PS1 Social and Environmental Assessment and Management System
The operational requirements of Mu Yuan farms are managed by a central corporate office that includes the following departments: (a) general manager office (including human resources); (b) production; (c) animal nutrition; (d) veterinary; (e) quality control; (f) sales; (g) purchasing; (h) project; (i) finance; (j) comprehensive management (including environment and occupational health and safety); (k) project development; and (l) construction. At the farm level the typical management structure includes a manager, 2 section heads, 2 environmental officers and an OHS officer.
Until 2009 Mu Yuan operated an informal environmental and social assessment and management system. In 2009 Mu Yuan initiated a process of ESMS development with the objective of seeking ISO14001 certification. The newly developed system is yet to be validated. Accordingly many of the ESAP requirements are based upon the need to address and rectify existing non-compliance and demonstrate the effectiveness of the management system.
Social and Environmental Assessment:
Mu Yuan has experienced a progressive expansion of farms between 1992 and 2010, with most rapid expansion occurring from 2004-2006 during which seven farms were established. As described above currently there are 14 breeding and hog production farms and two feed mills while Farm #s 13, 15 and 17 are under construction and currently operating below capacity. In addition between 2004 and 2007 the project implemented a CDM project involving installation of biogas facilities at 6 farms.
Until recently Mu Yuan management of environmental and social impacts has been informal and in general enforcement in the agricultural sector has been weak. As a consequence Mu Yuan has not completed comprehensive farm level environmental impact assessments (EIA) for its farms as required by the Chinese regulations, Provisions on Environmental Protection Design of Construction Projects and Pollution Control Management Methods for Livestock Industries. The EIA for Farm #17 has not been completed although construction has already commenced. To address these concerns Mu Yuan will:
implement retrospective environmental and social assessment (ESIA) and commit to address identified corrective measures for piggeries established without an ESIA being completed.
complete the environmental and social assessment for Farm #17 currently under construction
The final inspection approval from the local environmental protection bureau that confirms the acceptance of EIA developed for the biogas (wastewater treatment) facilities at twelve farms has been obtained. Wastewater generation was considered as the more significant potential environmental concern associated with the farms.
Management program
To cater for the rapid growth of farms, the company has recently developed a process flow document, “Mu Yuan’s Process Flow for Regional Development”, for new development and construction projects. The process flow describes the various stages of a new development and identifies the relevant department and the tasks to be completed at each stage. Some of the tasks related to environmental, social, health and safety management include securing approvals/ permits for: (i) water usage; (ii) land certificate; (iii) environmental impact assessment; (iv) site construction; (v) heritage and geology investigation; (vi) fire inspection, and; (vii) safety assessment.
Mu Yuan will ensure proper implementation of the process flow procedure in obtaining permits/ approvals prior to the commencement of construction activities. The document will be updated to indicate the sequencing/ timing for various stages of environmental, health, safety and social approval processes. It will obtain the necessary discharge permit for environmental pollutants emitted, as required under its EIA approval documents. It will also obtain water abstraction permit for groundwater usage for all farms.
Mu Yuan is seeking to achieve ISO14001 certification. Since 2009, Mu Yuan has worked with a semi-governmental certification body to develop an Environmental Management Manual and Environment Procedures. The Environmental Management Manual consists of various managerial documentations including: release order; appointment of environmental representatives; company general requirements; environmental policy; overall plan that includes company’s plans in completing/ achieving environmental aspects, regulatory requirements, target, performance indicators, implementation, resources, training, communications, documentation, document and operations controls, and emergency response; and checking and corrective actions. The environmental procedures established cover the various aspects of the management system including identification of environmental aspect and impact, regulatory requirements, training and communications, control procedures, pollution control and monitoring, emergency response, inspection and corrective actions, and management review. Although the management system documentations and procedures have been established, the implementation of management system is considered to be at premature stage. Mu Yuan will continue to strengthen the execution and implementation of the management system.
An internal audit for ISO 14001 Management System was completed in December 2009. The audit indicated that implementation of environmental management system at the company is in line with the ISO 14001:2004 requirements. A few minor non-conformances were identified including the need to improve the design of forms, to refine the environmental target, and to enhance collection and communication of regulatory requirements. According to the environmental management unit personnel, these are being rectified and an external audit is scheduled to occur in April 2010 with certification expected to be received by June 2010.
Mu Yuan has also produced a staff booklet that provides an overview of the environmental aspects of Mu Yuan and in particular addresses the environmental regulations relevant to operations, environmental procedures and technology.
Although the company does not plan to obtain the OHSAS 18001 management system certification, it has developed a policy and operating procedures for the management of health and safety issues within the company. Mu Yuan has also produced a staff booklet that provides an overview of the health and safety aspects of Mu Yuan and in particular addresses the control and prevention for various safety aspects of the operations, the responsibilities of different departments/ personnel within the company in terms of health and safety management and safe operating procedures. Based on the review of documents provided, Mu Yuan maintains reports/ records on work related accidents/ incidents, safety site inspection, corrective action closeout of safety improvements, and other water/ electrical supply safety inspections. However, accident/ incident statistics have not been maintained. As part of its workplace safety program, Mu Yuan will maintain records of workplace incidents and accidents, conduct detail root cause analysis, identify safety trends and implement control measures to further reduce incident/ accident rates.
The company is pursuing ISO 22000 Food Safety Management Systems (FSMS) certification due to demand from Japanese market channeled through Shandong Longda Group Limited. The company has recently completed relevant external audit and expect to receive certification in April 2010.
Issues related to animal welfare are under the responsibility of Production Department. Although not formalized, Mu Yuan refers to EU standards regarding housing, feeding and transportation. Discussions with Mu Yuan indicate that the company is active in continuously improving livestock raising conditions and welfare. Segregated early weaning (SEW) practices lead to removal of piglets from sows at 16-18 days (cf. 14 days in US operations). Initially piglets are housed together in large pens prior to being transferred to individual pens with slatted floors as growers. Both feed and water are available on demand. Feed composition, based on inputs from veterinarians and nutritionists, varies according to growth stage. In summer ventilation is provided through control of ventilation shafts beneath the raised pens. In winter heating is provided by circulating heated water through a below-floor reticulated piping system. The company has A three-tiered (breeders, veterinarians, veterinary director) disease prevention and control system. As described in the section addressing PS2, individual farm workers are responsible for continuous monitoring of their pigs and are provided with an initial mentorship prior to assuming full responsibilities for pig husbandry. Transport distances to slaughter are minimal and Mu Yuan utilizes especially fitted trucks for transportation. Trucks are disinfected and provided with adequate temperature, humidity and ventilation.
Organizational capacity
The Comprehensive Management Department assumes responsibility for environmental management; occupational health and safety; maintenance, construction and development of environmental protection facilities; landscaping; and, catering. At the corporate level the Environmental Management Unit comprises 8 staff who oversee the work of farm-level environmental coordinators (2 to 5 persons per farm). The main responsibilities of the farm-level environmental coordinators include: operation of wastewater treatment and biogas facilities, which include ensuring normal operations of the wastewater piping system; ensuring maximum solid and liquid waste segregation (for manure); ensuring no discharge of wastewater other than use for cleaning of pig housing and irrigation; ensuring proper maintenance of equipment and normal operation of power generation from biogas. Mu Yuan will revise job descriptions for the farm-level environmental coordinators (or coordinators at the higher level) so as to include broader responsibilities in environmental management, including environmental monitoring for facilities other than biogas/ wastewater treatment system.
With regard to Occupational Health and Safety, at the corporate level the OHS Unit has 5 staff who oversee the health and safety management issues within the company. At the farm-level there is one health and safety coordinator whose main responsibilities include conducting daily safety inspection at the farm. These coordinators are also involved in coordinating and conducting month safety inspections at the farms together with the management personnel. There are one to two safety personnel at the feed mills. The company has dedicated safety personnel for the construction sites who are trained by the local authority on construction site safety.
Monitoring
The CDM project involving the development of biogas digestors for 6 farms, required Mu Yuan to address the management and monitoring of the biogas digestors. This data served as inputs for the verification of the project and subsequent monitoring. Tracking of environmental data commenced in October 2009 and are available for surface water, ground water, ambient air and noise levels associated with the biogas facilities as well as some data investigating the potential effects of using waste water derived from the biogas facility for irrigation i.e., soil fertility analyses. The company is currently at the stage of evaluating the actual quantity of carbon reduction through the biogas process to enable it to earn credits through the CDM project.
PS2 Labor and Working Conditions
Organizational capacity
The total workforce is 1,179, of which approximately 800 are farm workers located on the 14 pig breeding and production farms. The Human Resource Department is managed by five staff responsible for application of human resource policy, procedures and administration. Activities of the Department are guided by the Human Resource Manual that addresses recruitment, training, annual leave and resignation/termination. Mu Yuan will strengthen the Human Resource Manual through the development of sections addressing job descriptions, working hours, worker benefits and a grievance mechanism. Mu Yuan will develop a formal grievance procedure creating various, independent (and anonymous) channels for farm workers to provide suggestions and raise their concerns with the Human Resource Department.
Worker Welfare
The majority of farm workers are recruited from the local population in the immediate vicinity of the farm. The minimum age for employment is 18 years. All workers sign a standard written contract with the company which describes a general description of the position and terms and conditions of employment. During the first three months of employment they are assigned to a mentor thereby receiving on-the-job training. Workers are essentially paid on a production basis that allows for a minimum monthly wage of RMB 1,000/month (cf. minimum wage of RMB485/month for Nanyang City and between RMB320 to RMB500 per month for Henan Province) and a performance bonus calculated at the end of the production cycle. In addition all employees receive social insurance (which covers pension, unemployment, medical, injury, and maternity) and 11 days of public holidays in accordance to the regulatory requirements. Finally given biosecurity concerns and lengthy quarantine periods associated with gaining access to and working in the farms, farmers are provided with no-cost accommodation on the farm and subsidized meals in the canteen. In general, the single workers are provided with accommodation in shared two-bunk rooms, while married workers will have a room for the couple. According to Mu Yuan, the majority of the workers are from local villages and family members are allowed to visit the workers. The company also provides a service to fetch workers’ children studying in other town to visit them over weekends,
Farm workers are required to work irregular hours determined by the pig production cycle (i.e., farrowing, weaners, growers). Farm workers assigned to delivery work in three shifts. Farmers assigned to looking after the sow and piglets during lactation (i.e., until the piglets are 18 days of age), during weaning (i.e., until the piglets are 52-55 days of age) and as growers (until pigs are 100-110 days of age) are required to maintain the equipment, ensure adequacy of feed and water, cleaning, monitoring the health of the pigs. Typically this implies relatively low intensity work spread over a long day i.e., from 8 am to 10 pm. To ensure compliance with labour laws, Mu Yuan has submitted notification to and received approval of the local labour department regarding irregular working hours. Finally an ACFTU union chapter is active and company workers are free to participate therein.
Worker Health and Safety
Mu Yuan uses third parties for the construction of new farms. Contractors recruit local villagers as construction workers. Health and safety issues are jointly managed by Mu Yuan and Contractor personnel. The workers receive training for health and safety requirements related to construction activities from Mu Yuan safety personnel as well as the contractor.. During the site visit to Farm #17 which was under construction, general safety rules were observed posted onsite and basic personal protective equipments (PPE) were used by the workers. However, it was observed that not all workers were adhering to the PPE requirements. Further, excessive manual handling works were observed in the slaughterhouse where workers are required to operate electric saws, remove bones, and lift and cut meats.
Mu Yuan will review its occupational health and safety policies, procedures, control measures and training program for consistency with good international industry practice. This includes ensuring consistent use of personal protective equipment, provision of safety devices and assessment against ergonomic risk. Mu Yuan will also ensure periodic health/ medical testing of all farm workers in accordance with standard international practice.
With regards to fire safety, fire safety control measures are required to be included into the design of each facility. A final inspection approval by the local fire safety department should be obtained upon completion of a construction project/ building. During the appraisal, such fire safety approval for the facilities owned by Mu Yuan was not available for review. Mu Yuan will implement retrospective fire safety inspection for facilities that were established without a fire safety approval being completed.
PS3 Pollution Prevention and Abatement
Through the CDM, Mu Yuan constructed biogas projects on six farms from 2005-2007. Project development was preceded by completion of an EIA. Each farm was installed with one biogas equipment (Upflow Anaerobic Sludge Bed Reactor (UASB) and Internal Circulation Anaerobic Reactor (IC)) and the manure is treated on site. As per information from the CDM report for the six farms, the biogas project treats the raw manure and wastewater from 188,500 swine annually by anaerobic digester, and uses the biogas generated during the treatment process for power generation. Mu Yuan uses flushing system to collect the manure automatically, all the manure is flushed to the anaerobic digestion reactor. After anaerobic digestion, the wastewater is treated aerobically in an oxidation pond and then is used for on-farm use, on-farm irrigation and agriculture irrigation on farms located close by to the farms. Total installed capacity of the project activity is 1.09MW; the electricity generated from the biogas is used for the company’s daily operation. Monitoring plan has been established to monitor livestock numbers and weight, biogas flow, methane fraction, electricity generation. Human resources assigned to the CDM project include CDM Manager and 2 farm level staff for monitoring and maintenance. Based on the project design document for the CDM project, the estimated reductions of the proposed project activities (six farms) are 110,461 tCO2e per year during the crediting period of 10 years. Based on the UNFCCC Clean Development Mechanism Monitoring Report for the activities from December 2007 to May 2008, the total emission reductions for claiming certified emission reductions (CER) was ERy 3,254 tCO2e. At the time of appraisal, Mu Yuan indicated that the company is at the final stage of reviewing/verifying the data and has not received CDM credits. Mu Yuan reports that all farms have biogas equipment and that this is a standard component in development of all new farms.
Based on the information provided during the appraisal, the biogas system eliminated direct wastewater discharge from the farms. Wastewater generated subsequent to the biogas process is used for washing of pig housing, gardening and irrigation for local farmers. Currently, solid waste is provided to farmers free-of-charge.
Mu Yuan relies on nearby reservoirs and onsite groundwater wells for its sources of water at the farms. Currently there is no accurate data on water consumption available for the farms. As the farms maintain certain distance from the local village, groundwater abstraction at the farms in general does not create competitive water usage issues. According to Mu Yuan personnel, no relevant complaint has been received from the local villages. As part of it environmental monitoring effort, Mu Yuan will track data for water consumption, wastewater discharges, as well as water/ wastewater recycling.
Based on the review of environmental management system document, the company has established the following environmental targets: (i) recycling of hazardous and general wastes; (ii) zero fire incident; (iii) air emission standard (particulate less than 250mg/m3 [or 200mg/m3 for boilers after 1st Jan 2001] and dark smoke of 1 on Ringelmann Chart); (iv) resource re-use for animal manure, (v) noise control, and (vi) odor control. Based on the monitoring report provided by Mu Yuan for the boiler stacks and particulate removal system in Farms # 2 and #12, the particulate emission was in the range of 189-220mg/m3, which is higher than the limits specified in IFC’s EHS Guidelines (50mg/m3) and Chinese regulations as specified in the environmental targets. Mu Yuan will implement corrective measures to ensure that emissions are within limits specified in IFC guidelines. Further Mu Yuan will develop and implement an environmental and social monitoring framework compliant with relevant Chinese laws and the requirements of the IFC Performance Standards and EHS Guidelines. The monitoring will include but not be limited to the following:
Resource use (water, electricity, coal)
Air emissions from incinerators
Air emission for various boilers and cooking facilities utilizing coal
Odor control; and
Wastewater discharge
Where data indicates that parameters exceed relevant limits specified in the IFC EHS Guidelines, Mu Yuan will implement corrective actions.
The farms utilize natural and forced ventilation for odour control at the pig housings. The pig pens are elevated allowing air to flow through the swine collection pool beneath and ventilated via a concrete structure at a height of approximately 5m. Odour is allowed to disperse into atmosphere without further chemical/ physical treatment. Extreme odour was not noted during the site visit to one of the farms.
While Mu Yuan makes limited use of fuels at the farm-level, storage of the fuel occurs within the office/dormitory complex. Mu Yuan will improve the storage facilities for generators and fuels, and general house-keeping of the storage areas.
Mu Yuan utilizes coal as fuel for hot water boilers, steam boilers, and cooking activities in the dormitory/ canteen. The hot water boilers at the farms are equipped with cyclones for dust removal from the coal burning process. The coal, which is sourced from various suppliers within Henan province is stored on open, uncovered concrete platforms located adjacent to the boiler. The EIA for the feed mill in Guanzhang indicated that the facility is equipped with dust collector to collect dust generated from the feed production processes while the on-site boiler is equipped with dust removal system using water sprat/ scrubber. Mu Yuan will design and construct of appropriate flooring and stormwater runoff mitigation measures for coal storage areas.
Chemicals and medicines (for animal including vaccine and nutrition) are centrally stored in a warehouse in Guanzhang Feed Mill as well as at the accommodation/ office area of farms. Mu Yuan will also review both centralized and farm-level facilities for storage of medicines and chemicals. Appropriate systems for management and storage will be defined and implemented. General house-keeping will be improved.
An incinerator used for the disposal of carcasses and other wastes is available at Farm #2. Carcasses are typically temporary stored in cold storage at the farms before transported to Farm #2 for incineration. According to Mu Yuan personnel, the incinerator has a capacity of 100-3000 kg/hr and is fired by diesel for initial burning with burning temperature of 850oC to 1100oC. The exhaust is treated with wet scrubbing particulate removal before being discharged to the atmosphere. At the slaughterhouse unwanted parts from the animal such as blood, head, fat, skin and intestines are sold to local third party meat, feed and tannery processors for further processing. Meat or animal parts that are not fit for further processing (or potentially containing diseases) are burnt in a small incinerator within the slaughterhouse. The incinerator is also operated with diesel with particulate removal cyclone before discharge. Site personnel indicated a disposal of approximately 10kg/week via the incinerator.
According to Mu Yuan personnel, used syringes, needles and vaccine containers used for animal care are centrally managed and disposed of by central warehouse personnel through third party contactors (at the hospital in Nanyang City). Relevant records were not available for review during the appraisal. During the appraisal, solid waste (food and domestic wastes) dumping on ground was observed at the construction site of Farm #17. Mu Yuan will ensure both solid and hazardous wastes are segregated and dispose off per the regulatory requirements. These include general waste from the dormitory, canteen, as well as contaminated wastes (vaccines and syringes).
PS4 Community Health, Safety and Security
Mu Yuan farms are located in rural areas throughout Neixiang County. As described in Section PS5 below, Mu Yuan site selection and screening criteria aim to identify sites located on poor quality agricultural lands distant from settlements. As such interaction between farms and adjacent communities is dominated by employment of local people on the farms and the passage of Mu Yuan vehicular traffic (e.g., delivering feed, transporting pigs to slaughter) on smaller rural roads. Given the large number of Mu Yuan farms and their distribution throughout the County, Mu Yuan will develop driver procedures and ensure that drivers attend defensive driving courses.
Mu Yuan has implemented strict biosecurity procedures on all its farms. Farms are fully fenced and gated thereby restricting access. As described above, farm workers are required to follow strict quarantine procedures governing there access to and ready movement to and from the farms, with these requirements becoming progressively more severe in moving from hog farms to breeding (parent, grandparent and great grandparent) farms. All vehicular access to and movement within farms requires passage through dips.
Mu Yuan has developed various emergency response plans to address potential emergencies including fire and biogas leakage.
The feed mill located in Guanzhang Town is surrounded by commercial and residential establishments. At the time of appraisal, fire protection/ control measures within the mill was observed to be minimal including the lack of fire alarm system and appropriate dust control. Mu Yuan will conduct a comprehensive safety assessment/ review for its feed mills operations complying with the requirements under Safety Regulation for Dust Explosion Prevention, GB 15577-95, which will cover general training and inspection, use of explosion proof equipment, fire prevention, explosion prevention, means of egress, personal protection and emergency response, as well as reaction, fire and explosion prevention measures described in IFC’s EHS Guidelines. The assessment is aimed to reduce risk to the adjacent commercial/ residential communities.
PS5 Land Acquisition and Involuntary Resettlement
A review of Mu Yuan processes for identifying and securing land demonstrated that PS 5 Land Acquisition and Involuntary Resettlement was not applicable for any land transaction to date. Information provided in this section provides a description of Mu Yuan land identification processes and provides the context for this conclusion.
With the exception of Farm #1 and Farm #11, Mu Yuan’s farms occupy land areas of 100 to 200 thousand square meters each. Lands are cleared for the construction of pig housings, dormitory, and wastewater treatment facilities. The lands are leased from local villages for a period of 30 years as specified under the regulations for agricultural lands.
As with other aspects of Mu Yuan’s environmental and social management system, land identification, screening and acquisition procedures have only recently been formalized. Mu Yuan utilizes long lead times for the identification and screening of potential sites and efforts to secure community support for the proposed developments. Potential sites are identified through various mechanism including discussion and information gathering with local government, land agents and referrals, the latter occurring as news of development spreads from one area to another. Potential sites are subjected to a comprehensive site screening procedure that includes the following criteria:
location (including consideration for the presence of drinking water protection zone, scenic area and natural protection zone);
accessibility;
land area;
land productivity/quality;
supply of inputs including labour, feed, electricity and water; (vi) industrial benefits, and,
community relations.
Mu Yuan indicated a preference to identify sites characterized by poor land quality (i.e., a preference to avoid good agricultural lands), distance from settlements (a buffer of not less than 500 meters from sensitive neighborhood such as villages and schools), reasonable accessibility and an ability to link the site to the government electrical grid. The screening procedure is further supported with a recently developed site selection manual.
Following identification of potentially suitable sites Mu Yuan initiates a process of community engagement that includes village meetings and cross-visits to existing Mu Yuan farms. Land use agreements require a negotiated settlement supported by at least two-thirds of the affected communities. With regards to the cost of leasing, Mu Yuan reports that it is often difficult to find comparable reference for agricultural lands. Accordingly they proceed on the basis of assessing the current rental market, comparable exchanges and the productivity of the land. A cost-benefit analysis for farmers is presented to village-level meetings thereby providing the rationale for the proposed rates.
According to company representatives, Mu Yuan has renewed agreements with local villagers for lands that were previously leased, in order to be in compliance with the regulatory requirements. During the project appraisal, several land agreements were reviewed and demonstrated to be compliant with relevant legislation. Based on these documents, lands are leased from local villages for annual rental of RMB 380 per mu. The yearly rentals are paid up front at the beginning of the year.
