Ukraine: Agro-Industrial Poultry Farm

  • Overview

    Existing poultry houses within the VPF.

    For villagers living near “the largest poultry farm in Europe,” the Vinnytsia Poultry Farm in Ukraine is omnipresent. While only half complete, it is already massive, housing over 17 million chickens tightly quartered in hundreds of chicken houses. And chicken rearing is just the beginning. The farm and associated agro-industrial operations also include a slaughterhouse, manure storage, and wastewater treatment plant, plus over 25,000 hectares of cropland and facilities to grow and process feed for the chickens.

    Some report that these operations are making village life untenable. Towering buildings emit dust and foul odors at all hours of the day. The chickens produce over 224,000 tonnes of manure each year, which is stored in the open air for months at a time before being spread on company cropland. Constant, heavy vehicle traffic has caused damage to homes and village roads. Details of the environmental impact of the whole operation have not been fully disclosed, but some local wells have tested positive for dangerously high levels of nitrates, and some community members fear that MHP may be responsible.

    Local villagers have long voiced concerns about the farm’s operations, despite intense pressure not to criticize this important source of local employment. The company’s future expansion plans, combined with its lack of transparency about the environmental impacts of its current and future operations, have only heightened these concerns.

    Frightened by the possibility of risks to their health and environment, and seeking a forum in which to access information and develop solutions, community members filed complaints on 5 June 2018 to accountability offices of the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), which together have provided more than US$600 million in financing to MHP. The IFC’s Compliance Advisor Ombudsman (CAO) has found the complaint eligible and is beginning its assessment process. The EBRD’s Project Complaint Mechanism (PCM) is also reviewing the complaint. Villagers are requesting a dialogue process with the company to answer their questions and address their concerns.

    IFC – CAO complaint available in English and Ukrainian
    EBRD – PCM complaint available in English and Ukrainian

    Read more about the CAO and PCM.

    As the largest industrial poultry complex in Europe, MHP’s Vinnytsia facility inevitably creates a burden for nearby communities,” yet “[c]ommunity members have little to no access to relevant information concerning the environmental and social impacts of the company and its operations.” – SOMO, Chicken Run

  • The Story

    Credit: Majda Slamova, 2017

    Owned by one of the wealthiest men in Ukraine, Myronivsky Hliboproduct (MHP) is the country’s largest poultry producer. It accounts for 30 percent of industrially farmed poultry consumed in Ukraine and exports hundreds of thousands of tonnes of poultry meat to countries throughout Europe, the Middle East, Africa and beyond. The company controls 370,000 hectares of cropland in Ukraine. Its vertically integrated business model means that the company controls all stages of poultry production – from growing fodder to feed the chickens until their slaughter and distribution – which has led to the creation of a series of intensive mega-farms throughout the country.

    MHP boasts that one of those mega-farms, the Vinnytsia Poultry Farm (VPF) is the “largest poultry farm in Europe.” Phase 1 of the farm began construction in 2010, and includes over 450 chicken houses, which hold over 17 million chickens at a time.

    But local villagers must contend with far more than chicken rearing. The mega-farm includes all of the facilities involved in poultry production: a slaughterhouse, hatchery and manure storage facilities, fodder production plant and wastewater treatment plant. MHP’s associated and overlapping Zernoproduct operation leases 25,000 hectares of local farmland, on which it grows grains to feed the chickens.

    Now, the company has started construction of “Phase 2” of the Vinnytsia Poultry Farm, which will double its production capacity and add a new biogas energy plant to power its operations. Once Phase 2 is fully operational, the farm is expected to:

    • Include at least 836 separate chicken houses;
    • House up to 32 million chickens at a time;
    • Consume over 6 million cubic meters of water per year;
    • Produce over 411,000 tonnes of manure per year; and
    • Produce on the order of 1.5 million tonnes of greenhouse gases per year.

    Chicken excrement lays in open manure storage containers and field piles.

    Local community members have experienced negative impacts from MHP’s operations that include odor and dust, as well as damage to roads and buildings from heavy vehicle traffic. As MHP begins ramping up development of Phase 2, community members fear that these problems will only intensify. Many also fear potential pollution and health impacts from practices like pesticide spraying, the storage of vast quantities of manure in open fields and application of used water from poultry farms to irrigate cropland.

    Local people report that MHP has a history of poor information disclosure, which has prevented them from understanding current and potential future environmental and health impacts. Villagers are also concerned that working conditions in MHP facilities are poor – in some cases potentially even posing health and safety risks for employees. They are also aware of reports of alleged retaliation against individuals around the country who have raised concerns about MHP operations.

    Many local villagers rely on MHP for employment, and the company has made significant contributions to village council budgets, creating pressure at the local level not to raise concerns or question the company. But many villagers are fed up with what they perceive to be a pattern of poor consultation, false promises and problematic MHP operations.

    Despite these issues, MHP has received significant and repeated support from international development finance institutions. In 2003, MHP became the first Ukrainian business to receive funding from the International Finance Corporation (IFC), which financed the expansion of MHP’s facilities throughout the country. Since then, MHP received four more loans from the IFC, four from the European Bank for Reconstruction and Development (EBRD), one from the European Investment Bank (EIB), and benefitted from dozens of guarantees from Dutch trade insurance agency Atradius DSB. The U.S. Overseas Private Investment Corporation (OPIC) also began vetting a project to support expansion of the Vinnytsia Poultry Farm, although it ultimately decided not to invest. International public financing of MHP has totaled over US$700 million to date.

    Large vehicles frequently utilize village roads creating risks to pedestrian
    safety and damage to buildings.

    History

    Since construction of the Vinnytsia Poultry Farm began in 2010, local community members have repeatedly raised concerns about inadequate information and negative impacts from the mega-farm. For many years, these concerns have largely gone unaddressed. In Olyanytsya, villagers have long been demanding an investigation into reduced water levels in wells and a bypass road and other measures to reduce vibrations, odor and dust caused by heavy vehicle traffic through their main road, as well as compensation for related damage to buildings. MHP agreed years ago to build a bypass, but the road is still not complete, although construction of other MHP facilities has moved forward on schedule, leaving villagers feeling de-prioritized.

    Community members from the village of Kleban have raised concerns about MHP’s practice of storing manure in open fields for extended periods. They have repeatedly requested the company to build natural barriers around its poultry houses to minimize dust and odor impacts. Again, MHP agreed to this demand many years ago, yet has failed to honor those promises. Similarly, community members in Zaozerne, who have raised the need for more information and better consultation on the environmental impacts of MHP operations, such as pesticide spraying, and on the cumulative impacts of having so many farming facilities surrounding their village, are still waiting for their concerns to be addressed.

    Community members across multiple villages complain that they have not been properly consulted about MHP’s operations, and therefore cannot be sure of their impacts. MHP has made some improvements over the past year, including by developing a new Stakeholder Engagement Plan and disclosing environmental assessment documents for a few of its planned Phase 2 facilities, however many villagers continue to feel that public meetings do not allow an opportunity for real dialogue about these concerns.

    “… a former village head explained how public hearings did take place, but that people were informed when it was already too late to influence the project. While villagers were informed about the company’s intentions, they did not have a say in the details of the project.” – SOMO, Chicken Run

    Cracks have appeared in recent years in residents’ homes close to the road, both on
    building exteriors and along the walls and ceilings of interior rooms.

    Villagers have raised these issues directly with MHP and with local government representatives, as well as with national politicians and MHP’s international lenders, in some cases prompting ad hoc investigations or reports. For the most part, however, their concerns remain unaddressed.

    Community members fear that these problems are indicative of systematic issues in MHP’s business operations, which have likely led to similar harm to communities throughout the Vinnytsia region and in other parts of the country.

    Initial Steps

    Villagers have been raising their concerns about MHP’s local operations for many years, not only through local public hearing processes, but also through letters and other communication directly with MHP, with local, regional and national government bodies, and with international lenders. While those efforts have led to some progress on some points, the majority of their questions and concerns have been left unresolved.

    The Complaints

    As a result, in June 2018, community members from the local villages of Olyanytsya, Zaozerne and Kleban filed complaints to the accountability offices of the International Finance Corporation (IFC) and of the European Bank for Reconstruction and Development (EBRD), which together have provided more than US$600 million in financing to MHP. Villagers are requesting the IFC’s Compliance Advisor Ombudsman (CAO) and the EBRD’s Project Complaint Mechanism (PCM) to facilitate a dialogue process with the company to answer their questions and address their concerns.

    IFC – CAO complaint available in English and Ukrainian
    EBRD – PCM complaint available in English and Ukrainian

    The complaints identify a range of concerns shared by the three villages, including:

    • Continuous odor and dust impacts from the significant and growing number of facilities surrounding the villages;
    • Dramatic increase in heavy vehicle traffic through the villages, causing damage to roads and nearby residences;
    • Current and potential negative impacts to air, water, and soil resulting from pollution and pesticide use;
    • Decrease in water levels of local wells potentially linked to construction and operation of the mega-farm;
    • Fear that the planned expansion of the mega-farm will cause additional impacts that they are not yet aware of; and
    • Exacerbating all of these concerns, a lack of meaningful community consultation, with inadequate disclosure of information about environmental and social impacts and mitigation measures and a lack of any real opportunity to have a say in project design.

    Community members reported seeing dead fish floating in the river near the
    outflow pipe of the wastewater treatment. They fear that this may have been
    related to the Company’s operations.

    In their complaints to the CAO and the PCM, the villagers are requesting a facilitated dialogue process with MHP, to answer their questions and address their concerns about the impacts of the company’s operations on their communities. They believe that there are feasible, concrete steps that the company can take to mitigate the impacts on their villages. They also believe that this process can give rise to systemic lessons to improve MHP’s operations across Ukraine.

    Case Partners

    CEE Bankwatch Network: the largest network of grassroots, environmental and human rights groups in central and eastern Europe, focused on monitoring public finance institutions operating in those regions.

    Center for Environmental Initiatives Ecoaction: a Ukrainian member-based civil society organization that unites efforts of active and concerned people in a joint struggle to protect the environment and achieve the desired social transformations.

  • The Case
    • Jun 2018

      The Compliance Advisor Ombudsman (CAO) found the complaint against the International Finance Corporation (IFC) eligible.  The CAO will now begin its assessment process, during which it will work with complainants and other stakeholders to determine how the complaint will proceed.  Villagers are requesting the CAO to facilitate a dialogue process with MHP.

    • Jun 2018

      Villagers from three Ukrainian communities, supported by CEE Bankwatch, Ecoaction and Accountability Counsel, filed complaints to accountability offices of the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), which together have provided more than US$600 million in financing to MHP. The complaints highlight a wide range of community concerns about potential negative environmental and social impacts from MHP’s mega-farm in Vinnytsia, including odor, dust and air and water pollution, and damage to roads and buildings from heavy vehicle traffic. Community members also report that MHP has a history of poor information disclosure, which has prevented them from understanding current and potential environmental and health impacts. Villagers are requesting that the IFC’s Compliance Advisor Ombudsman (CAO) and the EBRD’s Project Complaint Mechanism (PCM) facilitate a dialogue process with the company to answer their questions and address their concerns.

      IFC – CAO complaint available in English and Ukrainian
      EBRD – PCM complaint available in English and Ukrainian

    • Jun 2017

      CEE Bankwatch Network published “Beatings, Framings and Industrial Chicken Farms: a Human Rights Briefing on MHP Projects and International Public Finance in Ukraine,” a brief summarizing the concerning trend of community activists, including from the Vinnytsia region, facing intimidation, harassment and threats.

    • May 2016

      CEE Bankwatch Network published “The problems with MHP’s expansion in Ukraine” raising issues about MHP’s current operations and planned expansion in the Cherkasy region. These findings echo the experiences of villagers who have been impacted by the Vinnytsia Poultry Farm.

    • Feb 2016

      CEE Bankwatch Network and the National Ecological Center of Ukraine (now Ecoaction) published “Briefing: Problematic MHP expansion in Ukraine with EBRD support” highlighting MHP’s lack of meaningful community consultation and the inadequate assessment and mitigation of its environmental and social impacts in several regions of Ukraine, including Vinnytsia.

    • Sep 2015

      CEE Bankwatch Network and the National Ecological Center of Ukraine (now Ecoaction) published “Black Earth: Agribusiness in Ukraine and the Marginalisation of Rural Communities” summarizing the results of a fact-finding mission to the Vinnytsia Poultry Farm. The report found, among other things, odor and community health risks linked to the management of manure and other waste, increased traffic and road safety risks, a lack of information and consultation with communities, resulting in mistrust and fear, and pressure on communities to lease their land for the expansion of the mega-farm.

    • Sep 2015

      Centre for Research on Multinational Corporations (SOMO) published “Chicken Run: The Business Strategies and Impacts of Poultry Producer MHP in Ukraine,” a report examining the business strategy of MHP and the adverse environmental and social impacts of that strategy, as evidenced by the Vinnytsia Poultry Farm.

  • Impact

    Credit: Majda Slamova, 2017

    Our Impact

    Despite pressure to remain silent, local villagers have been raising concerns about the Vinnytsia mega-farm’s operations for years, with support from CEE Bankwatch Network and their Ukrainian member group, Ecoaction. Over time, individual villages realized that they were not alone: many of their concerns were shared by other villages affected by MHP’s operations.

    Dismissive and inadequate responses from both MHP and its international financiers left them feeling frustrated and ignored. As a result, they requested Accountability Counsel’s support to develop and pursue complaints to two accountability offices: the Compliance Advisor Ombudsman (CAO) of the International Finance Corporation (IFC) and the Project Complaint Mechanism (PCM) of the European Bank for Reconstruction and Development (EBRD). In those complaints, villagers seek a facilitated dialogue process with MHP, to answer their questions and address their concerns. (IFC – CAO complaint available in English and Ukrainian; EBRD – PCM complaint available in English and Ukrainian)

    Accountability Counsel attorneys traveled to Ukraine in 2018 to document villagers’ concerns and to prepare them for the dialogue process that they hope to establish.

    The CAO has found the IFC complaint eligible and is beginning its assessment process.  The PCM is still reviewing the EBRD complaint to determine whether it is eligible for the next steps in the PCM’s process. Together with CEE Bankwatch and Ecoaction, Accountability Counsel will provide support to these brave villagers throughout the complaint processes, as they seek solutions that will mitigate the impacts on their own communities, as well as providing systemic lessons for MHP’s operations across Ukraine.

    We will provide updates on our impact as we work to ensure that MHP and its international investors finally hear the villagers’ voices.

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