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John Morrell Food Group Corporate Social Responsibility 2010

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					      JOHN MORRELL FOOD GROUP
CORPORATE SOCIAL RESPONSIBILITY
               2010/2011 REPORT
ABOUT THIS REPORT
Welcome to our first John Morrell Food Group Corporate Social Responsibility (CSR)
Report. This report highlights our progress in environmental performance, animal care,
food safety and quality, helping communities, and employee relations—key topics for
our company and our stakeholders. This report also discusses our strengthened CSR
governance and management, including a set of sustainability goals and targets that all
Smithfield Foods operations adopted in 2010 (see page 23).

John Morrell is an independent operating company of Smithfield Foods. A comprehen-
sive CSR review covering all of Smithfield Foods’ operations is available on the Web at
www.smithfieldcommitments.com. That review follows the Global Reporting Initiative
(GRI) G3 Guidelines, which provide a recommended sustainability reporting framework
and indicators.

Forward-Looking Information
This publication may contain forward-looking statements within the meaning of federal
securities laws. In light of the risks and uncertainties involved, we invite you to read the
Risk Factors and Forward-Looking Information sections of Smithfield Foods’ Form 10-K
for fiscal 2011.




TABLE OF CONTENTS
1          About John Morrell Food Group
2          Key Data Summary
3          Letter from President Joseph B. Sebring
4          CSR Across Our Business
5          Environment
11         Animal Care
14         Food Safety & Quality
16         Helping Communities
19         Employees
22         Governance & Management
24         Contact Us
25         Third-Party Recognition
ABOUT JOHN MORRELL                                                                                                            At a Glance
FOOD GROUP                                                                                                     FY 2011

The John Morrell Food Group traces its roots to the founding of
                                                                                       Headquarters            Cincinnati, OH
John Morrell & Co. in England in 1827. The company is the oldest
continuously operating meat processor in the United States. It
                                                                                           President           Joseph B. Sebring
consists of national and regional brands that help drive profitable
growth in meat categories such as ham, smoked sausage, hot dogs,                          Employees            9,500
deli meats, bacon, pulled pork, and dry sausage.
                                                                                              Brands           John Morrell, Curly’s, Eckrich,
                                                                                                               Armour, Margherita, Healthy Ones,
Headquartered in Cincinnati, Ohio, the John Morrell Food Group
                                                                                                               Patrick Cudahy, Golden Crisp,
brings expertise to retail, deli, foodservice, direct store delivery,
                                                                                                               Krakus, Carando, Kretschmar,
convenience store, club store, military, and co-manufacturing                                                  Premium Pet Health, Saratoga
outlets. We are one of three pork group independent operating
companies (IOCs) within the Smithfield Foods family. As a                          Major Subsidiaries          Armour-Eckrich Meats, LLC
vertically integrated company, Smithfield’s hog production group                                               Curly’s Foods, Inc.
                                                                                                               Mohawk Packing Company
is the primary supplier of the pork that goes into our products.
                                                                                                               Patrick Cudahy, LLC
                                                                                                               Saratoga Food Specialties
Armour-Eckrich Meats, a major subsidiary of the John Morrell                                                   Premium Pet Health
Food Group, became part of the Smithfield Foods family in 2006,
when Smithfield acquired the Eckrich, Armour, and Margherita                                Facilities         San Jose, CA; Denver, CO;
brands from ConAgra Foods. Armour-Eckrich’s primary product                                                    Sioux City, Sioux Center, and
                                                                                                               Mason City, IA; St. Charles and
lines include dry and smoked sausage, lunchmeat, precooked
                                                                                                               Bolingbrook, IL; Peru, IN;
bacon, hot dogs, portable lunches, and deli products.
                                                                                                               Junction City, KS; Springfield, MA;
                                                                                                               St. James, MN; Omaha, NE;
In 2009, as part of a corporate restructuring at Smithfield Foods,                                             Elizabeth, NJ; Springdale, OH;
Patrick Cudahy, Inc., and Carando Foods became a part of the                                                   Sioux Falls, SD; Smithfield, VA;
John Morrell Food Group. Founded in 1888 in Cudahy, Wisconsin,                                                 Cudahy, WI
Patrick Cudahy produces fresh and dry sausages, sliced bacon
                                                                            Packaged Meats Produced            1.1 billion pounds
(raw/precooked), and other specialty packaged meats, and is
among the top three U.S. producers of precooked bacon.                            Pet Food Produced            324 million pounds
Carando Foods, based in Springfield, Massachusetts, produces
Italian deli and specialty meats.                                                   Spices Produced            66 million pounds

                                                                                            Products           Ham, smoked sausage, hot dogs,
                                                                                                               deli meats, bacon, pulled pork,
                                                                                                               dry sausage, pet food, spices

                                                                                               Sales1          $3.7 billion

                                                                                                         1   Reflects intersegment and intrasegment sales.




                                                                        1
KEY DATA SUMMARY
Below are some key performance indicators we feel are particularly important to internal and external stakeholders, as well as
to John Morrell as a company. The data included here are specific to John Morrell. Data for all of Smithfield Foods can be found
online at www.smithfieldcommitments.com.




          ENVIRONMENT
                                                                                      FY 2011                 FY 2010          FY 2009     FY 2008


          Water Use (gallons per cwt1)                                                    160.5                    163.4          163.8       180.4
          Energy Use (decatherms per cwt)                                                 0.324                   0.325           0.310       0.328
          GHG Emissions (metric tons CO2e per cwt)                                      0.0372                  0.0378           0.0365      0.0385
          Solid Waste to Landfill (lbs per cwt)                                             5.82                    6.41           6.92        6.47




          COMMUNITIES
                                                                                      FY 2011                 FY 2010          FY 2009     FY 2008


          Learners to Leaders Contributions                                          $164,400                $100,000          $100,000    $100,000
          Total Food Donations2 (lbs)                                                  551,590                     N/A             N/A         N/A




           EMPLOYEES
                                                                                     CY 2010                 CY 2009           CY 2008     CY 2007


          Total Case Rate                                                                   5.65                    6.43            7.72       8.43
          Days Away, Restricted, Transferred Rate                                           3.84                    4.33           4.78        3.55
          Days Away from Work Rate                                                          1.27                    1.77           1.87        1.79
          OSHA Notices of Violations                                                          13                        5            16           1
          OSHA Penalties                                                               $11,305                   $6,625          $11,191     $2,500



      1   100 pounds of product
      2 Overall food donations are not available because they were not tracked on a company-wide basis prior to fiscal 2011.




                                                                                        2
Dear John Morrell Stakeholders:
Our success at John Morrell hinges not only on our ability to produce, process, and supply quality products.
It also hinges on our ability to do so in a responsible manner.

Indeed, our key stakeholders—customers and end consumers, governmental officials, regulatory authorities,
analysts, and investors—increasingly expect us to address sustainability concepts and performance. By integrating
sustainability into our day-to-day operations, we are better able to drive innovation, differentiate ourselves from
our competitors, and gain favorable market positions.

As one of three independent operating companies of Smithfield Foods’ Pork Group, we have recently begun
working toward new goals and targets in five key areas: environmental performance, animal care, food safety,
community relations, and employees. As this report highlights, we have already reached some of these new
targets just one full year into the program. And we’re constantly looking for new ways to continue our progress
and push for further improvements in all areas.

For example, we have reduced our water usage (on a normalized basis) by 11 percent since 2008, ahead of the
10 percent water reduction target by fiscal 2016. We have also lowered normalized waste to landfill by 10 percent—
the target reduction for fiscal 2016. And, we’re seeing reductions in our normalized energy usage and greenhouse
gas emissions thanks to a variety of energy efficiency projects across all of our facilities.

We’re particularly proud of our community-focused initiatives. In fiscal 2011, we donated more than 550,000
pounds of food to those in need. Our Learners to Leaders programs are providing improved educational access
to students who may not otherwise achieve academic success. Our partnership with the Taco Bell Foundation for
Teens and Junior Achievement is encouraging middle and high school students in Illinois to stay in school and
apply their educations to the real world.

We’re working with our customers—including supermarkets, public school systems, and restaurant chains—to
develop innovative products that address consumer needs and demands for products with better nutritional
profiles. All of our product categories include lines with either lower sodium, reduced fat, or less sugar. This fall,
we introduced a reduced-fat hard salami that uses whey protein to decrease the fat percentage by 50 percent—
a sizeable difference. We’re using new technologies to replace sodium by as much as 50 percent in some products.

We invite you to explore the pages of this report—our first corporate social responsibility report for John Morrell—
and we welcome your feedback.

Sincerely,




Joseph B. Sebring
President

September 30, 2011

                                                        3
 CORPORATE SOCIAL RESPONSIBILITY
 ACROSS OUR BUSINESS
 We have focused this report on the key CSR topics highlighted below. The diagram illustrates the major
 components of Smithfield Foods’ business and the stages of the value chain in which the key topics arise.




                                                           FOOD SAFETY
GOVERNANCE
GOVERNANCE                 ANIMAL CARE
                           ANIMAL CARE                      & QUALITY




             HOG
             HOG              FRESH PORK
                              FRESH PORK           PACKAGED MEATS
                                                   PACKAGED MEATS                            RETAIL, FOOD-      MEALTIME
          PRODUCTION
          PRODUCTION         (First Processing)
                             (First processing)   (Further Processing)
                                                  (Further processing)                      SERVICE, EXPORT,   (End Consumers)
                                                                                                                    consumers)
                                                                                            PROCESSING, AND
                                                                                              INDUSTRIAL
                                                                                              CUSTOMERS




                                                                         TRANSPORTATION




  HELPING
  HELPING
COMMUNITIES
COMMUNITIES
                             EMPLOYEES
                             EMPLOYEES                            ENVIRONMENT


                             HUMAN RIGHTS
                             HUMAN RIGHTS



                            HEALTH & SAFETY
                            HEALTH & SAFETY




                                                                   4
ENVIRONMENT
At John Morrell, we are constantly striving to improve environmental performance and we aim for leadership in our industry.
We closely monitor environmental outputs and work to reduce our footprint. In 2010, Smithfield Foods, John Morrell, and
the other independent operating companies (IOCs) elevated our environmental commitments by adopting specific
environmental targets. Our aim is to further improve beyond the significant reductions already achieved and reduce water use,
energy use, greenhouse gas (GHG) emissions, and solid waste outputs (per unit of production) to 10 percent below fiscal 2008
levels by 2016.


Since fiscal 2008, John Morrell has accomplished the following:
                                                                           OUR ENVIRONMENTAL GOALS
¬	Reduced normalized water usage by 11 percent;                            ¬	Eliminate notices of violation (NOVs)
¬	Reduced normalized GHG emissions by 3 percent and                        ¬	Reduce natural resource demand
  reduced normalized energy usage by 1 percent; and                        ¬	100% compliance, 100% of the time
¬	Reduced normalized waste to landfill by 10 percent.
                                                                           OUR ENVIRONMENTAL TARGETS
We selected 2008 as the baseline because it was the first year             ¬	Water: 10% reduction over fiscal 2008 by fiscal 2016
that we collected a full set of data using an automated reporting          ¬	Energy: 10% reduction over fiscal 2008 by fiscal 2016
system we adopted in 2007, making year-over-year comparisons               ¬	Solid Waste: 10% reduction over fiscal 2008 by fiscal 2016
more meaningful.
                                                                           All targets are normalized.
At John Morrell, we are pleased to report that we are already
reaching some new targets one full year after embarking on our
new sustainability program. And although we have made great
strides, we are hopeful that our new sustainability management          Several of our facilities have shown tremendous progress
program will drive progress even further.                               from 2008 through 2011 in all areas of resource reduction,
                                                                        on a production-weighted basis. For example:
The data we provide in this section are normalized per 100 pounds
of product so that we can better compare year-over-year progress        ¬	At the Patrick Cudahy Golden Crisp facility in Sioux Center,
in water use, energy use, and solid waste management efficiency.          Iowa, energy use has decreased by 49 percent; water
                                                                          use has decreased by 56 percent; and solid waste to landfill
                                                                          has decreased by 15 percent.

                                                                        ¬	At the Armour-Eckrich meats facility in St. Charles, Illinois,
                                                                          energy use has decreased by 14 percent; water use has
                                                                          decreased by 17 percent; and solid waste to landfill
                                                                          has decreased by 20 percent.

                                                                        ¬	At Saratoga Food Specialties, energy use has decreased by
                                                                          48 percent; water use has decreased by 89 percent; and solid
                                                                          waste to landfill has decreased by 43 percent.




                                                                    5
                                                                                                   The plant chemist at our Sioux Falls
                                                                                                   facility monitors dissolved oxygen
                                                                                                   concentration in aeration basins.



ENVIRONMENTAL PERFORMANCE


Water Use                                                                   ¬	The Patrick Cudahy facility in Cudahy, Wisconsin, reduced
                                                                              water usage by over 7 million gallons per year simply by installing
¬	Water use target: 10% reduction over fiscal 2008                            flow-restricting nozzles on 13 hoses used for plant cleaning.
   (normalized) by fiscal 2016                                                This also decreased energy usage by 5,300 decatherms per year
¬	Progress to date: Reduced normalized use by 11%                             because less hot water is used for cleaning.

The availability of quality fresh water is a growing global concern         ¬	The Armour-Eckrich facility in St. James, Minnesota, installed a
with potential implications for agriculture, such as increased costs          glycol cooling system to cool air compressor motors, decreasing
or more stringent wastewater standards. Overall, John Morrell’s               water usage by approximately 6.7 million gallons per year.
processing facilities use water for cooling, cleaning, sanitizing,
and making our products, totaling 2.1 billion gallons in fiscal 2011.                                                                                           200
John Morrell carefully monitors water use at each facility and                             180.4
makes every effort to become more efficient. Since 2008, we have                                       163.8      163.4        160.5
reduced water used per 100 pounds of product by 11 percent.                                                                                     Goal
                                                                                                                                                162.3           150
Some examples include the following:

¬	The John Morrell facility in Springdale, Ohio, reduced water
  usage by 144 million gallons per year in fiscal 2011 (compared to                                                                                             100
  fiscal 2008) by making modifications to the method of cooling
  product following the cooking cycle. This represents                                     2008        2009        2010         2011            2016
  a production-weighted decrease of 48 percent.                                                                                                                  50
                                                                                           Water Use (gallons/cwt)

¬	The Armour-Eckrich facility in Mason City, Iowa, now saves                                                              All values reported by fiscal year.
  8.4 million gallons each year by placing restrictors on high-
                                                                                                                                                                  0
  pressure hot water hoses that are used to clean plant work areas.


                                                                        6                                                                    ENVIRONMENT
                                              1

Energy and GHG Emissions1                                                               ¬	The Armour-Eckrich facility in Mason City, Iowa, began turning
                                                                                          off lights during nonproduction hours. This saves approximately
¬	Energy use target: 10% reduction over fiscal 2008                                       280,000 kWh per year.
      (normalized) by fiscal 2016
¬	Progress to date: Normalized use down 1%                                              ¬	The John Morrell facility in Sioux Falls, South Dakota, used
¬	GHG progress to date: Normalized emissions down 3%                                      159 million cubic feet of biogas in its boilers, saving 127.2 billion
                                                                                          BTUs of natural gas per year. This facility also utilizes hot water
                                                                                          generated from rendering heat exchangers to preheat boiler
Climate change, which has been linked by many scientists to                               feed water, thereby reducing energy demand by 42.9 billion
GHG emissions, may have future impacts on water use, energy                               BTUs of natural gas per year.
prices, weather patterns, and demand for consumer goods. As
in any industry, GHG emissions occur to some extent during                              ¬	The Patrick Cudahy facility in Cudahy, Wisconsin, reduced
the production and distribution of our products. We are working                           natural gas usage by 20 billion BTUs by installing a new boiler
to better understand the significance of our industry’s contribution                      burner management system to increase boiler efficiency by
and the potential impacts of climate change on our business.                              4 percent.
(See “The Carbon Footprint of Pork” on the Web at
www.smithfieldcommitments.com.)                                                         Through these and other energy efficiency efforts, John Morrell’s
                                                                                        normalized energy use decreased by 1 percent. This improvement
We have focused our efforts on mitigating the risk of climate                           was made even with the continuing shift to the production of
change by improving energy efficiency and utilizing cleaner-                            resource-intensive, fully-cooked (ready-to-eat) products for
burning fuels. For example, we have nearly eliminated the use of                        foodservice customers and consumers.
#6 fuel oil (a less clean-burning fuel) for plant heating at our largest
production facility. We monitor our progress and identify best
                                                                                                                                                                         350
practices at all our facilities. We have set a new target to reduce                                  0.328                0.325       0.324
                                                                                                               0.310
our energy intensity (energy use per 100 pounds of product) to
10 percent below fiscal 2008 levels by fiscal 2016. Meeting the                                                                                         Goal             300
                                                                                                                                                        0.295
target should also reduce GHG emissions.
                                                                                                                                                                         250
During fiscal 2011, we implemented a variety of energy efficiency
projects, including the following:                                                                                                                                       200

¬	The Armour-Eckrich facility in St. James, Minnesota, made                                          2008      2009       2010         2011             2016
  adjustments to its ammonia refrigeration system, reducing
                                                                                                                                                                         150
                                                                                                     Energy Use (decatherms/cwt)
  electrical energy demand by 800,000 kWh per year without
  any capital investment.                                                                                                          All values reported by fiscal year.   100

                                                                                                                                                                          50

1   John Morrell reports GHG emissions using the Greenhouse Gas Protocol
                                                                                                                                                                           0
    Initiative developed by the World Resources Institute (WRI) and the
    WBCSD (www.ghgprotocol.org). Publicly available emission figures are used
    where no reliable data is available from energy providers. We report on scope
    1 emissions (direct) and scope 2 emissions, which include indirect emissions
    associated with the use of purchased electricity.




ENVIRONMENT                                                                         7
We decreased our normalized GHG emissions by 3 percent over                          use as fuel in a steam boiler. This offsets fuel use and reduces
the past four years, largely through our efforts to use energy                       methane emissions, while deriving value from what is normally
efficiently and utilize cleaner burning fuels.                                       considered a waste product.


            0.0385                0.0378       0.0372
                                                                                 400
                                                                                          N/A      N/A         0.07        0.09           0.13           86%
                      0.0365

                                                                 Goal            350
                                                                 0.0346
                                                                                          2007     2008        2009        2010           2011       09–11 change
                                                                                 300 Biogas Production (decatherms in millions)

                                                                                 250                                              All values reported by fiscal year.
                                                                                                                                               N/A = Not available

            2008       2009        2010          2011            2016            200
                                                                                  Materials Use and Waste to Landfill
            Direct and Indirect GHG Emissions (metric tons CO2e/cwt)
                                                                                 150
                                                                                  ¬	Solid waste target: 10% reduction over fiscal 2008
                                           All values reported by fiscal year.
                                                                                        (normalized) by fiscal 2016
                                                                                 100
                                                                                  ¬	Progress to date: Reduced normalized material to
GHG Emissions from Transportation                                                       landfill by 10%
Transporting our meats around the world contributes to the total
                                                                                     50
carbon footprint of our products. We continue working to improve                     We have reduced production-normalized solid waste generation by
the efficiency of our trucking operations. Some examples of our
                                                                                      0
                                                                                     10 percent since fiscal 2008. Although we have reached our target,
efforts include the following:                                                       we will continue to push for greater efficiencies.

¬	Armour-Eckrich Meats has now fully integrated into the John                        We have implemented a number of changes to help us toward our
  Morrell Food Group distribution center network, which means                        waste reduction goal. For example, the Armour-Eckrich facility in
  that transportation loads are combined and the weight per truck                    St. Charles, Illinois, identified a company that would recycle waxed
  has increased. This has significantly decreased the number of                      cardboard boxes. By using this service, the facility has diverted
  trucks on the road and correspondingly has netted significant                      approximately 500 tons of waxed cardboard per year from landfill
  fuel savings.                                                                      for beneficial reuse.
                                                                                                                                                                        8
¬	Armour-Eckrich has also optimized its shipping logistics with
                                                                                                              6.92
  one of its largest supermarket chain customers. We now send full                                 6.47                                                                 7
                                                                                                                         6.41
  trucks direct from our operating facilities or combined full trucks                                                                  5.82
                                                                                                                                                                        6
  out of our Indianapolis Distribution Center. We are also now                                                                                          Goal
                                                                                                                                                        5.82
  using larger, 53-foot trailers to maximize the weight and volume                                                                                                      5
  per truck for shipment.
                                                                                                                                                                        4
Biogas Production
                                                                                                                                                                        3
For nearly two decades, our largest facility in Sioux Falls, South
Dakota, has used its anaerobic wastewater treatment systems to                                    2008       2009        2010           2011            2016            2
capture biogas—which is approximately 70 percent methane—for                                      Solid Waste to Landfill (lbs/cwt)
                                                                                                                                                                        1
                                                                                                                                  All values reported by fiscal year.
                                                                                                                                                                        0



                                                                                 8                                                                      ENVIRONMENT
Compliance                                                             OUR PACKAGING REDUCTION EFFORTS


¬	Compliance goals: 100% compliance, 100% of the time;                 The packaging that surrounds our products is critical to ensuring
	 eliminate NOVs at our facilities                                     food quality and safety. It offers protection during transit, extends
¬	Progress to date: 82% of John Morrell facilities                     shelf life, and communicates important nutrition and safe-handling
   received no NOVs or fines in calendar 2010                          information to consumers. The packaging is literally the face of our
                                                                       products, and we take every opportunity to improve it.

We seek full compliance with local, state, and federal                 Because we offer so many types of products, we use a wide
environmental requirements at all times and have compliance            variety of materials when packaging our foods, including resin-
management programs that train and motivate employees to               based plastics such as clear film and bags for sealing meats, and
prevent, detect, and correct violations. We track several indicators   corrugated cardboard boxes for shipments. Other packaging items
of compliance, including NOVs and penalties. We take any NOV           include foam trays, plastic boxes, absorbent liners, folding cartons,
or fine seriously. While taking corrective actions, we work quickly    zipper bags, plastic tubs and lids, and rigid plastic trays.
to determine how our management systems can be improved.
We also work with regulators to resolve all environmental issues       Like many large food companies, we acknowledge that our
as they arise.                                                         packaging practices could improve. There are still significant
                                                                       opportunities for us and for our packaging suppliers. In recent
                                                                       years, we have introduced a host of changes—large and small—to
                                                                       reduce material usage and post-consumer waste, save money,
                                                                       and improve transportation efficiencies. We have worked with our
                                                                       cardboard suppliers to introduce mechanically assembled boxes to
                                                                       our production process. This decreases the amount of cardboard
                                                                       used, saves money, reduces our carbon footprint, and improves
                                                                       shipping efficiency. (With smaller packages, truck space can be
                                                                       utilized more efficiently, thus reducing the number of deliveries.)
                                                                       The mechanically assembled boxes should also reduce the number
                                                                       of repetitive-motion injuries for our employees.

                                                                       We have also expanded our use of resealable or reusable
                                                                       packaging. Recycled materials can be utilized in some packaging
                                                                       types, but food-safety and quality considerations must be met first.
                                                                       We’re replicating theses changes across our operations whenever
                                                                       possible. Some examples of recent efforts include the following:

                                                                       ¬	Our John Morrell processing plant in Sioux Falls, South Dakota,
                                                                         invested in a new bagging system that “right sizes” packaging
                                                                         to the specific product, significantly reducing the amount of
                                                                         material required. This eliminated plastic waste to landfill and
                                                                         resulted in annual savings of $370,000.

                                                                       ¬	John Morrell and Armour-Eckrich replaced an oversized
                                                                         rectangular package for smoked sausage with crescent-style
                                                                         packaging. The new contoured design reduces plastic film and
                                                                         corrugated cardboard use by over 840,000 pounds per year.


ENVIRONMENT
INTERNAL AWARDS PROGRAM

Each year, Smithfield Foods gives internal awards to projects                 Best Recycling of a Previous Year’s Project
and initiatives that help the environment and save money.                     The Armour-Eckrich facility in St. James, Minnesota, produces
Environmental Excellence Awards are given to specific people                  lunchmeats and cools products in a water shower following the
(or a team of people), while a President’s Award is given for a               cooking phase. The showers used to run continuously during
project that is the combined effort of a larger group. John Morrell           production. The facility now employs evaporative cooling by
company facilities were recognized in the following categories in             running the shower water flow for one minute, then shutting off
2011. The President’s Award was for 2010.                                     the water flow for two minutes. Without compromising product
                                                                              quality, this process modification saves approximately 16 million
Environmental Excellence Awards                                               gallons of water per year. This effort was based on a project
                                                                              submitted the previous year by the John Morrell facility in
Cleaner/Greener Production Processes and/or Packaging                         Springdale, Ohio.
The Golden Crisp facility in Sioux Center, Iowa, produces sliced,
precooked bacon products and bacon bits for foodservice and retail            Smithfield President’s Award Winners
sales. Bacon ends and pieces were previously cooked, collected in
plastic-lined cardboard combos, transferred back to the bacon bit             Community Involvement
line, and then recooked, chilled, and packaged. The facility installed        Employees from the Armour-Eckrich facility in Junction City,
an in-line bacon dicer and now processes the ends and pieces only             Kansas, participated in a number of events organized in the local
once, thus saving over 1,900 plastic liners and cardboard combos.             community, including parades, the Kansas State Fair, the Self-Help
This change also saves more than 300,000 kWh per year of                      Housing project, and Junction City cleaning day.
electricity for the recooking process and saves more than
31,000 pounds of carbon dioxide for the chilling process.                     Recovering from Structural Fire
                                                                              The Patrick Cudahy facility in Cudahy, Wisconsin, recovered
Waste Reduction and Pollution Prevention                                      from the largest structure fire in state history without any injuries
The Armour-Eckrich facility in Mason City, Iowa, produces more                or personal damage to neighboring facilities, due to their
than 120 ham and lunchmeat products and uses several standard                 preparedness and effective management. Carter Hanson,
corrugated cardboard box sizes for shipping. The facility analyzed            facility environmental coordinator, was selected as the year’s
all products and associated boxes to “right size” them for the                “Zero Hero” for his preparedness and ongoing management of
finished products they hold. Box size adjustments were made for               the environmental issues that were encountered as a result of the
21 products, reducing cardboard use by over 100,000 pounds per                fire that ravaged the facility in July 2009.
year and making truck loads more stable.




                                                                         10                                                           ENVIRONMENT
ANIMAL CARE
The well-being of the hogs raised for our products is pivotal to our success. The farms that raise the animals do all that they can to
ensure their safety, comfort, and health. The pork that goes into our products comes from Murphy-Brown, LLC, Smithfield Foods’ hog
production independent operating company (IOC), and its subsidiaries. Those hog production operations own approximately 460 farms
and contract with 2,135 contract hog producers in the United States alone. John Morrell and Smithfield’s other meat processing operations
also receive pigs raised by numerous independent hog producers, whose numbers fluctuate depending upon market conditions.


Smithfield Foods’ animal care management programs guide the                 Smithfield was also one of the original adopters of the NPB
proper and humane care of the animals at every stage of their               “We Care” program, which demonstrates that pork producers are
lives, from gestation to transport to processing. All farm employees        accountable to established ethical principles and animal well-being
and contract hog producers must employ the methods and                      practices. Read about this program at the following address:
techniques of the management system, and steps are taken to                 www.pork.org/Programs/32/wecare1.aspx.
verify their compliance.
                                                                            To learn more about animal care, please view Murphy-Brown’s
Two groups within Smithfield address animal care issues: the                new video series, Taking the Mystery Out of Pork Production, at
corporate-level Smithfield Foods Animal Care Council and the                www.takingoutthemystery.com. The seven-part series, which was
subsidiary-level Murphy-Brown Animal Care Committee. Each                   released in early 2011, was designed to educate consumers and
meets regularly and reviews internal policies and procedures to             others about pork production.
ensure that they are effective at delivering sound animal care.
The committees also ensure that the policies are in keeping with
a commitment to continual improvement.
                                                                                OUR ANIMAL CARE GOAL
                                                                                ¬	Keep our animals safe, comfortable, and healthy
ANIMAL CARE ON FARMS

                                                                                OUR ANIMAL CARE TARGETS
Murphy-Brown and its subsidiaries raise animals according to
                                                                                ¬	Maintain 100% Pork Quality Assurance Plus
the National Pork Board’s (NPB) Pork Quality Assurance Plus
                                                                                  (PQA Plus®) certification and site assessments at
(PQA Plus®) program.
                                                                                  company-owned and contract farms
                                                                                ¬	Maintain PQA Plus certification for all suppliers and
Pork producers become PQA Plus certified only after attending
                                                                                  move toward site assessments as well
a training session on good production practices (which includes
topics such as responsible animal handling, disease prevention,
and responsible antibiotic use). Farms entered into the program
undergo on-farm site assessments and are subject to random
third-party audits.




                                                                       11
Farm Audits
                                                                                0.5%      2.6%       3.8%      4.8%      6.6%       30%
All company-owned and contract farms supplying John Morrell
have been site-assessed under the PQA Plus program. The                        2006       2007      2008       2009      2010       2011
program’s random third-party audits complement Murphy-Brown’s                  Sows in Company-Owned Group Housing
and its subsidiaries’ internal auditing systems. This internal audit
program is designed to evaluate day-to-day practices relative to
strict animal care guidelines and legal and regulatory requirements.        ANIMAL CARE AND HANDLING AT OUR PLANTS


Adherence to Murphy-Brown’s Animal Care Policy is a condition               Smithfield Foods’ family of companies treats animals with respect at
of employment and a condition of agreements with contract                   all processing plants. All processing plants have developed quality
producers. Contract producers found to be in violation of these             programs following the standards set in the USDA’s PVP program.
agreements must take appropriate corrective actions. Those                  These PVP programs monitor aspects of traceability, country of
growers who fail to take corrective action or who are found                 origin, PQA Plus adherence on farms, and TQA status of drivers.
to condone willful abuse or neglect of animals are subject to               All Murphy-Brown—and its subsidiaries’—farms that send animals
immediate termination. Any employee who observes neglectful or              to processing plants must participate in the program. Many other
abusive behavior on farms is encouraged to anonymously contact              suppliers participate as well.
the company’s toll-free reporting hotline.
                                                                            John Morrell has only one pork processing facility—in Sioux Falls,
Smithfield Foods’ processing plants, the Murphy-Brown and                   South Dakota. However, the processing is handled by Farmland
its subsidiaries’ farms that supply them, and many external hog             Foods, another Smithfield independent operating company. For
producers also participate in the U.S. Department of Agriculture’s          this reason, John Morrell does not have direct responsibility for any
(USDA) Process Verified Program (PVP), which is modeled on                  animal care and handling.
ISO 9000 quality management and assurance standards. Through
independent third-party audits, the program gives assurance to              Smithfield Foods’ animal care programs help ensure that the hogs
customers that participating agricultural companies are providing           that come to the plants were raised where management systems
consistent, high-quality products.                                          address health, animal well-being, and proper use of antibiotics.
                                                                            All suppliers are certified to the PQA Plus guidelines and are
Housing of Pregnant Sows                                                    progressing toward completing the on-farm site assessment portion
                                                                            of the Pork Board’s PQA Plus program.
Murphy-Brown and its subsidiaries are making good progress on
a commitment to phase out individual gestation stalls for pregnant          Plants at all Smithfield IOCs continue to make significant
sows at all company-owned sow farms and replace them with                   investments in animal handling facilities with new barns,
group housing. By the end of 2011, Murphy-Brown will have                   improvements to existing barns, and improved unloading areas in
30 percent of sows on company-owned farms in group gestation                order to ensure that pigs are safe and comfortable. Plants have also
housing facilities. The company has been making significant capital         recently initiated the use of electronic data collection systems to
expenditures to increase the number of farm conversions. The total          track animal audit information and report on plant-specific trends.
cost of the transition to group pens is estimated to be in excess of
$300 million. For more information, watch the video series at               In addition, Smithfield has led the U.S. pork industry toward a
www.takingoutthemystery.com.                                                procedure known as CO2 anesthetizing. All company facilities use
                                                                            the Butina® CO2 Backloader anesthetizer system. This allows the
                                                                            pigs to move slowly and in small groups, which is much less stressful
                                                                            for the animals and their handlers.




                                                                       12                                                          ANIMAL CARE
ANTIBIOTICS USE IN HOG PRODUCTION


Smithfield’s commitment to the highest standards of food safety               In fact, there are no hormones approved by the U.S. Food and
and animal care includes the appropriate administration of                    Drug Administration (FDA) for growth promotion in pigs. All
antibiotics to treat and control diseases and to ensure good                  antibiotics choices and applications are based on guidance from
animal health. The company strives to limit antibiotics use through           licensed veterinarians.
enhanced management practices and vaccines intended to
improve animal health.                                                        Smithfield Foods believes that responsible use of antibiotics
                                                                              protects the health of hogs and enhances their quality of life, and
Since 2002, Smithfield has had a formal and publicly available                Smithfield’s farming IOCs have been industry leaders on this issue.
antibiotics use policy that outlines its commitments and usage
requirements. Adherence to the policy is obligatory for anyone who            Every antibiotic used is regulated by the FDA. Murphy-Brown
works with the animals owned or managed by or under contract to               and its subsidiaries comply strictly with all antibiotic withdrawal
Smithfield’s IOCs. The company reviews the antibiotics use policy             timelines—the amount of time needed to allow the antibiotics to
periodically to confirm that it is up-to-date with the best science.          clear an animal’s system before slaughter—as established by the
                                                                              USDA and the Food Animal Residue Avoidance Databank.
Murphy-Brown and its subsidiaries and contract farmers administer
antibiotics only when necessary for the health of the animals. The            Some countries, such as Japan, Russia, and several nations in the
policy calls for the responsible use of antibiotics for three specific        European Union, require farms and suppliers to make specific
purposes: to prevent disease, control disease, and treat disease, with        adjustments to those mandates. Smithfield Foods always adheres
proper diagnostic confirmation. Antibiotics are given strategically           to the guidelines of those countries with which it does business.
when pigs are sick or injured, or when they may be exposed to
illnesses. Contrary to popular perception, antibiotics are not
continuously fed to the animals. We do not use antibiotics for                    0.149     0.167     0.116      0.106    0.124      0.147          –1.3%
growth promotion purposes, nor do we use hormones in pigs to
promote growth.
                                                                                  2006      2007      2008       2009      2010       2011      06–11 change
                                                                                  Feed-Grade Antibiotics Use (Ibs/cwt)


                                                                                                                               All values reported by fiscal year.
                                                                                          Data here are for Smithfield’s hog production independent operating
                                                                                           company and its subsidiaries. Feed-grade antibiotics purchased vary
                                                                                                     from year to year based on a number of factors, including
                                                                                                  weather conditions, emergence of illnesses, and other issues.




ANIMAL CARE                                                              13
FOOD SAFETY & QUALITY
Smithfield and John Morrell work together to ensure livestock traceability and to provide the highest-quality meats and packaged
foods to our customers. Our vertically integrated business model helps us manage the safety and quality of our products through careful
management, strict policies, and dedicated employees. Responsibility for food safety stretches from our corporate Food Safety Council
to the employees within each of our facilities.


We partner with industry, government, and independent experts
to create and implement rigorous food safety and quality practices              OUR FOOD SAFETY & QUALITY GOALS
in all our processing facilities. We believe our systems lead the               ¬	Deliver safe, high-quality meat products with no recalls
industry, and we work hard to make certain we are using the most                ¬	100% compliance, 100% of the time
up-to-date, science-based procedures.
                                                                                OUR FOOD SAFETY & QUALITY TARGETS
OUR APPROACH TO FOOD SAFETY AND QUALITY                                         ¬	Obtain 100% GFSI certification for all relevant facilities1
                                                                                ¬	Assure wide variety for different diets and needs and
Producing high-quality, safe, nourishing food is a complex under-                 include products designed to address health and
taking that is critical to our success. All Smithfield companies                  wellness in accordance with accepted standards
follow a comprehensive approach that addresses each phase of
production, from farms to processing plants. Our management                     1 “Relevant” facilities are those producing meat for human consumption.

system applies to facility, equipment, and process design;
operating and sanitation procedures; employee training; and
auditing of our facilities.                                                  assessments more consistent and efficient, while ensuring
                                                                             compliance in foreign markets. We decided to move to GFSI
There are senior-level food safety managers at John Morrell, and             certification because it provides a consistent framework for food
all managers undergo specialized training in food safety issues.             safety, from auditing of plants to verification of employee training
Across all Smithfield operations, we have dozens of food safety and          processes. Many of our customers rely on the GFSI certifications
food science professionals, including a team of leading industry             rather than conduct their own audits of our facilities.
microbiologists, who are responsible for ensuring optimal food
safety management and product quality.                                       Our original food safety target was to obtain GFSI certification for
                                                                             all relevant facilities. Today, 100 percent of relevant facilities are
Our food safety systems are based on the Hazard Analysis and                 GFSI certified and subject to GFSI’s annual third-party audits.
Critical Control Points (HACCP) system, which is required of all             Our goal now is to maintain the certification at all facilities.
meat and poultry companies producing products in the United States.
HACCP is a comprehensive food safety control system designed to              ¬ Food safety & quality goal: No product recalls
address all reasonably occurring physical, chemical, and biological             of any type
hazards, and keep potentially hazardous products from going to               ¬	2011 progress: No recalls at John Morrell Food Group
market. These systems are reviewed and validated annually as part               operating facilities
of the Global Food Safety Initiative (GFSI) certification process.
                                                                             Training
In 2009, Smithfield’s Food Safety Council required GFSI
certification for all relevant facilities. This audit scheme, which          Maintaining a company-wide culture of safe food requires that our
certifies a plant’s compliance with an internationally recognized set        employees meet our strict food safety requirements and are familiar
of food safety standards, is making food safety and quality                  with best practices. All employees undergo rigorous training in



                                                                        14
food safety and quality policies and procedures to keep our foods               The Eckrich Smok-Y™ Turkey Breakfast Sausage, for example, was
safe. Employees typically undergo one general training a year, plus             recently reformulated and now contains just 1.5 grams of fat per
additional job-specific training. In addition, GFSI verifies employee           serving. Regular breakfast sausage typically has 13 grams of fat
training programs as part of their auditing processes.                          per serving. We also produce a reduced-fat hard salami under the
                                                                                Armour and Eckrich labels, using whey protein to decrease the
Auditing, Inspections, and Testing                                              fat percentage by 50 percent. A reduced-fat pepperoni, which
                                                                                our customers use on pizzas for school lunch programs, includes
Smithfield Foods developed first-generation, comprehensive                      isolated soy protein as a fat replacement to lower the finished fat
auditing protocols about 30 years ago with the intention of                     percentage by 50 percent.
improving our ability to effectively control food safety hazards.
Over the years, the protocols have been updated and enhanced to                 Sodium
meet changing customer and consumer demands, and to ensure
continuous improvement. Our ongoing internal auditing program                   Sodium is a life-essential nutrient and is critical for food preservation
ensures our products are of the highest quality and safety, and that            and food safety. Salt is also a key ingredient in many of our
they meet all internal and government standards.                                products and helps us meet customer and consumer demands for
                                                                                quality, authenticity, flavor, and convenience. Smithfield’s sodium
We are constantly assessing the programs to make sure they are                  policy, which is based on a commitment to producing wholesome
as robust as possible and that they incorporate any new regulatory              food products for customers, is consistent with the view that a
findings and/or best practices in our industry. Each facility is subject        healthy lifestyle is based not just on one nutrient, but on a range of
to a variety of inspections and audits, including the GFSI audits               factors, including dietary patterns and exercise. Smithfield Foods
mentioned above. Any nonconformance discovered by an audit is                   updated that policy in 2011.
addressed swiftly at each facility. A follow-up audit is conducted
after the initial audit to make certain that problems have been                 John Morrell offers a variety of products that are lower in sodium
sufficiently addressed.                                                         than their traditional counterparts. For example, we reformulated
                                                                                Healthy Ones honey ham to reduce sodium to approximately
NUTRITION                                                                       360 mgs per serving—28 percent lower than traditional honey hams.
                                                                                We also recently developed a hard salami and a Genoa salami,
At John Morrell, we are proud to offer affordable products that                 sold under the Eckrich and Margherita labels, that have 50 percent
contain a significant source of protein. We believe it’s important to           less sodium than their traditional counterparts. Both products use
provide consumers with a wide range of dietary choices, such as                 potassium chloride in place of sodium chloride to achieve the
products with reduced fats, sugar, and salt.                                    sodium reduction.

Over the years, we have developed leaner cuts of pork and have
                                                                                  NUTRITION ENHANCEMENTS
modified many products to be lower in fat, salt, and/or sugar.
                                                                                  Some examples of our nutritionally improved products
All of John Morrell’s packaged meat product categories include
                                                                                  include the following:
product lines that are nutritionally improved with either lower
sodium, reduced fat, or less sugar. For example, every variety of our
                                                                                  ¬ Eckrich Lite Franks (50% less fat than regular franks)
Healthy Ones ham, turkey breast, chicken breast, and roast beef
                                                                                  ¬ Eckrich Lite Bologna (40% less fat than regular bologna)
are certified “Extra Lean” by the American Heart Association.
                                                                                  ¬	Eckrich Deli Reduced Fat Hard Salami
In addition, each variety of Healthy Ones deli meat is at least
                                                                                    (50% less fat than regular salami)
97 percent fat free and has reduced sodium.
                                                                                  ¬	John Morrell Low Sodium Bacon
                                                                                    (25% less sodium than John Morrell regular bacon)
                                                                                  ¬	John Morrell Diced Ham (96% fat free)




FOOD SAFETY & QUALITY                                                      15
HELPING COMMUNITIES
Making a positive impact on our communities is one of our core values. We focus in particular on programs that nourish the body and
the mind. In addition to hunger- and learning-related activities, we provide support for our local communities.


In many of the areas where we do business, we are a primary employer. Helping our employees and those who live around our plants
helps us become a stronger, more vital company. From a business standpoint, our philanthropic efforts also correlate directly with
our ability to recruit and retain good workers.


HUNGER RELIEF                                                               colleges and universities. Over the years, the Foundation has
                                                                            grown to fund educational partnerships in the communities where
As a food company, it makes sense for us to focus on hunger                 our employees live and work.
relief efforts. In the United States, more than 50 million people—
including 17.2 million children—live in households that are food            In 2010, the Foundation awarded 19 scholarships totaling $377,500
insecure. And the numbers have recently jumped significantly as             for the education of children and grandchildren of Smithfield Foods
a result of the nation’s struggling economy. As part of Smithfield’s        employees. To be eligible, a student must be a dependent of a
new sustainability management program, we have set a target to              Smithfield employee, demonstrate financial need, and be accepted
provide at least 1 million servings a year of food for those in need        by one of seven schools we have named as partners. Since the
through our Pork Group. (A serving is estimated at a quarter-               inception of this program, we have awarded 93 annual scholarships
pound of meat.)                                                             worth more than $2 million.

The Helping Hungry Homes® initiative is Smithfield’s corporate-             The Smithfield-Luter Foundation also supports student scholarships
level effort to provide food for families in need. In fiscal 2011,          at Christopher Newport University (CNU) in Newport News,
John Morrell donated over 2.2 million servings of protein.                  Virginia. The university decides which students will share in the
                                                                            awards. The program, which began in 2006, has provided $415,800
EDUCATIONAL PROGRAMS                                                        in grant money to 331 students to date.

We’re passionate about our educational initiatives, which offer
learning opportunities for those who may not otherwise have                    OUR COMMUNITY GOAL
them. We strongly believe that education is the bedrock of                     ¬	Provide food to those in need and enhance education
any community. Our programs support the education of our                         in our communities
own employees and their families, as well as the educations of
individuals who live in the areas where we operate.                            OUR COMMUNITY TARGETS
                                                                               ¬	Provide 1 million servings a year of food for those in need
The Smithfield-Luter Foundation                                                ¬	Each Pork Group independent operating company
                                                                                 (IOC) to support two Learners to Leaders programs
The Smithfield-Luter Foundation, the philanthropic wing of                     ¬	Each facility to support two National FFA or
Smithfield Foods, was founded in 2002 to provide academic                        education events
scholarships for employees’ children and grandchildren at select               ¬	Each facility to participate in at least one cleanup day




                                                                       16
Our Learners to Leaders collaboration with
Southeast Technical Institute in Sioux Falls has
improved education for 114 students to date.


Learners to Leaders®


¬   Learners to Leaders target: Each Pork Group IOC                           Lumberton, North Carolina; Harrogate, Tennessee; Green Bay,
    to support two Learners to Leaders programs                               Wisconsin; Denison, Iowa; Norfolk, Virginia; Milan, Missouri; and
¬   2011 progress: 100% of John Morrell facilities                            Crete, Nebraska, and we’re continuing to establish partnerships
    supported at least two programs                                           across the United States.

                                                                              In the past four years, the Learners to Leaders program in Sioux
Launched in 2006, Learners to Leaders is a national education                 Falls has provided improved educational access for 114 high
alliance funded by the Smithfield-Luter Foundation. With additional           school students who may not otherwise have achieved academic
support and expertise from John Morrell and the other Smithfield              success. Each participant has graduated from high school and
IOCs, along with support from local educational partners, the                 nearly all have sought advanced training and post-secondary
program works to close the education gap for underprivileged                  education. Smithfield Foods and John Morrell will give $104,400
students in our employees’ communities. Learners to Leaders                   to support the education of 25 students enrolled in the 2011/12
focuses on people from disadvantaged backgrounds who have the                 academic year’s program.
desire to succeed but don’t yet have the skills to overcome their
challenges—whether academic, social, or economic. These often                 In early 2010, Smithfield Foods and John Morrell partnered with the
include first-generation college-bound students or low-income or              Taco Bell Foundation for Teens and Junior Achievement in Chicago
minority individuals. Over five years, the Smithfield-Luter Foundation        to encourage middle and high school students in the Cicero and
has made $1.7 million in contributions to Learners to Leaders.                Bolingbrook school districts to stay in school and to teach them
                                                                              how to use what they learn in the real world. Junior Achievement
The first Learners to Leaders program began in Sioux Falls, South             provides valuable training in financial literacy, entrepreneurship, and
Dakota. Since then, we have funded programs in Chicago, Illinois;             work-readiness education. We donated $60,000 to fund student
                                                                              activities such as a financial “boot camp” and job shadow programs.




HELPING COMMUNITIES                                                      17
¬	FFA target: Each facility to support two National                        Highlights from John Morrell during this reporting period include
   FFA or education events                                                 the following:
¬	2011 progress: 100% of John Morrell facilities
   supported at least two events                                           ¬	John Morrell employees in Sioux Falls, South Dakota, donated
                                                                             more than $423,500 to the United Way in 2010. Overall,
                                                                             John Morrell employees and corporate pledges have provided
SUPPORTING WORLD WATER MONITORING DAY                                        $2.6 million to the United Way since 2007.

Smithfield Foods has provided financial support and employee               ¬	Each year, volunteers from John Morrell’s Sioux Falls, South
participation to World Water Monitoring Day since 2003. This past            Dakota, plant rally teams from corporations, congregations,
year, 100 percent of John Morrell’s facilities took part. Overall,           and civic groups to paint the homes of low-income seniors
Smithfield employees distributed 200 sampling kits and had over              and people with disabilities. The program helps homeowners
750 participants at sampling events held in 17 states across the             remain living independently in their own homes and improves
United States.                                                               neighborhoods throughout the Sioux Falls area.

                                                                           ¬	In 2011, Smithfield Foods and Patrick Cudahy donated $50,000
¬	Cleanup target: Each facility to participate in                            to the Cudahy (Wisconsin) Fire Department in recognition
   at least one cleanup day                                                  of their efforts in fighting a blaze that nearly consumed the
¬	2011 progress: 100% of John Morrell facilities                             Patrick Cudahy plant in 2009. The Cudahy Fire Department
   organized at least one event                                              plans to use the funds to help pay for a mobile command post.

                                                                           ¬	Our Armour-Eckrich facility in Junction City, Kansas, provided
OTHER COMMUNITY INVOLVEMENT HIGHLIGHTS                                       food for volunteers in a recent city-wide cleanup day.

We have numerous programs that support our local communi-
ties, ranging from food donations to charity road races to
environmental cleanups. Our efforts at John Morrell mirror
Smithfield’s corporate emphasis on education, hunger relief,
and environmental stewardship.

As part of our new sustainability management program, we
recently began collecting additional information on employee
volunteer efforts, facility charitable contributions, and community
participation. The number and types of these events has already
surpassed our expectations. We are continuing to refine our
tracking process so we can better quantify and report on our
efforts in the future.




                                                                      18                                               HELPING COMMUNITIES
EMPLOYEES
Our company’s success is largely due to the efforts of our roughly 9,500 employees. We are committed to protecting their health and safety,
and we strive to create a fair and ethical workplace environment. We provide good jobs—often in rural communities with high unemployment
rates—and offer competitive wages, robust benefits packages, and opportunities for career development and advancement. Very often, we’re
the largest employer in the regions where we operate.



We recognize that our jobs can be demanding. For that reason,                  protected by federal law. The company works hard to provide
we emphasize workplace safety and training, as well as employee                employees of all backgrounds with opportunities for training and
health and wellness. In our industry, employee turnover can exceed             advancement at all levels. All Smithfield Foods facilities adhere to
50 percent. Although we are always seeking to improve employee                 Equal Employment Opportunity policies and programs.
retention, our company turnover rate is consistently below the
industry average.                                                              We are always seeking new markets for our products. We want our
                                                                               workforce to be reflective of a diverse customer base so that our
DIVERSITY                                                                      company can benefit from a variety of perspectives.

John Morrell Food Group aims to promote and cultivate a                        Many of our facilities offer English as a Second Language courses
workforce that will enhance our company’s competitiveness in                   for workers and translate company communications and training
an increasingly diverse and interconnected world. Our global                   documents into Spanish, Croatian, Albanian, and Vietnamese.
perspective and commitment to inclusion are central to our mission             These languages are spoken by high proportions of employees.
of producing good food, responsibly.                                           A number of locations also offer Spanish classes for English-
                                                                               speaking managers who want to improve their communications
We do not discriminate against any employee or any applicant                   with Spanish-speaking employees.
because of race, color, religion, ethnic or national origin, gender,
sexual preference, age, disability, veteran status, or any other status
                                                                                   60.04        57.12       60.40       60.97       60.86        1.4%

                                                                                  Percent of Employees

    OUR HEALTH & SAFETY GOAL                                                       12.54        12.49       14.63       15.42       14.87        18.6%
    ¬	Reduce employee injury rates
                                                                                  Percent of Management

    OUR HEALTH & SAFETY TARGETS                                                    2006        2007         2008       2009         2010      06–10 change
    ¬	Meet or beat general manufacturing industry national                         Minorities at John Morrell
      average for injuries
    ¬ All safety leadership to participate in 10-hour general                                                       Data reported as of September each year.
                                                                                                 2006 data do not include Patrick Cudahy or Armour-Eckrich.
      industry training programs                                                                                    2007 data do not include Patrick Cudahy.
    ¬ Increase formal employee engagement to 25 percent
      by fiscal 2015
    ¬ Host Safety Roundtable meetings at all locations




                                                                          19
                                                                                       EMPLOYEE HEALTH AND SAFETY
    34.19        35.07       35.56       34.42       34.27         0.2%

                                                                                       Meat production can be a hazardous business. Our people
   Percent of Employees
                                                                                       are critical to our success, and ensuring their safety is one of
    11.08        13.91       14.35       14.72       14.98        35.2%                our highest priorities. In early 2010, Smithfield Foods set new
                                                                                       targets to meet—or beat—the general industry averages for three
   Percent of Management
                                                                                       categories that we report to the Occupational Safety and Health
   2006         2007         2008        2009        2010      06–10 change            Administration (OSHA). Prior to 2010, our target had been to
   Women at John Morrell                                                               meet or beat safety averages for the meat industry alone. We set
                                                                                       our sights higher after we began surpassing the meat industry
                                       Data reported as of September each year.
                    2006 data do not include Patrick Cudahy or Armour-Eckrich.         safety averages.
                                       2007 data do not include Patrick Cudahy.

                                                                                       We have improved injury rates due in large part to our Employee
                                                                                       Injury Prevention Management System (EIPMS) and auditing
   2010 John Morrell Minority Breakdown
                                                                                       processes. The EIPMS helps us identify hazards and risks and
                                                                                       develop injury prevention solutions.
                                     6.4%
                                        2.3%
                                                                                       On average, U.S. beef and pork processors report 6.9 injuries
              15.0%                                                                    per 100 employees—more than twice the average for all private
                                                        White                          industry occupations, according to 2010 data from the U.S.
                                                                                       Department of Labor’s Bureau of Labor Statistics. John Morrell’s
                                                        Hispanic
                                                                                       injury rate is 5.65 per 100 employees.
       37.1%                 39.1%                      African-American

                                                        Asian                          OSHA Total Case Rate (TCR):
                                                                                       The number of work-related injuries and illnesses per 100
                                                        Other
                                                                                       employees at John Morrell that result in medical treatment has
                                                                                       fallen substantially since 2006. In 2010, it improved by 12 percent
                                                                                       over 2009 and 37 percent since 2006.

EMPLOYEE BENEFIT PROGRAMS                                                              OSHA Days Away, Restricted, Transferred (DART) Rate:
                                                                                       The number of work-related injuries and illnesses per 100
John Morrell offers competitive wage and benefit programs.                             employees that result in an employee missing work, having
We provide comprehensive health insurance and other traditional                        restricted duty, or being transferred from his or her regular duty
benefits, including 401(k) plans, life insurance, and vision and                       work assignment fell by 11 percent in 2010 and by 12 percent from
dental care. We also offer robust health and wellness programs                         2006 through 2010.
that challenge our workers to take better care of themselves.
                                                                                       OSHA Days Away From Work Injury and Illness
For example, many of our facilities provide free blood pressure                        (DAFWII) Rate:
and cholesterol screenings for employees. Other locations offer flu                    The number of work-related injuries and illnesses that result in
shots for workers, blood tests, mammograms and prostate cancer                         one or more days away from work per 100 employees has fallen
screenings, on-site massage therapists, and weight management                          39 percent since 2006. For 2010, John Morrell posted a 28 percent
programs. Our “Great Expectations” maternity care program for                          reduction over the previous year.
pregnant employees provides free generic prenatal vitamins and
$100 gift certificates for baby care items upon successful completion
of the program (offered through our insurance provider).


                                                                                  20                                                             EMPLOYEES
             In Sioux Falls and across the company,
             John Morrell has excelled at reducing
             employee injury rates.




                                                                                           OSHA Violation Notices
 10.00
                                                                                           In 2010, John Morrell had five regulatory inspections conducted
 9.00                                                                                      at locations across the country, receiving 13 citations with penalties
 8.00                                                                                      totaling $11,305.

  7.00

 6.00                                                                    –37%                  5             1         7           5              5              0%

 5.00                                                                                         Inspections
 4.00                                                                    –12%                  16            1         16          5              13            –19 %
 3.00
                                                                                              Notices of Violation
 2.00
                                                                                               $13,188       $2,500    $11,191     $6,625         $11,305       –14%
                                                                         –39%
  1.00
                                                                                              Penalties
 0.00
                                                                                               2006         2007       2008        2009           2010       06–10 change
          2006        2007         2008         2009         2010     06–10 change
                                                                                               OSHA Inspections, NOVs, and Penalties
          TCR, DART, and DAFWII Rates Compared with National Averages
                                                                                                                                       All values reported by calendar year.
   John Morrell Food Group                       National Average
   TCR                                                                                     Smithfield Foods President’s Awards
   DART                                                                                    In 2011, for their safety program results in 2010, the Armour-Eckrich
   DAFWII                                                                                  facility located in St. Charles, Illinois, received the President’s Award
                                                                                           for Health & Safety first prize for its employee participation and
                                             All values reported by calendar year.
          National averages are based on 2009 data from the U.S. Department of             implementation of the Smithfield Behavioral Risk Improvement
           Labor’s Bureau of Labor Statistics. Its 2010 data were not yet available
                                                                                           process, which is designed to help our employees make safety a
            when this report was produced. We track trends throughout our fiscal
                       year, but we only report the OSHA rates by calendar year.           matter of habit.



EMPLOYEES                                                                             21
GOVERNANCE & MANAGEMENT

JOHN MORRELL FOOD GROUP VALUES


It isn’t enough to have great brands and great products. The key to our success is our people. We strive to meet customers’ needs and identify
future trends; and with almost 200 years of experience, we remain focused on exceptional customer service, responsible practices, and industry-
defining innovation and quality. We are proud to have a highly motivated organization that will carry this tradition forward for years to come.



Our mission is to be a trusted, respected, and ethical food industry leader that excels at bringing delicious and nutritious meat and specialty
food products to millions every day while setting industry standards for corporate social responsibility (CSR).


In 2010, our parent company, Smithfield Foods, took significant              Together, Smithfield’s board-level Sustainability, Community,
steps to advance our corporate social responsibility strategy across         and Public Affairs Committee and the corporate Sustainability
the company, including how we manage sustainability issues. At the           Committee approve any new CSR goals and targets, and guide
corporate level, we formed two new sustainability committees (one            strategy going forward. Smithfield Foods’ CEO reviews the
for the board of directors, the other for top executives across the          sustainability performance of each IOC, including John Morrell,
company), created a new position of chief sustainability officer, and        on an annual basis.
developed a series of goals and performance targets. While we had
been focused on CSR for a number of years, these latest steps are            CSR MANAGEMENT
taking our program to a new level.
                                                                             Overall management of Smithfield’s CSR program rests with
CSR GOVERNANCE                                                               the Sustainability Council, which is comprised of a core team of
                                                                             senior managers and subject matter experts along with the lead
At the corporate level, overall responsibility for CSR governance            sustainability official from John Morrell and the other Smithfield
issues rests with the board’s Sustainability, Community, and Public          IOCs. The Council facilitates decision making, helps develop CSR
Affairs Committee, which receives regular updates through                    goals and promote CSR, reviews best practices, and coordinates
Smithfield’s chief sustainability officer.                                   and disseminates key CSR data.

Central direction on CSR comes from the corporate-level                      Consistent with Smithfield’s decentralized management structure
Sustainability Committee, which is composed of some of the                   and philosophy, John Morrell and other Smithfield IOCs each
company’s most senior executives, including the chief financial              have their own CSR programs, functions, and staffs. This means
officer and four subsidiary presidents (including John Morrell’s             we manage CSR issues independently, within an overall corporate
president). This committee, which is chaired by Smithfield’s                 framework that establishes expectations for all Smithfield
chief sustainability officer, brings all of Smithfield’s CSR issues          operations. Within this framework, we are responsible for meeting
together under one umbrella, approves company-wide goals                     company goals and targets and including them in strategic business
and performance targets, and maintains accountability for each               plans. We report CSR data on a quarterly basis to our Council and
independent operating company (IOC).                                         provide recommendations for future improvement.




                                                                        22
SMITHFIELD FOODS SUSTAINABILITY GOVERNANCE




                                                                 BOARD OF DIRECTORS


                                                          COMMITTEES OF THE DIRECTORS
                             Audit       Compensation        Nominating and            Pension and             Sustainability, Community,
                                                              Governance               Investment                  and Public Affairs



                                                                             CEO


                                       Ethics and Compliance          Chief Sustainability           Executive Sustainability
                                             Committee                      Officer                       Committee



                                                               SUSTAINABILITY COUNCIL


                            The Smithfield Packing          John Morrell
                                                                                      Farmland Foods, Inc.          Murphy-Brown, LLC
                                Company, Inc.               Food Group
                                                                                      Sustainability Officer        Sustainability Officer
                             Sustainability Officer     Sustainability Officer




CSR TARGETS                                                                           John Morrell and our peer IOCs have additional targets related
                                                                                      to the key sustainability areas. These range from sponsorship
In response to increased corporate-level emphasis on CSR, in 2010                     of community cleanup events to the submission of projects for
John Morrell adopted a series of new goals and corresponding                          consideration in external environmental/sustainability awards
targets for our five primary sustainability focus areas. The targets,                 programs. The new sustainability targets also ask that each
which apply to John Morrell and the other Smithfield IOCs, include                    IOC conducts at least two meetings per year with community
the following:                                                                        stakeholders to highlight our programs and obtain input.

¬	Reduce natural resource use (energy and water) and solid                            In many areas, Smithfield Foods has already met the targets in
  waste by 10 percent over fiscal 2008 numbers (normalized)                           the first year of implementation. In the environmental arena, for
  by fiscal 2016;                                                                     example, we attribute strong performance in energy, water, and
¬	Maintain 100 percent Pork Quality Assurance Plus                                    waste metrics to the company’s recent restructuring, our focus on
  (PQA Plus®) certification for our hog production facilities;                        high-margin/high-volume products, improved capacity utilization,
¬	Provide those in need with 1 million servings of food per year;                     and continued resource conservation efforts.
¬	Meet or beat the general manufacturing industry national
  average for injuries; and                                                           Smithfield and its IOCs will continue to monitor their progress and
¬	Obtain 100 percent Global Food Safety Initiative (GFSI)                             will consider whether the company needs to reset targets or add
  certification for all facilities.                                                   new areas of focus. Historically, data for our companies tends to
                                                                                      vary from year to year, which means we need to monitor results
                                                                                      over time.




GOVERNANCE & MANAGEMENT                                                          23
CONTACT US
The feedback we receive on our performance and communications efforts is very valuable to John Morrell.
We look forward to hearing from you as we proceed along our performance improvement journey.




JOHN MEYER


Director of Environmental Affairs and Sustainability
Tel: +1 513 346 4982
E-mail: jmeyer2@johnmorrell.com




    The John Morrell Food Group 2010/11 Corporate Social
    Responsibility Report achieved the following by printing
    on paper with recycled content compared with 100 percent
    virgin paper:



    Wood saved                                3,479 pounds

    Wastewater flow saved                     5,598 gallons                                  This report is printed on Astrolite PC 100® stock produced
                                                                                                    by Monadnock Paper Mills. This stock is made from
    Solid waste not produced                  1,075 pounds                            100 percent post-consumer recycled fiber. Astrolite PC 100 is also
                                                                                    manufactured carbon neutral using 100 percent renewable electricity.

    Carbon dioxide not generated              1,082 net pounds                                                      Created and produced by RKC!
                                                                                                         (Robinson Kurtin Communications! Inc)
    Energy not consumed                       3.88 million BTUs                                                   Content developed by BuzzWord
                                                                                                      Feature photography by Timothy Llewellyn
    Carbon emissions not produced             473 pounds                                                                   Printed by J.S. McCarthy




                                                                  24
THIRD-PARTY RECOGNITION



               American Meat Institute
          Foundation (AMIF) Environmental
                Recognition Program for
         Environmental Management Systems

                         ¬

               AMIF Environmental
               Achievement Awards

                         ¬

                 Central States Water
              Environment Association
              Industrial Environmental
                 Achievement Award
               (Patrick Cudahy facility
                in Cudahy, Wisconsin)

                         ¬

            Alliance for Chemical Safety,
                 Second Mile Award
             (Springdale, Ohio, facility)
                          John Morrell Food Group
A Smithfield Foods Independent Operating Company


                                  P.O. Box 405020
                      Cincinnati, OH 45240-5020
                                    +1 800 722 1127
                    www.johnmorrellfoodgroup.com

				
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