MHP has presented plans to address environmental and social impacts to ensure that the proposed Project will, upon implementation of the specific agreed measures included in the Environmental and Social Action Plan (the “ESAP”) attached to this summary, comply with the environmental and social requirements, host country laws and regulations, and IFC’s Policy, Performance Standards and Guidelines. The information about how these potential impacts will be addressed by the Company is summarized in the paragraphs that follow.
PS1: Social and Environmental Assessment and Management Systems
Social and Environmental Assessment
Ukrainian legislation requires all new developments and greenfield projects to carry out an environmental impact assessment (EIA) study and evaluate potential negative impacts on environmental and social conditions. Based on this process, the company should develop and implement corrective actions to avoid, minimize, mitigate or compensate identified adverse impacts as spelled out in an Environmental and Social Management Plan. Based on the fulfillment of these steps, an approval for the implementation of a project can be applied for and obtained from the authorities.
The EIA studies are in progress for MHP’s new poultry production facilities currently being constructed in Vinnytsa. Relevant approvals will be received prior to commissioning of facilities.
The Company is committed to strict enforcement of the national requirements and of IFC standards. To this effect, the Company will conduct necessary EIA studies and implement mitigation measures for all new or reconstructed facilities, including on-site petrol stations for transport fleet. Reports on progress will be provided to IFC annually.
EHS, social, food safety and quality management system; management programs; organizational capacity
MHP is a rapidly growing organization, with its individual operations/sites currently relying on the local conditions and adherence to regulatory requirements in these locations. Local sites have been developing and improving food safety and quality management systems consistent with international and national standards. More than half of individual sites have implemented or are implementing integrated management systems in accordance with ISO 9001, ISO 22000 and HACCP (Hazard Analysis and Critical Control Points) through which MHP improves the quality and safety of its products. Four operations have ISO 9001, ISO 22000 and HACCP certificates; two sites have national food safety certificates of compliance. Local operations make efforts towards incorporation of OHSAS 18001 and ISO 14001 management system elements into the developed quality and food safety systems.
According to the national laws, all local site operations have EHS departments/services or assigned environmental and occupational safety engineers to address requirements of supervisory authorities, including availability of relevant EHS permits, plans and reports. Although these systems taken individually are reasonably acceptable, and include EHS managers, external reporting and monitoring, the corporate EHS management system is not consistent throughout the vertically integrated organization.
MHP’s corporate management is aware of this requirement to improve the corporate EHS management system and is committed to establish the sound corporate EHS management system to bring consistency to its core businesses. This is presented in more details in the attached Environmental and Social Action Plan (ESAP), which describes actions planned by MHP to ensure that its corporate management system meets international best practices.
Specifically, Company management is committed to strengthening its corporate EHS management system consistent with national regulations, international and IFC’s standards. Actions agreed with IFC will include, but will not be limited, to the following: a) appointment of a suitably qualified environmental manager at corporate level; b) development of corporate improvement programs that will incorporate objectives to be achieved and specify measures for its achievement; key performance indicators to measure progress and indication of responsibilities and timetable for implementation at core businesses; c) step-by-step development and implementation of the corporate EHS management system appropriate to the nature and scale of the rapidly growing and vertically integrated organization.
Training
Top and line management of some individual operations had been trained on development and implementation of EHS, food and quality management systems in accordance with international standards. Specific OHS training required by local regulations is systematically delivered. Additionally, recently appointed OHS corporate manager organizes workshops for OHS engineers of local sites.
Training needs for professional skills of workers are identified by line managers depending on changes taken place at operations and equipment, based on an employee’s job hazard questionnaire. Specific external and internal including on-the-job training is provided to personnel so they have the knowledge and skills necessary to perform their direct responsibilities.
Monitoring and reporting
Supervision audits of quality and food safety management systems are conducted by a local independent consultant regularly. The scope of these audits also covers availability of some occupational health and safety documents.
MHP established internal laboratories with modern equipment at individual operations to monitor feed and food quality.
EHS external reporting of local operations includes the quarterly and annual reports submitted to the relevant authorities to address compliance with legal requirements. Internal EHS reporting is provided to the management of local operations. MHP will also be reporting to IFC within the context of the Annual Monitoring Report.
Land acquisition/leasing procedures for agricultural purposes
Potential expansion areas suitable for MHP’s grain production are analyzed for soil quality; access to local roads; availability of workforce and services for specialized services, like harvester operators, workforce accommodation. Land cultivated by MHP is leased from individuals and local land owners since private companies can use agricultural lands on a leasehold basis, according to Ukrainian laws. Lease duration ranges from five to fifteen years. The Company regularly renews individual leases, preferably well before they approach termination of lease, to give long term continuity and incentives to continue soil improvement activities.
Reportedly, lands already leased or being leased were either idle or abandoned during long time or long-term cultivated. Neither involuntary resettlement nor economic displacement has been associated with any of MHP''s land acquisition/leasing.
The Company is committed to acquire/lease lands for future expansion undertaken with IFC’s support in compliance with national legislation and IFC’s standards and guidelines. Details of this compliance for the Company’s land expansion program will be provided in the IFC’s Annual Monitoring Reports.
PS2: Labor and Working Conditions:
Human Resources Policy, Non-Discrimination and Equal Opportunity
Protection of the work force in Ukraine is provided through national labor laws that guarantee employees’ rights for labor protection, specify core rights and responsibilities of an employer and employees and are consistent with main international labor conventions. The Company adheres to the national legislation and its Human Resources policy is based on prohibition from discrimination in employment based on gender, race, age, ethnic, religious or nationality.
Going forward, MHP will develop/enhance its corporate HR Policy by focusing on the management commitments to employees’ rights for labor protection, including right /freedom for professional associations, trade unions; reduction of staff turnover; HR organizational structure and responsibilities; internal communications. The policy will be applicable to all businesses of MHP Group of companies, including its construction companies.
Working conditions and terms of employment
Currently, MHP has approximately 21,000 employees and intends to increase its workforce by creating about a thousand additional new local jobs as a part of the expansion of its poultry production and processing business. Working conditions at MHP’s operations comply with national labor laws and IFC’s Performance Standard 2. Employment of children below the age of 16 years is prohibited; children below 18 years are not employed in dangerous, night or overtime work; forced labor is not employed. The company’s internal regulations supplement local labor laws and set up essential terms of employment, including hours of work, wages, and leave for illness, vacation or holiday. The Company hires personnel after preliminary medical examination addressing specific working conditions and then repeats the health exams regularly.
MHP has collective bargaining agreements with workers’ representatives at local operations where trade unions function. Five trade unions consolidate about ten percents of employees.
Also, MHP offers to employees sustained and competitive payment and annual bonuses; social benefits and discounts; employees came from other regions are given apartments to rent that may be transferred to their property after long-term work.
Grievance Mechanism
The Company actively encourages employees and managers to openly discuss and resolve internal conflicts; corporate grievance procedure ensures consideration of a complaint provided that an employee submits a written official application. MHP has agreed to revise the grievance procedure and make it consistent with IFC’s Performance Standard 2 by allowing grievances to be presented without the risk of oppression. The new grievance procedure will be made available to all employees.
Occupational health and safety
Corporate EHS management system needs improvements in establishing internal transparent functional communications and reporting between corporate management and local individual sites, primarily, related to monitoring and registration of incidents and near-misses; identification of actual non-compliance with local regulations and development of corrective actions to avoid recurrent nonconformance. To address this deficiency, MHP will develop a set of corporate procedures as defined in the ESAP and will report to IFC annually on progress of its implementation.
The Company carries out medical examination of employees at the time of entry on job and after that repeats the health examinations on a regular basis scheduled according to specific working conditions. Also, there are on-site first aid medical points at some local operations.
According to the national laws, there is scheduled monitoring of workplaces undertaken by supervisory services. If parameters do not meet national OHS standards, specific corrective measures are implemented, including supply of personal protective equipment against physical (noise, dust) and chemical hazards (pesticides, disinfecting agents, antibiotic products), including biological security measures, where applicable. The Company provides, and requires the use of proper hygienic conditions, including shower cabins, working cloths and shoes, disinfection, and controls that these requirements are enforced.
As mentioned above, the Company is developing food safety management system, including amendment of its General Hygiene Practices (GHPs) that contributes to the OHS improvement. Also, the Company has mandatory life and fire safety and occupational health and safety training for its employees. In addition, the Company arranges job specific training.
Occupational health and safety (OHS) risks associated with MHP various businesses are reduced by adherence to safety rules and procedures developed by the Company. Reportedly, MHP’s accident frequency is law and ranges from 0.05 LDA/MMH (Lost-Day-Accident/Million-Man-Hours) in 2008 to 0.07 in 2009. MMH is based on 2000 man-hours per year. However, one fatality was registered in 2008 and one fatality in 2009. The Company has provided to IFC additional information on the fatalities and corrective actions that have been undertaken to prevent recurrence in the future.
PS3: Pollution Prevention and Abatement:
Pollution prevention, Resource Conservation and Energy Efficiency
MHP undertakes continuous efforts to promote pollution prevention and energy efficiency systems and is fully committed to continue work towards efficiency of energy and water consumption. MHP develops logistic schemes, uses GPS for monitoring vehicle and agricultural machinery movement, and equips trucks with fuel flow rate control sensors to control and minimize fuel consumption. The visited feed mill and grain silos are designed with modern equipment. MHP intends to purchase farming equipment and machinery manufactured by internationally recognized suppliers.
At the Mironivsky feed mill, part of waste sunflower husk is burned for energy production sufficient to cover the mill demand in steam generation and heating of premises. Burning of 1.8 tonnes of husk replaces 1,000 cubic metres of natural gas.
Mironivsky chicken farms and the slaughterhouse also have the most technologically advanced and energy saving equipment supplied from leading European producers; vast majority of operations are fully automated. Where appropriate, close water systems are implemented.
Biosecurity
MHP keeps eggs’ hatching, chicken growing and processing operations at the same site. It gives an advantage to minimize risk of disease infection through purchasing eggs from third parties and transportation between sites. A comprehensive range of bio-security measures implemented at breeding, production and processing operations ensures protection from the spread of diseases and include, among others, accurate cleaning and disinfection measures after each cycle of hatching and rearing; dividing into clean and dirty zones; observation and maintaining of proper hygienic conditions by personnel, including the use of shower cabins, working cloths and shoes, shore disinfection barriers; disinfecting vehicles entering production areas, etc. MHP also requests its franchisees to implement the same strict hygiene standards and monitors compliance with these standards regularly.
Quality of major raw materials and finished feeds, including protein, fibre, vitamin, mycotoxin, etc. analyses is controlled by on-site laboratories. Visited laboratory at the Mironivsky feed mill was well equipped and staffed.
Power and water supply
Power for local operations is sourced from public grid. To provide local operations with heating, hot water and steam supply gas-fired boilers are installed. Water is supplied from own water wells or from mains of the nearest settlements. Physical, chemical and microbiological water quality is monitored regularly at each individual site by the MHP’s laboratories. It is supported by monitoring undertaken by local authorities. The company has been undertaken efforts to reduce water consumption through recycling of water after treatment, where applicable.
Air emissions
The company holds or is developing documentation for getting permits for air emissions issued by relevant authorities for local operations. Monitoring of point source air emissions and its compliance with national limits are undertaken by supervisory authorities on a selective basis; the Company relies on it.
Some of grains handling facilities have abatement equipment to capture dust emitted from feed mills and grain elevators. It includes bag filters and cyclones or its combination. According to analysis of emissions after treatment made recently at the Mironivsky feed mill, concentration of dust averages 20-25 mg/cubic metre and meets national standards. Reportedly, the company did not have any complaints related to odor or noise from its facilities.
Wastewater management
The principal sources of wastewater from MHP operations are poultry processing plants. All large slaughterhouses have typical on-site wastewater treatment that includes mechanical treatment by flotation and biological treatment at aeration tanks; two parents’ farms with smaller slaughterhouses discharge wastewaters to the municipal mains after primary screening. Treated effluents are discharged to either municipal mains or to disposal/receiving ponds.
The most advanced technologies are employed at the on-site wastewater treatment plant (WTP) of Mironivsky chicken complex. It includes separation from grease and floatable solids, anaerobic and aerobic processes and mechanical treatment. Finally, liquid effluents are disinfected at the ultraviolet unit and discharged at a river. Quality of liquid effluents is monitored regularly and meets strict national standards and the World Bank/ IFC effluents guidelines.
Wastewaters generated by poultry breading/rearing farms with high concentrations of organics are delivered to mechanical separation; liquid effluents are discharged to receiving ponds; sludge is delivered to sedimentation ponds. After a period of settling (natural biological aeration), it is used as field fertilizer.
Druzhba narodov and Lehko meat processing plants implement primary screening and grease separation before discharging wastewaters to the municipal mains for further finishing treatment.
Monitoring covers analysis of liquid effluents from poultry farms, meet processing plants and slaughterhouses. It is supported by inspections undertaken by authorities. Wastewater management practices implemented by individual sites will be audited as a part of the corporate audit program to identify areas for improvement, including monitoring of actual amount of generated wastewaters and condition of sludge and receiving ponds, to prevent potential leakage.
Waste management
Crop residues are chopped and plowed into the soil as a natural fertilizer. Waste fractions with different content of grain from 50 to 10% generated by grain handling facilities are used as components for animal feed production. The fraction with less than 2% of grain is converted by composting and later used as natural fertilizer for field cultivation. Sunflower husk is recycled and used as chicken litter and as biofuel internally or externally, for export to thermal power stations.
The bulk of solid waste is generated by poultry farms. To minimize waste generation, individual sites maintain low water content in organic manure through scraping wastes and use of steam or hot water instead of cold water. Waste is collected and composted and then distributed for use as fertilizer on its agricultural fields. To minimize content of chemicals in manure low-protein and low-phosphorous diets are maintained in combination with nutrient balance in feeding.
Mironivsky poultry complex has implemented advanced technologies for recycling of biological waste from the slaughterhouse and poultry farms. Waste processing facilities are located remotely from others in a stand-alone building and combine digesters where different types of waste are treated with heat and/or solvents to promote deep decomposition. Shakhtarska chicken farm maintains biothermal composting pit (Bekkari pit) constructed of moisture- and thermo-resistant material with a hermetic cover and a ventilation system. Odourless and sterilized compost is used as fertilizer. Livestock litter is collected, composted and used either as fertilizer at own fields or sold to farmers.
Going towards improvement of waste management appropriate for vertically integrated and multifunctional organization, the Company is committed to develop and implement a comprehensive waste management system consistent with IFC’s EHS Guidelines. To achieve this, the Company will develop corporate waste management plans for core businesses, including grain handling; poultry production and processing operations. Except of inventory of waste sources and types, it will include proper methods for collection and temporary on-site storage of biological wastes prior to appropriate disposal; proper monitoring of finished compost composition to ensure it is uncontaminated; management responsibilities and proper staff training programs.
Hazardous materials handling
Implementation of asbestos containing materials (ACMs) is not prohibited locally, and ACM are used as asbestos-cement corrugated roofing. Going towards good practices related to minimization of the health and environmental risks associated with ACMs, the Company has agreed to undertake measures for avoiding their further use in new construction and renovation.
Also MHP will undertake the inventory of transformers and capacitors being operated by individual sites and identify those which may contain polychlorinated biphenyls (PCBs), classified as a persistent organic pollutant, and develop a long-term plan for stepwise replacement of PCBs.
The Company uses pesticides and chemicals certified and permitted by relevant local authorities. Handling, storage and use of personal protective equipment (PPE) for pesticides comply with national regulations. The company is committed to develop a formal documented Pesticide Management Plan which will cover the areas of pesticide selection and handling, application and storage, staff training, safety requirements, and disposal, consistent IFC and WHO guidance.
Practices of application, implementation and storage of chemicals by individual sites will be audited as a part of corporate audit program to identify areas for improvement.
Refrigerants used by MHP operations include ammonia and chlorofluorocarbons R22 and R507. For personnel potentially affected by ammonia, use of personal protective equipment (PPE) is mandatory. The ammonia unit is equipped with safety features required to comply with national regulations for working with ammonia as well as emergency response actions and emergency contact numbers. The facility has an emergency response plan and a trained emergency response unit for ammonia emergencies. Ammonia refrigeration facilities visited at Mironivsky poultry complex comply with internationally recognized standards.
Greenhouse Gas Emissions
Estimated carbon dioxide emissions from fuel and electricity consumption, livestock wastewater discharges of facilities average about 665,000 tons CO2 equivalent in 2009. Major contribution into greenhouse gas (GHG) emissions emanates from poultry headcount. To reduce greenhouse gas emissions, the Company will consider feasible actions and develop a program for reduction of GHG emissions by improving energy and water use and liquid effluent reduction and will report annually on the progress to IFC.
PS4: Community Health, Safety and Security
Some individual sites, such as Starinska, Mironivsky chicken farms, Katerinopolsky grain silo are located in the vicinity of settlements. Reportedly, buffer zones are in compliance with national laws and regulations. Emergency response plans appropriate to specific potential risks, including life and fire safety, are developed in accordance with national laws.
Risks associated with spraying of pesticides, fertilizer application are addressed through selection of weather conditions; application of fertilizers a few centimeters below the soil surface. As mentioned above, the company uses certified pesticides approved for application by local authorities.
MHP employs exceptional biosecurity measures against the animal disease spread that include indoor keeping of chickens, observation and maintaining of proper hygienic conditions by personnel, accurate cleaning and disinfection measures after each cycle of animal breeding. Biosecurity measures for vehicles going to farms include special disinfection barriers at entry check points and limiting movement to special areas within farms. Sufficient wastewater and waste management capacities of the recently commissioned facilities contribute into the reduction of potential risks to community health and safety.
MHP and supervisory authorities regularly review and assess the health of the stock, food safety and employees’ training. Additionally, to control systematically any potential risks to community health and safety from ingestion of drug (such as growth hormones) and pesticide residues, the Company will conduct studies to confirm that drug and pesticide residues in poultry and meat products meet maximum residue limits (MRLs) for veterinary drugs and pesticide recommended by the World Health Organization (WHO) and Food and Agriculture Organization of the United Nations (FAO) and will undertake corrective actions, if needed to comply with MRLs.
Guards provided security services to MHP’s facilities are licensed and trained according to the relevant national legal requirements. Staff does not wear fire arms.
PS6: Biodiversity Conservation and Management of Sustainable Natural Resources
MHP cultivates already converted land with modified habitats typical for agricultural areas. Good agricultural management is developed and applied by the Company for all crops. Genetically-modified organisms considered as alien species are not used.
