Company

& Values Comparison

Smithfield Foods Polyface Farms

From our small town beginning in Smithfield, V irginia, Smithfield Family owned, multi-
Foods has grown to b e the world's largest pork processor and hog generational, pasture-
producer producing food that were proud to s erve to our friends based, b eyond organic,
and family. local-market farm and
Publicly traded corp. with full vertical integration informational outreach
Owns & controls all s tages of production & distribution in Virginias
through family of companies worldwide Shenandoah Valley.
2006 Larry Pope succeeded Joe Luter (son of founder), Polyculture farm
established an industry-leading sustainability program produces b eef, chicken,
eggs, turkey, pork
Joel Salatin with salad-bar beef herd
Core Values
We will always strive to: Guiding Principles
Produce safe, h igh-quality and nutritious food
TRANSPARENCY: Anyone is welcome to visit the farm anytime. No
Create value for our stakeholders
trade secrets, no locked doors, e very corner is camera-accessible.
Be an employer of choice
Lead in animal care GRASS-BASED: Pastured livestock and poultry, moved frequently to
Protect and reinvigorate the environment new salad bars, offer landscape h ealing and nutritional superiority.
Make positive impacts on our communities INDIVIDUALITY: Plants and animals should b e provided a habitat that
allows them to express t heir physiological distinctiveness. Respecting
and honoring the p igness of the p ig is a foundation for societal h ealth.
COMMUNITY: We do not ship food. We should a ll seek food closer to
home, in our foodshed, our own b ioregion. This means enjoying
seasonality and reacquainting ourselves with our h ome kitchens.
NATURES TEMPLATE: Mimicking natural patterns on a commercial
domestic scale insures m oral and ethical boundaries t o human
cleverness. Cows are h erbivores, not omnivores; that is why weve
never fed them d ead cows like the USDA encouraged ( mad cows).
EARTHWORMS: Were really in the earthworm enhancement
business. Stimulating soil biota is our first priority. Soil h ealth creates
Smithfield processing plant a t Granjas Carroll de M exico
healthy food.

 Joe Luters Smithfield: Industrial Pork Production
Corporate ownership + profit growth mandate demands high yield, low cost production.

Cheap labor + Cheap feed + High mechanization + Distributed m arketing + Monopolization + PR
Less labor-intensive Monoculture corn high energy use global transpo Vertical integ. loyalty thru ads
Low-skill, lower-pay Pig products high overhead d emand for convenience price-out competitors misleading info
Resist unionization



high-density monoculture feedlots = plenty of cheap, convenient food

manure lagoons animals warehoused, monoculture corn chemical, hormone-laden meat
farming
human h ealth impacts stress & illness food-borne illness - salmonella, E. Coli, mad cow
(respiratory, n eurological) high CO2 impact
high death rate human h ealth impacts
environmental impacts land d egradation
(nitrates in watershed) use of antibiotics bad-tasting or bland meat
pesticides & fertilizers
super-bugs more processed food
air, land & water pollution
human h ealth impacts

A small selection of fines and legal complaints against Smithfield:
1997 fined $12.6 million for 6,900 violations of the Clean Water Act
2000 a greed to pay state of NC $50 million over 25 years for water pollution resulting from Hurricane Floyd flooding waste lagoons.
2006 U.S. appeals court upheld numerous charges brought by the National Labor Relations Board. Union said the company spied on
workers and had some beaten up on voting day. Company paid $1.5 million to workers it illegally fired.
2007 North Carolina filed six cruelty-to-animals charges against workers documented abusing p igs.
2009 assessed $900,000 p enalty b y the U.S. Justice Department to s ettle charges that the company engaged in illegal merger activity
during its takeover of Premium Standard Farms LLC
2011 U.S. Humane Society filed an SEC complaint alleging S mithfield makes false claims re: animal welfare and environ. conditions.
2012: 38 NOVs (Notice of V iolations) and $407,779 in fines: up 617% from 2007 (mostly due to a cquisitions)

 Post-Luter Smithfield Farms Sustainability Measures (2006-12)
Standard Areas from: Sustainability Standard for Livestock Operations (Food Alliance)


Standard Area: Healthy and Humane Care for
Livestock

Remain 100% Pork Quality Assurance Plus
(PQA Plus) compliant at company-owned and
contract farms.
Drivers and animal handlers trained and
certified PQA
Complete conversion from individual gestation
stalls to group housing for pregnant sows on
company farms b y end of 2017

Standard Area: Soil and Water Conservation, Standard Area: Safe and Fair
Nutrient Management Working Conditions
~ 1/2 worldwide ops ISO 14001 certified
Water: 10% reduction over 2008 b y 2016
Energy: 10% reduction over 2008 b y 2016
Greenhouse Gas ( GHG) Emissions: 10%
reduction over 2008 b y 2016
Solid Waste to Landfill: 10% reduction over
2008 b y 2016
Packaging: One n ew packaging reduction
project p er year p er independent operating
company ( IOC)
Fixed Criterion: No Feed Additive Antibiotics Zero Waste: One zero-waste-to-landfill
Banned in Europe facility for each IOC b y 2018
2012 showed overall increase from 2008 No 2012 NOVs (Notice of V iolations) on
company farms
Fixed Criterion: Continual Improvement Aim to eliminate NOVs each year on
Goal statements and improvement targets in contract farms
6 areas: Animal Care, Employees, Studying local water impacts from farm
Environment, Food Safety & Quality, Helping waste & runoff
Communities, Value Creation Several R&D contracts for manure biomass
energy p lants

 Polyface Farms Pasture-based Model: Sustainable by Design

Polyculture Pasturing Biomimicry

Raise multiple species Species natural b ehaviors
Rotating pasture mgmt Moving, mobbing, mowing
Low-tech solutions Species interdependence
Less d eforestation Closed waste loops
Ponds collect rainwater Composting ( eg p ig rutting)
Gravity-fed water No fertilizers
Less energy use No toxic waste
Plant trees Healthy soil b iota
Sustainable forest prods Forest = p ig pasture
Multi-gen family labor Stimulate p lant growth
Heal land Prevent Erosion
High s kill labor @ low cost More productive p er a cre

Relationship Marketing Education

Local, no product shipping Educational mission
On-farm + local retail & restaurant Books, speaking
Local/regional buying clubs Internships Sustainability Criticisms
No published sustainability reports. No data for
Less transpo energy use? Apprenticeships farm energy & water use, waste, runoff, CO2
Consumer a wareness Farm tours footprint of livestock, etc.
Community enhancement Promote sustainability Uses one non-sustainable chicken breed instead of
heritage breeds that support biodiversity
Loyal, expanding customer base Train next gen. of farmers Annually obtains eggs from outside farms to
replenish stock
Lack of d iversity, gender b ias in intern s election

 Analysis
I. Values and Sustainability

Smithfield sustainability values informed by financial risk m gmt Polyface sustainability values informed by a moral/ethical stance
Increasing efficiency/decreasing operating costs We are in the redemption business: healing the land, healing the
Complying with regulations (avoiding fines) food, h ealing the economy, and h ealing the culture.
Avoiding lawsuits
Don't you find it odd that p eople will put more work into choosing
Generating brand loyalty & positive PR
their mechanic or house contractor than they will into choosing the
New management sensed the Luter vision would kill the
person who grows their food?
company in an age of increasing d emand for clean meat

Why does t his matter? Because t he business risk approach m ay limit the extent to which a sustainability retrofit is effective.

II. Limitations of Sustainability Models

Smithfield: Sustainable retrofit Polyface: sustainable by design Scaling depends on food culture shift
Limited by cost effectiveness Model is not scalable to industrial levels toward local buying & relationship
Eg. resistance to gestation stalls retrofit Current regulations favor industrial farming away from convenience &
Large-scale change waits for policy & public Cost/lb of pork ~$2 h igher than industrial pork supermarkets
pressure No acct for external costs of industrial shared values a mong farmers
Top-down company culture change takes time model attn to interdependence of systems
BUT vertical integration makes top-down possible Polyface has guidelines for growth

Is it important to develop a scalable Sustainable m odel for livestock farming?

II. Cost Comparisons: which model is more efficient?
Smithfield: raises 15 million pigs/year, processes 27 million, producing 6 billion pounds of pork
Polyface: raises 17,000 animals producing 255,000 lbs of meat

Smithfield 2010 Smithfield 2012 Polyface 2009 Cost Savings items Polyface 500 acres Typical 500 acres
Sales 11 billion 13 billion 1.175 million Land productivity Managed grazing: Typical grazing:
400 cow-days/acre 80 cow-days/acre
Profit 62 million 361 million 192,000 Infrastructure cost Natural d esign: Capital equip.:
$.50/$1 annual sales $4 / $1 annual sales
Profit % 0.6 2.7 16 Family labor, reduced transpo costs