While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

IFC’s environmental and social review reveals that this investment will have impacts that must be managed in a manner consistent with the IFC Performance Standards (PS) on Social and Environmental Sustainability listed above. Impacts related to PS5: Land Acquisition and Involuntary Resettlement, PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, PS7: Indigenous People and PS8: Cultural Heritage are not expected with this investment for the following reasons. Any future land acquisition will only be done through willing seller / willing buyer negotiations. Project operations will not have direct adverse impacts on biodiversity as crop production is located on consolidated agricultural areas; the local population is not known to include indigenous people communities; the likelihood of finding of unknown cultural heritage, particularly archeological resources, within the existing agricultural and industrial zones is low.

This proposed investment is expected to have limited and site-specific environmental and social impacts and none is expected to be significant. Those impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections. Thus, this is a Category B project in accordance with IFC’s Environmental and Social Sustainability Policy. This categorization is in accordance with other similar type of projects within the sector. The project is designed to avoid, minimize and manage environmental and social risks and impacts of the Company’s operations in compliance with applicable IFC’s Performance Standards and World Bank Group (WBG) General and sector-specific (Crop production; Poultry production and Poultry Processing; Mammalian Livestock Production; Vegetable Oil Processing; Meat Processing) Environmental, Health and Safety (EHS) Guidelines.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

Main Environmental and Social Risks/ Impacts of the Project and Key Mitigation Measures

Key environment, health and safety and social impacts/issues of the project include: i) Environmental and social impact assessment of new facilities; ii) Environmental, social, occupational health and safety management systems of new facilities; (iii) EHS organizational structure and internal capacity; iv) Labor and working conditions, including occupational health and safety (OHS); v) Energy and water consumption; vi) Greenhouse gas emissions; vii) Hazardous materials handling; viii) Wastewater and waste management; ix) emergency preparedness and response. The Company has presented plans to address these EHS risks and impacts to ensure that the proposed Project will comply with the environmental and social requirements of Ukrainian laws and regulations, IFC’s Performance Standards, the WBG generic and sector-specific EHS Guidelines upon effective implementation of actions included in the E&S Action Plan (ESAP) agreed with IFC.



Environmental and Social Assessment, Identification of Risks and Impacts: Ukrainian legislation requires all new developments and greenfield projects to carry out an environmental impact assessment (EIA) study and evaluate potential negative environmental and social impacts. Companies are obliged to develop and implement corrective actions prescribed by authorities to avoid, mitigate or compensate identified adverse impacts. The Company has effectively met these requirements. Specifically, the Company has conducted full scale EIA studies for all new facilities currently being constructed in Vinnytsia region near the town of Ladyzhin followed by positive conclusions of the State Environmental Expert Committees. Cumulative impacts are not anticipated. To ensure effective and timely implementation of the IFC PSs and General and applicable sector specific WBG EHS guidelines MHP will enhance existing E&S Management Plans for the operational phase. The ESMPs will include actions, as measurable events that can be tracked over defined time periods, to address E&S risks and impacts identified through ESIA studies, including IFC’s PSs requirements.



For early identification of potential E&S risks and impacts associated with leasing of new agricultural land for crop cultivation, as spelt out in the ESAP, the Company will develop a corporate procedure for internal screening of future E&S risks and impacts and planning of mitigation measures ahead of leasing agreements, i.e. vicinity of surface water basins; establishment of buffer zones, if needed; occurrence of abandoned facilities with potential occurrence of hazardous chemicals; potential soil contamination from past activities; vicinity of residential areas; conditions of roads used by communities, etc. If risks to biodiversity are identified through this screening, more detailed assessment and analysis in compliance with PS1 and PS6 will be undertaken. Additionally, MHP will improve ma
nagement of contractors’ EHS performance through revision of the existing procurement/tender procedures for selection of contractors by including specific environmental and occupational health and safety (EHS) requirements in the tender documentation for bidders and contracts with winning contractors; approvals of the environmental and OHS managers ahead signing the contracts; regular control of contractors EHS performance. EHS requirements will, among others, include the requirement that a winning contractor shall have or develop a grievance mechanism consistent with PS2.



Policy: MHP will establish an overarching EHS policy defining the environmental, health and social objectives and principles to achieve sound environmental and social performance of all its business operations, as set forth in the ESAP. The policy will provide a framework for the environmental and social assessment and management process, and specify that the production sites will comply with the applicable local laws and regulations, the IFC Performance Standards and applicable WBG EHS guidelines.



Management Programs: E&S management programs of individual production sites remain focusing on actions to ensure compliance with local regulations. Additionally, management programs were enhanced by measures to address findings of internal environmental audits completed in 2012. The corporate program covers performance improvement and mitigation measures, including air emissions, wastewater treatment, waste collection and disposal. Going forwards, MHP, in cooperation with competent consulting companies, will develop a corporate EHS program for gradual implementation of the corporate and local EHS management systems consistent with ISO 14001 and OHSAS 18001.



Organizational capacity and competency: 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 permits and approvals. MHP has improved the corporate EHS organizational capacity and competency through assignment of a suitably qualified environmental manager at corporate level. Responsibility and authority of an occupational health and safety (OHS) manager have been defined clearly to ensure systematic safety monitoring and reporting at each site. The corporate EHS organisational structure has been established and adopted by MHP management. Thirteen local operations have obtained different combination of ISO 9001, ISO 22000, Global G.A.P., HACCP (Hazard Analysis and Critical Control Points) food safety certificates.



Monitoring and review: MHP will continue systematic monitoring and review of its EHS performance and develop a corporate procedure for internal or independent external audits of MHP’s individual sites, as outlined in the ESAP; a schedule for audits/inspections; a corporate procedure for systematic EHS reporting to senior MHP management; an
d a corporate procedure for regular management review of EHS performance against measurable qualitative and quantitative key performance indicators (KPIs) being established throughout implementation of management programs, including Lost Time Incidence Frequency Rate, Accident Free Days; Water Usage (kiloliters/ton), Energy Usage (kWh/ton); wastewater monitoring effluents and air emissions parameters; Staff Retention and Training Days/ employee. MHP operations submit annual reports on air emissions, wastewater tests and amount of generated wastes to authorities that supervise compliance with Ukrainian limits.



Emergency Preparedness and Response: Emergency response plans (ERRs) appropriate to specific potential risks, including life and fire safety, are developed and maintained in accordance with national laws at each local plant, including three warehouses for crop protection products and fertilizers; all warehouses are licensed and approved for operation by supervision authorities. ERRs are, typically, combination of procedures for using, inspecting, testing, and maintaining emergency response equipment; informing the public and emergency response agencies; training programs.



The visited facilities in Ladyzhin including silos, the future sunflower crushing plant and the fodder plant will be equipped with dust suppression systems where appropriate; explosion safety devices; life and fire (L&FS) means including fire alarm systems, fire hoses, fire extinguishers and detached fire water tanks. Ammonia refrigeration system being installed at the meat processing plant will undergo multistage inspections and approvals by relevant supervisory authorities. Maintenance personnel will be provided by personal gas detectors. Also emergency response plans will be developed at all new facilities.



Stakeholder Engagement: The Company maintains various social projects through support and finance contributions to economic vulnerable groups, orphans, kids, veterans and religious institutions to address immediate social and economic problems and improve the infrastructure within rural districts where MHP operates. MHP implements a grievance mechanism to receive and response communities’ concerns. MHP will enhance, as outlined in the ESAP, its external communications with affected communities and develop a stakeholder engagement plan (SEP) to ensure stakeholder engagement is an ongoing process. The SEP consistent with PS1 provisions and good international practices will involve the following elements: stakeholder analysis and planning, disclosure and dissemination of information, consultation and participation, and ongoing reporting to affected communities.

Human resources policies and procedures, terms of employment, non-discrimination and equal opportunity: Protection of the work force in Ukraine is provided through national labor laws consistent with the ILO core conventions that guarantee employees’ rights for labor protection. The human resources (HR) policies and procedures are consistent with PS2 and national labor laws. MHP enforces the implementation of corporate HR standards based on equal opportunities, non-discrimination principles in employment, and workers’ rights to participate in professional associations and trade unions. Currently, MHP intends to increase its workforce by creating about ten thousand additional new local jobs as a part of the expansion of its poultry production and processing business in the Vinnytsia region. Terms of employment including salary, working time, leave on maternity, illness and vacation, overtime and nighttime payment, safe working conditions, promotion and bonuses are outlined in the internal regulations. Collective agreements with workers’ representatives and internal regulations adopted at individual operations define supplementary terms of employment through stipulation of employee’s and management’s rights and responsibilities. Also, MHP offers to employees sustained and competitive payment; 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. In the town of Ladyzhin MHP has been finishing construction of blocked apartments’ buildings and a hostel for accommodation of employees from other regions of Ukraine.



Workers’ Organizations: MHP has collective bargaining agreements with workers’ representatives at local operations where trade unions function. Five trade unions consolidate about ten percent of employees.



Grievance Mechanism: MHP developed sound communication ways for employees to raise their concerns on workplace and labor issues. An existing grievance process, consistent with IFC’s Performance Standard 2, provides alternatives for employees to raise concerns other than to immediate supervisors. Additionally, MHP will request its contractors to ensure that workers have access to a grievance mechanism as mentioned above under PS1.



Protecting the Work Force: Children below the age of 18 years are not employed and forced labor is not used.



Occupational Health and Safety (OHS): According to Ukrainian laws, there is scheduled monitoring of workplaces undertaken by supervisory services. Specific corrective measures are implemented, including supply of personal protective equipment (PPE) 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 enfo
rced. 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. Field staff that have direct contact with the crop production products (CPPs) was given specific training in specialized training centres and internally. MHP will amend the existing training programs of employees handling pesticides and provide documentary evidence that the training is based upon MSDS (material safety data sheet) and/or ICSCs (international chemical safety cards), and will fully integrate pest management procedures into the EHS management system manual.



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. MHP will revise medical tests for workers handling CPPs containing organophosphates and carbamates formulations, monitor the cholinesterase levels and adopt a policy for workers rotation to avoid chronic exposures to specific pesticides, including:

i) Regular cholinesterase testing of employees to define if specific employees should be allowed to continue such practices and what specific levels dictate when employees should cease participating in such activities;

ii) Adoption and implementation of workers rotation practices to avoid chronic exposures to specific pesticides;

iii) Adequate training: Material Safety Data Sheets-based technical education for any chemical formulation employed, in the use of adequate Personal Protection Equipment (PPE);

iv) Inventory of available PPE and ensure availability of adequate PPE for employees exposed to contact with products.



Corporate EHS management system has been improved through establishing of internal functional reporting of local individual sites to corporate management, primarily, related to monitoring and registration of incidents and near-misses. MHP’s accident frequency is low and constitutes 0.8 LD/MMH (Lost-Day-Incident/Million-Man-Hours) in 2010 and 2011 accordingly. MMH is based on 2000 man-hours per year. The Company has agreed to undertake appropriate remediation measures, including internal or independent external OHS audits to improve safety statistics in the future.

Resource and Energy Efficiency: MHP continues working towards efficiency of energy and water consumption. Measures implemented at individual operations include closed water cycle at poultry processing operations; installation of nipple-shaped water supply systems at rearing sites; energy saving devices; heat recovery systems at meat processing and meal production operations; heat insulation of premises, production and auxiliary equipment and others. Additionally, a biogas production unit is scheduled for construction in 2013-2014 . As set forth in the ESAP, MHP will arrange water and energy efficiency audits at the selected plants to develop investment programs for energy efficiency and reduction of resource use, priority will be given to water and energy consuming operations.



Greenhouse Gases (GHG) Emissions: MHP quantifies emissions of greenhouse gases in line with local regulations. Quantification of GHG emissions will be conducted by the client annually in accordance with internationally recognized methodologies and good practice. Direct and indirect GHG emissions from MHP operations in 2011 average approximately 400,000 tonnes of carbon dioxide (CO2 eq.).



Air Emissions: Silos, the sunflower crushing plant and the fodder plant visited in the Vinnytsia region will be equipped with dust suppression and aspiration systems, where appropriate. Some of existing grains handling facilities have abatement equipment to capture dust emitted from feed mills and silos. It includes bag filters and cyclones or its combination. Additionally, dust catching systems will be installed at Shakhterska Nova poultry farm. The rendering plant at the Mironivsky poultry processing plant is equipped with gas emissions abatement equipment. The similar abatement system is planned to be installed at the new facilities in Ladyzhin. Monitoring of point source air emissions and its compliance with national limits are undertaken by supervisory authorities. Air emissions from boilers meet local and are below the WBG limits.



Wastewater management: Wastewater management practices implemented by individual sites have been audited internally by MHP. The management program adopted on the basis of audit findings covers, inter alia, monitoring of actual amounts of generated wastewaters; condition of sludge ponds and receiving fields; prevention of leakages; installation of observation wells nearby disposal fields for treated wastewaters from some poultry production sites. The Company continues further improvement of wastewater treatment systems at the existing operations, including the Starynska poultry farm and the Mironivsky complex. A wastewater treatment plant (WTP) is being installed at Vinnytsia complex and employs the most advanced technologies. It includes separation from grease and floatable solids, anaerobic and aerobic processes, absorption on active charcoal, and mechanical treatment. Finally, liquid effluents will be disinfected by ultraviolet and discharged
at a river. This WTP will receive wastewaters from poultry breading/rearing farms, the slaughterhouse and the meat processing plant.



Wastes: MHP has adopted and implemented a comprehensive waste management program based on environmental audits completed in 2012. The program encompasses inventory of waste sources and types; proper methods for collection and temporary on-site storage of biological wastes prior to appropriate disposal; management responsibilities and staff training. Also, MHP will invest in a pilot production of organic fertilizers from poultry droppings and construction of additional manure storage facilities. 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. Upon commissioning of the sunflower crushing plant in Ladyzhin, MHP plans to recycle sunflower husk as chicken litter and as biofuel for a new boiler to be installed at Vinnytsia complex. The rendering facility of Vinnytsia poultry complex is designed to produce meals from waste streams generated by hatchery, rearing sites, the slaughterhouse and the poultry processing plant.



Pesticide Use and Management: MHP adopted a Pesticide Management Plan in 2012 which covered pesticide handling, application and storage, staff training, safety requirements, and disposal. The Company has agreed to develop a policy statement to commit that MHP will avoid use of WHO Class Ia and Ib chemical formulations in its operations. MHP will formalize and create guidelines and procedures to ensure implementation of this policy. Specifically, in relation to pesticide use and management, MHP will develop and implement, as set forth in the ESAP, Integrated Pest/Disease Control Programs through the Company’s own technical team and the involvement of international and local advisers in entomology/plant pathology. MHP will formulate integrated pest/disease management (IPM/IDM) programs fully applying the requirements of IFC PS3 and the WBG guidelines. The IPM/IDM Programs shall include crop management practices, insect/disease monitoring, pest/disease ecology, biological control, and other control components, and, as a last resort, pesticide chemical formulations to avoid unacceptable economical levels of pest or disease damage. If a pesticide chemical formulation is also required as part of the IPM, then this IPM component will aim to carry a less significant weight than the other components of the IPM/IDM program.

Buffer zones established around individual plants 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 and fertilizer application is addressed through selection of weather conditions and application techniques of fertilizers in the soil surface. As mentioned above, the Company uses certified pesticides and chemicals approved for application by local authorities and operates three warehouses for crop protection products and fertilizers; all warehouses are licensed and approved for operation by supervision authorities.



Sanitation and disinfection procedures exist and their use is systematically enforced at all MHP poultry rearing units. Biosafety procedures include limited controlled site access and suitable infrastructure (e.g. fences); entrance gate with vehicle disinfection area, cleaning and disinfection procedures for visitors, materials and tools (e.g. foot disinfection at the entrance to sites/houses), control of pathogen vectors (rodents, insects), and organic waste management. Workers’ clothes are kept clean, shoes are scrubbed with disinfectant, and hands are washed. As part of its biosafety procedures, any sick or dead bird is removed and reported to the veterinarian. Breeders and broilers housing systems allow animals to engage in natural behaviors. Poultry rearing practices comply with IFC’s Good Practice Note (GPN) on Animal Welfare. Well-maintained bedding, feed and water availability, disease control, adequate temperature, ventilation, and humidity are key parameters which are closely monitored. Broiler chickens are controlled against diseases. Only certified providers and approved antibiotics are applied. This approach will be expanded to the new facilities.



Additionally, MHP will enhance control of any potential risks to community health and safety from ingestion of drug (such as growth hormones) and pesticide residues. The Company will arrange studies to confirm that drug residues in pork meet maximum residue limit (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.



MHP operates a total vehicle fleet of 450 lorries; to improve transport safety and prevent transport collisions MHP will develop a transport safety policy and supported procedures, as outlined in the ESAP.



Security: Guards provided security services to MHP’s facilities are licensed and trained according to the relevant national legal requirements. Staffs do not carry fire arms.

Consultations and other forms of community engagement have been conducted by individual sites in line with national laws and regulations, in most cases of new developments or expansions, held in cooperation with local authorities. Special events arranged for mass media highlighted MHP’s business development plans and finance data. Also, the Company discloses general information on its business activities and plans through its website, regional newspapers and professional magazines.

MHP is committed to enhance communication with communities that may be affected by its crop growing, poultry, feed production and other associated operations and all interested parties. Information about E&S aspects associated with the construction of facilities in the Vinnytsia region has been disclosed as part of the E&S impact assessment studies and related consultation process.

For more information, inquiries and comment about the Project and local access of documentation please contact:
Mrs. Anastasiya SobotyukHead of IR and CommunicationsTel: +38 050 339 29 99 Email: mailto:a.sobotyuk@mhp.com.uaWebsite: http://www.mhp.com.uaAddress: 158, Ak. Zabolotnogo Str., Kyiv, 03143, Ukraine

Broad Community Support is not applicable for this project