2012 SUSTAINABILITY REPORT
ABOUT THIS REPORT TABLE OF CONTENTS
Welcome to our second Farmland Foods Sustainability Report. About Farmland Foods 1
This report highlights ﬁve key pillars of our sustainability focus: Key Data Summary 2
animal care, employees, environment, food safety and quality, Letter from President Michael E. Brown 3
Value Creation 4
and helping communities. New to this report is a sixth pillar,
Animal Care 5
value creation, which underpins our sustainability strategy and
connects it with our business results to further focus our goals Environment 11
and commitments. Food Safety & Quality 16
Helping Communities 18
Farmland Foods, Inc., is an independent operating company of Governance & Management 22
Contact Us 24
Smithﬁeld Foods. A comprehensive sustainability review covering
Recognition & Awards 25
all of Smithﬁeld Foods’ operations, including Farmland Foods,
is available on the Web at smithﬁeldcommitments.com. That
review follows the Global Reporting Initiative (GRI) G3 Guidelines,
which provide a recommended sustainability reporting framework
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 2012.
ABOUT FARMLAND FOODS AT A GLANCE [Fiscal 2012]
HEADQUARTERS Kansas City, MO
Farmland Foods, Inc., provides a broad selection of pork products
for retail and foodservice customers in the United States and PRESIDENT Michael E. Brown
abroad. Its primary lines of business include fresh pork, case ready
pork, hams, bacon, fresh sausage, processed sausage, lunchmeat,
and specialty sausage. Since our founding in 1959, Farmland Foods CORE BRANDS Farmland
has maintained a proud heritage of working side by side with Cook’s
American farm families. Smithﬁeld Foods acquired the company
SUPPORTING BRANDS Ember Farms
in 2003. We have a large and growing international business, Premium Standard Farms
exporting products to more than 35 countries across six continents. Stefano Foods
Farmland Foods is one of three Pork segment independent
FACILITIES Carroll and Denison, IA
operating companies (IOCs) within the Smithﬁeld Foods family. Monmouth, IL
Kansas City and Milan, MO
Crete and Lincoln, NE
Salt Lake City, UT
FRESH PORK SOLD 2.0 billion pounds
PACKAGED MEATS SOLD 762 million pounds
PRODUCTS Fresh pork, case ready pork,
hams, bacon, fresh sausage,
processed sausage, lunchmeat,
and specialty sausage
SALES1 $4.4 billion
Reflects intercompany sales
FARMLAND FOODS Below are some key performance indicators we feel are particularly important
to internal and external stakeholders. The data included here are specific to
KEY DATA SUMMARY Farmland Foods. Data for all of Smithfield Foods can be found online at
CY 2011 CY 2010 CY 2009 CY 2008 CY 2007
EMPLOYEES Total Case Rate 3.49 4.16 5.39 5.76 5.35
Days Away, Restricted, Transferred Rate 2.44 2.74 3.0 3.87 3.17
Days Away from Work Illness and Injury Rate 0.65 0.84 0.88 0.86 0.49
OSHA Notices of Violation 10 5 2 4 7
OSHA Penalties $9,350 $7,445 $2,450 $2,485 $8,312
FY 2012 FY 2011 FY 2010 FY 2009 FY 2008
ENVIRONMENT1 Water Use (gallons per cwt2) 68.3 69.0 66.4 67.1 69.4
Energy Use (decatherms per cwt) 0.123 0.127 0.123 0.121 0.124
GHG Emissions (metric tons CO2e per cwt) 0.0118 0.0123 0.0119 0.0132 0.0139
Solid Waste to Landfill (lbs per cwt) 0.84 0.88 0.94 1.16 1.12
FY 2012 FY 2011 FY 2010 FY 2009 FY 2008
HELPING Learners to Leaders® Contributions $105,600 $53,050 $0 $0 $0
COMMUNITIES Total Food Donations (servings)3 1,249,612 1,597,112 1,934,972 4,313,664 2,248,196
Data from previous reports were adjusted due to improved data collection and reporting. 2 100 pounds of product
Prior to 2010, we counted any food donation as a charitable contribution. Beginning in fiscal 2011, we began to count
only those food donations that went to feed people in need.
Dear Farmland Foods Stakeholders:
In this, our second sustainability report, we share our thinking about wellness, which not only beneﬁts the individual, but lowers our
how we build value for those within and outside of Farmland Foods. company’s health care costs, too. Recently, we added a ﬁtness center
Our commitment to value creation hinges upon many things, but at our corporate headquarters to promote healthy habits.
chief among them is a reliance upon our 8,700 employees.
We also look for ways to improve the health of our communities,
At Farmland Foods, our employees share in our pledge to deliver good whether through contributions of food ($1.2 million worth in ﬁscal
food responsibly and in ways that nourish our consumers, enrich our 2012), donations of cash, or funding for education. This past spring,
communities, and minimize our impacts on the environment. Our members of Farmland Foods’ management team were especially proud
workforce is more engaged in these efforts than ever before, helping to see the ﬁrst cohort of teenagers graduate from the Learners to
to make Farmland Foods a much stronger business. At the same time, Leaders/Science Bound program in Denison, Iowa. It’s incredibly
we’re stepping up our efforts to offer our workforce the tools they gratifying to know that a program funded by Farmland Foods
need to grow personally and professionally. inspired these students to complete high school and continue on to
Iowa State University, which is allowing them to attend tuition-free.
This past year, for example, we conducted our ﬁrst companywide
employee survey to identify and measure those issues that most affect Programs such as these deﬁne what we mean by “value creation.”
our workers. About 86 percent of our workers responded—a high Other examples, including a number of efforts that are simultaneously
ﬁgure by any measure, but especially for a ﬁrst-time survey. On the reducing our environmental impact and saving money, can be found
whole, we got positive feedback on areas ranging from compensation throughout the pages of this report. I encourage you to take a look
to recognition for a job well done. Our employees told us they would and to let us know your thoughts on how we might improve.
like to contribute more to our productivity improvement initiatives.
We’re taking a close look at how we might address their comments Sincerely,
and create a working environment that not only meets, but exceeds,
It’s our responsibility to provide the safest possible workplace, and we Michael E. Brown
continue to reduce the rate of worker injuries. In fact, we ﬁnished 2011 President
at record lows for two categories of injuries that we report to federal
authorities. We also aim to encourage better employee health and October 1, 2012
Smithﬁeld Foods and Farmland Foods have a responsibility to drive growth
and improve shareholder value. We believe that ﬁnancial stability and Fiscal 2012 Sales: $4.4 billion*
sustainability go hand in hand. Our sustainability strategies help us connect
with our company’s core values and, at the same time, improve our Fiscal 2012 Expenditures to Communities
company’s overall performance. Doing the right thing is a strong motivator
for our work, but highlighting the link between sustainability and ﬁnancial h Wages and beneﬁts: $489.6 million
success also demonstrates the long-term viability of our approach. h Community donations: $1.6 million
Reflects intercompany sales
Farmland Foods has worked with Smithﬁeld Foods and its other
independent operating companies (IOCs) to embed sustainable practices
and principles systematically across all our business. In 2010, Smithﬁeld
Foods created a new sustainability management program, including board- FEEDING THE WORLD
and corporate-level oversight committees, a new executive-level position to
develop and oversee our sustainability strategy, and a core team to drive The world’s population is expected to rise from 7 billion today to
further progress. The company also set speciﬁc goals and targets for the ﬁve 9 billion by 2050. This growth will put further pressure on the cost
pillars of our sustainability program: animal care, employees, environment, and availability of natural resources—including land, water, energy,
food safety and quality, and helping communities. seed, and fertilizer—to produce sufﬁcient food. Just as important,
it will challenge global systems of agriculture and food distribution
This year, we have established a sixth pillar, which we call “value creation.” to provide nutritious diets to those who need it—when they need
Under this new pillar, we demonstrate how our sustainability program it and wherever they are located.
creates value for all our stakeholders while simultaneously improving
company ﬁnancial performance. We can create greater value for each of We, along with others in our industry, play an important role
our stakeholders by recognizing the intrinsic interconnections between in providing affordable sources of protein that are produced in
our business objectives and our sustainability objectives. responsible ways. We recognize food security as a growing and
complex issue that requires collaboration, creativity, and new
Our sustainability programs have been helping Farmland Foods and approaches to solve. Our Producing Enough Sustainable Food
Smithﬁeld Foods build and deliver value for many years—and will do video can be found at youtube.com/smithﬁeldfoods.
so even more in the future. Now, through this sixth pillar, we have
the ability to highlight the speciﬁc ways that they do.
4 VALUE CREATION
Smithﬁeld Foods aims to raise healthy animals by promoting their safety Program. The program complements
and overall well-being, and the company has a long history of industry existing procedures at Murphy-Brown, OUR ANIMAL CARE GOAL
leadership in responsible animal production. An animal care management which are designed to supplement the
h Keep our animals safe,
program guides the care of the animals at every stage of their lives, from internal evaluations of day-to-day
comfortable, and healthy
gestation to transport to processing plant. All farm employees and contract practices. Our processing plants,
hog producers must employ this management system, and Smithﬁeld Foods Murphy-Brown, and many of its contract
OUR ANIMAL CARE TARGETS
takes steps to verify their compliance. growers also participate in the U.S.
Department of Agriculture (USDA) h Remain 100% Pork Quality
As the world’s largest producer of pork, Murphy-Brown LLC,1 Smithﬁeld Process Veriﬁed Program (PVP), which is Assurance Plus (PQA Plus®)
Foods’ hog production independent operating company (IOC), raises pigs modeled on ISO 9000 quality manage- compliant at company-
on approximately 460 farms that it owns in the United States alone. ment and assurance standards and helps owned and contract farms*
Murphy-Brown also contracts with approximately 2,100 contract hog farms to ensure that standards are upheld and h Maintain PQA Plus
(“contract producers”) in the United States. In addition, our meat processing procedures followed. certiﬁcation for all suppliers
operations purchase pigs from numerous independent hog producers whose and move toward site
numbers ﬂuctuate depending upon market conditions. Details on Smithﬁeld Foods’ animal care assessments
auditing policies and procedures can be h Complete conversion from
Murphy-Brown created its own animal care management system more than found at smithﬁeldcommitments.com. individual gestation stalls to
a decade ago. Developed in consultation with two of the world’s foremost group housing for pregnant
experts in animal behavior and handling, this system continues to guide ANIMAL CARE AT OUR PLANTS sows on company farms by
operations today. The Murphy-Brown Animal Care Policy, which applies end of 2017
to Murphy-Brown, its subsidiaries, and its contract producers, articulates We treat animals with respect at our
a commitment to sound animal care and identiﬁes ﬁve speciﬁc areas of processing plants, using a systematic * The wording of this target has been
slightly revised from our previous report.
responsible practices. Suppliers that provide animal products to our facilities approach that includes the following: Where “PQA Plus compliant” is used
are expected to have similar operating policies and procedures to ensure the throughout this report, we mean that our
farms have been site assessed and that
proper care of their animals during all stages of production, transportation, h An animal welfare and humane specific employees have been certified
and processing. handling manual; according to PQA Plus program guidelines.
h A comprehensive training program;
All company-owned and contract farms are subject to random third-party and
audits and site assessments under the Pork Quality Assurance Plus (PQA Plus) h An auditing system with internal veriﬁcation and third-party audits.
Throughout this report, when we refer to Murphy-Brown, we mean Murphy-Brown LLC and its subsidiaries.
5 ANIMAL CARE
Our plants all have developed quality programs following the standards set HOUSING OF PREGNANT SOWS
in the USDA’S PVP. Our PVP programs monitor aspects of traceability, country
of origin, PQA Plus adherence on farms, and Transport Quality Assurance Increasingly, food companies are looking to suppliers to phase out individual
(TQA) status of drivers. All Murphy-Brown farms that send animals to our gestation stalls for pregnant sows. In early 2012, for example, several of our
plants must participate in the program. Additionally, many external suppliers restaurant customers announced that they would require all U.S. pork suppliers
participate in and meet all the requirements of the PVP. These programs help to provide plans to eventually phase out the stalls in favor of group housing.
ensure that the animals that come to our plants were raised where manage-
ment systems address health, animal well-being, and proper use of antibiotics. Smithﬁeld Foods remains on track toward our goal of phasing out individual
All suppliers are certiﬁed to the PQA Plus guidelines and are progressing gestation stalls for pregnant sows at all company-owned sow farms by 2017.
toward completing the on-farm site assessment portion of the National Pork The decision to move away from gestation stalls and into group housing has
Board’s PQA Plus Program. been controversial within our industry. Smithﬁeld Foods has never argued that
the science suggests one type of housing is better than another. We decided
In addition to the PQA Plus requirements, our processing plants follow a to move to group housing after consulting with many of our customers.
quality management program based on the American Meat Institute’s Animal Smithﬁeld Foods estimates the total cost of the transition to group pens will
Handling Guidelines. The Guidelines, which were updated in 2012, were be approximately $300 million. The cost ranges from $250 per sow to as
ﬁrst developed by Colorado State University’s Dr. Temple Grandin, who has high as $650 per sow at older farms with more complicated barn conversions.
provided Smithﬁeld Foods with her animal welfare expertise for many years.
HOG HANDLING AND QUALITY SOWS IN COMPANY-OWNED GROUP HOUSING
2007 2008 2009 2010 2011 2017
Our plants continue to make signiﬁcant investments in animal handling
facilities with new barns, improvements to existing barns, and improved GOAL
unloading areas in order to ensure that our pigs are safe and comfortable. 100%
We have also recently initiated the use of electronic data collection systems
at our processing facilities to track animal audit information and report on 30.4%
plant-speciﬁc trends. This allows us to maintain our records electronically
and to analyze data on a real-time and trending basis.
3.8% 4.8% 6.6% All values
2.6% reported by
In addition, Smithﬁeld Foods has led the U.S. pork industry toward a
procedure known as CO2 anesthetizing. All company facilities use the
Butina® CO2 Backloader anesthetizer system. This allows the pigs to move ANTIBIOTICS USE
slowly, in small groups, which is much less stressful for the animals and
their handlers. CO2 anesthetizing is very effective and produces higher- Smithﬁeld Foods’ commitment to food safety and animal care includes the
quality meat than the older, single ﬁle, electrical stunning systems. appropriate administration of antibiotics to prevent, control, and treat
6 ANIMAL CARE
FEED-GRADE ANTIBIOTICS USE (lbs/cwt) VALUE CREATION
2007 2008 2009 2010 2011 2012 07–12 change
Smithﬁeld Foods recognizes that animal health is critical to the success
0.167 0.116 0.106 0.124 0.147 0.157 –6% of its products and, therefore, to the success of its business. The
company’s animal care management systems, policies, and procedures
are designed to ensure the proper treatment of the hogs raised for
fresh and packaged meats. The better Smithﬁeld Foods cares for the
All values reported by fiscal year. The amount of antibiotics purchased varies from year to
year based on a number of factors including weather conditions, emergence of illnesses,
pigs, the better the company’s results as a whole.
inventory decisions, type of antibiotic used (feed, water, or injected), and active ingredient
concentration. The purchases went up slightly in fiscal 2012 due to herd health needs. Sound animal care management systems result in healthier animals
that gain weight faster and are more resistant to disease. Healthy
sows also have larger litters. Our systems beneﬁt both the pigs and
diseases and to ensure good health in its pigs.1 At the same time, the
the company’s overall ﬁnancial health. Animal care performance can
company strives to limit antibiotics use through enhanced management
inﬂuence the following:
practices and vaccines intended to improve animal health.
h Our reputation
Adherence to the company’s antibiotics policy is obligatory for anyone who
h Our relationships with customers and consumers
works with the animals owned, or managed by, or under contract to Smithﬁeld
h Production levels
Foods’ IOCs. The policy calls for the responsible use of antibiotics for three
speciﬁc purposes: to prevent disease, control disease, and treat disease, with
Smithﬁeld Foods’ contract grower relationships provide opportunities
proper diagnostic conﬁrmation. Smithﬁeld Foods reviews the policy periodi-
for hundreds of farmers to stay on their family farms, make investments
cally to conﬁrm that it is up-to-date with current regulatory guidance.
for the future, stabilize their incomes, and diversify their operations.
The company also creates markets for thousands of grain farmers
In April 2012, the U.S. Food and Drug Administration (FDA) issued new regu-
across the United States, who grow corn, wheat, sorghum, and other
latory guidance with two key principles on the use of antibiotics in food pro-
feed that Smithﬁeld Foods purchases.
duction. The principles are consistent with Smithﬁeld Foods’ existing antibiotics
use policy, and Murphy-Brown already follows the FDA’s recommendations.
By the Numbers Fiscal 2012
Company and contract farmers administer antibiotics only when necessary Contract grower payments $348 million
for animal health. Whether treating one individual animal or administering
U.S. grain purchases $1.2 billion
to a group of animals, all antibiotics choices and applications are based on
guidance from licensed veterinarians. Smithﬁeld Foods believes that respon-
sible use of antibiotics protects the animals and enhances their quality of life.
When we refer to “its pigs,” we mean all animals produced by Smithfield Foods’ livestock production
subsidiary Murphy-Brown, its subsidiaries, and their contract farms.
7 ANIMAL CARE
Employees receive special
training to deal with potentially
Our company’s success can largely be turnover rate by 10 percent year-over-
attributed to the hard work of our 8,700 year. In ﬁscal 2012, this rate was roughly OUR HEALTH & SAFETY GOAL
employees. Often we are the largest 20 percent—down from 22 percent in
h Reduce employee injury rates
regional employer where we operate. ﬁscal 2011 and far below the industry
Protecting employees’ health and safety average of around 50 percent.
OUR HEALTH & SAFETY TARGETS
is a priority, as is creating a fair and ethical workplace environment. We
offer competitive wages and robust beneﬁts packages, including tuition DIVERSITY h Meet or beat general
reimbursement and educational scholarships. manufacturing industry
We are always seeking new markets for national average for injuries
Jobs in our industry can be demanding. To maintain a supportive work envi- our products, and our company beneﬁts h All safety leadership to
ronment for our employees, we emphasize safety and training. We have a when our employee base reﬂects our participate in 10-hour general
variety of programs, provided free of charge to employees, to promote health diverse customer base. We aim to industry training programs
and wellness. Healthier employees contribute to a more positive work cultivate a workforce that provides a h Increase formal employee
environment and drive down company health care costs. Programs include variety of perspectives and experience, safety engagement to 25%
blood pressure and cholesterol screenings, mammograms, weight-loss pro- enhancing our company’s competitive- by ﬁscal 2015
grams, health coaching, and ﬂu shots. We recently added a ﬁtness center at ness in an increasingly diverse and h Host Safety Roundtable
our Farmland Foods corporate headquarters to encourage a healthy lifestyle. interconnected world. meetings at all locations
Our goal is to hire the right person, for the right job, at the right time. FARMLAND FOODS 2011 EMPLOYEE BREAKDOWN
Once on board, we aim to retain the workers that are thriving in their jobs 9.71% 0.51%
and provide them with opportunities to advance or expand their roles to
other areas of operation. We support promotions from within wherever White (39.27%)
possible and encourage our workforce to enhance their careers with 13.22% Hispanic (37.28%)
further education opportunities and tuition reimbursement. Approximately 39.27%
40 percent of open positions each year are ﬁlled with internal candidates. Asian (13.22%)
We actively recruit on college campuses to attract young people to work in 37.28% African-American (9.71%)
food production. As our workforce ages, it becomes increasingly important
to encourage younger generations to pursue careers in our industry.
We actively work to reduce employee turnover and aim to decrease our
HEALTH & SAFETY
MINORITIES AND WOMEN AT FARMLAND FOODS
2007 2008 2009 2010 2011 07–11 change Ensuring employee safety is one of our highest company priorities. Our
extensive safety systems and programs, which go well beyond regulatory
56.85% 57.55% 62.07% 60.81% 60.73% Not Available requirements, yield measurable results and protect employees while
reducing our workers’ compensation costs.
14.21% 14.43% 10.90% 11.23% 12.67% Not Available
OSHA INSPECTIONS, NOVS, AND PENALTIES
Minorities in Management Data reported as of 2007 2008 2009 2010 2011 07–11 change
September each year.
35.25% 35.65% 34.73% 34.26% 35.01% Not Available Percent change could
4 5 2 4 5 25%
not be calculated. Due All values reported
by calendar year.
Female Employees to a change in how
Inspections The federal govern-
we gather and report
ment has been en-
34.87% 34.55% 22.98% 23.53% 24.92% Not Available the values for 2007 7 4 2 5 10 43%
hancing its inspection
processes in recent
and 2008 are not years, leading to a
Women in Management comparable to metrics Notices of Violation significant increase in
reported since 2009. notices of violation
and penalty amounts
$8,312 $2,485 $2,450 $7,445 $9,350 12% in 2011. There contin-
ues to be a national
EMPLOYEE ENGAGEMENT Penalties OSHA trend toward
This past year, we conducted our ﬁrst companywide employee survey to
identify, measure, and prioritize issues that affect our workers and drive
business results. The surveys, typically offered in English and in Spanish, Historically, the meatpacking and processing industry has ranked among
evaluate topics such as communication, recognition, supervisory relationships, the most hazardous professions in the U.S. Prior to 2010, our target had
and leadership. The response rate for this inaugural survey was 86 percent. been to meet or beat safety averages for the meat industry, which we
The results indicate employees feel they are paid well and recognized for were accomplishing. In early 2010, we established new, more challenging
their work. They also believe they have a place at Farmland Foods over the targets to meet or beat the lower general industry safety averages for three
long term and are given better-than-average opportunities to develop pro- performance metrics we report to the U.S. Occupational Safety and Health
fessionally. Respondents also feel Farmland Foods produces high quality and Administration (OSHA): Total Case Rate (TCR); Days Away, Restricted, or
safe products. They also indicated that they would like to contribute to efforts Transferred (DART); and Days Away From Work Injury and Illness (DAFWII).
to improve plant productivity. By answering survey questions, employees This shift is signiﬁcant because the averaged general industry injury rates
directly impact action plans that contribute to an improved work environment. are much lower than rates for the meat industry alone.
average, U.S. beef and pork processors report 6.9 injuries per 100 employees,1
TCR, DART, AND DAFWII RATES nearly twice the average for all private industry occupations. Farmland Foods’
COMPARED WITH NATIONAL AVERAGES injury rate for 2011 was 3.49 injuries per 100 employees. Our OSHA TCR, DART,
2007 2008 2009 2010 2011 07–11 change and DAFWII rates continued to decline, and 2011 ﬁnished with Farmland
Foods at record lows for TCR and DART, thanks to the implementation of
9.00 our Employee Injury Prevention Management System and other programs.
All values reported VALUE CREATION
7.00 by calendar year.
We track trends
6.00 fiscal year but
Farmland Foods creates value through our employment of approxi-
report the OSHA mately 8,700 people, many of them in rural areas where there are
5.00 rates by calendar
limited job opportunities. Our operations also contribute to the
–35% averages for meat economic stability and development of our local communities, where
4.00 industry and all
industries are our employees reside and purchase goods and services. Committed to
3.00 based on 2010 the development and maintenance of a skilled workforce, Farmland
–23% data from the U.S.
Foods invests in employee training, workplace safety, and health and
2.00 Department of
Labor’s Bureau of wellness activities. These programs have an impact on our bottom
1.00 32% Data for 2011 were line, particularly around the following issues:
not yet available
0.00 when this report
was produced. h Workplace safety
h Workers’ compensation costs
TCR DART DAFWII h Absenteeism
h Employee satisfaction and engagement
National averages for animal h Turnover rates
slaughtering and processing industry
National averages for all industries,
By the Numbers Fiscal 2012
including state and federal government
Total salaries and wages $385 million
In calendar 2011, Farmland Foods beat the injury rates for the meat industry
Total beneﬁts (including pension) $104 million
and also beat the injury rates for all industries for TCR and DAFWII. Our
TCR and DART rates dropped by 16 percent and 11 percent, respectively, Total compensation expense $489 million
while our DAFWII rate ﬁnished 23 percent lower than our previous year. On
Source: 2010 data from the U.S. Department of Labor’s Bureau of Labor Statistics
(the most recent data available prior to this report’s publication)
A new air conditioning system
in Denison, Iowa, is lowering
that plant’s energy use.
It makes good economic and environmental sense to ENVIRONMENTAL PERFORMANCE1
use all resources—including water, energy, and land— OUR ENVIRONMENTAL GOALS
responsibly. Over the last 10 years, our environmental Water Use
h Reduce natural resource
management systems have evolved, and our perfor-
mance has signiﬁcantly improved. WATER USE TARGET
h Eliminate notices of
h 10% reduction over ﬁscal 2008
In 2010, Smithﬁeld Foods, Farmland Foods, and the other independent (normalized) by ﬁscal 2016
h 100% compliance, 100% of
operating companies (IOCs) adopted a set of challenging targets to further
elevate our performance as we work to reduce water and energy usage and PROGRESS TO DATE
solid waste. In 2011, we added new targets for greenhouse gas (GHG) h Reduced normalized use by 2%
OUR ENVIRONMENTAL TARGETS
emissions and packaging reduction projects. In addition, each IOC is working
toward at least one zero-waste-to-landﬁll facility by ﬁscal 2018. At Farmland The availability of quality fresh water h Water: 10% reduction over
Foods, we strive to continuously improve our environmental programs each is a growing global concern, with ﬁscal 2008 by ﬁscal 2016
year and increase employee engagement in sustainable practices. More potential implications for agriculture, h Energy: 10% reduction over
information about companywide targets, performance, and management such as increased costs per gallon and ﬁscal 2008 by ﬁscal 2016
systems is available at smithﬁeldcommitments.com. more stringent wastewater discharge h Greenhouse Gas (GHG)
standards. Our processing facilities use Emissions: 10% reduction
In ﬁscal 2012, we continued to demonstrate progress toward our targets. water for cooling, cleaning, sanitizing, over ﬁscal 2008 by ﬁscal 2016
Since 2008, on a production-weighted basis, Farmland Foods has and making our products. Farmland h Solid Waste to Landﬁll: 10%
accomplished the following: Foods used a total of 2 billion gallons reduction over ﬁscal 2008 by
in ﬁscal 2012. We monitor water use ﬁscal 2016
h Improved water efﬁciency by 2 percent; at each facility and continuously seek h Packaging: One new packag-
h Reduced energy use by 0.5 percent; opportunities to become more efﬁcient. ing reduction project per year
h Lowered GHG emissions by 15 percent; and Since 2008, we have reduced water used h Zero Waste: One zero-waste-
h Cut waste to landﬁll by 25 percent. per 100 pounds of product by 2 percent. to-landﬁll facility by ﬁscal 2018
h Compliance: Reduce NOVs
The data are normalized per 100 pounds of product (cwt)
to better compare year-over-year progress in water use, All water, energy, GHG, and solid waste
energy use, GHG emissions, and solid waste management targets are normalized by production levels.
efficiency. Some previously reported data were adjusted New GHG, packaging, and zero-waste-to-
due to improved data collection and reporting. landfill targets were added in fiscal 2012.
For example, our plant in Denison, Iowa, eliminated several inefﬁcient,
outdated practices, reducing water use by nearly 29 million gallons at a WATER USE (gallons/cwt)
savings of $69,000 each year. 2008 2009 2010 2011 2012 2016
VALUE CREATION 68.3
Sound environmental stewardship creates value for Farmland Foods, GOAL
for Smithﬁeld Foods’ shareholders, and for our broader communities. 62.4
By using resources more efﬁciently, we minimize our negative
environmental impacts, save operating costs, and improve our All values reported
by fiscal year.
Going beyond regulatory compliance requirements sometimes costs Energy Use
our business. However, we recognize and promote the importance of
protecting our reputation and the environment as we build strong ENERGY USE TARGET
relationships with our stakeholders based on common environmental h 10% reduction over ﬁscal 2008 (normalized) by ﬁscal 2016
PROGRESS TO DATE
We seek opportunities to capture additional value by exploring h Reduced normalized use by 0.5%
creative ways to turn our operational byproducts and underutilized
resources into valuable assets for our company. We track the costs and To monitor our progress and identify best practices, we track energy use
savings associated with projects submitted for annual consideration (electricity and other fuels combusted in stationary sources such as boilers
for a Smithﬁeld Foods environmental award. and heaters) at our facilities. Our target is to reduce our energy intensity
(energy use per 100 pounds of product) to 10 percent below ﬁscal 2008
By the Numbers Fiscal 2012 levels by ﬁscal 2016. During ﬁscal 2012, we implemented a variety of energy
Savings attributable to environmental award projects $4.96 million efﬁciency projects. For example, our Milan, Missouri, facility analyzed
refrigeration equipment efﬁciency and identiﬁed a number of underutilized
Capital costs associated with environmental coolers. After shutting these down, plant electricity usage decreased
award projects $1.96 million 9 percent over ﬁscal 2010.
Because of this and other newly implemented energy reduction efforts, In 2012, we adopted a new GHG reduction target, largely in response to
we reduced normalized energy use by 0.5 percent. This progress was made stakeholder requests. We have lowered our normalized GHG emissions over
despite a continuing shift to the production of resource-intensive, fully the past four years by using energy more efﬁciently and using lower-
cooked (ready-to-eat) products for foodservice customers and consumers. emission fuels, among other initiatives. In ﬁscal 2012, our normalized GHG
emissions were 15 percent below 2008 levels.
ENERGY USE (decatherms/cwt)
2008 2009 2010 2011 2012 2016 DIRECT AND INDIRECT GHG EMISSIONS (metric tons CO2e/cwt)
2008 2009 2010 2011 2012 2016
0.124 0.123 0.123
0.0119 0.0118 0.0125
All values reported
by fiscal year.
All values reported
by fiscal year.
Greenhouse Gas (GHG) Emissions1
Materials Use & Solid Waste
GHG EMISSIONS TARGET
h 10% reduction over ﬁscal 2008 (normalized) by ﬁscal 2016 Our waste reduction approach is to divert materials with a residual value
away from our waste streams toward recycling or reuse. Our greatest
PROGRESS TO DATE solid waste reduction and recycling successes come from adjustments
h Reduced normalized use by 15% in packaging waste, such as corrugated board and a variety of plastics.
Climate change, which has been linked by many scientists to GHG emissions, SOLID WASTE TO LANDFILL TARGET
may have future impacts on water availability, energy prices, weather h 10% reduction over ﬁscal 2008 (normalized) by ﬁscal 2016
patterns, and demand for consumer goods. As in any industry, GHG
emissions occur during the production and distribution of our products. PACKAGING REDUCTION TARGET
h One new packaging reduction project per year
Farmland Foods reports GHG emissions using the Greenhouse Gas Protocol Initiative developed by the
World Resources Institute (WRI) and the WBCSD (ghgprotocol.org). Publicly available emission figures are
used where no reliable data are 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.
h One zero-waste-to-landﬁll facility by ﬁscal 2018 SOLID WASTE TO LANDFILL (lbs/cwt)
2008 2009 2010 2011 2012 2016
PROGRESS TO DATE
h Reduced normalized solid waste to landﬁll by 25% 1.16
h Introduced new packaging reduction projects in ﬁscal 2012
h No facilities achieved zero-waste-to-landﬁll status in ﬁscal 2012 0.94 GOAL
New packaging reduction and zero-waste-to-landﬁll targets were added 0.84
in ﬁscal 2012. To be classiﬁed as a zero-waste-to-landﬁll facility, a facility
must not send any waste to landﬁll for a full 12 months. Because we All values reported
added this target in ﬁscal 2012, none of our facilities will be able to by fiscal year.
qualify until at least ﬁscal 2013.
We have reduced solid waste landﬁll disposal per 100 pounds of product To challenge us further, Smithﬁeld Foods and its IOCs introduced a new
by 25 percent since ﬁscal 2008. Some examples of our waste reduction waste target in ﬁscal 2012. Each domestic IOC must have at least one facility
efforts include the following: achieve zero-waste-to-landﬁll status by ﬁscal 2018.
h The Stefano Foods plant in Charlotte, North Carolina, replaced aluminum Packaging Reductions
baking pans with silicone parchment paper. This shift saves the facility
nearly $47,000 per year and reduces materials sent to landﬁll. The packaging surrounding our products helps ensure food quality and
safety. It offers protection during transit, extends shelf life, and communi-
h The Farmland Foods plant in Lincoln, Nebraska, installed automated cates important nutrition and safe-handling information to consumers.
box-making equipment and “right-sized” boxes, signiﬁcantly reducing To continue to drive improvement, Smithﬁeld Foods and its IOCs recently
material usage while saving more than $500,000 annually. adopted a new annual target that requires each IOC to develop a successful
packaging reduction project. Reduced packaging practices are shared across
all the operations of Smithﬁeld Foods.
We have reduced solid waste landfill disposal per
100 pounds of product by 25 percent since fiscal 2008. We have introduced mechanically assembled boxes to our production process,
which decreases the amount of cardboard used, saves money, reduces our
We are also making efforts to recycle more materials and use packaging carbon footprint, and improves shipping efﬁciency. We have also expanded
with post-consumer recycled materials. Although we have already surpassed use of resealable or reusable packaging. Recycled materials can be used in
our waste reduction target, we continue to push for greater efﬁciencies. some packaging as long as food safety and quality requirements are met.
Our facility in Monmouth, Illinois, for example, invested in a new bagging Compliance
system that right-sizes packaging to the speciﬁc product, signiﬁcantly
reducing the amount of packaging material required. This greatly reduced COMPLIANCE TARGET
plastic waste to landﬁll and saved $698,000 in ﬁscal 2012. The same facility h Reduce NOVs each year
also implemented a program to reuse bacon slab combo boxes, which more
than doubled the facility’s reuse rate while saving $54,000 in ﬁscal 2012. PROGRESS TO DATE
h 69% of Farmland Foods facilities received no NOVs in calendar 2011
In Salt Lake City, Utah, our facility reduced product bag sizes for all
outgoing products, resulting in a cost savings of over $927,000. We seek full compliance with local, state, and federal environmental
requirements at all times and have compliance management programs that
train and motivate employees to prevent, detect, and correct violations. We
track several indicators of compliance, including Notices of Violation (NOVs)
Our facility in Salt Lake City, Utah, received a 2012 National and penalties. We take any NOV or ﬁne seriously. When taking corrective
Environmental Excellence Award from the National Association of actions, we work quickly to determine how our management systems can be
Environmental Professionals. For this project, the Salt Lake City plant improved. We also work with regulators to resolve all environmental issues
teamed up with the local Catholic Community Services to set up as they arise.
training courses that taught basic life skills to refugees who had
recently come to the U.S. One area focused on the importance of
recycling, preserving our natural resources, and protecting the
environment. The goal was to teach information that the refugees
could take back to their families and communities. Many of them
were not aware of recycling issues.
Our microbiological testing
lab plays an important role
in ensuring food safety.
FOOD SAFETY & QUALITY
Producing safe, high-quality, and nourish- food safety hazards. Since then, the
ing food is the most important thing company has updated and enhanced OUR FOOD SAFETY
Farmland Foods does as a business. We the protocols to meet changing & QUALITY GOALS
work to ensure traceability and to provide customer and consumer demands,
the highest-quality meats and packaged and to ensure continuous improvement. h Deliver safe, high-quality
foods to our customers. Smithﬁeld Foods’ vertically integrated business Our rigorous microbiological testing meat products and eliminate
model helps to support the safety and quality of our products through programs constitute a signiﬁcant part of recalls
careful management, strict policies, and dedicated food safety professionals. our ready-to-eat food safety programs. h 100% compliance, 100% of
Food safety is a complex undertaking that we take very seriously. We partner NUTRITION
with industry, government, and independent experts to create and implement OUR FOOD SAFETY
rigorous food safety and quality practices. We believe our systems lead the Farmland Foods offers affordable & QUALITY TARGETS
industry, and we work hard to adopt the most up-to-date, science-based products that are a signiﬁcant source h Obtain 100% Global Food
procedures. Our food safety systems are based on the Hazard Analysis of protein. We believe it’s important to Safety Initiative (GFSI)
and Critical Control Points system required for all U.S. meat and poultry provide consumers with a wide range certiﬁcation for all relevant
companies. These systems are reviewed and validated at least annually as of dietary choices. Some consumers facilities*
part of the Global Food Safety Initiative (GFSI) certiﬁcation process. want products with reduced fats, sugar, h Assure a wide variety for
and salt, while others resist making different diets and needs,
Our original food safety target was to obtain GFSI certiﬁcation for all compromises on ﬂavor or convenience. and include products
relevant facilities. Today, 100 percent of relevant facilities are GFSI certiﬁed Our research and development teams of designed to address health
and subject to GFSI’s annual third-party audits. Our target now is to nutritionists, chefs, and food scientists and wellness in accordance
maintain the certiﬁcation at all facilities. work with our customers—including with accepted standards
supermarkets, public school systems,
Maintaining a companywide culture of safe food requires that our and restaurant chains—to develop * Relevant facilities are those producing
employees meet our strict food safety requirements and are familiar innovative products that respond to meat for human consumption.
with best practices. All employees undergo rigorous training in these evolving customer needs.
food safety and quality policies and procedures to keep our foods safe.
Over the years, we have developed leaner cuts of pork, and several of our
Smithﬁeld Foods developed ﬁrst-generation, comprehensive auditing products meet the American Heart Association’s certiﬁcation criteria for
protocols about 30 years ago to improve our ability to effectively control foods that are low in saturated fat and sodium content. All our packaged
16 FOOD SAFETY & QUALITY
We have been evaluating the sodium levels in all our products to ensure
VALUE CREATION that we are offering a balance of choices for a variety of preferences, diets,
and lifestyles. At the end of ﬁscal 2012, Smithﬁeld Foods had about 100 reduced-
Producing safe, high-quality food not only helps support the health and
sodium products in the marketplace, up from about 75 the previous year.
well-being of our consumers; it also builds value for our business, our
investors, and our customers, including the restaurants and retail chains
Smithﬁeld Foods’ sodium policy, which is based on our commitment to
that sell our products. One of our biggest risks as a company is food
producing wholesome food products for our customers, is consistent with
safety. We have systems in place designed to monitor food safety risks
our view that a healthy lifestyle is not based on just one nutrient, but
throughout all stages of our vertically integrated process. However, any
rather on a range of factors, including dietary patterns and exercise.
perceived or real health risks related to our products—or to the food
industry in general—could adversely affect our company’s reputation
Farmland Foods rolled out two new lower sodium hams in calendar 2011.
and our ability to sell our products.
One was a 25-percent reduced sodium ham and the other a 50-percent
lower sodium ham for the foodservice trade.
Virtually all food is susceptible to contamination by disease-producing
organisms or pathogens that are found in the environment. Any con-
tamination of our products could subject us to product liability claims,
adverse publicity, and government scrutiny, investigation, or intervention, TAME THAT FLAME!
resulting in increased costs and decreased sales as customers lose
conﬁdence in the safety and quality of our food products. Forget what your mother might have told you: It turns out that
cooked pork can be pink in the middle after all. In May 2011, the
As a company, we invest millions of dollars each year in capital U.S. Department of Agriculture’s Food Safety and Inspection Service
improvements to facilities and equipment, focusing on the safety of announced that it had lowered its recommended temperature for
our products and protection of our employees while simultaneously cooked pork by 15 degrees. The decision came as a result of signiﬁcant
enhancing production at existing and new facilities. food safety improvements in the pork industry in recent years. For
example, the parasitic disease trichinosis has been eliminated from
the commercial U.S. pork supply. According to the agency, pork can be
meat product categories—bacons, hams, hot dogs, and sausages—include safely consumed if cooked to an internal temperature of 145 degrees
product lines that are nutritionally improved with either lower sodium, (Fahrenheit) and allowed to rest for three minutes rather than the
reduced fat, or less sugar. 160 degrees it previously recommended. This means pork is now held
to the same temperature criterion as cuts of beef, veal, and lamb.
Salt is a key ingredient in many of our products and helps us meet customer
and consumer demands for quality, authenticity, ﬂavor, and convenience.
17 FOOD SAFETY & QUALITY
In fiscal 2012, Farmland Foods
donated 1.24 million servings
of food to those in need.
Farmland Foods values the importance of fundraisers generate dollars that further
strong, vibrant communities and strives to our hunger relief efforts. OUR COMMUNITY GOAL
make a positive impact in the areas where
h Provide food to those in
our employees work and live. In many of In our nation’s food banks, sourcing and
need and enhance education
the regions where we do business, we are a providing fresh meats and other protein
in our communities
primary employer. Assisting our employees and those who live around our presents a special challenge. Though it
facilities helps the community get to know us. Contributing to thriving local is critical for good health, fresh protein
OUR COMMUNITY TARGETS
communities enables us to become a stronger, more vital company. is more expensive than shelf-stable
food such as canned soups, cereals, h Provide 4 million servings
We focus in particular on programs that nourish the body and the mind. In and pasta. It is also more expensive a year of food for those
addition to hunger relief and learning-related initiatives, we also provide to transport because it requires in need*
support for environmental stewardship efforts, disaster relief, support of refrigeration. With food banks facing h Each Pork Group IOC to
ﬁrst responders and military families, and an emerging area of focus: health record demand for services, the need support two Learners to
and wellness. In ﬁscal 2012, Farmland Foods contributed approximately for protein is greater than ever. Leaders® programs
$342,000 in cash donations to programs and organizations we support. h Each fresh pork facility
Helping Hungry Homes is Smithﬁeld to support two FFA Organ-
HUNGER RELIEF Foods’ corporate-level initiative to help ization or equivalent
address the growing problem of food education events
As a food company, we believe we have a responsibility to help feed insecurity in the United States and, h Each facility to participate
families who are struggling to afford the food they need. According to the speciﬁcally, to help address the growing in at least one cleanup day
national hunger relief nonproﬁt, Feeding America®, more than one out of need for protein. Since its launch, h Each facility to participate
six children in the United States lives in a food-insecure household, which Farmland Foods, Smithﬁeld, and its in at least one World Water
means they do not always know where they will ﬁnd their next meal. other IOCs have donated 56.5 million Monitoring Challenge
servings of pork to food banks and other event per year
Farmland Foods and Smithﬁeld Foods have a long history of stocking food organizations that provide food for
banks, supporting after-school nutrition programs, and providing food relief people in need. In ﬁscal 2012, Farmland * The 4 million servings total is for all
of Smithfield Foods and its U.S. inde-
in the wake of natural disasters. We are especially proud of our partnerships Foods donated nearly $1.3 million of pendent operating companies (IOCs).
with our retail grocery customers across the country, whose in-store product to those in need.
18 HELPING COMMUNITIES
Within our headquarters community of Kansas City, Missouri, we have
partnered with Harvesters and its network of community food banks,
committing food donations, dollars, and the time of our employees. Once
Contributing to local communities by offering employment and paying
a month, we have been giving our employees paid time off to volunteer
taxes is one of the primary ways we create value for communities,
at Harvesters and put together “snack packs” for children who are at risk
but we also create value by supporting areas such as hunger relief,
of going hungry over the weekends. On average, 25 of our employees
education, and health and wellness. Our activities also support
participate each month.
agricultural communities in the regions where we operate.
We also ran a special promotion from Memorial Day through Labor Day
We are interdependent with our communities in many ways:
2012 to beneﬁt Harvesters. Through the “Bacon A Difference” campaign,
we donated 4.3 cents to Harvesters for each bacon product sold at
h Strong communities support our ability to recruit and retain good
participating grocery stores in Kansas City. We raised a total of $43,000.
workers and enable us to become a stronger, more vital company.
The campaign featured our partnership with Richard Petty Motorsports
NASCAR team to help raise awareness of food security issues. h The economic vitality of our local communities—and agricultural
communities more broadly—provides the basis for a reliable supply
“ The donations we received from Farmland through the ‘Bacon of the goods and services we need to operate.
A Difference’ partnership will put much-needed food on the
h Stable, well-governed communities provide a good place for our
table for Kansas Citians at a time when one in four children in
employees to live.
both Missouri and Kansas are at risk of being hungry.”
—Karen Haren, President and Chief Executive Officer, Harvesters By the Numbers Fiscal 2012
Cash donations $341,870
Food donations (cash value) $1.29 million
We believe that education is the bedrock of any strong community. Food donations (servings) 1.24 million
We’ve long supported programs that offer learning opportunities in the
Total amount of donations $1.6 million
communities where our employees live, work, and raise their families. One
of our company’s core values is helping to extend educational opportunities
to young people who will be tomorrow’s leaders in our communities.
19 HELPING COMMUNITIES
For the past decade, the Smithﬁeld-Luter Foundation has provided educa-
tional scholarships for our employees’ children and grandchildren at select
universities. Since the inception of this program, Smithﬁeld Foods has
awarded 127 annual scholarships worth more than $2 million. In ﬁscal 2012, Learners to Leaders in Denison, Iowa,
the Smithﬁeld-Luter Foundation awarded 34 scholarships totaling $256,000. Graduates First Class
Our Learners to Leaders program focuses on students from disadvantaged For eight 17- and 18-year-old
backgrounds who have the desire to succeed but don’t yet have the skills to students in Denison, Iowa, May
overcome their challenges—whether academic, social, or economic. In ﬁscal 2012 was a momentous month.
2012, Smithﬁeld Foods provided nearly $356,000 in funding to 350 students. They celebrated their graduation,
not just from high school but also
Learners to Leaders partners with the TeamMates Mentoring Program in from the prestigious Learners to
Crete, Nebraska. Farmland Foods and Smithﬁeld Foods have donated Leaders/Science Bound program,
$100,000 to date to fund the TeamMates initiative, providing positive role a rigorous ﬁve-year college
models for the community’s middle and high school students. The program preparation course.
matches a student with an adult volunteer mentor to provide one hour of
individual mentoring each week during the school year. Mentors are Since 2007, Farmland Foods and
encouraged to continue in the mentoring relationship until the student Graduates of the Learners to Leaders/
Science Bound program in DenisonSmithﬁeld Foods have sponsored
graduates from high school.
have earned scholarships to Iowa State.
the Learners to Leaders/Science
Bound program, a community
AMERICAN HEART ASSOCIATION educational partnership between the Denison, Iowa, Community
School District and Iowa State University. The program, which runs
One of Farmland Foods’ largest charitable efforts focuses on the American from eighth through twelfth grade, aims to inspire ethnically
Heart Association (AHA). This past year, we challenged our plants to raise, diverse students to pursue higher education in math and science,
collectively, $75,000 for the organization through auctions and other fund- thereby helping to close the economic gap that often separates
raising events. We have supported the AHA for many years and have been students from low-income or minority backgrounds.
increasing each year the amount we raise for the organization. In ﬁscal
2011, we raised about $86,800; in ﬁscal 2012, we succeeded in raising Students who successfully complete the academically challenging
nearly $91,700. program earn a full four-year tuition scholarship to Iowa State, so
20 HELPING COMMUNITIES
long as they pursue degrees in agriculture, science, technology, engineering, biologists, or engineers—especially as the ﬁrst in their families to attend
or mathematics. In the fall of 2012, the ﬁrst group of Denison program college,” she says. “We launch them off on this program, then they continue
graduates (eight total) will be attending Iowa State University, tuition-free. to work with their high school teachers. Now that they’re graduating,
we get to look back and say, ‘A part of us helped them into Iowa State.’”
“When we ﬁrst began, parents were skeptical,” says Collette Huntley, a
middle school teacher who helped launch the program. “These students are Aransa Soriano plans to study chemistry or chemical engineering at Iowa
typically the ﬁrst in their families to be thinking about a college education. State. Her father works at our Denison processing plant, and he encouraged
We had to convince their parents that we had the best interests of their Aransa to pursue the program and her dreams. Aransa, who also won a
children at heart. Now, the program sells itself.” separate scholarship through the Smithﬁeld-Luter Foundation for room and
board, is the ﬁrst in her family to graduate high school and attend college.
Teachers work together to identify students for the program, based on test
scores, classroom performance, and a desire to succeed. To continue in the “I hadn’t really been thinking of going on to college, but the Learners to
program each year, students must maintain a 3.0 grade point average (GPA), Leaders program changed my mind over the years. I’ve been encouraged
participate in the Learners to Leaders curriculum and activities, and offer an by a lot of people,” she says. “I think I cried more at the Science Bound
oral defense of what they have learned and why they deserve to remain in banquet than at my graduation because it’s really meaningful to me that
the program. Since enrolling in the program, 62 percent of the students in I actually graduated from the program.”
Denison have continued year after year, a testament to the hard work and
commitment of the students and their teachers. This rate is nearly double Carlos Velasquez is also among Science Bound’s ﬁrst graduating class.
that of similar programs sponsored by Iowa State in other communities. His mother works in the Denison processing plant. Carlos plans to major in
computer engineering at Iowa State through his Science Bound scholarship.
“The program is academically challenging,” says Dr. Connie Hargrave, When Carlos ﬁrst started the program, he saw it as primarily a way to hang
director of Science Bound at Iowa State. “It helps us develop early talent out with his friends. But once he got to ninth grade, he began to look at
among students with a propensity for math and science and helps the the program differently.
students arrive at college prepared to excel.”
“I realized that I’m now in high school, and I needed to start thinking
Kathy Jones, a middle school teacher, agrees. “For me, one of the greatest about my future,” he says. “Then I started to understand that I could get
things has been seeing students embrace the idea that they can be scientists, a scholarship to Iowa State if I stuck with the program.”
21 HELPING COMMUNITIES
GOVERNANCE & MANAGEMENT
Sound governance and management are foundations for trust, SUPPLY CHAIN MANAGEMENT
transparency, and progress at our company. Our systems for ethical
FARMLAND FOODS MISSION
conduct, the way we engage with stakeholders, our approach to public Our suppliers are integral to our
policy, and our management of supply chain issues are all important promise to produce good food
elements of our company’s overall sustainability strategy, cutting across We use our passion for pork responsibly. In ﬁscal 2012,
our key pillars and contributing to overall value creation. In recent years, to bring goodness to every bite. Smithﬁeld Foods and its IOCs
Farmland Foods, Smithﬁeld Foods, and its other independent operating implemented a Supplier Code of
companies (IOCs) have signiﬁcantly advanced our sustainability strategy Conduct to help ensure that our
and tied it more closely to our overall business strategy. suppliers continue to meet or
exceed our high standards. The code, which is incorporated into all new and
renewed contracts with our largest suppliers, sets forth the business conduct
SMITHFIELD FOODS SUSTAINABILITY GOVERNANCE requirements for all suppliers who do business with Smithﬁeld Foods and
its IOCs. The degree to which suppliers comply with the requirements—and
BOARD OF DIRECTORS the extent of their sustainability efforts—will be a consideration for future
business with Smithﬁeld Foods and its IOCs. The code outlines expectations
COMMITTEES OF THE BOARD around legal compliance, environmental sustainability, and business integrity,
as well as labor and human rights issues. Smithﬁeld Foods and its IOCs
Audit Compensation Nominating and Sustainability, Community,
Governance and Public Affairs monitor suppliers’ performance, although we do not conduct formal audits.
We also survey our largest suppliers to understand what they are doing in
areas such as energy reduction, natural resource use, employee safety, and
community giving. In ﬁscal 2012, Smithﬁeld Foods distributed a supplier
Ethics and Compliance Chief Sustainability Executive Sustainability survey for the ﬁrst time to Murphy-Brown’s independent hog producers.
Committee Officer Committee
The questions focused on environmental policies and targets, nutrient
management plans, and certiﬁcations on animal care issues.
Smithfield Packing John Morrell Food Group Farmland Foods, Inc. Murphy-Brown LLC
Company Sustainability Officer Sustainability Officer Sustainability Officer
22 GOVERNANCE & MANAGEMENT
SUSTAINABILITY TARGETS ERM is an ongoing process that includes continuous risk evaluation. As
a result of this process, the company is further strengthening reporting
In 2010, Smithﬁeld Foods and its IOCs adopted a series of aspirational goals practices around risk, internally and to the board of directors. Smithﬁeld
and corresponding targets in its domestic operations for ﬁve primary Foods also assigned senior-level “risk owners” to coordinate ERM programs
sustainability focus areas: animal care, employees, environment, food safety for speciﬁc risk areas and, as a result, provide greater accountability and
and quality, and helping communities. (See smithﬁeldcommitments.com for a more coordinated approach. As necessary, the company will adjust its
a full list of goals and targets.) In 2011, the company added new targets framework as its risk proﬁle changes.
including greenhouse gas (GHG) emissions reductions and packaging
reduction projects. In addition, each IOC must have at least one zero-waste- ETHICS & COMPLIANCE
to-landﬁll facility by ﬁscal 2018.
Safeguarding integrity remains a critical business priority. Ethical and lawful
ENTERPRISE RISK MANAGEMENT conduct is an essential part of our company’s culture, and we are committed
to conducting our business with the highest standards. Smithﬁeld Foods
Managing risk is not a new concept for Smithﬁeld Foods. In the company’s maintains a Code of Conduct and Business Ethics applicable to all
Form 10-K, it has already been highlighting the most signiﬁcant risk factors employees, ofﬁcers, and directors, and the board’s Nominating and
that could materially impact our operations. These include, but are not Governance Committee reviews it periodically.
limited to, ﬂuctuations in the commodity prices for hogs and grains;
outbreaks of disease among, or attributed to, livestock; perceived or real PUBLIC POLICY
health risks related to our products or the food industry in general; and
environmental regulation and related litigation. Smithﬁeld Foods participates in legislative and regulatory processes both as
an individual company and through industry associations. Smithﬁeld Foods
In ﬁscal 2012, Smithﬁeld Foods conducted the company’s ﬁrst formal believes that engagement in the political process is important in making
Enterprise Risk Management (ERM) assessment as part of an effort to its views heard on issues of signiﬁcance to the business. Representatives
develop an aligned, integrated ERM framework across the entire company. of Smithﬁeld Foods and its IOCs participate in many cross-industry boards
The goal of the ERM program is to proactively understand and deal with and commissions at the national and state levels. Smithﬁeld Foods follows
complex business risks—both tangible and intangible, existing and several public policy issues that it believes are important to the company,
emerging—that could negatively inﬂuence the achievement of the including those related to ethanol, free trade agreements, immigration,
organization’s objectives. and the U.S. Farm Bill. Discussion of those issues and our positions on them
is available at smithﬁeldcommitments.com.
23 GOVERNANCE & MANAGEMENT
This report is printed on Neenah Paper Classic
Crest Recycled 100 Bright White stock. This paper
The feedback we receive on our performance and communications contains 100 percent post-consumer recycled
efforts is very valuable to Farmland Foods. We look forward to hearing ﬁber and was made using 100 percent renewable
from you as we proceed along our performance improvement journey. electricity. We achieved the following by printing
on this stock instead of virgin paper:
Trees saved 19
Vice President of Human Resources, Safety, and Logistics
+1 816 243 3310 Water saved 8,744 gallons
firstname.lastname@example.org Solid waste
not produced 531 pounds
Energy saved 6 million BTUs
Susan A. Murphy
Environmental Engineering Manager not generated 1,816 pounds
+1 816 243 2730
Vice President of Quality Technical Services and Hog Procurement
+1 816 243 3386
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THIRD PARTY RECOGNITION AWARDS SPOTLIGHT
• National Association of Environmental Professionals Smithﬁeld Foods was selected by McDonald’s
2012 National Environmental Excellence Award Corporation as one of the restaurant chain’s
for Refugee Training Program in Salt Lake City, Utah 2012 Global Best of Sustainable Supply Chain
winners for the company’s ongoing efforts to
• Missouri “Show Me Heroes Flag of Freedom Award” protect the health and safety of our employees.
to Martin City plant for its hiring of Missouri veterans
• Missouri Water Environment Association’s Gold Award
for Pretreatment Excellence and Industrial Water Quality
Achievement Award to Martin City plant for its efforts
to save energy and improve wastewater efﬁciency
FARMLAND FOODS, INC.
A Smithﬁeld Foods
Independent Operating Company
P.O. Box 20121
Kansas City, MO 64195-0121
+1 888 327 6526