Farmers across the country are struggling with strict new rules aimed at protecting Europe's waterways from farm pollution.

The directive has also been a major headache for the poultry industry. Until now poultry litter - a mixture of poultry droppings and bedding material - was used by farmers as fertiliser.

But the practice of spreading it on fields was severely restricted by the directive from January last year, leaving poultry farmers with a lot of waste litter and nowhere to put it.

Now, it seems their prayers have been answered, with news that three Ulster companies have banded together in a bid to build a £100 million biomass plant at Glenavy in Co Antrim, run on poultry litter and another food industry by-product - meat and bone meal (MBM).

At the moment, most of the MBM produced in Northern Ireland is exported to green energy plants in Britain, according to Rose Energy, the new company formed by O'Kane Poultry Ltd, Moy Park Ltd and Glenfarm Holdings Ltd.

Rose Energy is now carrying out a public consultation ahead of seeking planning permission to build the plant, which would heat steam by burning poultry litter and MBM, potentially supplying the grid with enough electricity to power a town bigger than Ballymena.

Rose Energy director Mike Alcorn says it will be the first plant of its kind in the whole of Ireland. The proposed plant will make a strong contribution to Northern Ireland's green energy targets while providing a solution to the conundrum faced by farmers, he says. Indeed, it has been warmly welcomed by the Ulster Farmers Union, which says it will help Northern Ireland meet its environmental requirements and boost the industry's green credentials.

"This will help secure the future of the poultry sector in Northern Ireland, which is one of the largest private sector employers," Mr Alcorn says.

He insists it will be subject to strict environmental controls to make sure emissions are kept within the confines of the site and traffic volumes shouldn't increase, due to the local use of MBM.

But residents aren't so sure. Henry Philips, treasurer of Glenavy Development Partnership, says people fear the development, next to a rendering plant owned by Glenfarm Holdings Ltd, could cause problems with smells and traffic chaos.

" The people living in the village and the houses surrounding the area are very concerned because they think there is going to be an increase in the smell. Because more buildings are going to be added to the existing structures they feel all this waste will be coming into this area. And some of the roads are not geared up - there are not enough A roads."

Mr Alcorn insists the new plant is a separate operation from anything on neighbouring sites and has to be considered on its own merits. The plant will have to satisfy environmental concerns before it gets a licence.

"It will be under negative pressure, so there will be no escape of any air from the plant," he said.

"A third of the cost isn't to do with the cost of constructing the plant, but to construct various systems required to make sure it operates to the best standards."

But while Mr Philips understands the dilemma faced by the poultry industry, he says people are concerned about the impact of further development at the site.

"The smell is not an imagined possibility - it's something that already exists.

"People are concerned that they simply can't have all this enormous expansion without a considerable increase in smell. It already reaches two or three miles from the site," he said.