MK Group has recently contracted to acquire Carnex, wone of the key players in the meat production and processing sector in Serbia. Carnex has additional business units including crop production, silos, Vitamix feed mill and animal production consisting of three pig farms with capacity of approximately 90,000 pigs. Carnex produces over 100 products such as smoked products, fermented dry sausages, delicatessen meats, cooked sausages, pasteurized meats, sterilized meat products in foil and sterilized meals in cans and some processed chicken products. Carnex sells 20% of its products abroad. The MK Group also own three operating sugar plants in Serbia: Secerena- Jedinstvo, “Fabrika Secera Backa” and “Donji Srem” in Kovacica, Vrbas and Pecinci respectively.
The business activities of Agro Invest Ukraine, which is also part of the MK Group, include operation of silo complexes, cattle breeding for the purpose of selling to dairy producers and some primary crop production (sugar beet, sunflower and corn).
PS1: Social and Environmental Assessment and Management System
Environmental and Social Assessment:
Submission of an Environmental Impact Assessment (EIA) study for the proposed project is not required by the local authorities. Nevertheless, MK Group will assess the environmental aspects and impacts of its projects as part of its efforts to comply with the requirements of ISO 14001 (Environmental Management System). In addition, Carnex has committed to the Ministry of Environment to be ready to receive Integrated Pollution Prevention Control (IPPC) license for all of its facilities until 2015.
Management Systems and Organization:
Carnex operations are certified to GOST ( Standards for Ex-Soviet Union Countries) , HACCP Codex Alimentarius (Hazard Analysis and Critical Control Point system is an internationally accepted system of preventative food safety management and certification applying to food manufacturers and processors) and ISO 9001:2008 standards; certification was done by SGS in 2011 and is valid until November 2014. The Carnex Quality manager is responsible for the execution of the system. All plants have a centralized laboratory for organoleptic, chemical and bacterial control, packing control and chlorination testing.
Carnex has a safety officer and an environmental manager who oversee occupational health and safety (OHS) and environmental responsibilities respectively.
Going forward, Carnex will adopt a systematic Environmental and Occupational Health and Safety Management system, in line with internationally recognized standards, (e.g. ISO14001 and OHSAS18001 respectively) as per the attached Environmental and Social Action Plan (ESAP).
In addition to ISO22000:2005 certification, all of the Carnex sugar plants are certified for ISO14001:2004 and all other MK Group operations are certified for ISO9001.
MK Group will hire a Corporate Environment, Health and Safety (EHS) Manager/Coordinator who will oversee the environment, health and safety issues associated with its operations at the Group level and will be responsible for integration of the EHS system into the existing quality management system.
Training:
The Group has an established training program to provide both induction training as well as periodic supplemental trainings for all of its direct employees. These trainings cover the detailed EHS aspects related to its operations, including but not limited to PPE (Personal Protective Equipment) usage, job-specific trainings, environmental awareness, etc. The Company records all training activities and maintains training records for individual employees. Going forward, the MK Group will ensure that all contractor and seasonal workers also receive training on these EHS requirements.
Monitoring:
The Group has established a detailed monitoring program that covers key environmental parameters. Effluent discharges, air emissions, solid wastes, energy and water consumptions and lost time accidents, customer complaints, suppliers’ performances are among the regularly monitored parameters for the various operations at all plants, in compliance with Serbian regulatory requirements. In order to closely monitor the results of its EHS improvement efforts, the Group will create additional key environmental and safety performance indicators; e.g., water, energy use and solid waste formation per ton product and accident-related lost time frequencies and by site.
Reporting:
Reporting of EHS indicators is done internally - as per the requirements of the certified management system – as well as externally to the national regulatory agencies requiring EHS monitoring.
PS2: Labor and Working Conditions
Human Resources Policy and Management:
Carnex employs approximately 1242 people, 230 of which are administrative. Women employees constitute 30% of the total workforce. In addition to its regular staff, the company employs approximately 50 seasonal workers during harvesting and planting seasons due to the increasing production capacity. (May-November for fields and March-October for meat production).
Carnex has a well established HR management system with documented internal regulations and procedures that cover all key aspects of employment in detail, including recruitment, training, working conditions, performance evaluation, social benefits, disciplinary actions and dismissal.
The HR department provides all Carnex staff with handbooks related to working principles, human resources policy and procedures, rules and conditions of collective agreement, emergency preparedness, fire safety and safety rules. Employees work five days a week in 7.5 hour shifts, with a a half-hour lunch break.
For both employees and seasonal workers, Carnex pays significantly above both the minimum wage (~18,000 RSD) and the sector averages for the region. The annual payment package includes monthly gross salary and a performance bonus, as well as family and child allowances, annual leave, religious holiday are provided to union member employees in the amounts agreed in collective agreement. Overtime is paid in accordance with national Working Conditions regulations and the terms of collective bargaining agreements.
The MK Group has confirmed that there are no instances of forced labor or child labor at any of its operations; the minimum age of employment is 18 at all facilities.
Workers’ Organizations:
MK Group management has stated that each employee is free to join a workers’ organization and confirmed the existence of unions at all of its all plants.
Non-Discrimination and Equal Opportunity:
MK Group complies with the national labor law requirements for non-discrimination and has a documented hiring procedure. It will be explicitly stated in the HR hiring procedure that the Company is an equal opportunity employer, and does not make employment decisions on the basis of personal characteristics unrelated to inherent job requirements. Carnex plans to issue a mobbing/ nondiscrimination procedure in 2012. Agroinvest Ukraine has a very comprehensive HR Policy Handbook already in place.
Grievance Mechanism:
The Company adopts an ‘open door policy’ for responding to employees’ concerns, and a formal employee grievance mechanism exists. Aside from internal grievance mechanism, external worker protection mechanisms are ensured by the national labor laws and union activities.
Retrenchment:
There are no current plans for retrenchment, however if it becomes unavoidable, the company will implement retrenchment plan in accordance with PS2 and in consultation with the Unions.
Occupational Health and Safety:
Carnex:
Monthly OHS meeting are held with mandatory participation of the HR department and technical staff, an OHS consultant, and union representatives to identify risks and to improve workplace health and safety conditions. Risk analyses are available for all facilities of Carnex.
Lost time accidents and number of lost days resulted from accidents have been decreased by approximately 15% in the last three years.
There is an onsite medical clinic staffed by a doctor and nurses. In the case of more serious illnesses or accidents, Carnex has relationships with good local hospitals in both Vrbac and Novi Sad. All employees are provided with a free meal in every shift and paid for transportation to and from their place of work.
Other facilities
OHS activities at other Group are basically in line with applicable local requirements. A formal ork permission system for hot works, work at height, stand alone worker, electrical works and confined space will be for all facilities.
Fire Safety:
Fire extinguishers and fire hoses are available all sites and fire drills are conducted every year MK Group companies. Furthermore Carnex has its own fire brigade and fire team composed of 22 people, 7 of three shifts. Group will ensure that each pesticide and fertilizer warehouses will be equipped with fire detection and extinguishing systems. Dust xplosion isks in all
PS3: Pollution Prevention and Abatement
Carnex meat processing plant consumes approximately 150 kWhpig carcass which is industry benchmark (110-760 kWh pig carcass).
Carnex is a significant consumer of energy; installed electrical power is 4 MW and total capacity of steam boilers is 28 tons of steam/ h. For this reason, great attention is paid to energy efficiency equipment and installations. An energy audit was in cooperation with the Energy Efficieny Agency of Serbia. Danish company COWI carried the audit and most of the proposed measures were completed. Several projects will be implemented management of steam traps, condensate recovery for hot water preparation, replacement of old ammonia compressors, insulation of steam pipes, and improvements on central pneumatic installations and boiler room. Current specific water consumption is higher than the industry benchmark of 8.3 m3 per ton of carcasses processed. The company will undertake a water audit and study of its operations, including the pig farms, and identify measures to improve water usage efficiency
Water Sustainability in the fields: Water management at MK Group aims to optimize crop yield while conserving the quality of the crop. Irrigation is applied during the production cycle depending on the crop needs and weather conditions. MK Group applies irrigation through modern pivot drip systems at some part of the fields and has future plans to expand this system. Water resources are monitored and consumption varies consumption for irrigation varies from 100 to 250 liters per hectare depending on crop and rainfall for that year
Air Emissions
Carnex has three natural gas fired steam boilers in its processing plants, and uses fuel oil at its farms. missions from the three boilers are regularly monitored. Particulate matter emitted from the feed mill and silos is measured twice a year. According to the analyses done by accredited laboratory, results are in compliance with local legislation and WBG EHS Guidelines.
Dust and SO2 emissions at the sugar plants do not currently meet local and WBG EHS. The MK Group is aware of this situation and already has developed an action plan to bring these units into full compliance and will implement the required measures in a timely manner.
Air emission measurements of Agroinvest Ukraine and rain xport silos comply with local limits and WBG EHS .
Waste Water Management:
Carnex is in the process of constructing a state-of-the- art waste water treatment plant for the meat processing plant, which will be commissioned in 2013. The plant currently discharges 1146 m3/day waste water without proper treatment. The BOD, COD, suspended solids (SS), oil and grease (O&G) and pH levels of discharged waste water are 740, 1270, 332, 132 mg/l and 7.4 respectivel. The first three parameters are above the limits of local legislation WBG EHS Guidelines.
With the commissioning of the new plant – which will consist of mechanical, chemical and biological (SBR and DAF system) treatment - Carnex will comply fully with both sets of limits.
Waste water sourced from the pig farms are discharged to lagoons. Average BOD, COD, SS, O&G and pH values for the three farms are approximately 4000, 7000, 2000 , 50 mg/l and 7.9 respectively.
Carnex recently undertook a series of projects at its three pig farms in Vrbac, Backo Dobro Polje and Savina Selo in order to reduce pollution of discharged water: flow meters were installed, as well as an automated system for animal feeding that prevents unnecessary food spillage and water pollution and reduces the need for cleaning the lagoons (which accepts the entire amount of the farms’ waste water). Separators have been installed at all three farms to separate the solid and liquid portions of manure, with homogenisation of the liquid portion. Groundwater testing and analysis is done periodically to ensure that no contaminants are reaching groundwater sources.
Ecology Day was held on November 10, 2011 at the pig farm in Backo Dobro Polje, where Carnex demonstrated to the public methods for utilizing liquid manure for irrigation, as well as the separation and collection of the solid portion of the manure so that it can be used as a natural fertilizer for soils. In 2011 alone, more than 2,500 tons of solid manure had been spread over the agricultural land as fertlizer, as well as more than 5000 m3 of liquid manure for irrigation. By applying this system significant savings have been achieved and have been contributed to the protection of surface water flow.
Carmex has not yet obtained a permit for discharging waste water from the lagoons, which does not meet local limits, to the sewage system. Under new country regulations, farms are required to obtain an IPPC permit until 2015. Carnex will ensure that these required improvements will be completed, as described in the attached ESAP.
The Sunoko sugar plants discharge their waste water to lagoons as well. All three sugar plants have obtained the relevant permit from local environmental authorities. Piezometric undergroundwater measurements are performed periodically to ensure against the pollution of underground water sources.
Solid and Hazardous Waste Management:
Solid and hazardous wastes generated by Carnex operations are collected by different qualified contractors for recycle or disposal in line with local legislation. By-products of meat processing are used as raw materials for the feed mill plant or sold. By-products of sugar plants - molasses and saturated sludge - are sold as energy resources to other companies.
Cooling agents:
Carnex uses ammonia (NH3) as a refrigerant in its cooling systems for carcass chillers, blast freezers and storage freezers. Carnex will ensure that its handling and storage practices are in line with best industry practice and that the ammonia unit is periodically maintained by experts and equipped with safety features required to comply with national regulations for working with ammonia. The relevant emergency action plan as well as PPE usage will be improved. The Group will also adopt a phase-out plan for all ozone-depleting agents used at its plants.
Pesticide Use and Management:
The company is committed to develop a formal Pesticide Management Plan which will cover the areas of pesticide selection and handling, application and storage, staff training, safety requirements, and disposal, consistent with national laws and regulations, IFC policies and guidelines and WHO guidance. The Group committed not to use pesticides that are listed in the Stockholm Convention and as class Ia and Ib by the WHO.
PS4: Community Health, Safety and Security
MK Group of companies has an active grievance mechanism for the customer complaints and regularly monitors the number and root cause of complaints and under the scope of Good Manufacturing Practices and food safety system. Traceability practices and product recall procedures are available in case of any need.
Company will ensure that armed security forces will be trained and controlled in accordance with IFC requirements.
PS5: Land Acquisition and Involuntary Resettlement
MK Group of companies has an active grievance mechanism for the customer complaints and regularly monitors the number and root cause of complaints and under the scope of Good Manufacturing Practices and food safety system. Traceability practices and product recall procedures are available in case of any need.
PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
MK Group’s fields are on already converted land that was previously dedicated to other agricultural uses.
Genetically-modified organisms (GMOs) are considered alien species. Any new introduction of such organisms should be assessed in a manner consistent with the existing host country regulations and in compliance with the Cartagena Protocol for Biosafety.
