- A new report reveals how, in 2021, the Inter-American Development Bank (IDB) and the International Finance Corporation (IFC, the private sector arm of the World Bank) awarded multimillion-dollar loans to Pronaca, one of the largest companies in Ecuador, for it to expand its pig and poultry farms in the province of Santo Domingo de los Tsáchilas.
- Complaints over the company’s environmental practices have been made for at least the last 20 years.
- Tsáchila Indigenous communities and environmental organizations claim that no prior consultation took place, that details of the expansion of the company’s operations are unknown, that no requests for environmental permits have been made and that there are no data available on the appropriate waste management methods necessary to avoid water and air pollution.
The Tsáchila Indigenous communities of the province of Santo Domingo de los Tsáchilas, Ecuador, have spent more than two decades speaking out against the air and water pollution caused by the waste from pig and poultry farms owned by Pronaca, an Ecuadorian company that operates in the food production sector and is one of the country’s five biggest companies.
Today, one of these communities’ biggest concerns is the fact that, despite their repeated protests, since 2004, Pronaca has received $170 million from the International Finance Corporation (IFC) — the private sector arm of the World Bank — and $50 million from the Inter-American Development Bank (IDB).
The communities have denounced the air pollution and contamination of the Pove, Peripa, and Chigüilpe rivers caused by the release of animal waste, adding that they have lost part of their territory to the company’s expansion and that a prior, free and informed consultation was never carried out. “As a community we can no longer perform our daily activities; we can no longer fish, nor can we bathe in the river. Our cultural spaces feel closed off. Now we’re saying that enough is enough, that we want to protect our way of life and if they take away our water, then they take our lives,” said Byron Calazacón, a spokesperson for the Tsáchila Indigenous people.
On June 5, the Ecuadorian Coordinating Committee for the Defense of Nature and the Environment (CEDENMA) published the report “The environmental and Social Impacts of IDB Invest and IFC investments in Pronaca’s activities in Santo Domingo de los Tsáchilas, Ecuador.” The report examined the impacts that Pronaca’s factory farms have had on the natural resources and local and Indigenous communities of the province, and it looked into how the IFC and IDB’s own environmental and social standards were ignored when the loans were granted to Pronaca.
Two decades of complaints go unheard
Pronaca is the fourth-largest corporation in Ecuador and, according to 2022 figures from the Central Bank of Ecuador, it accounted for more than 17% of Ecuador’s GDP in 2018. Animal products account for 87% of its sales of consumer food products, and the company is the country’s largest producer of pork and poultry. According to the company’s 2022 Sustainability Report, Pronaca operates 59 industrial pig, poultry, livestock and crop farms and 18 processing plants across Ecuador. Roughly half of the company’s pig and poultry operations take place in the province of Santo Domingo de los Tsáchilas, close to impoverished Indigenous communities.
The company has applied for loans from the IFC and IDB for their operations on several occasions; those were granted despite protests from the Tsáchila Indigenous communities over impacts on air and water quality. Environmental organizations have also spoken out over awarding the loans, noting that they were given without the relevant and necessary social and environmental impact analysis.
One of the primary concerns raised in CEDENMA’s report is the decision by the IFC in March 2021 to award a $50 million loan to Pronaca “for the purpose of a 2020–2022 investment program aimed at improving the efficiency and expanding the capacity of its feed mills [dry feed given to livestock), pig farms and pork and poultry processing facilities.” Just five months later, the company received another $50 million loan, this time from IDB Invest, which the company intended to use, among other things, “to increase chicken and pig production, given its greater installed capacity.”
Natalia Greene, CEDENMA’s vice president, said, “These two loans were awarded during the pandemic, with no preliminary visit to the territory taking place because of Covid-19, despite the fact that the aim was to expand the company’s activities.”
For Greene, the issue with this lies in the fact that Pronaca has long been denounced by Santo Domingo’s Tsáchila Indigenous communities for producing negative social and environmental impacts over the course of decades. There is even an unresolved court case on the matter, which argues that the granting of credit to expand poultry and pork production violates the rights of Indigenous people in the region.
In 2008, members of local communities, including Tsáchila Indigenous women, went to Ecuador’s constitutional court to file a protective injunction in order to stop the construction of six new biodigesters that Pronaca was installing to process methane from its intensive pig farms. The case highlighted the negative impacts on the flora, fauna and the surface-level and subterranean water systems. The plaintiffs argued that the company’s actions violated their constitutional rights to health and to a clean and safe environment.
In 2009, the judge ruling over the case denied the request to halt the installation of the biodigesters but did recognize the serious issues of social and environmental pollution being caused and ordered the creation of a commission to supervise Pronaca’s activities, with particular attention given to the company’s waste disposal practices and water consumption.
The commission is formed by the ministries of environment, agriculture and livestock and health; the provincial and municipal government of Santo Domingo de los Tsáchilas; the water administration boards; and the Ombudsman’s Office. The latter has a duty to coordinate the commission to ensure that a comprehensive assessment of the contamination of areas surrounding the company’s operation sites is carried out.
However, the commission has held only one meeting and the comprehensive assessment of the area is yet to take place, with the Ecuadorian government citing a lack of funds “despite the fact that this assessment has been one of the main demands of the communities impacted [by Pronaca’s activities],” the CEDENMA report said. Furthermore, representatives from the communities involved have said that not a single community member was present at the only meeting held by the commission so far.
“An interdisciplinary and inter-institutional analysis to monitor water quality and identify the sources of pollution was never carried out. There were only a few, very general reports from the provincial government of Santo Domingo, which mentioned that more samples of heavy metals, fecal coliforms, etc., are needed, and that these studies have to be carried out not only on the surface water, but on the groundwater too, since pollution filters down and many people in the province get their drinking water from wells. But these studies were never carried out, and the commission has not been continued,” said Xavier León, staff member for the Latin American branch of the organization GRAIN, one of the many collectives and organizations supporting the Tsáchila Indigenous people in their case against Pronaca.
León, who has been following the case for more than 10 years, also said that no rigorous analysis of the current situation in the province was conducted before the loans were awarded to Pronaca by the IFC and the IDB; had they done so, it would have been clear that there was a lack of environmental control in the regulatory bodies. “In some aspects, responsibility for environmental matters lies with the Decentralized Autonomous Government of Santo Domingo de los Tsáchilas, and in other ways with the ministry of the environment. Until around three years ago, there were only two environmental inspectors in the whole province, and there has never been any specific sanction against these intensive farming activities, nor was analysis of the water carried out,” León said.
Mongabay Latam contacted the Decentralized Autonomous Government of Santo Domingo de los Tsáchilas and the environment ministry in order to establish whether they had carried out inspections of Pronaca’s activities, if irregularities had been discovered, and if any sanctions had been applied. As of yet, no response to these requests has been received.
Controversy over multimillion-dollar loans
According to León, Pronaca’s farms are located in the province of Santo Domingo de los Tsáchilas for two main reasons. The first is that in order to run intensive pig and poultry farms, one needs to use a lot of water, and the province has large water supplies. “Many of the farms are located less than 300 meters [984 feet] from the river courses,” León told Mongabay; secondly, the province is located in the central region of the country and is well connected to other parts of Ecuador, “which allows the company to distribute its products quickly.”
These characteristics have made Santo Domingo de los Tsáchilas a key area in the expansion of Pronaca’s operations, something that is a cause for concern for the region’s campesino and Indigenous communities, according to CEDENMA’s report. Greene highlighted how “to our surprise, almost no one in the province seemed to know about these loans [from the IFC and the IDB in 2021], nor did they know that they were for the purpose of expanding the company’s activities. Even we did not know exactly what they were going to be used for, despite doing a lot of online research on the subject of the loans using documents that are publicly available. We had to have several conversations with both financial bodies in order to get more information.”
CEDENMA’s report said the region’s Indigenous groups were not even informed, let alone consulted, by the company about its intentions to expand their operations in the area. Nor were they consulted by the IFC or IDB before the financial credits were awarded.
In a letter, the IDB told CEDENMA that during the structuring phase of the loan, “legal due diligence” was carried out, analyzing all the legal cases, complaints and environmental, social and labor-related proceedings that involved Pronaca at the time. Likewise, the bank said that during a supervision meeting it carried out in April 2022, a number of meetings were held, including some with governmental bodies, “where it was confirmed that the company’s environmental cases and complaints are in the closing stages and there are no significant environmental or social risks perceived.” Likewise, during these meetings it was also confirmed that, up until that point, there were no administrative proceedings relating to fines, penalties or notices of closure against the company.
For Greene, the problem was that there were no meetings with the local communities, while the 2008-09 legal proceedings against Pronaca were not properly investigated.
“The communities do not know anything about what is happening on their land. We don’t believe that the multilateral development banks are following their own rigorous environmental and social policies,” said Kari Hamerschlag, assistant director for food and agriculture at Friends of the Earth, an international network of environmental organizations that operates across 74 countries.
In an official statement in response to Mongabay Latam’s enquiries, the IFC said that they promote sustainable economic growth in Ecuador by financing and mobilizing capital for private sector projects. “Pronaca has been an IFC client since 2004, and our efforts have helped the company to improve its environmental and social standards on its farms and processing plants in line with the IFC’s Performance Standards, and with the bank’s environmental, health and safety guidelines and industry best practices.”
The financial corporation added that it always asks its clients to develop solid biosecurity, animal health and management system protocols in line with acceptable international guidelines.
Mongabay Latam also contacted the IDB to ask about the environmental and social criteria for awarding loans; however, by the publication of this report, no response had been received.
Another issue highlighted by CEDENMA’s report was that Pronaca did not apply for new environmental licenses, or even make changes to their current ones, in order to expand their operations. Furthermore, the exact details about the extent of their planned expansion, such as where and how it will take place, and how many hectares they plan to expand by, remain unknown. This is despite the fact that both local communities and CEDENMA have asked the company about these several times over the course of several months.
“Since 1988, Pronaca has been positioning itself very close to the territory of the Peripa commune. It first arrived as a shell company, and only gained an environmental license in 2004, as environmental controls are not very good in Santo Domingo de los Tsáchilas. As the Tsáchila people, we will go as far as we can to mitigate the pollution of our villages,” said Calazacón, the spokesperson for the Tsáchila Indigenous people, adding that the company had never spoken with the local communities about the activities it carried out in their territory.
León also said that when Pronaca first arrived on their land, more than 20 years ago, it started to operate there without conducting prior consultation and without the necessary environmental permits, which, he said, it only received years later. What the Tsáchila currently fear is that this process will be repeated with the expansion of Pronaca’s activities. “They weren’t penalized in any way, nor were they forced to implement any remedial measures for the watersheds or the communities, despite having started operations without permits. Currently they are using the same strategy. The fear is that the expansion will be carried out illegally and will later on be legalized without any penalty or commitment on the part of the company,” León claimed.
Mongabay Latam contacted Pronaca to hear its version of the fate of the $100 million loans it obtained in 2021 and what it had to say about the local communities’ claims about the lack of prior consultation and the lack of proper waste management from its pig and chicken farms. At the time of publication of this report, no response had been received.
As for the contamination of the water system, the report stated that CEDENMA conducted a round of water analysis in April 2022, in which it took samples from the Peripa River, close to the Pronaca farms and the local Indigenous communities, as well as further samples from more remote areas, for comparative purposes. “The results show high levels of contamination by total coliform bacteria in the Peripa River, in six of the eight samples from the areas closest to the Pronaca farms and the Indigenous communities. … The proximity to the city and the rainy season make it hard to reach definitive conclusions about the source of contamination. But the pattern found in the tests was noteworthy and should be further examined and studied.”
Calazacón called for Ecuador’s environmental authorities to monitor contamination levels in the rivers since, although there is also waste coming from other industries and the urban growth of the city of Santo Domingo, Pronaca is one of the main culprits. “Ever since the farms were created, we haven’t been able to use water from the river, and fishing activities and tourism have been severely affected,” Calazacón said.
Banner image: Photo for reference. A pig farm in the U.S. from the Environmental Protection Agency via Wikimedia Commons (Public Domain).
This story was first reported by Mongabay’s Latam team and published here on our Latam site on June 20, 2023.