Keskinoglu

Location:

Turkey

Project number:

42787

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

A

Target board date:

13 Nov 2012

Status:

Repaying

PSD disclosed:

13 Sep 2012

Translated version of this PSD: Turkish

Project Description

The EBRD is considering a long-term loan of up to EUR 30 million to Keskinoglu. The loan will support the Company’s capacity expansion programme including construction of a cold storage warehouse, a new legg-laying facility, new breeding facility, the expansion of its hatchery, egg pasteurization and incubation units, as well as the installation of cogeneration units, and a new manure drying system.

Transition Impact

Specific transition impact objectives will be drawn primarily from the following areas:

Market expansion though backward linkages and transfer of know-how to farmers: By establishing long-term cooperation agreements with contracted farmers Keskinoğlu ensures consistency of supply and quality of its products. It has an extended network of over 500 contracted farmers in the area. These farmers are long-term partners of the Company and it has worked with them over the last 40 years. The supply of inputs to farmers is interlinked with training, demonstration and extension of services aimed at optimizing their performance and introducing farmers to new techniques for broiler growing.

Introduction of new products and processes: The investment programme will support quality improvements through investing in a fully automated cold storage warehouse. Also investments in new EU-compliant cages for egg laying birds and the introduction of a new manure drying system.

Improvements in corporate governance and business standards: the investment programme of the Company envisages energy efficiency investments in co-generation units that will allow the Company to jointly generate its own electricity and heat in an efficiency manner. Also Keskinoğlu will undertake to comply with high environmental standards through implementation of the Environmental and Social Action Plan (ESAP), which has been developed based on the results of the independent environmental and social due diligence of the Company’s operations and the proposed project.

The Client

Keskinoğlu is the largest Turkish egg producer as well as a leading poultry meat producer in Turkey. The Company, located in Akhisar (near Izmir), is 100%-owned by the Keskinoğlu family and currently employs ca. 3,200 people.

EBRD Finance

Up to EUR 30 million term loan.

Project Cost

Up to EUR 55 million.

Environmental Impact

The project has been categorised A. An independent consultant undertook a gap analysis of the existing environmental and social studies against EBRD requirements and an audit of the existing facilities and operations, aimed at reviewing historic liabilities and risks associated with the past and current operations. The investment components covered under the proposed project, the egg laying facility in Rahmiye and the converted layer-rearing facility in Kapakli could potentially have significant adverse environmental and social impacts in the future and, the project therefore, falls under category A in accordance with the Bank’s ESP. The impacts associated with the other components of the project are expected to be site-specific, which can be readily identified and addressed through mitigation measures. Therefore, the ESIA has been focused on proposed development programmes at Rahmiye and Kapakli facilities.


Local Environmental Impact Assessments (EIAs) were prepared for Rahmiye egg production facility and Kapakli layer-rearing facility by local consultants in 2011-2012. Keskinoglu carried out Public Participation Meetings in Rahmiye and Kapakli villages, in May and November 2011, respectively. The main concerns raised during the meetings were noted as odour, manure-management and flies. These concerns were taken into consideration and further investigated, and mitigation measures to be taken are defined in the EIAs. These EIAs are currently being reviewed by the Ministry of Environment and Urban Development. The ESDD concluded that the local EIAs prepared for Rahmiye and Kapakli facilities contained gaps which needed to be filled in order to satisfy the EU EIA Directive requirements.

Supplementary investigations have been undertaken to address these gaps and an addendum to the local EIAs has been prepared for the project. The ESDD concluded that the potential social and environmental impact resulting from the project will be either short-term and/or relatively minor, if managed adequately. The potential impacts can be addressed through the implementation of the mitigation measures identified during the ESDD. The project will also result in a number of benefits including improvement to live bird handling, minimisation of the odour problem through the manure drying system, and additional employment opportunities and generally promoting economic development in the area.

Specifically in terms of animal welfare the consultants noted that the Company has a system in place for the management of animal welfare which is largely overseen by a number of veterinarians employed to ensure the health, welfare and biosecurity of poultry to Turkish standards. The Company is currently using a non-enriched caging system with stocking densities higher than would be best practice in the EU. Keskinoglu have agreed, as part of the capex programme to be financed by the Bank the procuring of new type of so-called enrichable cages (i.e. cages that can be converted into 100% EU compliant within a couple of days at the sheds' premises by removing the partition wall, providing for the so-call dark section for the hens to lay eggs in darkness, installing perches and "claw-shortening devices". The Company is the first (and still the only) poultry company in Turkey which has started investing in the new EU-compliant cages. Once the expansion programme is completed, 60% of the Company’s cages will be enrichable and 40% will be non-enriched cages.

The ESDD concluded that Keskinoglu has OHSAS 18001 certification but no established environmental management system in place at present. It also identified a number of issues with regard to Keskinoglu’s existing operations, including odour problems, air emissions permit, wastewater treatment, waste management, hazardous material storage, asbestos handling, and emergency response. Corrective measures to address these issues, mitigate potential environmental and social impact and bring the Company's operations into compliance with the EBRD's PRs have been developed and incorporated into the Environmental and Social Action Plan (ESAP).

The Stakeholder Engagement Plan has been developed and will allow Keskinoglu to develop a more structured approach to information disclosure and public consultation. In addition, a new mechanism for handling public complaints and grievances, should they arise, has been developed.

The Environmental and Social Impact Assessment (ESIA) disclosure package is under preparation in accordance with the Bank's ESP and PRs, and is planned to be disclosed locally and on the Bank's website by 24th August 2012.

There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

None.

Company Contact

Ismail Keskinoglu
CEO
Tel: 0090 236 427 2572
Email: ismail@keskinoglu.com.tr
Address: Kayalioglu Kasabasi
45200 Akhisar
Manisa
Turkey

 

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