forging responsible and sustainable agricultural development. y cia s.a... · hugo restrepo y cia...
TRANSCRIPT
Exporting chili pepper forging responsible and sustainable
agricultural development.
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Sustainability Report 2018
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Message from the President
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This company was created by our late father 42 years ago. We are the second generation to manage it and we are proud to continue producing and exporting succesfully spicy ingredients through innovative economic entrepreneurship with a social and environmental commitment. Our father, Hugo Restrepo, was a passionate protector of nature, who strove all his life to promote an efficient, socially and environmentally friendly agriculture, where company development, environment and social development could all be part of the same commercial goal.
Today, we are fully committed to continue having growth with environmental respect and protection, as well as forging growth whilst helping a socially sustainable agriculture. Our goal is to continue improving practices and introducing more environment-friendly measures at field level, in our processing facilities and during transport.
We are constantly implementing small innovations developed by our engineers or through our partnerships with local universities and research centers, all geared towards improving the sustainability of agriculture and decreasing the environmental impact of our operations.
We are fully committed to continue this legacy to the next generation by developing the company whilst taking care of the environment, internalizing upcycling principles, sharing our knowledge among farmers and promoting environmentally friendly practices that we find among the farmers.
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This document presents the steps we have taken in the past and introduces the ones to come in an effort to compile into one document our progress.
Camilo Restrepo Mejía
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Hugo Restrepo y Cia (HR&CIA) is a family owned company exporting chili pepper paste to industrial clients in the United States, Europe and the Middle East since 1979. HR&CIA is the most important Colombian chili pepper exporter producing a variety of non-cooked formulas which vary according to each client’s specifications. We are pioneers in Colombia in promoting chili pepper production with a scheme that favours small rural producers.
1. Introduction
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Since the beginning, we have outsourced the agricultural production to local farmers. To whom we provide the seeds, technical assistance and transport for their crops from the farms to the collection points. We offer fixed prices and buy 100% of the farmer’s production. In return we expect loyalty from the farmers, observance of technical instructions on agrochemical use and cultivation practices, as well as high quality and exclusive delivery of 100% of the crop. .
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In Colombia, HR&CIA handles approximately 300 hectares through 80 different farmers who produce Tabasco peppers (Capsicum frutescens), Cayenne peppers (Capsicum annum), Jalapeno (Capsicum annum) and Habanero peppers (Capsicum chinense). These peppers are bought as fruit and processed to make a paste or puree following the specifications provided by each client. The company’s headquarters are located in the south-western city of Cali (Cauca Valley) -a rich agricultural region. We also operate in Peru since 2003.
We have developed appropriate technology in the production of chili peppers and its handling, which is our most valued characteristic that has helped us gain an international reputation coupled with our responsible handling of exclusive recipes of international clients.
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This document provides an overview of the company operations’ and its social and environmental outreach. The document is divided into three main sections that present who we are as a company, our business and sustainability activities, and the future of our sustainability efforts. In all, it's a comprehensive view of our sustainability thinking and how we want to advance in the following years.
Similarly, the company is constantly looking at ways to improve the conditions of the workers and farmers and to improve the possibilities of agriculture as a feasible way of life.
In addition, environmental concerns are at the heart of our operations, a great deal of the technical assistance provided to farmers goes into the promotion of sustainable and environmentally sound agricultural practices. Increasingly more and more aspects of the company are geared towards a culture of no-waste, no-degradation and general environment protection.
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2. Who are we ?
We are a Colombian company dedicated to the production and export of spicy ingredients derived from the fruits of the Capsicum genus. The company has acquired valuable experience in the production and export of fermented, aged, depulped, concentrated and mixed chili peppers.
Created in 1979, when its founder, Mr. Hugo Restrepo (1940-2016) -an entrepreneur working in the flower business, was contacted by McIlhenny to grow chili pepper in Colombia. After 40 years of leading the company, HR&CIA is the materialization of his thinking and vision of innovative economic entrepreneurship with a social and environmental commitment. Hugo Restrepo, a passionate and protector of nature, strove all his life to promote an efficient, socially and environmentally friendly agriculture, where company development, environment and social development are all parts of the same goal. HR&CIA has an agricultural business model that promotes the importance of the environment; the importance of the farmer and the development of his agricultural knowledge to ensure better results through the use of sustainable practices; and the importance of agriculture as the axis and engine of rural development.
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a.Mission Statement HR & Cia’ s mission is to maintain the leadership in quality chili pepper commercialization. Whilst providing sustainability to the social and environmental aspects of production. Our business model allows us to strengthen agricultural practices to protect the environment and to make the agri-business a socio-economic viable option for all the stakeholders.
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b.Corporate governance Since the passing of its founder in 2016, Mr Hugo Restrepo, the shareholders appoint a Board of Directors for each company and a Group President from which stems a formal organizational structure with a Chief Executive; an Operations department in charge of supervising the company production activities; a Technical department responsible for providing assistance to the farmers; a Finance and Accounting department; a Research and Development department; an Environmental management department and an Export department.
Following unstable social conditions in Colombia during the 1990’s, we opened operations in Peru, establishing Capsicum Andino S.A.C. A company fully owned by HR&CIA that sources chili peppers from Peru and exports exclusively to HR&CIA clients. Both companies have the same operative structure under Group President and Board of Directors as explained above.
Main Office. Yumbo, Valle del Cauca-Colombia
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HUGO RESTREPO Y CIA S.A.SHAREHOLDERS
Restrepo Mejía Family 100%
BOARD OF DIRECTORS
LEGAL ADVISOR TAX ADVISOR
MARIO PAZ C. ALBERTO RIOS [email protected] [email protected]
CHIEF EXECUTIVE OFFICER
STRATEGIC CLIENTS AND BUSINESS DEVELOPMENT
CAMILO RESTREPO M. [email protected]
PRODUCT RESEARCH AND DEVELOPMENT
ANA LIA RESTREPO M.
CHIEF OPERATOR OFFICER PERU
CARLOS MAGAÑA [email protected]
CHIEF OPERATOR OFFICER COLOMBIA
CARLOS VARELA [email protected]
EXPORT
FINANCE AND ADMINISTRATION
PRODUCTION AND LOGISTICS AGRICULTURAL DIRECTION
EDILBERTO MUÑOZ L. [email protected]
GENERAL ACCOUNTING
CRISTINA SANCHEZ B.
EXPORT
FINANCE AND ADMINISTRATION
PRODUCTION AND LOGISTICS
QUALITY
RESEARCH AND DEVELOPMENT
WAREHOUSE AND MAINTENANCE
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We have focused our production into four varieties of Capsicum: Tabasco (Capsicum frutescens), Habanero (Capsicum chinense), Jalapeno (Cap[sicum annuum) and Cayenne (Capsicum annuum). They all have different levels of spiciness and flavor and a shelf life of 24-36 months.
-Tabasco is produced exclusively for McIlhenny Company, manufacturer of the world famous Tabasco® Sauce.
-Habanero is among the most spicy peppers in the world, it’s an ideal ingredient for extra hot sauces or as an enhancer of pungency in small quantities.
-Jalapeño is a common ingredient for green pepper sauces.
-Cayena is the most common pepper mash ingredient for the industrial manufacture of hot sauces and sauce recipes.
c.Our chili peppers
The product is traditionally sold as mash but research and development is currently devoted to finding new ways to efficiently concentrate the product and to create other product lines.
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Tabasco - Capsicum frutescens
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Yotoco - COLOMBIA
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Habanero - Capsicum chinense
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Lambayeque - PERU
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Jalapeño - Capsicum annuum
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Roldanillo - COLOMBIA
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Cayenne - Capsicum annuum.
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La Union - COLOMBIA
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During the first fifteen years, the company was growing, getting stable and profitable. Hence it focused its entire business to one client: McIlhenny Company. Nowadays, the company has clients in several foreign markets, notably in the USA, the European Community and Saudi Arabia.
d.Our markets
e.Our numbers (2017)International clients 21National clients 22Farmers 80Other suppliers (maintenance, admin, services, other products) 23Staff Colombia 29Sales in containers - Colombia 173Staff Perú 12Sales in containers - Perú 171Total Sales in Colombian Pesos (millions) 24,300
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d.Our growing sites
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g.Our process
SALE CONTRACTS AGREEMENT WITH CLIENTS FOR TONS OF
PEPPER MESH - PRICE AND DELIVERING TIMING ARE FIXED.
CROPS PROGRAMMING HECTARES TO BE PLANTED OF EACH PEPPER
VARIETY FOR ACCOMPLISHING WITH SALE CONTRACTS.
AGRICULTURAL CONTRACTS PROMOTION AMONG GROWERS FOR
ESTABLISHING THE PROGRAMMED AREAS OF PEPPER FIELDS, ASSURING FIXED PRICES AND
100% PURCHASE OF CROPS.
PEPPER FIELDS TECHNICAL ASISTANCE TO GROWERS FOR
GOOD AND MORE PRODUCTIVE CROPS.
MILLING - DISPATCHING COORDINATION OF MILLING, WAREHOUSING AND DISPATCHING TO CLIENTS WITH TRACEABILITY
DOCUMENTATION.
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3. Business & Sustainability
We understand business as a symbiosis between profitability, environmental protection and social commitment. In this sense, we look for profitability while taking steps to reduce the environmental impact at field level, at the processing facilities and during transportation abroad. Similarly, we are committed to improve the conditions of growers, pickers and other workers, as well as promoting a sustainable rural way of life for new generations of growers and pickers.
HR&CIA depends as a business from the sustainability of agriculture as a way of living for many. Therefore, we are constantly looking into making our contracts an attractive and economically viable option for growers. Our business model includes signing a contract with each independent farmer which includes a guaranteed fixed price per kilogram of fruit, free seeds, technical assistance and coaching; fruit processing and delivery to the market.
a.Social Commitment
i. at field level
1.Stable and fixed prices. 2.Seeds with high genetic value.
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Eliminating the cost of seeds, providing technical assistance and buying 100% of the crop at a fixed price makes growing chilli pepper an attractive option.
3.Personalized technical support in the management and administration of the fields.
4.Purchase100% of the harvest with weekly payments.
Traditionally, any agricultural endeavor starts with the grower buying seeds and this represents 15 to 25% of farmers total costs, financing the agriculture process and finally bringing the produce to market at a price that is market driven and generally unknown. This poses a risk for many as the gap between the cost of production and the selling price is unknown and may be unfavourable. In fact, 50% of the current growers have signed between 2 and 12 contracts with us.
In addition, 70% of the production costs are labor costs and mostly daily wages of pickers, constituting itself as an important source of local employment. Interestingly, we have witnessed an active participation of women. At field level we estimate that 70% of the farm labourers and/or pickers are women.
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The core of the company’s relation with the farmers is a task force that provides technical support from the selection of the fields all the way to the grinding of fruits. The task force is in contact with farmers through weekly visits for agronomic management, problem solving, and harvest and grinding supervising. The overall objective of this task force is to control the quality of the product and to maximize the yield per plant. In particular, the supervision of the harvest is very important because the fruit must be ripe, must have a distinctive colour and must not have leaves or peduncles that can ruin the product when grinded. In addition, the task force is essential to enhance a close relationship with the farmers and to provide a positive image of the company.
They are also in constant search for new fields for red pepper production and aware of the offers made by competitors to the farmers, which provides a better understanding of the farmers’ situation.
5.Harvest is received in our facilities every day.
6.Grinding goes on every afternoon with fresh chili peppers
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In certain areas of work we have implemented small programs along with local NGOs or government officials to help farmers understand economic management of their fields and better understand if a crop is profitable or not. We highlight here two examples of this in Peru:
‘My farm is my Business’ - This program is being implemented in San Martin, were we partnered with the local government to help farmers implement a simple accounting system. The local government printed and distributed basic accounting books for the farmers. Our technical staff is helping farmers learn how to keep their accounting records and how to understand the profitability of their crop. The community has highly appreciated this support.
‘Biol’ - In the same locality and with the same partner, we are providing technical assistance to farmers on manufacture and use of a bio-fertilizer, an interesting low-cost option for farmers.
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The company has its headquarters in Yumbo, Valle with a total of 29 staff members. Out of these, eight are women mostly in administrative functions and quality control. HR & Cia has implemented the new national laws on Safety, Health and Welfare at work and conducts regular audit on the same. After carrying out a psicosocial analysis of work environment we found that a good indicator of positive working conditions, is the high rate of employees who stay for 10 years or more working with us. Which can be an indicator of good level of salaries or at par with market and a positive motivation in the work setting as well as good welfare benefits. One of the outstanding measures in place is that recyclable waste, such as broken pallets or barrels, metals, wood etc are sold to recyclers. The produce of this sale goes to fund activities planned by the Welfare Committee, such as birthday parties, christmas celebrations, mothers day and many more.
ii. working conditions at processing facilities
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b.Environmental Commitment
Following 40 years of business, HR&CIA has seen the limitations of our environment and the need to improve production practices that do not degrade our environment. We train our farmers permanently in the use of biological controls, the use of permitted agrochemicals in line with USA Persuap List and European standards. The company has always encouraged farmers to introduce new technology in their field management to increase the yield per hectare and to adopt good agricultural practices (GAPs) and good environmental practices (GEP). Our environmental commitment has two sides: 1) the technical assistance to ensure high yields without degrading the environment and 2) measures to improve water, energy and waste management at the processing and operations.
i. technical assistance to farmers
As mentioned before technical assistance is at the core of the company’s relation with the farmers to understand their practices and build upon those to minimize environmental damage.
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To assure high quality product and e n v i r o nm e n t a l l y r e s p o n s i b l e agricultural methods. We follow Good Agricultural Practices which minimize the use of chemicals and other detrimental environmental impacts of farming operations and introduces practices like: crop rotation, preserving so i l in tegr i t y and produc t iv i t y , integrated pest management (IPM), drip irrigation, and waste reduction and management practices.
Preserving soil integrity and
productivity- includes a constant
search to reduce chemical fertilizers.
Currently the technical team first
enqu i res abou t the t rad i t iona l
agricultural practices of each individual
farmer, if those practices do not have
a negative impact in preserving the
soil, we adapt our recommendations
to include their positive practices.
MOYOBAMBA, SAN MARTIN REGION - PERU
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Integrated Pest Management (IPM)- is a sustainable and ecological approach to pest control. IPM utilizes an array of methods, including preventing, evaluating and monitoring pest presence whilst employing primarily biological and organic pest control methods. Biological pest control methods support the presence of organisms that eat target pests and also includes the use of insecticides derived from naturally occurring microorganisms. Chemical pest control is used only when strictly needed. IPM avoids adverse effects caused by conventional methods of pest management such as environmental pollution and health hazards posed by pesticides as well as pest resistance, secondary pest outbreaks and host plant resistance breakdown.
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Water has traditionally been abundant in the Cauca river valley. Irrigation was usually done by flooding the fields with water from the river. Drip irrigation is an effective method to reduce water usage and fertilizers. It is optimal to avoid weeds, erosion and soil degradation due to loss of nutrients from water runoff and has many other benefits. With this type of irrigation you reduce water because it goes directly to each plant along with any required fertilizer. We have been implementing this practice for the past 20 years which has proven to increase yields by 50% of tabasco per hectare and by 30% of cayenne.
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In addition to the above, only farms that are located in existing farmlands are considered for chili plantation. The technical assistance task force is constantly monitoring adherence to these practices during their weekly visits and ensure that farmers are properly trained to understand the benefits of following good environmental practices.
Crop rotation is a cornerstone for sustainable agriculture. This practice is highly beneficial and is essential in reducing insect and disease problems, maintaining soil fertility, reducing erosion, lowering the reliance on synthetic chemicals and helping to control weeds. Crop yields are also increased when the crop rotations are implemented. As an integral component of Integrated Pest Management (IPM), crop rotations proves a more effective method of pest management than pesticides alone. As explained before, we only accept fields which have had a previous crop rotation. .
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ii. Processing and operations
At the headquarters and processing plant in Yumbo, Valle measures are being taken to improve water management, waste management, energy consumption and the carbon footprint of transportation of produce to the processing plant and to our customers.
a. Water management Water is used in the processing facility only to clean containers and surfaces. We have introduced pressure washers which are very efficient in water usage.
b. Waste management Waste in the facilities consists of recyclable waste, clean waste and waste. Recyclable waste such as broken pellets, broken barrels, metals etc. is sold to recyclers and this money is used to fund staff welfare events. Clean waste is all recycled in place and the remaining waste is taken by a government approved company that disposes such material according to the local environmental regulations.
Moreover, we have an ongoing agreement with ICESI (a local university) to find sustainable uses for our waste. This topic is explained in ‘partnerships’. Also, our Quality Control team is revising procedures in order to reduce the quantity of salt in our waste. Liquid waste is mostly contaminated with salt that spills from the milling process, we are researching ways to address this as it is currently the main concern of the local environmental authority.
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c. Energy use During 2017 we have changed and modernized our energy cabling system to reduce energy waste due to obsolete routing. The lift trucks are gas operated and our milling process happens only 3 hours per day. The energy provider considers our facilities a low consumption client.
d. Transport carbon footprint Transportation of produce from the farms to the facilities and then onto the clients is the main source of transport-related carbon footprint. In the last years, this has been reduced at both ends of the chain.
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We used to export all produce in barrels, which occupies considerable space in a container due to its cylindrical shape. Since 2000 we started to introduce new barrels that significantly optimize the total amount of product transported to clients per container. Simultaneously, we introduced flexitanks - one giant bag that fills a 20ft container. Both options represent a significant reduction in our products’ carbon footprint, as well as a significant reduction in the total plastic use in the packaging per container.
Until the year 2000, we used barrels each one containing 180Kg of product for a total of 13 tons of pepper per 20Ft container and were using 18kg of packaging plastic per container and 2 tons per container. Today, our optimal transport is a 20Ft container adapted with a flexitank which can hold 23.5 tons of pepper and uses only 70Kg of plastic per 20ft container. However, the flexitank is not ideal for small clients that do not have infrastructure to unload produce from the flexitank and to store it. For these small clients we continue to ship in barrels, but are currently using barrels that are more efficient. Our current barrels can hold 200Kg per barrel for a total of 16 tons per 20Ft container and 1 ton of plastic per container.
FLEXITANK loading13 TONS OF PEPPER 2 TONS OF PLASTIC
20 ft. CONTAINER
16 TONS OF PEPPER 1 TON OF PLASTIC FLEXITANK
23.5 TONS OF PEPPER 70 KG OF PLASTIC
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e. Traceability
We have implemented a traceability scheme. The traceability scheme means that each container dispatched and to the detail of each barrel, if applicable, has a code that identifies, when was the contract signed, which seeds were used, when was the crop planted, who was in charge of supervising the field, when did the harvest took place, from which farm it came, who brought the product to the plant and when, who was the farmer and which were the parcel sizes, who processed and when was the grinding process. This scheme is so specific that ensures accountability throughout the organization and is the backbone of sustainability in the supply chain.
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c.Research and development
i. Partnerships We have subscribed an agreement with Universidad ICESI -a prominent local university, to develop research and development in a number of projects with different levels of involvement. Some of those projects are:
Bio-repellent- this project has two lines of research, one looking into biologic repellent specific for rodents and a second one looking into repellency for insects in crops. The overall objective for our company is to find new ways to use that product that doesn’t reach the target colour and that today is somehow discarded. Understanding other industrial uses of each fruit will help us find ways to reduce our organic waste.
Mechanic picking of Tabasco- the objective is to design a machine that can pick the tabasco fruits. Our farmers are faced with increasing difficulties to find labor due to reduced interest of young people in the countryside.
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In addition, we have an agreement with Universidad del Valle to develop a photonic system to diagnose problems in the crop, such as viruses, water quantity and soil in real time through the use of drones. Four of our crops are being used by the University to test and tune the parameters for accurate diagnosis.
Finally, we also have an agreement with the University of Tarapoto in Peru to study the biologic predators of Tabasco in our crops.
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We are fully committed to continue growing with environmental respect and protection, as well as forging growth whilst helping a socially sustainable agriculture. Our goal is to continue improving practices and introducing more environment-friendly measures at field level, in our processing facilities and during transport.
4. Going forward
As we explained, the technical assistance at field level is the backbone of the sustainability of our business. For 2019, we plan to include environmental recommendations at post-harvest as part of the technical assistance protocol. This will include alternatives to any possible crop burning, adequate disposal of plastics. In particular, we are planning to acquire a chipper to chip the dried plants and leave them ready to be mixed with the soil for the next crop rotation, hence avoiding any possibility of the growers burning this organic material. We are also looking into ways to replace the plastic used to cover the plants for drip irrigation, which is a considerable waste brought in by drip irrigation, as well as good practices to dispose fertilizer containers. In addition, we are promoting the use of biological and organic inputs in the field to further reduce agro-chemical inputs.
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And finally, we will start selling our product in a new packaging: the Bag-in-Box. Branded as ‘COMPACTO Taste the Cauca Valley’, this new packaging has a number of environmental benefits such as a 50 percent lower carbon footprint, 5 times less waste generated and 20 percent less energy used by weight when compared to other rigid packaging containers. It is essentially our product concentrated at 142%, with a unique and innovative technology that concentrates the product without using heat, vapour or chemicals like in other concentrated products such as fruits or tomatoes.
As a family we are committed to develop our company whilst taking care of the environment, internalizing upcycling principles, sharing our knowledge among farmers and promoting environmentally friendly practices that we find among the farmers. .