Ukraine: Agro-Industrial Poultry Farm

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, with the capacity to hold over 17 million chickens at a time. In 2018, the company began construction on Phase 2 of the Vinnytsia Poultry Farm with the intention of nearly doubling its production capacity. According to the most recent information from MHP, the farm now includes over 722 chicken houses, each holding up to 55,000 chickens.

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. Phase 2 has also included the construction of a biogas energy plant to power its operations.

According to planning documents for Phase 2, the fully expanded farm was expected to:

• House 32 million chickens at a time, spread across 836 chicken houses;
• 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 past and current 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. A citizen water monitoring project has confirmed growing problems with local water quality, but MHP continues to deny responsibility while at the same time refusing to disclose any data to support its position.

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 a total of six loans from the IFC, seven from the European Bank for Reconstruction and Development (EBRD), one from the European Investment Bank (EIB), one from the US International Development Finance Corporation (DFC), and benefitted from dozens of guarantees from Dutch trade insurance agency Atradius DSB. International public financing of MHP has totaled over US$1.2 billion to date. Most recently, in September 2023, the IFC, EBRD, and DFC approved new loans totaling $480 million to support expansion of the farm’s biogas plant and provide working capital to refinance the company’s eurobonds.

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 measures to address the impacts from road vibrations, odor, and dust caused by heavy vehicle traffic through their main road, as well as compensation for related damage to buildings. MHP agreed from the start of its operations to build a bypass road, but when a road was finally completed in 2018, its narrow design and low vehicle capacity has left some villagers questioning its adequacy as many large trucks doing business with MHP continue to prefer the road through the village.

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 during its Phase 2 expansions, 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$900 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, and, if the dialogue fails, conduct compliance reviews to determine whether the repeated investments in MHP violated the banks social and environmental safeguards.

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 community members from 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;
• Poor working conditions in MHP facilities which may pose health and safety risks for employees; 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.

The Dialogue Process

In response to the complaints, the CAO and the IPAM agreed to jointly facilitate a dialogue process between complainants and MHP. Complainants requested the dialogue process hoping for concrete steps to mitigate impacts on their villages, as well as systemic lessons to improve MHP’s operations across Ukraine. The dialogue process lasted three and a half years and included 23 meetings between community members and MHP. During the COVID-19 pandemic, these meetings continued but moved to a virtual format. Despite the efforts of the community and the progress they felt they were on the cusp of making, the company decided to withdraw from the dialogue process in July 2021, triggering its closure with no final agreement reached.

Villagers continue to report issues such as building damage from heavy road traffic through the village, farm odors, and poor water quality. Due to an ongoing lack of environmental monitoring information, they continue to fear that serious impacts from the company’s operations may be going undetected.

In July 2020, before the end of the dialogue process, the PCM was replaced by a new office at the EBRD called the Independent Project Accountability Mechanism (IPAM), which took over handling of this case from the PCM. The EBRD – IPAM and IFC – CAO published pulic reports from the mediation process summarizing the outcomes of the confidential mediation and the outstanding issues that remained unresolved.

The IFC – CAO’s conclusion report is available in English and Ukrainian.

The EBRD – IPAM’s Problem Solving Summary is available in English and Ukrainian.

Compliance Review

Following the abrupt end of the mediation process, the CAO and IPAM have both transferred the complaints to their compliance review functions. Each accountability office will first assess whether the case merits a full investigation. IPAM completed its compliance assessment in 2022 and decided to undertake a full investigation to determine whether the bank’s investments have harmed local communities and whether the bank has breached its standards. The CAO’s assessment process is still underway.

The EBRD – IPAM Compliance Assessment Report is available in English and Ukrainian.

To better understand the quality and safety of local water resources, community members took part in a community water testing initiative across rural Ukraine, led by Ecoaction. Community representatives worked with Ecoaction to collect and test samples from various drinking water sources, such as wells and boreholes. The project also sampled from local rivers, streams, and ponds. The results of this initiative confirmed the villagers’ concerns about the contamination of their drinking water. Nitrates and other contaminants in many local wells far exceeded safe drinking levels. The levels found in the Vinnytsia region exceeded the contamination found in nearly all of the other rural communities tested, pointing to the impact of the vast scale of agricultural production in the area. Rivers in the area were also found to be highly polluted. Levels of contaminants were found to be significantly higher downstream from where MHP discharges water from its treatment plant than upstream. These high concentrations are poisonous to many species and pose a high risk to local biodiversity.

The Russian invasion of Ukraine has added new complexities to community members’ struggle. While much has changed since the war broke out, many longstanding problems with the company’s operations have continued or gotten worse. State environmental monitoring has stopped altogether during the war. The few opportunities for information disclosure about new MHP developments have been discontinued under martial law. The impacts from the company’s operations have continued, as have the company’s poor relationships with local affected people. Meanwhile, MHP has profited from a recent wave of public development bank funding to support Ukrainian food security and reconstruction. Now, local villagers are calling on these banks to ensure remedy for the negative impacts of their investments in MHP.

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.