhouse-agricultural-development-project-beigao-production-base-iee



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http://www.lcpz.gov.cn/tabid/1203/InfoID/48686/frtid/2708/Default.aspx The Social Compliance Audit Report is accessible at: http://www.adb.org/projects/documents/prc-greenhouse-agricultural-development-project-beigao-base-oct-2015-scar


NA


Yes. Please refer to the environmental clearance by Licheng District Environmental Protection Bureau attached as Appendix 4. The social compliance audit report concluded that the procedures and contract for land lease is comply with applicable government requirements.


Yes.


Yes

Does the subproject engage contractors and other providers of goods and services: who do not employ child labor6 or forced labor;7 who have appropriate management systems that will allow them to operate in a manner which is consistent with the intent of (A) ensuring legally permissible equal opportunity and fair treatment and non-discrimination for their workers, and (B) not restricting their

Yes. After the establishment of ESMS, the contract added the new provisions that the contractor’s performance should be consistent with national laws on labor, gender and children, and other social safeguards issues.




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workers from developing a legally permissible means of expressing their grievances and protecting their rights regarding working conditions and terms of employment; and whose subcontracts contain provisions which are consistent with paragraphs (i) and (ii) above.

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APPENDIX 1: ROLES AND RESPONSIBILITIES FOR ESMS IMPLEMENTATION Job title Description of responsibilities in the

ESMS Description of other responsibilities in the company besides ESMS

E&S General Manager

The ESMS general manager will i) have oversight for environmental and

social issues; ii) ensure resources are made available for

environmental and social management; iii) will sign the Company’s annual ESMS

performance report to ADB; iv) ensure that ADB is notified if and when

there is a material environmental or social safeguards non-compliance;

v) ensure that ADB is notified if and when the responsible staff has been changed or replaced with new staff;

vi) organize and coordinate the E&S training.

vii) ensure that all subproject companies adopt and apply this ESMS accordingly.

Offices management; Legal issues; CSR.

E&S Coordinator

i) Work with E&S manager at project company to do the initial impact assessment to check if the candidate subprojects are comply with ADB’s SPS 2009 and national laws and regulations; the ADB Rapid Environmental Assessment (REA) Checklist (Agro-Industry), Involuntary Resettlement Screening Checklist, and Indigenous Peoples Impact Screening Checklist (Attachment 5) can be referred.

ii) prepare IEE for category B subprojects on environment, and social compliance audit report under the assistance of E&S manager at project companied;

iii) supervise the effective implementation of the EMP;

iv) coordinate periodic environmental and social impact monitoring according to the approved monitoring plan;

v) prepare AESPR with the assistance from project companies and/or consultant and submit to ADB on time;

vi) ensure implementation of ESMS system at both corporate and project companies; and

vii) maintain E&S relevant documents. viii) implement the E&S training at corporate

and subproject company level.

Investment relationship; CSR

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HR E&S Officer

i) Coordinate with the base company to provide enough human resource to implement ESMS;

ii) Organize necessary training to the staff.

Other HR affairs.

E&S regional manager

i) have oversight for environmental and social issues in the region;

ii) ensure resources are made available for environmental and social management;

iii) providing support to ESU to prepare the IEE for category B subprojects on environment, and social compliance audit report;

iv) reporting to the general E&S manager when there is some significant issue;

v) Organize necessary training to the staff.

Production Base E&S Manager

i) liaising with government/local village in handling social aspects of subprojects including land leasing and community engagement;

ii) providing support to ESU to prepare the IEE for category B subprojects on environment, and social compliance audit report;

iii) conduct the consultation for land leasing and environment;

iv) prepare and submit the annual environment and social impact monitoring report to the E&S General Manager and ESU;

v) handling environmental and social related complaints and report to E&S General Manager;

vi) monitoring the gender, labor and other social issues;

Other job functions assigned by the company, such as other administration and HR affairs.

Note:

Male Female

PB=Production Base Figure 1 ESMS Implementation Organization Chart

APPENDIX 2: ON-SITE ENVIRONMENTAL CHECKLIST EXAMPLE The on-site environmental management performance for construction is supervised by the E&S manager using the checklist. The environmental aspects checked include: i) soil erosion and pollution; ii) air quality; iii) noise; iv) solid waste management; v) occupational health and safety; vi) flora. The following figures show one example filled out by E&S manager of Zhongshan production base on 19th December 2015.

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APPENDIX 3 EMP MONITORING RESULTS

Le Gaga contracted Xiamen Sino-Tech Testing Technology Ltd to monitor the air quality and acoustic environment. Construction for Beigao production base has not commenced as of the reporting period. The table below presents monitoring results for Zhongshan production base and Dayang production base.

Production Base

Monitoring Location Monitoring Date

24h-TSP (mg3/m3)

Noise dB(A) during daytime

Zhongshan Production Base

4 points at boundary of the construction sites

1# (upwind) TSP: 2015/12/29-2016/01/05 Noise: 2015/12/29

0.083 37 2# (downwind)

0.100 34

3#(downwind) 0.083 39 4#(downwind) 0.133 36

Dayang Production Base

4 points at boundary of the construction sites

1# (upwind) TSP: 2015/12/29-2016/01/05 Noise: 2015/12/29

0.100 40 2# (downwind)

0.333 46

3#(downwind) 0.300 42 4#(downwind) 0.183 42

Applicable Standard / 70 (GB12523-2011)

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(1) Monitoring Results for Zhongshan production Base

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(2) Monitoring Results for Dayang production Base

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APPENDIX 4: ENVIRONMENTAL PERMIT

Production Base Name Approval Authority Approval Date Zhongshan Production Base Xianyou County EPB 2014/12/09 Dayang Production Base Hanjiang District EPB 2014/12/22 Beigao Production Base Licheng District EPB 2014/12/19

Major requirements of local EPB include: a) Spoil earth shall be cleaned timely to avoid soil erosion and dust; b) Noise level shall be controlled under the requirements of Noise Discharge Standard at

Boundary of Construction Site (GB 12523-2011); c) Cooking wastewater shall be treated by oil separation tank. Residential wastewater shall

be treated to standard for Water Quality of Agricultural Irrigation (GB5084-2005) before reuse for irrigation;

d) Cooking fume shall be treated to satisfying Cooking Fume Emission Standard for Restaurant (GB18483-2001);

e) Packing waste from fertilizer and pesticide shall be handled by certificated agencies.

(1) EIA Approval for Zhongshan Production Base

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(2) EIA Approval for Dayang Production Base

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(3) EIA Approval for Beigao Production Base

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APPENDIX 5: SPECIAL ISSUES OF SOCIAL SAFEGUARD IMPLEMENTATION 1. 3 social compliance audit reports for Dayang, Zhongshan and Beigao Base have been

prepared by Le Gaga and cleared by ADB. All the reports are posted on ADB’s website. 2. According to the reports, below are the main conclusions:

(i) Land Lease. Land lease of the bases were carried out by villages, Le Gaga and local governments in conformity with government laws and regulations. Le Gaga paid the rent to the village committee on time. The rent was finalized based on consultation. All procedures and measures implemented complied with ADB SPS SR2 requirements, and there is no outstanding noncompliance issue. An effective organizational system has been established at all levels. The responsibilities of the agencies concerned are well defined and their staff is well trained, thereby promoting the successful implementation of land lease. Full consultation activities are conducted before signing the land lease contract and all farmer’s queries have been addressed fully. By now, the related agencies and Le Gaga have not received any appeal and grievance. The GRM is working well. (ii) Ethnic Minorities/Indigenous Peoples Safeguards Performance of Audited Subprojects. The Dayang base will not adversely affect any ethnic minorities or indigenous peoples. Moreover, Le Gaga has high percentage of ethnic minority farm workers and new job opportunities will be generated for the ethnic people. Fujian and Guangdong Province are both highly economic developed in PRC and its difficult to employ local villagers to work on the production bases, as the salaries are not attractive and there are more other non-agricultural job opportunities. In order to solve the labor shortage, many farmers from the southwestern provinces have been employed, and they are mainly come from Yunnan, Guizhou and Guangxi Province. They are nearly all ethnic minorities, and the main groups are Zhuang, Yi and Miao. The jobs in Le Gaga are attractive and suitable to them, as they have low education level and technical abilities. When these farm workers go home during festivals, they always introduce Le Gaga to their relatives and more and more workers come to the farm. Also, Le Gaga sends the job information in the labor markets in the western provinces. The living customs of these ethnic minorities are respected. Le Gaga has made a significant contribution to improve their income and children’s education. (iii) Stakeholder Engagement, Gender and Development, Labor and Working Conditions. Stakeholder engagement and grievance mechanism was/is running efficiently. Le Gaga upholds gender equality and provides equal employment opportunities for men and women. Women’s rights are protected reasonably well. Le Gaga is strictly following the national labor laws and regulations. The work hours, wages of men and women workers, benefits in terms of accommodation, medical, and social insurance are complied with the China Labor Law (1995) and the Labor Contract Law (2008). The farm worker’s children can receive the local education without restriction according to the Compulsory Education Law (2006). The audit reports also propose some recommendation for the AESPR to include the information below. (i) Final number of land area leased to Le Gaga by 2015 and the number of HHs; Table 2 has provided the land area of each base by 2015. Reply: Le Gaga regularly checks the land area with the village committee to confirm if the areas are changed in written, as supplementary agreement. Below is an example for the Huian Base.

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Translation of the document:

Confirmation Letter of the Area of Land Lease

This is to confirm that Le Gaga Quanzhou Company has leased 457.25 mu land from Wushan Village, Wangchuan Township of Huian County by June 30, 2015.

Wushan Village Committee

22 October 2015

(ii) Job opportunities generated during construction and operation, and the number of jobs provided to the local people, women and ethnic minorities; Reply: Le Gaga’s business makes a significant contribution to women’s employment. As of June 30, 2015, Le Gaga indirectly hired 2,261 farm workers (during busy harvest time, the number is 3,000) through a labor company to perform all agricultural labor work on farms, and the female workers account for 80%. Among the total 217 staff in Le Gaga, female staff accounts for 30%. Men and women are given equal pay for equal work. The Chairman of the Board is female and among the 11 senior management staff, there is also a female sales director. (iii) Working and living condition of the ethnic minorities workers at the base;

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Reply: Le Gaga has developed internal regulations for dormitory management, and Le Gaga is closely monitoring the labor outsourcing company as all farm workers are hired through outsourcing arrangements. Separate and adequate facilities (rooms, toilets, etc) are provided to women workers. (iv) If any grievance occurs during construction and operation, and the measures to address. By now, the related government agencies and the company have not received any grievance from the farmers and the community.

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APPENDIX 6: PHOTOS AT CONSTRUCTION SITES

Dayang Production Base

Zhongshan Production Base

Documents

47335-001: Greenhouse Agricultural Development Project · ABBREVIATIONS . ADB - Asian Development Bank AESPR Annual Environmental and Social Performance Report CNY - Chinese Yuan