CORPORATE SOCIAL RESPONSIBILITY REPORT 2008/09

CORPORATE SOCIAL RESPONSIBILITY REPORT 2008/09

Smthfeld Foods: A Global Leader Producng Good Food. Responsbly. NORTH AMERICA UNITED STATES t Arkansas t Calforna t Colorado t Georga t Illnos t Indana t Iowa t Kansas t Kentucky t Maryland t Massachusetts t Mnnesota t Mssour t Nebraska t New Jersey t North Carolna t Oho t Oklahoma t Pennsylvana t South Carolna t South Dakota t Texas t Utah t Vrgna t Wsconsn MEXICO

Through ndependent operatng companes and jont ventures, as well as our stake n Europe s largest packaged meats provder, Smthfeld Foods operatons extend to 13 countres. EUROPE BELGIUM FRANCE GERMANY ITALY THE NETHERLANDS POLAND PORTUGAL ROMANIA SPAIN UNITED KINGDOM ASIA CHINA Wholly owned Smthfeld Foods operatons as well as the Butterball, LLC, jont venture n the Unted States Campofrío Food Group, S.A., a publcly traded company n whch Smthfeld Foods owns 37 percent Jont ventures

TABLE OF CONTENTS Letter from C. Larry Pope, Presdent and CEO 4 Letter from Denns H. Treacy, VP, Envronmental & Corporate Affars 6 About Smthfeld Foods 11 Governance and Management 18 FINANCIAL HIGHLIGHTS Envronment 26 Anmal Welfare 47 Food Safety 55 Helpng Communtes 59 Employees 64 Internatonal Operatons 75 Corporate Offcers and Drectors 92 Corporate Informaton 93 GRI Index 94 CSR SPOTLIGHTS Farm-to-Fork Sustanablty Reportng 23 Envronmental Protecton Expendtures 38 The Scence of Hog Producton 54 CSR Actvtes of a Jont Venture 89 MAPS, DIAGRAMS, AND MAJOR TABLES Smthfeld Foods Global Operatons IFC Fnancal Hghlghts 2 Smthfeld Foods Key Commtments 8 Fscal years ended May 3, 2009 Aprl 27, 2008 Aprl 29, 2007 (n mllons, except per share data) Sales $ 12,487.7 $ 11,351.2 $ 9,359.3 Income (loss) from contnung operatons (242.8) 139.2 211.9 Net ncome (loss) (190.3) 128.9 166.8 Income (loss) from contnung operatons per dluted share (1.72) 1.04 1.89 Net ncome (loss) per dluted share (1.35).96 1.49 Weghted average dluted shares outstandng 141.1 134.2 111.9 Addtonal Informaton Captal expendtures $ 174.5 $ 460.2 $ 460.5 Deprecaton expense 264.0 258.0 201.0 Workng captal 1,497.7 2,215.3 1,795.3 Total debt 1 2,988.2 3,883.4 3,092.9 Shareholders equty 2,561.4 3,048.2 2,240.8 Total debt to total captalzaton 2 53.8% 56.0% 58.0% Key Data Summary 10 Our Famly of Companes 12 Smthfeld Foods Producton 14 1 Total debt s equal to notes payable and long-term debt and captal lease oblgatons ncludng current porton. 2 Computed usng total debt dvded by total debt and shareholders equty. CSR Across Our Busness 17 Envronmental Inputs and Outputs 27 Consoldated Fnancal Statements 90 2

ABOUT THIS REPORT Welcome to Smthfeld Foods Corporate Socal Responsblty (CSR) report. Ths s our fourth CSR report, whch bulds on our experence publshng annual envronmental reports from 2001 to 2004. Ths report dscusses our performance n envronmental stewardshp, anmal welfare, food safety, communty engagement, and employee well-beng the CSR areas we consder mportant to our company and ts stakeholders. We also nclude a secton on governance, whch underpns all of our CSR performance, and a secton on our wholly owned nternatonal operatons. The order of dscusson n the report s not meant to emphasze one ssue over another. To help determne the focus and communcatons objectves of ths year s reportng, we consdered stakeholder feedback from a number of sources, ncludng the Nathan Cummngs Foundaton, Envronmental Defense Fund, and Chesapeake Bay Foundaton. We expect that many of our stakeholders wll fnd ths report of nterest, ncludng our employees, nvestors, customers, and end consumers; governments and nongovernmental organzatons; and the communtes n whch we do busness. Over the past two reportng years, we have worked hard to algn our report more closely wth the Global Reportng Intatve (GRI) G3 Gudelnes, whch provde a recommended sustanablty reportng framework and ndcators. We are reportng at a GRI-checked applcaton level of B. More nformaton on the G3 Gudelnes and applcaton levels s avalable at the followng Web address: www.globalreportng.org/grireports/applcatonlevels/. We used the GRI G3 Gudelnes to help focus the boundares of the qualtatve and quanttatve nformaton n ths report. Wth the excepton of the About Smthfeld Foods secton, and unless otherwse ndcated, the nformaton and metrcs wthn ths report pertan to Smthfeld Foods ndependent operatng companes and nvestments n whch we have a controllng (51 percent or more) nterest.* We also provde dscusson of our management approach to contract farmng, prmarly n the areas of envronment and anmal welfare, but do not provde performance data because our contract farmers are ndependent busnesses. Changes n the scope of reportng or reclassfcatons of data prevously reported are noted n the relevant data sectons, as are other assumptons and bases for calculatons. We prmarly use Amercan measurement unts for data for our U.S. operatons, metrc unts for nternatonal operatons, and Amercan numberng conventons throughout. The fnancal data n ths report have been audted by a thrd-party frm. Other data and nformaton have been subject to nternal revew but not external, thrd-party assurance. The content focuses prmarly on calendar year 2008 but ncludes fscal 2009 fnancal nformaton and dscusson of some key developments that occurred n early 2009. Smthfeld s fscal year runs from May through Aprl. Throughout ths report, Smthfeld Foods s referred to as Smthfeld. The name Smthfeld s also sometmes utlzed for ease of reference to ndcate one or more ndependent operatng companes. Smthfeld should not be confused wth The Smthfeld Packng Company, Inc., whch s a subsdary. Forward-Lookng Informaton Ths publcaton may contan forward-lookng statements wthn the meanng of federal securtes laws. In lght of the rsks and uncertantes nvolved, we nvte you to read the Rsk Factors and Forward-Lookng Informaton sectons of Smthfeld Foods Form 10-K for fscal 2009. * Smthfeld Foods, Inc., s a holdng company wth a number of ndependent operatng companes. For the purposes of ths report, the term ndependent operatng company and subsdary are used nterchangeably to refer to varous enttes of the Smthfeld Foods famly of companes.

Dear Smthfeld Foods Stakeholder: It can be easy for companes to make corporate socal responsblty a prorty durng tmes of fscal prosperty. It becomes much more challengng when the economc road s rough. We are publshng ths year s CSR report n the mdst of a global recesson of hstorc proportons. Smthfeld Foods has not been mmune to these events. Indeed, the costs of hog producton spked substantally n 2008, thanks n large part to feed and energy prces that ht record hghs. Whle sales n our packaged meats dvson were strong, they could not make up for the losses sustaned n our hog producton unt. C. Larry Pope Presdent and CEO Another sgnfcant challenge we faced ths year was the sprng 2009 outbreak of A(H1N1) nfluenza the offcal name of the msnamed but wdely quoted swne flu. Much of the ntal meda focus fell on a hog farm n Veracruz, Mexco, that s partly owned by Smthfeld. The nfluenza outbreak was dffcult for the entre pork ndustry, whch had to dspel many common msperceptons about the vrus. Accordng to the Centers for Dsease Control and Preventon, the A(H1N1) nfluenza s not transmtted by food and cannot be contracted from eatng pork or pork products. More nformaton about the nfluenza vrus, and Smthfeld s response, can be found on our Web ste at www.smthfeldfoods.com. Despte these challenges, we dd not back away from our CSR commtments. We mantaned the core programs and systems that we have developed to address envronmental and socetal concerns, although the economy dd force us to slow the pace of some of our efforts. Nevertheless, we contnued to focus on our CSR goal of becomng the most trusted, respected, and ethcal food ndustry leader. Recent efforts nclude the followng: u We sent to market the frst hogs to be produced n new group housng part of our pledge to replace ndvdual gestaton stalls for pregnant sows. u To further mprove transparency, we expanded the scope of our reportng to nclude baselne envronmental data from our wholly owned nternatonal operatons n Poland and Romana as well as our most recent domestc acqustons. 4

u At our processng plants, we mproved our rate of recyclng, reduced sold waste generaton, and mproved effcences n electrcty and water use. u u u We contnued to fund our new Helpng Hungry Homes ntatve, whch provdes food for low-ncome famles, and worked wth celebrty cook Paula Deen to delver donatons. We also partnered wth promnent chef Jeff Henderson to help spread the message of hunger relef, dversty, and empowerment. We have contnued fundng educatonal programs that enhance the leadershp and career development sklls, as well as personal growth, of students preparng for eventual careers n agrbusness. We saw a contnued reducton of our overall total njury and llness rate, whch remans well below the ndustry average. We contnued to focus on our CSR goal of becomng the most trusted, Our CSR efforts are gettng notced. We are extremely proud to have been selected as the frst recpent of McDonald s new Sustanablty Award for the suppler that best exemplfes the McDonald s vson, prncples, and values for sustanable supply. And n 2009, we were ncluded for the frst tme among CRO (Corporate Responsblty Offcer) magazne s lst of 100 Best Corporate Ctzens. Meanwhle, we re optmstc that fscal 2010 wll mprove, and we are hopeful that we wll emerge from the recesson ahead of other ndustres. respected, and ethcal food ndustry leader. We re pleased to share wth you our CSR report for 2008/09. We beleve you wll fnd that our slogan Good Food. Responsbly. s lvng up to ts promse. Sncerely, C. Larry Pope Presdent and Chef Executve Offcer June 15, 2009 5

Dear Smthfeld Foods Stakeholder: In the past decade, CSR has become an ntegral component of Smthfeld s busness operatons. Socal responsblty creates busness opportuntes, mnmzes regulatory threats, attracts customers and nvestors, safeguards our employees, and engages stakeholders. Ths report covers the ssues that we beleve are most mportant to Smthfeld and to our stakeholders: envronmental stewardshp, anmal welfare, food safety, communty engagement, and employee well-beng. We are makng progress n these areas, as noted n the followng examples: Denns H. Treacy Vce Presdent Envronmental and Corporate Affars u We contnued to ntegrate and algn our most recent acqustons wth our core Smthfeld operatons, mplementng systematc approaches to the management of envronmental, health and safety, anmal welfare, and food safety ssues. We also present examples of how one of our jont ventures n Mexco s tacklng CSR ssues. u Our envronmental and safety record mproved on a number of fronts. For example, our U.S. facltes that process meat nto fnshed products cut ther greenhouse gas emssons per unt by 25 percent n 2008. The long-term trends n our energy and water effcency show great mprovement. Our safety ndcators have mproved anywhere from 12 percent to 31 percent over fve years, and two of the three key measures are better than ndustry averages. u Our employees contnue to fnd creatve ways to mprove operatonal and envronmental performance. In ths report, we document the costs and savngs generated as a result of nvestments n envronmental mprovements. In 2008, we nvested $6.1 mllon n projects that saved nearly $11 mllon. u We resolved a long-standng, contentous stuaton at our largest processng plant, n Tar Heel, North Carolna, where the Unted Food and Commercal Workers Internatonal Unon (UFCW) had been attemptng to unonze the hourly work force. Smthfeld and the UFCW agreed to hold a secret-ballot unon electon, n whch the employees voted n favor of unonzaton by a vote of 52 percent to 48 percent. We respect the decson of our employees, and we look forward to workng wth the unon. 6

u Three Smthfeld facltes partcpated n a plot effort amed at provdng a frst-ever, comprehensve farm-tofork look at sustanablty ssues and ther management across the pork producton value chan. Our ntatve was recently lsted among McDonald s 2009 Global Best of Green for companes wth leadng envronmental practces. The recent A(H1N1) nfluenza outbreak, coupled wth the global economc slowdown, made ths past year a partcularly challengng one. But we do not queston the value of mantanng and expandng our CSR ntatves. Our customers, nfluenced n turn by ther customers, have ever-hgher expectatons for our CSR performance and dsclosure about t. To meet and exceed ther expectatons, we must rase standards throughout our value chan and ndustry, document that our operatons are envronmentally sound and safe, and engage wth our supplers on these ssues. As we communcate wth customers and other stakeholders, we contnue to strve to be as transparent as possble. And we must renforce the value of our CSR efforts to our employees n the face of fnancal pressures and contnung controverses about ndustral food producton. Our ndustry and our company wll always be attacked by those who oppose rasng any anmals for food and wll be controversal among those who prefer a small-scale approach to food producton. We reman commtted to provdng affordable proten sources for mllons of famles through large-scale meat producton conducted n a responsble manner. We also beleve we can learn from other perspectves and promote dalogue by practcng transparency and engagng wth stakeholders. Indeed, we have led the ndustry n revewng our practces and adoptng new ones when they make sense for our company, our customers, and other stakeholders. Our commtment to transton our farms to group housng for sow gestaton and our polcy on antbotcs use exemplfy our leadershp efforts. We see our CSR reports as an mportant way to provde nformaton about our company, communcate our values, and encourage dalogue. We hope you fnd ths report nformatve, and we welcome your comments on t. We reman commtted to provdng affordable proten sources for mllons of famles through large-scale meat producton conducted n a responsble manner. Denns H. Treacy Vce Presdent, Envronmental and Corporate Affars June 15, 2009 7

SMITHFIELD KEY COMMITMENTS CSR FOCUS AREA OVERALL GOALS 2007 08 COMMITMENTS 2008 09 RESULTS FUTURE PLANS ENVIRONMENT 100% complance 100% of the tme Reduce NOVs NOVs reduced by 20% snce 2007 Reduce NOVs through focused tranng and nformaton programs Contnuously revew and reduce envronmental mpacts Reduce emssons and waste generaton Snce 2007, SOx emssons fell by 18.5%; sold waste generaton per anmal unt ncreased 7%; and cardboard recyclng decreased by 33% Reduce sold waste generaton through source reducton, reuse, and expanded recyclng Work toward quantfable, corporate-level envronmental performance targets Improve the effcency of our use of raw materals and energy Communcate envronmental performance and polces to the publc Snce 2007, further processng electrcty effcency mproved by 5.5%; frst processng water use effcency mproved by 0.6%; and natural gas use rose by 19% Reported usng GRI G3 Gudelnes Expanded scope and coverage of reportng Develop specfc targets for energy reducton Expand the scope of nternatonal data to nclude addtonal GRI ndcators ANIMAL WELFARE Adhere to sound anmal welfare practces Integrate audts wth Natonal Pork Board s Pork Qualty Assurance (PQA) Plus program All company-owned and contract farms are n the process of beng certfed and ste assessed under PQA Plus Complete PQA Plus certfcaton and ste assessment at all company-owned and contract farms by September 2009. Comply wth and pass all follow-up thrd-party audts Phase out ndvdual gestaton stalls at all company-owned sow farms; begn weanng pgs at an average of 24 days Frst anmals produced from open gestaton stall facltes reached market n early 2009; completed converson surveys on several dozen farms Convert all ndvdual gestaton stalls to group housng Improve hog handlng and transportaton safety Two accdents n U.S. Contnue to mprove response to accdents to reduce anmal njures and fataltes FOOD SAFETY Mantan excellent food safety record Make safe, hghqualty food Ensure complance wth nternal and government standards Better address pathogen control, food securty, and tranng Further mplementaton of comprehensve new audtng protocols ntroduced n 2006 Worked toward Global Food Safety Intatve certfcaton for Smthfeld facltes 100% complance 100% of the tme Improve proactve R&D research on nutrton Mantan hgh standards n product and servce labelng No sgnfcant penaltes or fnes assocated wth product labelng regulatons Mantan excellent labelng record, ncorporatng Country of Orgn labelng COMMUNITIES Noursh mnds and bodes n the communtes where our employees lve, work, and rase ther famles Support ongong educaton efforts Provde educatonal scholarshps for employees chldren and grandchldren Donated $660,875 to Learners to Leaders program over three years Awarded 48 scholarshps worth $290,000 n 2008 Contnue to close the educaton gap for underprvleged students n our employees communtes Contnue to rase employee awareness of scholarshp opportuntes Provde food to those n need In fscal 2009, provded approxmately 3.7 mllon pounds of food, worth about $4.6 mllon. Partnered wth natonally known chef to spread the message of hunger n Amerca. In Romana, launched Food For Souls Contnue donatng much-needed food for hunger-relef programs

Ths table hghlghts some of our goals, commtments, results, and future plans n the CSR areas we vew as partcularly mportant. We have a number of overarchng goals for our company. Our management systems call for targets to be set n mportant performance areas. CSR FOCUS AREA OVERALL GOALS 2007 08 COMMITMENTS Gven the decentralzed nature of our company, and the fact that the targets vary by busness and faclty, t s dffcult to aggregate company-wde targets. As we contnue to advance our CSR efforts, we wll work toward settng and reachng quantfable targets and goals. 2008 09 RESULTS FUTURE PLANS COMMUNITIES (contnued) Support local envronmental stewardshp efforts Sponsored World Water Montorng Day, an nternatonal program organzed by the Water Envronment Federaton Contnue supportng local efforts EMPLOYEES Treat our employees wth respect, whle protectng ther health and safety Promote dversty and cultvate a representatve U.S. work force Comply wth federal and state mmgraton legslaton by strengthenng our hrng practces and reducng employment of unauthorzed workers Began creatng a leadershp program to develop a more dverse and well-prepared Smthfeld work force. Awarded assocate membershp n U.S. Immgraton and Customs Enforcement s (ICE) new IMAGE program ICE Mutual Agreement between Government and Employers Launch leadershp program Contnue ensurng the ntegrty of our work force Mantan actve employee engagement Conducted employee engagement surveys at ndependent operatng companes and responded to employee concerns from pror surveys Respond to employee concerns and contnue wth engagement efforts Offer opportuntes for further educaton and advancement wthn our company Rembursed 50% to 100% of tuton and lab fees; provded scholarshps for employee dependents Increase employee partcpaton Improve employee retenton Provded strong benefts, compettve wages, and employee-focused programs Contnue decreasng turnover rates HUMAN RIGHTS Ensure far treatment of our employees throughout the company Implement a new Human Rghts Polcy (www.smthfeldfoods.com/employees/ human.aspx) Provded copes of the polcy to all employees, encouragng them to call a toll-free hotlne f they need to report volatons Protect and advance human rghts through dedcated oversght and mplementaton of the polcy HEALTH & SAFETY Foster contnuous mprovement and a culture of safety as a core value Implement Employee Injury Preventon Management System (EIPMS) Enhance employee safety management Rolled out EIPMS audt and conducted lead audtor tranng for 30+ audtors Held monthly conference calls to fnd mprovement opportuntes and completed EIPMS refresher tranng at all locatons Contnue baselne EIPMS audts at all locatons Increase engagement/partcpaton n safety processes. Create new tranng programs Mantan hghest tranng standards Annual Safety Conference conducted onlne throughout the year Conduct 10-hour OSHA General Industry tranng for all conference partcpants Improve safety metrcs OSHA metrcs versus ndustry averages: OSHA TIFR Rate: 6.58 (8.40) OSHA DART Rate: 4.40 (5.50) OSHA DAW Rate: 1.27 (1.20) Improve OSHA metrcs. Contnue to reduce number and severty of njures Acheve external recognton for our efforts Eghteen facltes recognzed by Amercan Meat Insttute (AMI) n Aprl 2009, up from 13 n 2008 Increase number of facltes partcpatng n the AMI recognton program

KEY DATA SUMMARY (See pp. 77 88 for baselne data from our operatons n Poland and Romana.) ENVIRONMENT 1 CY 2006 CY 2007 CY 2008 Ar Emssons NOx 2 (tons) p. 36 381 403 Not Avalable SOx 2 (tons) p. 36 562 458 Not Avalable Complance Notces of Volaton (NOVs) p. 42 64 50 40 Monetary Value of Sgnfcant Fnes p. 42 $183,952 $266,446 $69,616 FY 2007 FY 2008 FY 2009 Energy/Greenhouse Gas Emssons Electrcty Consumpton (kwh n mllons) p. 32 1,031 1,271 1,529 Drect & Indrect GHG Emssons 3 (metrc tons CO2e) p. 34 Not Avalable 1,153,634 1,354,640 Water Water Use (gallons n bllons) p. 37 6.9 7.2 8.4 Sold Waste Sold Waste Generaton (thousand tons) p. 39 84.6 87.5 154.5 Cardboard Recyclng (thousand tons) p. 40 24.3 48.2 32.4 1 All envronmental data s for processng facltes, except NOVs, whch nclude farms. 2 Calendar year 2008 data scheduled for release n md-2009. 3 GHG emssons data were not recorded pror to 2007. 4 Feed-grade antbotc data suppled by AgProvson. 5 Analyss now ncludes Premum Standard Farms, purchased n 2007. EMPLOYEES ANIMAL WELFARE COMMUNITIES CY 2006 CY 2007 CY 2008 Health and Safety Rates (per 100 employees) Total Injury and Illness Frequency Rate (TIFR) p. 72 8.74 6.76 6.58 Days Away, Restrcted, Transferred (DART) Rate p. 73 5.83 4.04 4.40 Days Away from Work (DAW) Rate p. 73 1.49 1.27 1.29 Complance OSHA Inspectons p. 73 26 18 25 OSHA Notces of Volaton p. 73 32 12 40 OSHA Penaltes p. 73 $41,404 $11,037 $38,787 FY 2007 FY 2008 FY 2009 Transportaton Market Hog Accdents p. 51 3 6 2 Hog Fataltes p. 51 83 243 33 Antbotcs Use 4, 5 Nov '05-Oct '06 Nov '06-Oct '07 Nov '07-Oct '08 Feed-Grade Medcatons Purchased (lbs. per 100 lbs. sold) p. 50 0.155 0.151 0.107 FY 2007 FY 2008 FY 2009 Corporate Gvng Smthfeld-Luter Foundaton Scholarshps (Total $ Value) p. 60 $282,256 $349,979 $290,000 Learners to Leaders p. 60 $277,490 $383,385 $319,415 Food Donatons Overall Food Donatons (lbs. of food) p. 62 1.8 mllon 3.3 mllon 3.7 mllon

A DIVERSIFIED FOOD PRODUCTION AND MARKETING COMPANY ABOUT SMITHFIELD FOODS Smthfeld Foods, Inc., s a global company commtted to provdng good food, responsbly. We are the world s largest hog producer and pork processor, wth more than 50 brands of pork and turkey products and more than 200 gourmet foods. Headquartered n Smthfeld, Vrgna, we have operatons n 13 countres through wholly owned subsdares and jont ventures. The majorty of our facltes and our approxmately 52,400 employees are n the Unted States. Internatonally, we have controllng nterests n meat producton, packagng, and dstrbuton operatons n Poland, Romana, and the Unted Kngdom, along wth jont ventures and mnorty nterests n Belgum, Chna, France, Germany, Italy, Mexco, the Netherlands, Portugal, and Span. Each of our operatng companes and jont ventures operates ndependently and mantans ts ndvdual dentty. Some of our popular brands nclude Smthfeld, John Morrell, Farmland, and Butterball. Our sales for fscal 2009 reached nearly $12.5 bllon, up from $11.4 bllon n fscal 2008. More detaled nformaton can be found n our annual report, avalable on our Web ste at nvestors.smthfeldfoods.com/annuals.cfm. Our products are sold to more than 4,000 customers n the Unted States and nternatonally, ncludng supermarket and hotel chans, wholesale dstrbutors, restaurants, hosptals, and other nsttutons. We also sell to companes that further process our meats nto consumer food products. We consstently appear on the Fortune lst of Most Admred Companes, rankng ffth among all U.S. food producton companes n 2009. Also n 2009, we were ncluded among CRO magazne s latest lst of 100 Best Corporate Ctzens. MERGERS AND ACQUISITIONS Over the years, we have completed a seres of mergers and acqustons that have made us a global company and a leadng food producer. Most recently, n December 2008, we fnalzed the merger of Campofrío Almentacón, S.A., wth Groupe Smthfeld Holdngs S.L. Smthfeld Foods owns 37 percent of the new company, now known as Campofrío Food Group. The merger, whch created the largest pan-european company n the packaged meats sector and one of the fve largest worldwde, represented a major step n our global growth strategy. In June 2008, we announced that we had entered nto an agreement wth COFCO Lmted, Chna s largest natonal agrcultural tradng and processng company, to sell 7 mllon shares. Chna s experencng rapd growth n pork consumpton, consumng more pork than the rest of the world combned. 11 t ABOUT SMITHFIELD FOODS

HOG PRODUCTION FISCAL 2009 SALES $2.8 BILLION*** PORK FISCAL 2009 SALES $10.5 BILLION Murphy-Brown LLC The Smthfeld Packng Company, Inc. John Morrell & Co. Farmland Foods, Inc. Premum Standard Farms, LLC Smthfeld Specalty Foods Group Cumberland Gap Provson Co. Armour- Eckrch Meats, LLC Curly s Foods, Inc. Patrck Cudahy Inc. Cook s Hams, Inc. North Sde Foods Corp. Note: Fscal 2009 sales nclude ntersegment sales of $(2.4) bllon. 12

OUR FAMILY OF COMPANIES Ths chart provdes an overvew of Smthfeld Foods organzatonal structure. Our ndependent operatng companes and jont ventures mantan ther ndvdual denttes, and together they make us a leader n several key categores. INTERNATIONAL FISCAL 2009 SALES $1.4 BILLION*** OTHER FISCAL 2009 SALES $250.8 MILLION HOG PRODUCTION MEAT PROCESSING AgrPlus (Poland) Smthfeld Foods Ltd. (U.K.) Campofrío Food Group, S.A.** Butterball, LLC* Carroll s Turkey LLC Smthfeld Ferme (Romana) Anmex (Poland) Maverck Food Co. Ltd. (Chna)* Granjas Carroll de Méxco (Mexco)* Smthfeld Prod (Romana) Norson (Mexco)* Norson (Mexco)* Agroalm (Romana) * Jont venture (not ncluded n sales fgures) ** Smthfeld Foods owns a 37 percent stake (not ncluded n sales fgures). *** Internatonal hog producton sales are reported n the Hog Producton segment. 13

SMITHFIELD FOODS PRODUCTION GENERAL 2008 2009 Employees 1 58,100 52,400 Brands 50+ 50+ Products 200+ 200+ Sales 2 $11.4 bllon $12.5 bllon Customers 4,000+ 4,000+ PORK Pounds of Fresh Pork Produced 4.0 bllon 4.5 bllon Pounds of Packaged Meats Produced 3.1 bllon 3.1 bllon Sales $9.6 bllon $10.5 bllon HOG PRODUCTION Sows 1.1 mllon 1.1 mllon Market Hogs Produced 19.4 mllon 20.0 mllon Jont Venture Sows 98,000 90,000 Jont Venture Market Hogs Produced 1.5 mllon 1.7 mllon Hog Producton Sales $2.4 bllon $2.8 bllon INTERNATIONAL Products Produced (lbs.) 870 mllon 806 mllon Sales $1.2 bllon $1.4 bllon OTHER Sales 2 $149 mllon $251 mllon All values reported by fscal year 1 2008 total employees ncludes Smthfeld Beef Group, whch was sold to JBS S.A. n October 2008. 2 Includes sales of wholly owned lve cattle nventores that were excluded from the sale of Smthfeld Beef Group, whch was completed n October 2008. ABOUT SMITHFIELD FOODS t 14

CHANGES IN OPERATIONS Pork Group We are restructurng our pork group to consoldate and streamlne ts corporate structure and manufacturng operatons and make the company more compettve. The reorganzaton, whch was announced n February 2009, wll reduce the number of ndependent operatng companes (IOCs) n the pork group from seven to three. Four exstng IOCs wll be combned under the varous busness unts of The Smthfeld Packng Company, Inc., John Morrell & Co., and Farmland Foods, Inc. As a result of the restructurng, sx plants wll close, and we expect to elmnate approxmately 1,800 postons. Wherever possble we wll offer transfers to employees, and we are provdng assstance to help others fnd employment wthn ther local communtes. All employees were provded wth a 60-day closure notfcaton, as requred under the federal Worker Adjustment and Retranng Notfcaton Act (WARN). Sow Producton Begnnng n the thrd quarter of fscal 2008 through the thrd quarter of fscal 2009, we reduced the sze of our U.S. sow herd by 10 percent n order to reduce the oversupply of hogs n the U.S. market. Ths has resulted n a reducton of 100,000 sows, whch wll result n approxmately 1.4 mllon fewer market hogs n fscal 2010 and approxmately 1.8 mllon fewer market hogs annually thereafter. In addton, n June 2009 we announced that we wll further reduce our sow herd by 3 percent, or approxmately 30,000 sows. We beleve that ths reducton wll result n approxmately 540,000 fewer market hogs annually. Smthfeld Beef Group, Inc. In October 2008, we completed the sale of Smthfeld Beef Group, Inc., our beef processng and cattle feedng operaton, to JBS S.A. for $575.5 mllon n cash. Smthfeld had only a small market share among U.S. beef producers and lttle potental to grow. The net proceeds from the sale helped Smthfeld dramatcally mprove lqudty. STRUCTURE OF OUR MAIN BUSINESSES Smthfeld Foods conducts ts busness through fve reportng segments: Pork, Internatonal, Hog Producton, Other, and Corporate, each of whch ncludes a number of subsdares, jont ventures, and other nvestments. Pork Segment The Pork segment produces a wde varety of fresh pork and packaged meat products n the Unted States and markets them natonwde and nternatonally. In fscal 2009, we sold approxmately 4.5 bllon pounds of fresh pork and 3.1 bllon pounds of packaged meats. Pork segment sales totaled $10.5 bllon n fscal 2009. 15 t ABOUT SMITHFIELD FOODS

Hog Producton Segment We operate numerous hog producton facltes wth approxmately 1.1 mllon sows producng about 20 mllon market hogs annually worldwde. Through jont ventures, we have another 90,000 sows producng about 1.7 mllon market hogs a year. The Hog Producton segment s Murphy-Brown LLC s the world s largest hog producer, wth sales of $2.8 bllon n fscal 2009. Internatonal Segment Smthfeld Foods Internatonal segment, whch accounts for approxmately 8,600 employees, produces a wde varety of fresh and packaged meats that are sold all over the world. In fscal 2009, our nternatonal operatons processed approxmately 806 mllon pounds of meat products. Sales for ths segment reached approxmately $1.4 bllon n fscal 2009. Other Segment The Other segment s composed of our turkey producton operatons, our 49 percent nterest n Butterball, LLC, the naton s largest turkey producer, our remanng lve cattle operatons, and our nterest n lve cattle jont venture operatons. For a detaled descrpton of our busnesses, read Smthfeld Foods Form 10-K at nvestors.smthfeldfoods.com/sec.cfm. ABOUT SMITHFIELD FOODS t 16

CORPORATE SOCIAL RESPONSIBILITY ACROSS OUR BUSINESS We have focused ths report on the key CSR topcs hghlghted below. The dagram llustrates the major components of our busness and the stages of our value chan n whch the key topcs arse. GOVERNANCE ANIMAL WELFARE FOOD SAFETY SMITHFIELD FOODS HOG PRODUCTION FRESH PORK (FIRST PROCESSING) PACKAGED MEATS (FURTHER PROCESSING) TRANSPORTATION RETAIL, FOOD- SERVICE, EXPORT, AND PROCESSING & INDUSTRIAL CUSTOMERS MEALTIME (END CONSUMERS) COMMUNITIES EMPLOYEES ENVIRONMENT HUMAN RIGHTS HEALTH & SAFETY

GOVERNANCE AND MANAGEMENT Smthfeld s msson s to be a trusted food ndustry leader that brngs delcous and nutrtous meat and specalty food products to mllons every day, wth a strong commtment to corporate socal responsblty. The company s core values state that we wll constantly strve to produce safe, hgh-qualty, nutrtous food, to be an employer of choce, to advance anmal welfare, to protect the envronment, and to have a postve mpact on our communtes. Our strong framework of governance, management, and accountablty for ethcal behavor s the key to upholdng our msson and values, and mantanng the trust of nvestors and stakeholders. In ths secton of our report, we dscuss our governance structures, how we manage CSR ssues, our ethcal standards and programs, our stakeholder engagement efforts, publc polcy ssues of nterest to our company, and our poltcal contrbutons. CORPORATE GOVERNANCE The Smthfeld board of drectors (the Board ) ncludes 13 members, nne of whom are ndependent (as determned by the Board n accordance wth the gudelnes of the New York Stock Exchange and other organzatons). The Board has establshed fve commttees: Audt Compensaton Executve Nomnatng and Governance Penson and Investment We also have an executve-level ethcs and complance commttee (the ECC ), chared by our chef legal offcer, whch oversees the full range of complance ssues for Smthfeld. The char of the ECC regularly reports to the audt commttee of the Board on rsks and complance ssues related to the envronment, anmal welfare, and other CSR ssues. The Smthfeld Foods vce presdent for envronmental and corporate affars, who sts on the ECC, s responsble for nformng the Board about Smthfeld s CSR ssues and progress and regularly brefs the audt commttee on the progress of the CSR program. Addtonal corporate governance nformaton, ncludng our governance gudelnes and commttee charters, s avalable on the Web at nvestors.smthfeldfoods.com/governance.cfm and www.smthfeldfoods.com/pdf/governance-appendx.pdf. CSR MANAGEMENT Smthfeld Foods tradtonally has operated wth a decentralzed management structure and phlosophy. Our subsdares have GOVERNANCE AND MANAGEMENT t 18

ther own corporate functons and staffs and manage many ssues ndependently, wthn an overall corporate framework that establshes expectatons for all our operatons. Our Code of Busness Conduct and Ethcs, for example, apples to all our global operatons. In the early part of the decade, we dentfed several CSR ssues that merted a more consstent management approach across the company n order to meet our goal to lead the ndustry n our practces. The frst such ssue was envronmental management. We mplemented and certfed envronmental management systems at all of our U.S. farms and processng facltes and some overseas operatons. Recognzng the value of applyng structured, dscplned management systems to CSR ssues, we have expanded that approach to anmal welfare, employee health and safety, and food safety. Common elements of the management systems nclude polces, employee tranng, goal settng, correctve acton, thrd-party audtng, and executve revew. As needed, we have formed corporate or cross-subsdary commttees to develop and mplement consstent approaches to our CSR ssues. For example, n 2003 Smthfeld establshed a sustanablty commttee consstng of senor managers. The commttee s responsble for helpng the company address the ntegraton of the fnancal, envronmental, and socal aspects of ts busness. Smthfeld s vce presdent of envronmental and corporate affars, who s a corporate offcer, manages the company s envronmental programs, revews recommendatons from the sustanablty commttee, and drects strateges on envronmental and socal topcs. Ths offcer reports drectly to the chef executve offcer and executve vce presdent. Other commttees nclude an anmal welfare commttee, a food safety commttee, and a commttee focused on hunger relef that coordnates food donatons. Most recently, we formed a dversty commttee to help the company dentfy opportuntes for strengthenng relatonshps wth our customers, our employees, our supplers, and our communtes. We have developed these approaches n our U.S. operatons. We also are phasng n our management system approaches at our wholly owned nternatonal subsdares n Poland and Romana, as well as addressng CSR ssues unque to those regons. Ths report covers those nternatonal operatons, located n Poland and Romana, provdng a baselne data set and nformaton on ther management of CSR ssues. Of course, regulatory frameworks vary from country to country. Therefore, we, lke many other companes, are workng hard to algn our goals and approaches to mportant ssues such as envronmental management wth our nternatonal operatons. Our envronmental management expertse s avalable to the companes n whch we hold a mnorty nterest. We have worked wth several of these companes to address partcular envronmental ssues, and we encourage them to utlze envronmental complance practces that are consstent wth our own. We ntend to expand these efforts wth our jont ventures, ncludng those n whch we recently acqured an nterest. In addton, we wll contnue to dentfy emergng CSR ssues where we operate and develop systematc approaches to managng them. Ths report ncludes examples of ntatves at jont venture facltes n Mexco. (See CSR Spotlght 4 on page 89.) When we acqure a new company, we conduct varous revews, ncludng assessng the company s practces related to employees, safety, and the envronment. We also try to address the current relatonshp wth local regulators and the communtes n whch 19 t GOVERNANCE AND MANAGEMENT

they are based. Followng an acquston, mplementaton of our envronmental and health and safety management systems (descrbed n the respectve sectons of ths report) begns promptly and helps us determne practces already n place as well as gaps. We then use our corporate-level tranng programs and ntranet stes to communcate Smthfeld best practces. ETHICS AND COMPLIANCE Smthfeld mantans a Code of Busness Conduct and Ethcs (the Code ) applcable to all employees, offcers, and drectors. We publsh the Code n the fve major languages of the countres n whch we have operatons. It conveys the company s polces and practces for conductng busness n accordance wth applcable law and the hghest ethcal standards. Any waver of the Code for executve offcers or drectors can be made only by the Board or ts Audt Commttee and must be promptly dsclosed. Our Board adopted the Code, and the Board s Nomnatng and Governance Commttees revew t perodcally. The ECC admnsters the Code. All drectors and executve offcers are requred to complete an annual certfcaton relatng to ethcs and complance wth the law, the Code, and other company polces. The char of the ECC reports perodcally to the Audt Commttee on the admnstraton of the Code and s requred to report promptly any volaton of the Code by an executve offcer or drector to the Charman of the Audt Commttee. The Code and any amendments or wavers are avalable at www.smthfeldfoods.com. The company also has provded employees wth opportuntes to report ethcs volatons or smlar concerns through an anonymous telephone hotlne. The company revews and responds to all hotlne complants. STAKEHOLDERS We defne as stakeholders all persons or organzatons who are mpacted or beleve they are mpacted by the operatons or practces of the company. Interacton wth dverse stakeholders allows us to engage wth and learn from these groups. We contnuously conduct an nternal analyss to dentfy stakeholders. In general, we have dentfed and defned the followng stakeholders as groups we engage wth regularly: Internal stakeholders, ncludng company employees, faclty management, and corporate management, among others. External stakeholders, ncludng shareholders and nvestors; the customers and supplers wth whom we do busness; the end consumers of our products; federal, state, and local governments and regulatory enttes; nongovernmental organzatons; and the communtes n whch our employees lve and work. GOVERNANCE AND MANAGEMENT t 20

In 2008, we expanded our stakeholder engagement efforts on the local level by workng closely wth Ceres on the Faclty Reportng Project (FRP), a local-level sustanablty reportng process desgned to engage stakeholders and dsclose the mpacts companes have on communtes n whch they operate. Smthfeld s FRP s descrbed n CSR Spotlght 1 on page 23. Smthfeld has made a practce of frank and tmely communcatons wth our key stakeholders by lstenng, learnng, and communcatng openly. Stakeholders are typcally engaged drectly or as drected by and through the efforts of Smthfeld s vce presdent for envronmental and corporate affars. Many of our engagements occur around partcular ssues. For example, several actons dscussed n the Anmal Welfare secton resulted from stakeholder consultaton as follows: In 2007, followng dscussons wth and nput from company customers and nongovernmental organzatons, Smthfeld announced plans to phase out the use of sow gestaton crates on hog farms and replace them wth group housng. In 2005, Smthfeld executed an agreement wth Compass Group, one of the world s largest caterng companes, and Envronmental Defense Fund, a nonproft advocacy group, to report and track our use of antbotcs. The agreement bult upon an antbotcs polcy that had been n exstence at Murphy-Brown for some tme. In 2008, ths stakeholder nteracton was hghlghted n a case study n the Gude to Successful Corporate-NGO Partnershps, developed by the Global Envronmental Management Intatve (GEMI, of whch Smthfeld s a member) and Envronmental Defense Fund. Smthfeld responded to suggestons by anmal welfare groups a stakeholder segment wth whch the meat ndustry has had a sometmes-adversaral relatonshp to revse ts procedures for respondng to road accdents nvolvng the transportaton of anmals. The changes have resulted n mprovements to the handlng of accdents. The followng are addtonal examples of our nteractons wth stakeholders: Employees are one of our most mportant stakeholder groups. We are contnung ntatves to engage wth employees on a range of ssues, ncludng dversty. (Please see the Employees secton for more detal.) Increasngly, our customers are hearng from ther customers the ultmate consumers about CSR ssues of concern to them. We partcpate n suppler CSR surveys and communcate drectly wth customers, ncludng workng wth our customers to develop approaches to ssues rangng from anmal welfare to nutrton to envronmental and health and safety practces. We are respondng n numerous ways, ncludng offerng low-fat and low-sodum products. We have also engaged our sales force, whch provdes the prmary customer pont of contact, to communcate our approach to CSR so they can nteract knowledgeably wth our customers on these ssues. The government s an mportant stakeholder, and Smthfeld contnues to explore nnovatve ntatves wth elected offcals. For example, Smthfeld entered nto a voluntary agreement wth the North Carolna attorney general s offce to nvestgate 21 t GOVERNANCE AND MANAGEMENT

and partcpate n a varety of envronmental enhancement efforts. These nclude commttng $15 mllon to fund the ndependent nvestgaton of envronmentally superor technologes, as that term s defned n the agreement, for farm manure management, as well as $50 mllon over 25 years to fund envronmental enhancement projects n the state. Smthfeld also entered nto an agreement wth the Iowa attorney general to provde $100,000 per year for 10 years to fund a program for the awardng of annual grants to Iowa ctzens or enttes to pursue nnovatve programs to advance swne producton n that state. The grants are awarded to applcants selected by the attorney general n collaboraton wth Iowa legslators and Smthfeld. We operate n a hghly regulated ndustry. Thus, establshng and mantanng good relatonshps wth regulatory agences at all levels s key to our ablty to operate successfully. We cooperate wth agences n a varety of ways. For example, three of our ndependent operatng company facltes partcpated n the Performance Track program of the U.S. Envronmental Protecton Agency (EPA). Through ths program, faclty managers worked closely wth regulators to dentfy opportuntes to exceed legal requrements. Partcpatng companes typcally set publc, measurable goals to mprove the qualty of ar, water, and land. For example, Smthfeld Transportaton s Smthfeld Dvson, the frst of our facltes to partcpate, pledged to reduce ts energy use and mprove ts management of nonhazardous waste. Even though the EPA has recently elmnated the Performance Track program, Smthfeld contnues to benchmark mprovement under the crtera establshed for the program. Our supplers are mportant stakeholders n our value chan. As a vertcally ntegrated company, we are our own bggest suppler. Nonetheless, we nteract regularly wth external supplers. We work closely wth our contract growers on envronmental ssues, as dscussed n the Envronment secton of ths report. Several organzatons, ncludng Ceres, Envronmental Defense Fund, and the Nathan Cummngs Foundaton, have revewed our prevous reports and/or a draft of ths report and provded valuable feedback. We have tred to respond to the feedback n preparng ths report. For example, we have expanded coverage of our nternatonal operatons and ncreased the number of operatons covered by our data set. For the 2007/08 report and agan ths year, we used the Global Reportng Intatve G3 Gudelnes and had GRI check our applcaton-level declaraton. We are also reportng on key ssues such as anmal welfare n more depth. Our engagement wth dverse stakeholders s also reflected n the lst of organzatons n whch we hold membershps. A comprehensve lst of these membershps s avalable on our Web ste at www.smthfeldfoods.com. GOVERNANCE AND MANAGEMENT t 22

CSR SPOTLIGHT 1 Smthfeld and Stakeholders Plot Farm-to-Fork Sustanablty Reportng As a vertcally ntegrated company, Smthfeld s value chan s complex and ncludes dverse types of operatons. For several years, Smthfeld has engaged wth stakeholders nterested n the company s envronmental performance to ncrease ts publc reportng on envronmental and other sustanablty ssues across the busness. The steady expanson of nformaton n ths report s, n part, a result of that engagement. Durng 2008, three Smthfeld facltes reached out to stakeholders and prepared communty-level sustanablty reports amed at provdng a frst-ever, comprehensve, farm-to-fork look at sustanablty ssues and ther management across the pork producton value chan. After consderng requests from the Nathan Cummngs Foundaton, a nonproft phlanthropc organzaton, and other stakeholders for addtonal nformaton on the envronmental performance of our farms, several of our facltes partnered wth Ceres, a natonal network of nvestors, envronmental organzatons, and other publc nterest groups: PRODUCTION Blueberry Sow Farm, a Murphy-Brown sow farm n Ammon, North Carolna Smthfeld s frst faclty-level plot report usng the Ceres framework took place n 2006 and was produced by the North Sde Foods faclty. The plot project was a valuable learnng experence for all partcpants and accomplshed the followng: Drove external relatonshp buldng that has helped strengthen tes wth customers, communty members, regulators, and other stakeholders, and has helped confrm the facltes understandng of external stakeholders perceptons and prortes related to sustanablty. Led to the development of addtonal faclty sustanablty reports that provded a comprehensve and balanced pcture of faclty mpacts, hghlghtng the mportance of the company s contrbutons to communtes and employees, as well as envronmental mpacts. Engaged employees on ssues outsde ther day-to-day responsbltes and provded a broader forum for trend dentfcaton and problem solvng related to sustanablty ssues. FIRST PROCESSING a Smthfeld North slaughterng and processng faclty n Smthfeld, Vrgna PACKAGING the North Sde Foods further processng faclty n Cummng, Georga The faclty sustanablty reports are avalable by requestng them usng the general contact nformaton on the company Web ste. We contnue to assess whether addtonal facltes and communtes may beneft from ths form of reportng. Ceres provded tranng, tools, and advce to gude the facltes through the stakeholder dalogue and reportng process. Stakeholder engagement vared from meetngs wth regulators and nongovernmental organzatons to a communty cookout at the Blueberry Sow Farm. These efforts dentfed ssues of nterest to stakeholders that were then addressed n the reports. We followed the format of the Ceres Faclty Reportng Project, whch seeks to provde a generally accepted faclty-level economc, envronmental, and socal sustanablty reportng framework. The reportng addresses envronmental complance and stewardshp, employee health and safety, anmal well-beng, food safety, and communty nvolvement.

PUBLIC POLICY Publc Polcy Issues of Interest We partcpate n legslatve and regulatory processes both as an ndvdual company and through ndustry assocatons. We beleve that engagement n the poltcal process s mportant n makng our vews heard on ssues of sgnfcance to the busness. Smthfeld representatves partcpate n many cross-ndustry boards and commssons at the natonal and state levels, ncludng, for example, servng on the board of drectors of the Natonal Assocaton of Manufacturers (NAM), and servng as the foundng char of NAM s Sustanablty Task Force. We also value our partcpaton as a member of the EPA s Farm, Ranch, and Rural Communtes Federal Advsory Commttee (FRRCC). The Commttee works to strengthen relatons wth the agrculture communty and focuses on the mpacts of the EPA s agrculture-related programs, polces, and regulatons, ncludng those regardng clmate change and renewable energy; a comprehensve envronmental strategy for lvestock operatons; and areas of common nterest between sustanable agrculture and protecton of the envronment. The followng are among the most sgnfcant current publc polcy ssues for our company: The Farm Bll: We took an actve role n the debate on the Farm Bll that was passed n 2008. Of partcular concern to our company was an effort to ban meatpackers from ownng lvestock. Many n our ndustry, Smthfeld ncluded, choose to own or contract for lvestock because t s the most effcent way to delver the consstent-qualty meat demanded by modern consumers. Gven our busness strategy of vertcal ntegraton, we strongly opposed ths provson and were glad t was not ncluded n the fnal bll. Country of Orgn Labelng: New rules on country of orgn labelng were fnalzed n early 2009, after years of debate. Smthfeld joned wth other affected companes to engage Congress and the U.S. Department of Agrculture (USDA) n dalogue about the best way to mplement the changes to acheve ntent of the new requrements by provdng nformaton to consumers whle managng the practcal challenges of labelng each product. Imports of Poultry Products from Chna: Due to an obscure provson n an appropratons bll, mports of frozen processed poultry products from Chna have been effectvely prohbted. Ths ban on poultry products may make t dffcult for companes lke Smthfeld to export products to Chna. Smthfeld s workng wth others n the ndustry to persuade Congress to resolve ths ssue. Immgraton Reform: We are closely followng the mmgraton reform ssue because we have many valued employees who are legal mmgrants. We are a naton of mmgrants. Just lke ther Amercan-born co-workers, our mmgrant GOVERNANCE AND MANAGEMENT t 24

employees want ther chldren to enjoy greater opportuntes and the stablty that enables famles to stay together and thrve. Smthfeld has not endorsed any specfc legslaton, but we do support legslaton that ncludes protectons for legal mmgrants and ther employers, and provdes a path to ctzenshp for mmgrant workers. Food Safety: Congress s now consderng legslaton to brng sgnfcant change to the food safety system. Smthfeld ntends to carefully revew the substantve detals of that debate and make comments to key polcymakers where approprate. Smthfeld remans commtted to workng wth the USDA and the federal government to ensure the safest possble food supply. We have taken comprehensve steps n our facltes to ensure food safety, as dscussed n the Food Safety secton of the report. Other Issues: Several other ssues may be the subject of legslatve acton durng 2009. One such ssue s restrctons on the use of antbotcs n feedng and rasng anmals. We have engaged wth stakeholders on antbotcs ssues, as descrbed n ths secton, and follow a strong antbotcs polcy, as dscussed n the Anmal Welfare secton. We are closely followng legslatve developments on the ssue. Another ssue s the card check bll. We have spoken out n opposton to the legslaton, whch would allow a unonzaton decson by workers wthout a secret-ballot electon. We are also montorng developments on greenhouse gas regulaton and clmate change legslaton for ther mpact n Smthfeld. Poltcal Contrbutons Through corporate contrbutons and donatons made by our poltcal acton commttee (HAMPAC), Smthfeld Foods regularly supports poltcal canddates seekng offce at the local, state, and federal levels. Ths s done to help ensure the electon of those ndvduals who support polces that are far to our company and share our concerns about the future of the food producton ndustry. Durng the 2008 electon cycle, Smthfeld Foods and ts afflated PAC contrbuted a total of $252,200 to canddates across the naton. Smthfeld does not endorse one party over another and bases contrbutons largely on whch party holds the majorty n the state or federal legslature and on ndvdual canddates who share the values descrbed n the precedng paragraph. For more nformaton about Smthfeld Foods and ts PAC, vst www.hampac.org or e-mal hampac@smthfeldfoods.com. 25 t GOVERNANCE AND MANAGEMENT

ENVIRONMENT OUR COMMITMENT: REDUCING OUR IMPACT At Smthfeld, we am to lead our ndustry by mnmzng the envronmental mpacts of meat producton and processng wth methods that are socally responsble and economcally sound. In 2000, Smthfeld adopted an envronmental polcy commttng us to envronmental performance goals based on contnuous mprovement, nnovaton, and technology development. Our goals are general to account for varatons among locatons and ndependent operatng companes. They nclude the followng: Achevng 100 percent complance wth envronmental laws and regulatons 100 percent of the tme Contnuously mprovng envronmental performance Reducng emssons and waste generaton Improvng the effcency of our use of raw materals and energy Reducng operatng and captal costs Workng toward envronmental performance targets Communcatng envronmental performance and polces to the publc We share best practces throughout our global network, extendng our outreach efforts to our supply chan, ncludng our contract growers. Despte fnancal challenges presented by the current economy, we are commtted to establshng and meetng hgher, quantfable performance goals. OUR MANAGEMENT APPROACH: CONTINUOUS IMPROVEMENT A dedcated sustanablty commttee, made up of senor managers from our human resources, envronment, safety, legal, and fnance departments, oversees Smthfeld s envronmental strategy. The commttee explores ways to balance fnancal, envronmental, and socal performance across our busness. Our polces, management systems, and programs create accountablty and provde support for mantanng and advancng our commtment to mproved envronmental performance. They also work to antcpate and meet the expectatons of customers, consumers, regulatory bodes, host communtes, and other key stakeholders. Our Envronmental Polcy Statement can be found on our Web ste at www.smthfeldfoods.com/responsblty/eps.aspx. Envronmental Management Systems (EMS) Smthfeld uses the Internatonal Organzaton for Standardzaton (ISO) 14001 standard to mtgate and mnmze the potental envronmental mpact of pork producton and food processng. We beleve that certfcaton to ISO 14001 has strengthened our ENVIRONMENT t 26

ENVIRONMENTAL INPUTS AND OUTPUTS ACROSS OUR BUSINESS Ths dagram llustrates the major envronmental nputs and outputs nvolved at key stages of our value chan, from the frst phases of hog producton through the tme our foods reach consumers. INPUTS ENERGY WATER HOG FEED ENERGY, WATER, PACKAGING, FOOD INGREDIENTS, PRESERVATIVES, REFRIGERANTS, CLEANERS, PAPER, ADDITIVES, CARDBOARD DIESEL FUEL LUBRICANTS ENERGY REFRIGERANTS PACKAGING ENERGY REFRIGERANTS PACKAGING SMITHFIELD FOODS HOG PRODUCTION FRESH PORK (FIRST PROCESSING) PACKAGED MEATS (FURTHER PROCESSING) TRANSPORTATION RETAIL, FOOD- SERVICE, EXPORT, AND PROCESSING & INDUSTRIAL CUSTOMERS MEALTIME (END CONSUMERS) OUTPUTS GHG EMISSIONS ANIMAL MANURE WASTEWATER, GHG EMISSIONS, AIR EMISSIONS, RECYCLABLES, FOOD RESIDUES, SOLID WASTE GHG EMISSIONS AIR EMISSIONS WASTEWATER, GHG EMISSIONS, AIR EMISSIONS, RECYCLABLES, FOOD RESIDUES, SOLID WASTE GHG EMISSIONS SOLID WASTE WASTEWATER CROP PRODUCTION BIOGAS FOR REUSE

CURE Program Improves Wldlfe Habtat In August 2003, the North Carolna Wldlfe Resources Commsson (WRC) made our Murphy-Brown subsdary ts frst corporate partner n ts Cooperatve Upland-habtat Restoraton and Enhancement (CURE) program, desgned to ncrease and enhance wldlfe habtats. Murphy-Brown gave the WRC access to ts propertes for habtat management and conservaton research. The frst ste selected n February 2005 was the Mr. Holmes Farm complex n Ammon, North Carolna. Over 16 months, the WRC planted 60 acres of natve warm-season grass and nstalled 150 acres of feld borders to maxmze nestng grounds for brds. The WRC holds workshops at the ste for farmers, local governments, landowners, and prvate conservaton groups. Issues dscussed nclude buffer system use, upland habtat management, forestry and burnng practces for habtat enhancement, and benefcal predacous nsect populatons n wldflower habtat. The ste has shown sgnfcant ncreases n brdcall counts for three seasons. In 2007, the WRC receved fundng for another three years to expand the CURE project to other Murphy-Brown farms and local propertes. In 2006 and 2008, the WRC s Small Game Commttee awarded Murphy-Brown the Lawrence G. Dedrck Small Game Award. For more on habtat restoraton, vst www.ncwldlfe.org/cure/ndex.htm. envronmental performance by requrng a long-term management plan ntegratng regular thrd-party audts, goal settng, correctve acton, documentaton, and executve revew. Smthfeld s Envronmental Management System (EMS), whch conforms to the ISO 14001 standard, addresses the sgnfcant envronmental aspects of our operatons, provdes employee tranng programs, and facltates engagement wth local communtes and regulators. Most mportantly, the EMS allows the collecton, analyss, and reportng of relevant envronmental data to help ensure our complance wth all applcable envronmental legslaton and regulatons. Our goal s to acheve and mantan certfcaton of all wholly owned facltes. In 2001, Smthfeld completed ISO 14001 certfcaton of all domestc company-owned farms, becomng the frst lvestock operaton n the world to do so. In 2004, the company s pork processng plant n Tar Heel, North Carolna, became the world s frst major meat processng plant to acheve ISO 14001 certfcaton. That same year, we completed certfcaton for all company meat processng plants. In 2009, Premum Standard Farms, a Murphy-Brown subsdary that was acqured n 2007, completed ISO 14001 certfcaton for all of ts locatons. AgrPlus, our hog producton afflate n Poland, became the frst Polsh operaton to obtan ISO 14001 certfcaton for ts 28 farms n 2005, and passed recertfcaton audts for all farms n January 2008. Smthfeld Ferme and Smthfeld Prod n Romana have establshed envronmental management systems for ther operatons and wll be pursung certfcaton n 2009. Ths year, several facltes postponed thrd-party revew for ISO 14001 certfcaton due to budget cuts. They contnued to mplement ther EMS durng the year and were preparng to be audted and certfed by September 2009. Tranng Tranng s fundamental to contnued mprovement n our operatons. Indvdual faclty tranng programs, coupled wth a company-wde annual tranng conference, create a culture of envronmental awareness that helps us to reduce our envronmental footprnt. We requre all envronmental coordnators to partcpate n envronmental tranng when they are hred and to update ther tranng throughout ther career. In 2008, n response to the economc downturn, our annual Envronmental Tranng Conference was converted from n-person meetngs to a Webnar format. Smthfeld employees receved tutorals on topcs crtcal to the food processng ndustry, ncludng envronmental regulatory requrements, ncdent notfcaton procedures, water conservaton, and wastewater treatment. Twelve envronmental tranng sessons were repeated weekly over a fve-week perod. Attendance was mandatory, ENVIRONMENT t 28

and taken at each sesson to ensure that at least one person per faclty attended each sesson. Our ISO 14001 thrd-party audtors also attended to ensure that the tranng met our annual nternal tranng commtments. Envronmental Performance of Contract Growers Smthfeld s ndependent operatng companes use roughly 2,785 contract farms (nearly 2,155 of whch are n the Unted States) to supply our processng facltes wth hogs. Murphy-Brown supples the lvestock, feed, and veternary care to the contract farms, whle the contract farmers themselves provde the ntal faclty nvestment, labor, and front-lne management. In fscal 2008, approxmately 65 percent of our Hog Producton segment s market hogs were fnshed on contract farms. Smthfeld requres as a condton of ther contracts that all contract growers comply wth all relevant envronmental laws and permt requrements. However, Smthfeld does not mpose a unversal suppler polcy pertanng to envronmental practces. Volatons may result n contract termnatons or the removal of lvestock from a grower s farm untl the problem s resolved. Although we do not report envronmental performance for contract farms, we nformally montor ther complance. In 2008 our approxmately 2,155 domestc contract growng operatons receved 53 Notces of Volaton (NOVs) from envronmental agences. The vast majorty of the NOVs for contract growers related to alleged recordkeepng defcences. Our 480 companyowned farms had fve NOVs. FARM NOTICES OF VIOLATION 2007 5 82 2008 company owned farms contract farms* ENVIRONMENTAL PERFORMANCE 6 53 All values reported by calendar year * Contract farm NOV fgures are based on revews of state database nformaton and surveys of producton staff. Data Collecton and Management Smthfeld has a sound record of envronmental reportng, usng metrcs recognzed and used by our customers, stakeholders, and compettors. We report processng data separately by our two man types of facltes: frst processng facltes, whch render lvestock nto wholesale cuts of meat, and further processng facltes, whch process and package meat products for consumers. Whle we report absolute data, n order to provde an accurate comparson of operatonal effcences we have normalzed the data on a per-anmal or per-weght bass. Armour-Eckrch Plant Reduces Its CO2 Relance The Armour-Eckrch Meats plant n Juncton Cty, Kansas, whch produces approxmately 100 mllon pounds of smoked sausage annually under the Eckrch, Butterball, John Morrell, and Healthy Ones brands, has found a way to reduce ts relance on carbon doxde (CO2) by 33 percent. That translates nto an average savngs of 38 tons every week. We nject CO2 nto our varous sausage blends to help cool them, explans Powerhouse Supervsor Carl Lawson. By nstallng a plate water chller, we re now coolng the cty water we use n the blendng process from 60 to 70 degrees Fahrenhet down to 35 degrees Fahrenhet. As a result, we don t need as much CO2. Elegant n ts smplcty, the water chller s composed of 23 stanless steel plates flled wth lqud ammona refrgerant. The temperature of ncomng muncpal water decreases just by flowng around the plates. One of the great thngs about ths system s that t s transferable to any faclty that uses non-chlled water n ts products and an external coolng source such as CO2, adds Plant Manager Adran Mtchell. The decreased CO2 use has yelded one addtonal envronmental beneft. The plant now receves one less delvery of the gas per week, elmnatng any desel fuel emssons the truck would have generated n the process. 29 t ENVIRONMENT

Pror to 2006, many of our subsdares collected data ndependently and wthout centralzed gudance or management. Ths created nconsstences n reported metrcs and made faclty-to-faclty comparsons dffcult n past reports. For example, we have noted that our 2004 data show a company-wde jump n emssons and declne n effcences across several metrcs, and the cause s not clear. Smthfeld establshed unform, automated protocols for envronmental metrc measurement and reportng n 2006 and rolled them out for use across the company n 2007. We have collected one full year of data usng the new system, and contnue to develop and mprove our data-collecton program. Even as we contnue to explore ways to better capture and communcate envronmental data, several factors, dscussed below, affect the data and the sgnfcance of data trends. Scope of Reportng The scope of our reportng has expanded greatly over the past fve years. Ths s due to mproved data collecton and company growth. For fscal 2008 we report on 49 domestc processng plants and 467 farms, compared to 44 plants and 445 farms n fscal 2007. Our expanded data sets now nclude Murphy-Brown s Premum Standard Farms subsdary as well as domestc processng facltes not ncluded n prevous reports. One result s that the absolute data reported n ths secton of the report mght be nterpreted to suggest, erroneously, that we have ncreased resource use and emssons over tme at the same facltes producng the same amount of fnshed product. In realty, ths has resulted, for the most part, from the collecton of addtonal data from exstng facltes and from the addton of data from more recently acqured facltes (rather than the constructon or start-up of entrely new facltes). Thus, we also report normalzed data to better track our effcency, whch s a more accurate ndcator and shows mprovement n many performance areas. In ths report, the followng were not ncluded n the scope of the data: Jont venture and contract farm energy use, greenhouse gas emssons, ar emssons, and waste generaton Contract busnesses Operatons n whch we hold a mnorty nterest New Metrcs For ths report, we have made a number of changes to mprove our reportng and better algn wth the Global Reportng Intatve (GRI) G3 Sustanablty Reportng Gudelnes. Ths report ncludes the followng for the frst tme: Greenhouse gas (GHG) emssons data from company-owned transportaton Multple years of GHG emssons data from domestc operatons Envronmental protecton expendture and savngs data for the past fve years Envronmental data from processng and farmng operatons n Poland and Romana Data from the nternatonal operatons are reported n a separate secton as they are ntended to provde a baselne (snce tme seres data s not avalable) and certan of the data are not drectly comparable to the domestc data. We wll contnue expandng ENVIRONMENT t 30

the scope of our reportng n future reports to cover addtonal facltes and operatons as our data management system matures. The numbers n the data charts have been rounded. Because percentage changes are calculated based on non-rounded values, they may vary from those calculated based on the rounded numbers. Energy Use and Greenhouse Gas Emssons Clmate change, whch has been lnked by many scentsts to GHG emssons, may have mplcatons relatve to water use, energy prces, weather patterns, and demand for consumer goods. The U.S. Envronmental Protecton Agency (EPA) reports that carbon doxde (CO2) released by fossl fuel combuston for power generaton, vehcle and manufacturng emssons, and heatng s the prmary greenhouse gas n the Unted States, representng approxmately 85 percent of total GHG emssons. As n any ndustry, GHG emssons occur to some extent at varous ponts n our operatons. Our processng plants emt CO2 and ntrous oxde (N2O) (through energy use) and methane (CH4) (va wastewater treatment) Our transportaton actvtes result n CO2 emssons (due to fuel use) Our farms emt methane* and N2O (from anmal manure, treatment systems, and crop producton) and CO2 (due to energy use) Because fossl fuel use and GHG emssons are lnked, we report them together n ths secton. The data reported on the followng pages account for more than 90 percent of our energy use. We are workng toward developng a fuller carbon profle of Smthfeld s operatons that wll nclude all domestc and nternatonal processng facltes, our farmng operatons, and contrbutons from hog feed mlls, and the transportaton of feed, lve anmals, and food products. We antcpate a reducton n overall energy and GHG emssons next year, as the data wll reflect the sale of our Beef Group n 2008. Electrcty Consumpton [Reportng Facltes: Processng/49, Murphy-Brown/557, Premum Standard Farms/24] In ths year s report, we nclude data from fve addtonal processng plants. However, normalzed data show that we have mproved our energy effcency, cuttng energy use per 100 pounds of producton by 5.6 percent ths past year, and by 31 percent snce 2004. In addton to pushng for greater effcency at our processng facltes, our corporate nformaton technology (IT) department has made an effort to reduce energy use n our offce-based operatons. Our Green IT Intatve ncludes a number of potental projects, all of whch are nexpensve and effectve ways to decrease our carbon footprnt whle cuttng energy costs: Properly managng computer power usage Makng double-sded prntng the prnter default Rasng data center thermostats by fve degrees n summer Vrtualzng servers and replacng old equpment wth Energy Star-rated devces Increasng use of WebEx, vdeo conferencng, and telecommutng * In the Unted States, the EPA reports that agrculture accounted for less than 6 percent of GHG emssons n 2007. The largest sources of methane emssons are enterc fermentaton (22.7 percent) from rumnant anmals such as cows and sheep (not hogs), landflls (22.6 percent), natural gas systems (18.4 percent), coal mnng (10.5 percent), and manure management (7.5 percent). (Source: epa.gov/clmatechange/emssons/usnventoryreport.html) John Morrell Plant Lowers Its Salt and Water Use Few meals are as easy to prepare as a hot dog. Producng one s qute another matter. John Morrell & Co. s packaged meats plant n Sprngdale, Oho, makes approxmately 125 mllon pounds worth every year that are sold under several Smthfeld Foods brands. The process ncludes chllng the cooked product twce, frst n water and then n a brne soluton. The latter requres large amounts of salt that eventually get released nto the plant s wastewater. By makng just a few engneerng adjustments, the Sprngdale plant has been able to reduce the amount of brne ts hot dogs requre by 50 percent. That has lowered salt consumpton by the same percentage from 500,000 to 250,000 pounds each week. As a result, the Hamlton County water treatment plant handles 13 mllon fewer pounds of salt annually. Moreover, producng less brne translates nto decreased water use. Through ths ntatve, the plant has reduced ts annual water consumpton by 5.6 mllon gallons. We dd a number of thngs to mprove the effcency of the system, explans Project Engneer Charle Kuhn. For example, we redesgned the tanks that hold the soluton to allow the use of an automated float assembly. The automated float shuts off the flow of brne to prevent overflow far more effcently than havng an operator do t manually. 31 t ENVIRONMENT

ELECTRICITY CONSUMPTION 2004 2005 2006 2007 2008 468 493 695 677 880 04 08 change 88% kwh n mllons frst processng 294 327 336 594 649 121% kwh n mllons further processng 762 820 1,031 1,271 1,529 101% kwh n mllons total 341 311 285 290 288 16% kwh n mllons farm total 42 43 39 40 38 10% kwh per anmal unt frst processng 49 25 28 36 34 31% kwh per 100 lbs. further processng All values reported by fscal year Processng Faclty Natural Gas Use [Reportng Facltes: 49] We use natural gas n bolers to make hot water and n ovens to cook our food products. We have cut natural gas use per 100 pounds of producton by 10 percent snce 2004. PROCESSING NATURAL GAS 2004 2005 2006 2007 2008 2.9 2.7 3.8 4.1 5.2 04 08 change 79% decatherms n mllons frst processng 7.0 1.9 1.8 3.1 3.4 51% decatherms n mllons further processng 9.9 4.6 5.6 7.2 8.6 13% decatherms n mllons total 0.27 0.27 0.20 0.25 0.23 14% decatherms per anmal unt frst processng 0.19 0.14 0.12 0.15 0.17 10% All values reported by fscal year decatherms per 100 lbs. further processng ENVIRONMENT t 32

Farm Natural Gas Use [Reportng Facltes: Murphy-Brown/75, Premum Standard Farms/3] Natural gas use for employee and anmal comfort at Murphy-Brown and Premum Standard Farms s lnked wth operatonal output and fluctuates wth the weather. FARM NATURAL GAS decatherms n mllons Murphy Brown 2004* 2005 2006 2007 0.091 0.193 0.189 0.178 2008 0.181 05 08 change 6% decatherms n mllons Premum Standard Farms 0.005 0.021 0.033 0.028 0.022 4% decatherms n mllons total 0.096 0.214 0.222 0.206 0.203 5% All values reported by fscal year * 2004 data for Premum Standard Farms nclude February and March only. Lqud Propane Gas Use [Reportng Facltes: Murphy-Brown/443, Premum Standard Farms/19] Lqud propane gas use for employee and anmal comfort at Murphy-Brown and Premum Standard Farms also fluctuates wth the weather. LIQUID PROPANE GAS decatherms n mllons Murphy Brown 2004* 2005 2006 2007 2008 05 08 change 0.48 0.83 0.55 0.59 0.45 46% decatherms n mllons Premum Standard Farms 0.13 0.39 0.37 0.39 0.34 12% decatherms n mllons total 0.61 1.22 0.92 0.98 0.79 35% All values reported by fscal year * 2004 data for Premum Standard Farms nclude February and March only. 33 t ENVIRONMENT

Bogas Producton [Reportng Facltes: 6] Snce 1992, select plants have captured the byproduct of our anaerobc wastewater treatment for use as fuel (bogas) n modfed steam bolers. Ths offsets fuel use and reduces methane emssons, whle reusng a waste product. Producton of ths bogas has rsen 67 percent snce 2004 as the fnancal and envronmental benefts are realzed and more facltes contrbute. Durng fscal 2008, sx facltes produced enough of ths bofuel to power 12,782 U.S. households for one year. Bogas use wll be affected n future reports followng the 2008 dvestture of our Beef Group, whch has accounted for roughly 40 percent of producton. BIOGAS PRODUCTION 2004 2005 2006 2007 2008 04 08 change 0.29 0.43 0.47 0.53 0.49 67% All values reported by fscal year decatherms n mllons Greenhouse Gas (GHG) Emssons We calculate GHG producton emssons usng the WBCSD/WRI Global Greenhouse Gas Protocol, quantfyng scope 1 and 2 emssons, whch nclude ndrect emssons assocated wth the use of purchased electrcty. In 2008, company plants emtted the equvalent of 1.35 mllon metrc tons of CO2. Ths 17 percent change snce 2007 s due to the ncrease n the number of reportng plants from 44 to 49. We reduced our further processng emssons per 100 pounds of producton by 25 percent compared to 2007 and our frst processng emssons per anmal by 5 percent. GHG Emssons from Fuel Burnng [Reportng Facltes: 49] GHG EMISSIONS EMISSIONS (Metrc tons CO2e)* 2007 2008 Change Frst Processng (kg CO2e per anmal unt) EFFICIENCY** Further Processng (kg CO2e per 100 lbs.) 2007 2008 Change 2007 2008 Change Total Drect & Indrect GHG Emssons 1,153,634 1,354,640 +17% 37 35-5% 37 28-25% Total Drect & Indrect Carbon Doxde (CO2) Emssons 1,150,346 1,348,988 +17% 37 35-5% 37 28-25% Drect Methane (CH4) Emssons 200 229 +14% 0.006 0.006-2% 0.006 0.004-40% Drect Ntrous Oxde (N2O) Emssons 3,088 5,423 +76% 0.158 0.146-7% 0.158 0.105-33% All values reported by fscal year t * The unversal unt to ndcate the global warmng potental (GWP) expressed n terms of the GWP of one unt of carbon doxde. * * A lower number ndcates mprovement. ENVIRONMENT t 34

GHG Emssons from Transportaton Ths year, we report for the frst tme on GHG emssons from company-owned trucks. The fleet data were assembled from Murphy-Brown, Smthfeld Packng, and Smthfeld Beef, and GHG emssons were calculated usng the WBCSD/WRI Global Greenhouse Gas Protocol. Because other subsdares use contracted trucks, they are not ncluded n ths data. GHG EMISSIONS HOG PRODUCTION MURPHY- BROWN SMITHFIELD PACKING PROCESSING SMITHFIELD BEEF* TOTAL Number of trucks 343 113 N/A** N/A** Mles traveled 25,991,408 8,724,871 N/A** N/A** Gallons of desel 5,572,334 2,354,377 3,398,522 11,325,233 Metrc tons CO2e 57,912 24,469 35,320 117,701 All values reflect calendar year 2007. * Due to the recent dvestture of the Smthfeld Beef Group, we were unable to account for the number of trucks and total mles traveled n 2007 * * Not avalable Ar Emssons The charts that follow dsplay total and normalzed emssons from 2003 through 2007 for 16 of our facltes requred to report ar emssons to the EPA. (As of the wrtng of ths report, the 2008 data s not yet due to the EPA and thus not reported here.) Normalzed sulfur oxde emssons for further processng facltes appear to be unusually low for 2003, leadng to a deceptvely large ncrease from 2003 to 2007. We have snce converted to a software-based collecton system and contnue to mprove data accuracy. We have ncreased energy effcency and reduced emssons at many of our facltes by addng emsson control devces, upgradng equpment, and tunng bolers. We now use fossl fuels wth lower sulfur content, as well. These efforts have reduced normalzed NOx and SOx emssons, wth further processng SOx emssons somewhat of an anomaly, as noted above. Ozone Depletng Substances (ODS) Ozone depleton caused by gases assocated wth refrgeraton s an ssue facng our ndustry. All but three of our smaller facltes use anhydrous ammona (NH3) as ther prmary refrgerant. NH3 s more energy effcent than hydrochlorofluorocarbons (HCFCs) (466 BTU/lb. vs. 68 BTU/lb.). It does not contan ODS, nor s t lsted as a greenhouse gas. Smthfeld does not use perfluorocarbons (PFCs) and uses lmted HCFCs. Because we use so lttle ODS, we do not track or report emssons. 35 t ENVIRONMENT

NOx and SOx [Reportng Facltes: 16] NOx EMISSIONS 2003 2004 2005 2006 2007 328 292 366 320 353 03-07 change 8% tons frst processng 43 28 27 61 50 16% tons further processng 371 320 393 381 403-24% 9% tons total 0.03 0.032 0.028 0.027 0.023-37% 24% lbs. per anmal unt frst processng 0.004 0.008 0.003 0.005 0.002 37% All values reported by calendar year Normalzed values were formerly reported n tons rather than pounds. lbs. per 100 lbs. further processng SOx EMISSIONS 2003 798 2004 730 2005 761 2006 560 2007 455 43% 03 07 change tons frst processng 1 0.10 0.06 2 3 200% tons further processng 799 730 761 562 458 43% tons total 0.036 0.034 0.03 0.02 0.014 61% lbs. per anmal unt frst processng lbs. per 100 lbs. further processng All values reported by calendar year Normalzed values were formerly reported n tons rather than pounds. * The ncrease appears to be artfcally hgh, potentally due to an nexplcably low fgure for 2003, range reportng, and mproved dlgence n reportng for subsequent years. 0.00001 0.0002 0.00022 0.00134 0.00096 15,900%* ENVIRONMENT t 36

Water Use In the Unted States, we use muncpal water supples from surface and groundwater sources, prvate surface water mpoundments, and prvate wells. Our facltes use water for processng, coolng, cleanng, and santaton of our facltes; cleanng and mantanng restrooms; washng trucks; and makng our products. Our farms use water for sustanng anmal health and cleanng equpment and nfrastructure. Because water s such an mportant part of our operatons, we pay careful attenton to water use and strve to become more effcent. Our recent water conservaton efforts have made our plants more effcent, even as we acqure larger facltes. In 2008 we used 9 percent less water per anmal unt than n 2007. The 16.7 percent ncrease n total use for the same tme perod s the result of the reportng by addtonal, recently acqured facltes and does not reflect an ncrease n water use. We are workng to share best water-effcency practces wth our newest acqustons. Water Use [Reportng Facltes: 49] gallons n bllons frst processng 2004 2005 4 4.2 2006 5.2 2007 4.8 2008 5.6 04 08 change 40% gallons n bllons further processng 1.2 1.5 1.7 2.4 2.8 126% gallons n bllons total 5.2 5.7 6.9 7.2 8.4 60% gallons per anmal unt frst processng 370 379 284 280 253 32% gallons per 100 lbs. further processng 207 121 88 103 112 46% All values reported by fscal year Farm Water Use [Reportng Facltes: Murphy-Brown/557, Premum Standard Farms/21] Growng pgs need water for drnkng, santaton, and coolng (wth msters, cool cells, and drppers). Over the years, we have mplemented ways to use water as effcently as possble at our hog-rasng facltes. In the past fve years, our water effcency has remaned steady at between 22 and 24 gallons per pg per day. 37 t ENVIRONMENT

CSR SPOTLIGHT 2 Envronmental Protecton Expendtures and Investments Effcent natural resource use makes good busness sense, especally n tmes of economc uncertanty. Smthfeld has responded to the current fnancal downturn by creatvely cuttng costs wthout sacrfcng the ntegrty of our envronmental programs. For example, our annual envronmental tranng sessons on ar complance, wastewater operatons, and other topcs were held va Webnars n 2008 to save travel costs and resources. Our Portsmouth, Vrgna, processng plant succeeded n reducng ts water use by 40 percent over a sx-month perod by focusng on drvng down utlty costs. Faclty managers revewed all the operatons wthn the faclty for opportuntes to make an mmedate mpact on water use, and they sought ways to mprove effcences wthout major captal nvestment. As a result, managers at the plant: Bult a cabnet to capture and recycle water used wth the emulson rnser, reducng water use by 98 percent and savng around 20 mllon gallons per year. Replaced onloadng nozzles, whch keep products most before packng. Changng from a steady stream to a spray system reduced water use from 3.5 gallons per mnute to 0.21 gallons per mnute, a savngs of 94 percent. Ths translates to 10 mllon gallons per year. In total, the plant spent $35,000 replacng neffcent spray nozzles and wll see an annual savngs n water costs of $258,000 per year. The Commonwealth of Vrgna recognzed our efforts, awardng Smthfeld Packng wth a Vrgna Governor s Envronmental Excellence Award n 2009. Replaced nozzles on the rotor screens, cuttng water use from 1 to 0.6 gallons per mnute. Ths could save 2.4 mllon gallons per year. Replaced narrow chll sprays wth nozzles wth wder ranges, reducng the number of nozzles needed and reducng the water needed to operate. Developed a water recrculaton system for the packagng machnes. Replaced 39 nozzles that had used 6.21 gallons per mnute wth eght that use only 2.82 gallons per mnute, whle mantanng performance levels. Ths has the potental to save 19 mllon gallons per year. Snce 2004, we have saved nearly $38 mllon through envronmental mprovement projects. We gather these data as part of our Presdent s Awards, our nternal envronmental award program, whch requres applcants to submt project detals, ncludng amount spent, payback tme, and overall spendng. Ths estmate s conservatve, as t accounts only for projects wth proven savngs, and only captures the savngs for the year the project was submtted. Most projects pay for themselves n less than a year, and the savngs exceed the captal nvested. For more nformaton, see the sdebar on page 43. In 2008, nvestments for envronmental mprovement projects totaled $6.1 mllon (compared wth $14 mllon n 2007 and $6.9 mllon n 2006). Projects Awards Honorable Mentons Captal Expendtures Savngs Return on Investment (Months) 2004 31 5 0 $0 $2.0 mllon N/A* 2005 70 14 0 $4.1 mllon $5.8 mllon 8.9 2006 93 16 10 $6.9 mllon $7.2 mllon 11.5 2007 137 16 11 $14.0 mllon $12.0 mllon 14.0 2008 129 17 17 $6.1 mllon $10.9 mllon 6.7 Total $31.1 mllon $37.9 mllon * Not avalable

FARM WATER USE gallons per pg per day farrow to fnsh Murphy-Brown 2004 2005 2006 2007 2008 04 08 change 22.45 23.90 23.83 21.69 20.67 8% Cuttng Waste Through More Effcent Supply Chan gallons per pg per day farrow to fnsh Premum Standard Farms 23.76 25.74 25.05 23.61 21.74 Materal Use and Waste Management [Reportng Facltes: 49] Our processng facltes generate general trash, packagng, paper, and wastewater resduals. Overall waste generaton has ncreased due to the acquston of new facltes and the ncluson of fve addtonal facltes n ths report. Also, facltes sometmes swtch between land applcaton (not ncluded n these fgures) and landfllng (ncluded n these fgures) of wastewater resduals. A shft from land applcaton to landfllng by several facltes was a lkely contrbutor to the ncrease as well. However, we have reduced sold waste generaton per anmal unt by 40 percent snce 2006. 9% All values reported by fscal year In the past year, we partnered wth a pallet and plastc contaner poolng servces company. It ssues, collects, repars, and ressues pallets and contaners from ts network of servce centers. By better managng pallet supply chan logstcs, we are helpng to save: 20.7 mllon pounds of sold waste from enterng landflls WASTE LANDFILLED tons n thousands frst processng 2004 2005 36 38 2006 60 2007 39 2008 50 04 08 change tons n thousands further processng 35 22 24.6 48.5 104.5 199% tons n thousands total 71 60 84.6 87.5 154.5 118% 39% 64.3 bllon BTUs of energy (enough to power 1,700 homes for a year) 11 mllon pounds of GHG emssons (equvalent to takng 960 cars off the road annually) lbs. per anmal unt frst processng 3.6 13.2 4.2 7.6 3.96 2.8 3.66 38.68-34% 17% lbs. per 100 lbs. further processng 13.2 4 3.96 3.66 8.68 34% All values reported by fscal year Normalzed values were formerly reported n tons rather than pounds. At our plants, our baled cardboard s pcked up by local recyclers who provde certfed weghts each month. Several offce materals are pcked up for recyclng (paper, cardboard, alumnum, and, n some cases, plastc soda bottles) but are not weghed. 39 t ENVIRONMENT

"[Smthfeld] has some nnovatve programs for lowerng ts carbon footprnt, ncludng usng the bogas produced by anaerobc waste treatment to fuel steam bolers. Smthfeld Foods also performs well on the socal front, contrbutng to or leadng several communty development programs " 2009 Consumer Food, Food Producton, and Beverages Sectors Analyss, Corporate Envronmental and Sustanablty Reportng Roberts Envronmental Center Claremont McKenna College CARDBOARD RECYCLING 2004 2005 2006 2008 22.5 23.6 24.3 48.2 32.4 44% 2007 04 08 change All values reported by fscal year tons n thousands Expandng Our Recyclng Efforts Many of our plants and offces began trackng plastcs recyclng ths year. Our baselne results wll be presented n the next report. Smthfeld Packng has mplemented programs to reduce polluton and waste n Smthfeld, Vrgna. At Smthfeld South, we nstalled a refurbshed cardboard baler, ncreasng cardboard recyclng sgnfcantly. At Smthfeld North, roughly 100,000 pounds of stanless steel and steel were sent to a metal recycler from two metal scrap storage felds. A group of facltes from John Morrell, Armour-Eckrch n Juncton Cty, Kansas, Smthfeld Packng n Wlson, North Carolna, and Farmland Foods n Martn Cty, Mssour, dverted more than 137 tons of used wood smokng chps from landflls by recyclng them through local landscapng companes for use as compost. In 2008, the Farmland Foods faclty n Monmouth, Illnos, recycled about 420,000 pounds of scrap metal, and t used the proceeds to provde 10 scholarshps of $1,000 each to chldren of Farmland Foods employees. Also, Smthfeld Foods gave the Monmouth faclty $3,000 to donate to local organzatons to further ther envronmental protecton goals. These funds were dstrbuted to Lvng Lands and Waters for rasng envronmental awareness and for preservng and restorng major rvers and watersheds; as well as to Pheasants Forever for habtat mprovement, educaton, and advocacy for sound land management. The Smthfeld Packng IT dvson sponsored the second annual Employee e-recycle Program on Earth Day 2009. Smthfeld Foods orgnally developed the program, and Smthfeld Packng won an envronmental award for ts efforts last year. Ths free annual servce allows all Smthfeld employees to have ther personal technology equpment (e.g., computers, montors, prnters, cables, scanners, cell phones) collected and dsposed of n accordance wth legal and envronmental gudelnes, so t doesn t end up n a landfll. Anmal Manure Treatment Systems and Crops Produced The followng pe charts descrbe the type of treatment systems and approxmate acreage of crops fertlzed wth treated effluent from lagoon and sprayfeld systems. Murphy-Brown s waste treatment and crop plantng practces have remaned relatvely unchanged snce 2004. ENVIRONMENT t 40

Treatment Systems and Crops Produced by Premum Standard Farms n 2008 [Reportng Facltes: 32] CROPS PRODUCED (Total Acreage 66,170) ANIMAL MANURE TREATMENT SYSTEMS Alfalfa (520 acres) Corn (1,120 acres) Wheat (1,610 acres) Soybeans (2,620 acres) Wheat/Sudan Forage (8,490 acres) Fescue (9,720 acres) Pasture Grasses (42,090 acres) Anaerobc Lagoon and Evaporaton 9% Dgester and Land Applcaton 9% Slurry Store and Land Applcaton 9% Anaerobc Lagoon and Land Applcaton 73% All values reported by fscal year Treatment Systems and Crops Produced by Murphy-Brown n 2008 [Reportng Facltes: 445] CROPS PRODUCED (Total Acreage 34,015) ANIMAL MANURE TREATMENT SYSTEMS Sorghum/Sudan Forage (540 acres) Alfalfa (875 acres) Fescue (1,200 acres) Soybeans (5,910 acres) Corn (10,330 acres) Wheat (7,650 acres) Pasture Grasses (7,510 acres) Slurry Store and Land Applcaton 1% Mesophlc Dgester and Land Applcaton 3% Anaerobc Lagoon and Evaporaton 25% Anaerobc Lagoon and Land Applcaton 71% All values reported by fscal year 41 t ENVIRONMENT

COMPLIANCE We seek full complance wth envronmental requrements at all tmes. To ths end, our goal s to optmze exstng envronmental programs through mproved coordnaton and communcaton wthn the company to accomplsh the followng: Improve overall envronmental performance and elmnate NOVs Effectvely analyze and communcate EMS/ISO audt results Increase tranng conference attendance and expand tranng programs Advance Smthfeld Foods Awards partcpaton Earn more thrd-party recognton Share results annually wth management We track several ndcators of complance, ncludng NOVs and penaltes. All our wholly owned domestc subsdares, ncludng company-owned farms, receved 40 NOVs n 2008. Total fnes for domestc facltes fell by nearly $200,000 n 2008. NOVS AND FINES 2004 2005 2006 2007 2008 04 08 change 82 33 64 50 40 51% NOVs $57,280 $124,978 $123,952 $166,446 $69,616 22% NOV fnes N/A* N/A* $60,000 $100,000 N/A* N/A* All values reported by calendar year * Not applcable U.S. EPA agreement fnes Also, pursuant to state consent judgments wth the State of Mssour and a federal consent decree entered nto by Premum Standard Farms (PSF) several years before ts acquston by Smthfeld, PSF contnues to partcpate n the development and nstallment of next-generaton technology (as defned n the consent judgments) for certan PSF farms n Mssour. We contnue to montor ongong envronmental enforcement relatve to wastewater releases and an operatonal upset at our former Souderton faclty, whch s now owned by JBS Souderton, Inc., a wholly owned subsdary of JBS Packerland, Inc. (collectvely JBS Packerland). The nvestgatons nto these ncdents by the U.S. EPA, the Pennsylvana Department of Envronmental Protecton (PADEP), and the Pennsylvana Fsh and Boat Commsson are stll ongong. For more nformaton, read our Form 10-K Annual Report for fscal 2009 that s avalable at nvestors.smthfeldfoods.com/sec.cfm. ENVIRONMENT t 42

Toxcs Release Inventory Data [Reportng Facltes: Ter II/31, Form R/13] Smthfeld reports to the EPA s Toxcs Release Inventory (TRI) database each calendar year for ammona, chlorne, and ntrates. We report a few others, but these are the most common and are ncluded n ths report. Ter II data represent the amount of chemcals kept on ste, and Form R data correspond to certan envronmental releases requred by the regulatons to be reported under ths program. Gatherng TRI data fulflls our regulatory oblgatons and helps mprove chemcal management decsons. It should be noted that because the 2008 TRI data are due to the EPA n md-2009, they are not ncluded n ths report. Although we collect actual Ter II and Form R data, some states requre stes to report n ranges. These ranges often cover an order of magntude (e.g., 100,000 to <1,000,000 pounds), meanng actual data may not equal reported values. To avod understatng our data, we submt the hgh end of the range n ths report (e.g., a faclty wth an actual value of 100,001 pounds reports 999,999 pounds). Ammona Ammona (NH3) s the prmary refrgerant used n our plants. Changes n our Form R data resulted from the ncrease n the number of facltes reportng ths year (13 nstead of 12 last year). Normalzed data show a decrease n releases requred for reportng. FORM R AMMONIA lbs. n thousands frst processng 2003 290 2004 1,304 2005 274 2006 345 2007 349 03 07 change 20% Awards Program Yelds Envronmental Gans Smthfeld s Presdent s Awards our nternal awards program are gven for excellence n a varety of areas, ncludng envronmental and safety performance. On the envronmental sde, the awards encourage team projects that surpass complance and focus on polluton preventon and envronmental stewardshp. The program ncludes recognton by senor management and cash awards of $5,000, of whch $3,000 s donated to a charty of the wnnng team s choce. Wnnng programs are selected based on ther envronmental mpact and socal sgnfcance, effcency, costeffectveness, orgnalty and nventveness, and techncal value, among other factors. The 2008 Presdent s Awards recognzed the followng groups for model envronmental performance: lbs. n thousands further processng lbs. n thousands total lbs. per anmal unt frst processng lbs. per 100 lbs. further processng 210 94 44 53 70 67% 500 1,398 318 398 419 16% 0.021 0.068 0.007 0.01 0.008 60% 0.006 0.002 0.007 0.002 0.002 65% All values reported by calendar year FARMLAND FOODS, INC. Wchta, Kansas (Communty Outreach) Assstance and donatons n support of Greensburg, Kansas, after the communty was devastated by a tornado. FARMLAND FOODS, INC. Monmouth, Illnos (Best Recyclng of a Prevous Year s Project) Donated recyclng money collected at the local plant to local school system to be used as college scholarshps. For a look at last year s safety award wnner, see the sdebar on page 70. 43 t ENVIRONMENT

Smthfeld Garners Thrd-Party Recognton SMITHFIELD FOODS Smthfeld contnues to be a member company of the FTSE4Good Index, the responsble nvestment ndex calculated by global ndex provder FTSE Group. CRO (Corporate Responsblty Offcer) magazne ncluded Smthfeld among ts 100 Best Corporate Ctzens n 2009. The Vrgna Chamber of Commerce Torchbearer Award went to Smthfeld Packng and Murphy-Brown. The Amercan Meat Insttute honored Smthfeld wth ts Envronmental Recognton Awards for Envronmental Management Systems, known as the Envronmental MAPS 4-Ter Recognton Awards. SMITHFIELD FOODS/ NORTH SIDE FOODS TIER II AMMONIA 2003 2004 2,672 3,761 Chlorne Chlorne s used to dsnfect our processng water supply. Total releases reman low for our further processng facltes but have vared wdely for frst processng facltes. Ths s due to range reportng as well as the small number of facltes usng chlorne. FORM R CHLORINE 2003 16 2004 11 2005 5,806 2005 36 2006 5,504 2006 26 2007 6,699 2,579 8,489 855 3,720 4,219 2007 3 03 07 change 03 07 change 13 0 0 27 28 113% 151% 5,251 12,250 6,661 9,224 10,918 108% 0.14 0.28 0.22 0.22 0.21 53% 0.60 0.04 0.05 0.12 0.16 64% 74% All values reported by calendar year Ter II fgures for processng facltes ncreased due to hgher producton volumes and ncreased need for refrgeraton. 81% lbs. n thousands frst processng lbs. n thousands further processng lbs. n thousands total lbs. per anmal unt frst processng lbs. per 100 lbs. further processng lbs. n thousands frst processng lbs. n thousands further processng McDonald s frst-ever Foods Suppler Sustanablty Award recognzed Smthfeld for practces ensurng the health and welfare of employees, the welfare and humane treatment of anmals, and programs that mnmze mpacts on the envronment and natural resources. 29 11 36 53 31 6% 0.00043 0.00052 0.00099 0.00066 0.00010 77% 0.00098 0 0 0.00069 0.00065 33% All values reported by calendar year lbs. n thousands total lbs. per anmal unt frst processng lbs. per 100 lbs. further processng (contnued on opposte page) ENVIRONMENT t 44

TIER II CHLORINE lbs. n thousands frst processng 2003 2004 146 39 2005 239 2006 51.4 2007 160 03 07 change 10% (contnued from opposte page) lbs. n thousands further processng 9 2 0.18 50.1 140 1,456%* lbs. n thousands total 155 41 239 101.5 300 94% lbs. per anmal unt frst processng 0.005 0.003 0.011 0.003 0.006 12% lbs. per 100 lbs. further processng 0.00067 0.00007 0.00008 0.00159 0.03577 5,215%* All values reported by calendar year * The ncrease s artfcally hgh, due to mproved dlgence n reportng between 2003 and 2007 as well as the use of range reportng. Ntrates At Smthfeld, ntrates are released through permtted wastewater dscharges from processng facltes. Values peaked n 2005, due to range reportng (as explaned prevously). Releases have snce fluctuated as we have closed some facltes but are also reportng ntrate releases from addtonal facltes to the EPA. Normalzed values have fluctuated snce 2003 but reman low. There are no Ter II data, as we do not store ntrates. FARMLAND FOODS The Western Illnos Economc Development Partnershp gave the Monmouth faclty awards for Manufacturer of the Year, Best Renovaton to a Faclty, and Envronmental Impact. SMITHFIELD PACKING Vrgna's Governor s Envronmental Excellence Award (Bronze) went to Smthfeld s Portsmouth locaton for a 40 percent reducton n water use at the faclty over sx months. The Industral Waste & Pretreatment Award (Slver) for Envronmental Excellence (Charlottesvlle, Vrgna) was gven to the North and South ham and products facltes for dedcaton to polluton preventon, waste elmnaton and reducton, and one year of perfect complance wth pretreatment permt condtons. MURPHY-BROWN AMMON COMPLEX North Carolna Wldlfe Resources Commsson s Small Game Commttee 2008 Lawrence G. Dedrck Small Game Award was gven for work to restore songbrd and qual habtats. 45 t ENVIRONMENT

FORM R NITRATES 2003 2004 7,743 9,041 2005 10,011 2006 8,981 2007 9,949 03 07 change 28% lbs. n thousands frst processng 143 49 49 168 142 0.4% lbs. n thousands further processng 7,886 9,090 10,060 9,149 10,091 28% lbs. n thousands total 0.14 0.14 0.19 0.18 0.16 16% lbs. per anmal unt frst processng lbs. per 100 lbs. further processng All values reported by calendar year 0.0031 0.0030 0.0035 0.0065 0.0054 72% BIODIVERSITY We recognze that bodversty s an ssue of growng scentfc and publc concern. Varous scentsts and organzatons have categorzed several factors that threaten bodversty, such as habtat destructon, nvasve speces, polluton (ncludng runoff), human overpopulaton, and overharvestng. We avod mpacts on bodversty by not operatng n protected habtats or areas of hgh bodversty value. It s our understandng that there are no protected speces wth habtats n areas where we operate domestcally. Furthermore, several Smthfeld farms and facltes feature buffers and other natural areas, preservng local natural habtat. In calendar year 2000, n furtherance of our contnued commtment to responsble envronmental stewardshp, we and our North Carolna-based hog producton subsdares voluntarly entered nto an agreement wth the attorney general of North Carolna (the Agreement). Ths Agreement reflects our commtment to preservng and enhancng the envronment of Eastern North Carolna by provdng a total of $50 mllon to assst n the preservaton of wetlands and other natural areas n eastern North Carolna and to promote smlar envronmental enhancement actvtes. Ths commtment s beng fulflled wth annual contrbutons of $2 mllon over a 25-year perod begnnng n 2000. ENVIRONMENT t 46

OUR COMMITMENT TO ANIMAL WELL-BEING ANIMAL WELFARE We have three goals when t comes to the anmals we rase. We want them to be safe, comfortable, and healthy. As a food producer, the health and well-beng of our anmals s drectly lnked to our success as a company. At Smthfeld, we beleve we have a moral oblgaton to protect and promote the well-beng of our anmals; ths, n turn, promotes the producton of safe food. We are constantly revewng our systems and procedures to enhance the comfort of our lvestock and mnmze ther stress. Food companes lke Smthfeld wll always be subject to crtcsm by certan groups ncludng those that oppose human consumpton of meat and large-scale farmng operatons. However, we play a crucal role n socety by provdng safe and affordable food for mllons of people every day. As the world s largest pork producer, we also beleve that we can play an mportant role by settng new standards for sound and responsble anmal producton. We were the frst pork producer to develop and mplement a comprehensve, systematc anmal welfare management program to montor and measure anmal well-beng. We have been recognzed as ndustry leaders for our wllngness to mprove producton, handlng, transportaton, and slaughter methods for the beneft of the anmals. Many of these enhancements ncrease producton costs, but we beleve they are the rght thngs to do to safeguard our anmals. In 2002, two of the world s foremost anmal welfare experts Dr. Stan Curts of the Unversty of Illnos at Urbana and Dr. Temple Grandn of Colorado State Unversty descrbed our anmal welfare program as a conscentous model for the entre Amercan pork ndustry. We requre our contract growers to employ the methods and technques of our anmal welfare management program and take steps to verfy ther complance, as dscussed later n ths secton. These contract growers share n our responsblty to provde nutrtous food and fresh water, sound veternary care, approprate treatment and/or tmely euthanasa for sck or njured anmals, protecton from extreme weather condtons, and freedom from wllful neglect or abuse. MANAGING ANIMAL WELFARE We are the world s largest producer of pork, wth approxmately 480 company-owned hog producton farms and approxmately 2,155 contract hog growers n the Unted States alone. Our comprehensve anmal welfare management system gudes the proper and humane care of our anmals, from gestaton to transport to processng plant. Two groups wthn Smthfeld oversee anmal welfare ssues: the corporate-level Smthfeld Foods Anmal Welfare Councl and the subsdary-level Murphy-Brown Anmal Welfare Commttee. Each meets bannually on a formal bass. Together, these commttees revew nternal polces and procedures to ensure that they are adequate and effectve at delverng sound anmal care and that they are n keepng wth our commtment to anmal well-beng. 47 t ANIMAL WELFARE

Lfe Cycle of a Pg The followng nformaton may be a useful companon to some of the elements dscussed n ths secton of the report. From nsemnaton to brth: Approxmately 114 days or 3 months, 3 weeks, 3 days From brth to weanng (10 12 lbs.): 21 24 days From weanng to feeder pg status (approxmately. 50 lbs.): 45 49 days From feeder pg to market weght (260 265 lbs.): 125 130 days Total age from brth to market: 195 200 days or 6.5 months Anmal Welfare on Our Farms For many years, Smthfeld and Murphy-Brown followed an Anmal Welfare Management System (AWMS) that we developed for our own operatons. Over the past year, we have transtoned to the Natonal Pork Board s Pork Qualty Assurance Plus Program, whch s better known as PQA Plus. Whle the concepts and methods of the two systems are essentally the same, the PQA Plus program offers a unfed, ndustry approach for anmal welfare and food safety ssues. As the largest pork producer n the world, we volunteered to provde nput and recommendatons to help the Natonal Pork Board develop PQA Plus. Pork producers become certfed only after attendng a tranng sesson on good producton practces, whch nclude such topcs as dsease preventon, bosecurty, responsble antbotc use, and approprate feedng, and after undergong regular on-farm assessments and random thrd-party audts. PQA Plus certfcaton s vald for three years. The Natonal Pork Board and Natonal Pork Producers Councl (NPPC), whch works on legslaton, regulatons, and trade ntatves that mpact Amerca s 67,000 hog farms, have a goal of certfcaton for all pork producers under the PQA Plus program. Smthfeld and Murphy-Brown are encouragng all 67,000 U.S. hog producers to partcpate. In fact, Don Butler, drector of government relatons and publc affars for Murphy-Brown, s the current NPPC presdent. Audts We are on target to have all of the company-owned and contract farms certfed and ste-assessed under the PQA Plus program by the end of 2009. The program s random thrd-party audts complement Murphy-Brown s nternal audtng system, whch began n 2002. Our nternal audt program s desgned to dentfy defcences or nonconformances wth our strct anmal care gudelnes and legal and regulatory requrements, and to prevent potental problems from occurrng. Traned audtors vst every company farm and contract producer at least once annually. Adherence to proper anmal care s a condton of our agreements wth contract farms. Growers found to be n volaton of these agreements must take approprate correctve actons. Contract growers who fal to take correctve acton or who are found to condone wllful abuse or neglect of anmals are subject to mmedate termnaton. In the seven years snce our audt program began, we have termnated contracts wth nne growers who dd not meet our strct condtons. We encourage anyone especally our own employees who observes abusve behavor on one of our farms to anonymously contact our toll-free reportng hotlne. In addton, we partcpate n the U.S. Department of Agrculture s (USDA) Process Verfed Program (PVP), whch s modeled on ISO 9000 qualty management and assurance standards and requres complance wth all USDA rules and regulatons. Through ndependent thrd-party audts, the program gves assurance to customers that agrcultural companes are provdng consstent, hgh-qualty products. Only companes wth documented qualty management systems n place are elgble to receve certfcaton under the USDA PVP program. ANIMAL WELFARE t 48

Tranng All new company employees who work wth our lvestock undergo an extensve anmal care tranng program durng a 90-day probatonary perod. These new workers must demonstrate competence n anmal handlng technques and a thorough understandng of our corporate anmal welfare polcy before the probatonary perod s lfted. We provde wrtten manuals and vdeotaped tranng programs, n Englsh and Spansh, along wth on-the-job tranng and mentorng wth experenced anmal handlers. Regular tranng programs contnue throughout an employee s career. Housng of Pregnant Sows We have commtted to phasng out ndvdual gestaton stalls for pregnant sows at all company-owned sow farms and are replacng them wth group housng. We announced the program, known as free access, n January 2007 wth plans to complete the conversons wthn 10 years. We currently estmate the total cost of our transton to group pens to be approxmately $300 mllon. Due to economc condtons, we no longer expect to complete the phaseout wthn 10 years of the orgnal announcement. However, we reman commtted to mplementng the program and are pleased wth our progress to date. We have completed group housng conversons at two exstng farms n North Carolna and Colorado and at a newly bult faclty n Mlford, Utah. The Crcle Four locaton n Utah ncludes two new 5,000-hog housng stes where the anmals have access to ndvdual stalls to eat, drnk, and rest, but can also move nto a more open pen area. The anmals have the prvacy and protecton of an ndvdual stall, yet are free to move around and socalze wth the other sows n the pen. Sows housed n group pens requre dfferent management practces than sows n ndvdual stalls, and our farm workers receve specfc tranng to carry out the dfferent practces. The frst anmals to be produced from these new open facltes reached the market n early 2009. We have analyzed several dozen of our approxmately 275 company-owned sow farms to determne the best possble way to convert to group sow housng at each locaton. Few farms are exactly alke. Some wll requre extensve retrofts and reconfguraton; many may requre new permts from state agences n order to make any sgnfcant changes. As part of our sow housng converson process, we are also ncreasng the length of weanng tme for pglets. As we convert to group housng, we wll begn weanng pgs at an average of 24 days, rather than 21 days, and replacng older farrowng crates wth wder ones. We beleve longer weanng tmes wll translate nto stronger pgs and, ultmately, healther anmals. Antbotcs Use We do not use antbotcs to promote anmal growth. Our company and contract farmers use antbotcs only to treat sck or njured anmals and to prevent dsease. Our Antbotcs Polcy apples to all hogs and turkeys rased by Smthfeld-owned and Move to Group Housng Shows Commtment to Anmal Welfare Hstorcally, hog producers have used ether ndvdual gestaton stalls or group housng for sows durng ther 16 weeks of pregnancy. There s no scentfc consensus on whch system s superor, and there are dstnct advantages to each. For example, ndvdual stalls make t easer to montor the pregnant sow, provde medcal attenton, and prevent njury from aggressve sows, whle group housng allows for more anmal exercse and nteracton. Our own extensve research ncludng a three-year study found that both housng systems can work equally well from an anmal safety and producton standpont. Regardless of the housng system used, sound management s key. Nevertheless, our decson to swtch to group housng demonstrates our responsveness to our customers and other stakeholders, many of whom vew group housng as the more anmal-frendly soluton. More and more of our large customers, ncludng some restaurant chans, are consderng or have adopted anmal welfare polces for the products they purchase. Meanwhle, several states ncludng Arzona, Calforna, Colorado, Florda, and Oregon have passed legslaton to ban sow gestaton crates, and we contnue to montor such actvtes. 49 t ANIMAL WELFARE

contract farms. We strctly comply wth all antbotc wthdrawal tmelnes the amount of tme needed to allow the antbotcs to clear an anmal s system before slaughter as establshed by the USDA and the Food Anmal Resdue Avodance Databank. A lcensed veternaran revews all of our antbotcs use at least quarterly. Natonal programs, ncludng PQA Plus, also nclude prncples and gudelnes on antbotcs use to protect anmal well-beng and publc health. We publcly report the amount of feed-grade antbotcs that are purchased per hundred pounds of product sold. And, n a frst-of-ts-knd purchasng polcy, we partnered wth the foodservce gant Compass Group North Amerca and the nonproft Envronmental Defense Fund to promote responsble antbotcs use n manstream pork producton. Smthfeld s closely followng legslaton that was ntroduced n Congress n March 2009 to ban the nontherapeutc use of antbotcs n lvestock. Whle the bll was desgned to prohbt the use of antbotcs that promote growth, t would also ban antbotcs that prevent and control dsease. Smthfeld and the Natonal Pork Producers Councl beleve such legslaton would be detrmental to the health and well-beng of pgs and could jeopardze publc health. Pork producers need access to a range of anmal health products to keep our anmals healthy and, n turn, produce food that s safe for human consumpton. MURPHY-BROWN FEED-GRADE ANTIBIOTIC USE 2005 2006 2007 2008 0.109 0.155 0.151 0.107 Data does not nclude recently acqured Premum Standard Farms. Each year represents a 12-month perod through October. 05 08 change 2% lbs. per 100 lbs. sold Anmal Clonng Although the U.S. Food and Drug Admnstraton has concluded that meat products from cloned anmals are safe for human consumpton, Smthfeld Foods does not produce meat products from cloned anmals and has no plans to do so n the future. The scence nvolved n clonng anmals s relatvely new. We wll contnue to montor further scentfc research on ths technology. We contnue to mantan our focus on the development and mprovement of our meat products through careful selectve breedng and genetc research. (See CSR Spotlght 3 on page 54 for more on the scence of hog genetcs.) Clonng s wholly unrelated to ths effort. Safe Transportaton Each year, Smthfeld s 200 company-owned tralers and 170 contract haulers log more than 50 mllon mles transportng lve anmals from farms to processng plants. We strctly comply wth federal anmal transport tme gudelnes and have systems n place to maxmze the comfort and safety of our anmals. For example, we requre two drvers on trps longer than eght hours; ANIMAL WELFARE t 50

ths reduces the number of stops needed so the anmals spend less tme on the traler. Other measures to mantan anmal comfort nclude fans and water msters n hot weather and extra panelng and beddng n wnter months to provde protecton from the cold. Safety s a top prorty for every one of those trps. But wth thousands of journeys each year, accdents can happen, although they are nfrequent. Our lve-haul accdent-response procedures are wdely regarded by anmal welfare experts as the best n the ndustry. We have fve equpment tralers known as rescue unts, whch are stocked wth a varety of equpment, such as lghts, pennng equpment, saws, generators, and other devces that would be needed when a truck carryng our anmals s nvolved n an accdent. The tralers are statoned n key areas where our busnesses are concentrated. When an accdent occurs, desgnated company employees are dspatched to pck up a rescue truck and brng t to the accdent ste. Our goal s to have a rescue unt arrve at an accdent ste wthn the frst hour of the ncdent. Our procedures, whch were developed wth the help of anmal scentsts, facltate swft and humane acton and are desgned to protect anmals and handlers, as well as the publc. We have traned our truck drvers and our employees on proper technques for enterng overturned tralers, extractng anmals, and euthanzng njured anmals. We also provde regular tranng sessons for state and local polce, fre, and other publc safety offcals who respond to accdent scenes. All company-employed and contract drvers who transport our anmals also must be certfed under the Natonal Pork Board s Transport Qualty Assurance Program, whch educates transporters, producers, and anmal handlers on all aspects of hog producton, ncludng the correct way to move pgs of varous weghts from small pglets to adults that can wegh more than 400 pounds. TRANSPORTATION ACCIDENTS INVOLVING MARKET HOGS Number of Accdents Number of Market Hogs Involved Hog Fataltes Murphy- Premum Murphy- Premum Murphy- Premum Brown Standard Total Brown Standard Total Brown Standard Total Farms Farms Farms 2007 3 N/A* N/A* 533 N/A* N/A* 83 N/A* N/A* 2008 6 N/A* N/A* 1,106 N/A* N/A* 243 N/A* N/A* 2009 1 1 2 186 168 354 16 17 33 *Premum Standard Farms data pror to fscal 2009 are not avalable. t All values reported by fscal year 51 t ANIMAL WELFARE

Smthfeld Foods and The Famly Farm Isaac Sngletary knows pgs. For four decades, he has been rasng hogs on the North Carolna farm that has been n hs famly for more than a century. Sngletary and hs wfe, Nna, earned a good lvng as ndependent hog producers for many years. But n the 1990s, producton costs spked, forcng many small farmers out of busness. The wrtng was on the wall: If you ddn t do somethng dfferent, you were gong to be left by the sde of the road, Sngletary says. That somethng dfferent turned out to be contract hog growng. Sngletary worked out a deal wth Carroll s Foods, the pork producton company that was purchased by Smthfeld n 1999. Carroll s bought half of Sngletary s property to buld a company sow farm, whle Sngletary held on to the remander of hs land for contract hog growng. As a contract grower for Smthfeld, Sngletary s Reedy Branch Farm shelters, feeds, and cares for approxmately 20,000 hogs a year untl they reach market weght of about 260 to 265 pounds each. Smthfeld Foods supples everythng Sngletary needs to rase the pgs, ncludng feed, transportaton for the anmals to and from hs farm, veternary support, and techncal assstance from producton experts. Most mportantly, Smthfeld provdes a steady ncome stream that protects hm from the ups and downs of a volatle market. Anmal Welfare at Our Plants The respectful treatment of our anmals at our processng plants s just as mportant as the way we treat the anmals whle they are growng at our farms. We have systems and procedures n place to ensure mnmal stress and dscomfort for our anmals when they arrve at the plants. Enhanced Hog Handlng As herd anmals, hogs are most comfortable movng sde by sde n groups. As of 2006, we changed the new vehcle purchasng and fabrcaton specfcatons for our company-owned lve-haul truck fleet wthn Murphy-Brown s Eastern operatons. All new tralers purchased now have larger rear gate openngs, whch make t easer to unload hogs and mnmze stress on the anmals. We also have found that t s more effectve to herd anmals wth plastc panels, known as herdng boards. These changes, n conjuncton wth newly mproved unloadng facltes at Smthfeld Packng s processng plants n Tar Heel, North Carolna, and Smthfeld, Vrgna, further demonstrate our commtment to contnuous mprovement of our hog handlng procedures. Enhanced Slaughter Methods In recent years, we have been mplementng a procedure at our slaughter facltes known as CO2 anesthetzng. Many anmal scentsts, veternarans, and other experts vew ths process as less stressful, partcularly for hogs. Anmals are processed n groups, rather than sngle fle, and exposed to CO2 gas, whch causes them to quckly lose conscousness. Smthfeld s among those companes n the Unted States that are leadng the ndustry-wde trend toward the use of CO2 anesthetzng. Eght of our nne hog processng facltes utlze ths process. Qualty Management Our qualty management program for our nne anmal processng plants ncludes many of the components employed on our farms. Above all else, we have a zero-tolerance polcy for anmal abuse or mshandlng. Any employee found to be n volaton wll be subject to dscplne, up to and ncludng termnaton. Wllful neglect or abuse of anmals by any Smthfeld Foods employee are grounds for mmedate dsmssal, and offenders may also be subject to crmnal prosecuton under applcable law. Key elements of our qualty management program at the processng plants nclude the followng: Anmal Welfare Program. Each plant mantans a comprehensve, wrtten anmal welfare program based on the Amercan Meat Insttute s (AMI) Anmal Handlng Gudelnes, whch nclude seven core crtera related to ssues such as wllful acts of abuse and access to water. Each plant also has an anmal welfare commttee that seeks ways to contnuously mprove our handlng of anmals. (contnued on opposte page) ANIMAL WELFARE t 52

Expert Personnel. Our anmal welfare professonals must undergo tranng and certfcaton through the Professonal Anmal Audtor Certfcaton Organzaton (www.anmalaudtor.org/paaco). Smthfeld Foods s also actvely nvolved wth the AMI s Anmal Welfare Commttee, whch establshes standards, best practces, and contnung educaton. Tranng. Tranng programs are developed and mantaned for all employees who work wth lve anmals. Employees are traned when they jon the company and, subsequently, at least once per year. Audtng. Our programs are audted nternally and by thrd partes to verfy, enhance, and update current company practces. Thrd-party audts at our facltes are conducted by a recognzed, qualfed ndependent audt frm or by the USDA s Agrcultural Marketng Servce. Suppler Expectatons. All Smthfeld Foods supplers must follow establshed ndustry standards for anmal well-beng. Producers and transporters of anmals are subject to mmedate termnaton f they fal to take adequate steps to uphold approprate anmal welfare practces. Regulatory Complance. Anmals that need to be housed at processng plants before slaughter are cared for n accordance wth all regulatory requrements, under accepted standards for anmal care and welfare. We employ tmely use of humane methods to euthanze sck or njured anmals that do not respond to approprate treatments. (contnued from opposte page) Sngletary s currently under a fve-year contract wth Smthfeld, whch pays hm the same prce per hog no matter the external market forces. The relatonshp allows Sngletary to do the job that he knows and loves on hs own land. I would not be n busness today f I had not decded to become a contract farmer, he says. Sngletary and other contract growers partcpate n regular company tranng programs on anmal health and welfare ssues, and beneft from new technologcal advances n hog producton to whch he mght not otherwse have access. Lke all of Smthfeld s contract farmers, he also s subject to routne company audts. They check what we do to make sure that we re dong t all correctly, he says. Whle Sngletary occasonally msses the ndependence of a solo farmng operaton, he says contract growng was far and away the rght decson for hm and hs famly. He has thrved as a contract grower, earnng recognton from Smthfeld fve tmes as Fnshng Grower of the Year. He has been able to hold onto hs property, whch s now worth a tdy sum, and has stayed actve n hs communty, provdng employment for others and contrbutng to varous cvc and church groups n hs small town of Bladenboro, North Carolna. At 65, Sngletary has eased off work n recent years to spend more tme wth hs famly, but he has no frm retrement plans yet. Hog farmng, he says, s a way of lfe. 53 t ANIMAL WELFARE

CSR SPOTLIGHT 3 The Scence of Hog Producton Scence s probably the last thought on the mnds of most consumers when they st down to a plate of rbs or a holday ham. But breedng the hogs that wll produce the chocest and tastest meats, at an affordable prce, s a complex and sophstcated process that s part hgh-tech DNA analyss and part good heredtary luck. At Smthfeld Foods, seven genetcsts n North Carolna spend ther days examnng pg characterstcs to pnpont whch combnatons of sows and boars wll create the deal market hog. As a commercal producer, Smthfeld strves to reach several goals: elevatng the health of the anmals, mprovng the qualty of our foods, and maxmzng the effcency of our producton. It s mportant to note that Smthfeld Foods does not genetcally modfy our anmals. Our breedng program uses gene selecton to dentfy the best trats for market hogs and carefully selects the best anmals from each generaton to be the parents of the next. To understand the process, t helps to vsualze a pyramd, explans Matt Culbertson, general manager at Smthfeld Premum Genetcs. At the top of the pyramd are pure lne breedng pgs, whch have been selectvely developed to have specfc trats. Over several generatons, one elte parent anmal at the top of the pyramd wll mpact tens of thousands of progeny at the commercal level. These pure lne anmals, whch are unque breed populatons such as Durocs, are housed n remote, secure farms n Texas and North Carolna desgned to mnmze dsease contamnaton. (Smthfeld has ts own propretary Duroc lne.) Bosecurty s a top prorty and requres a commtment smlar to many processes found n other ntensvely managed health facltes. For example, at the state-of-the-art nucleus compounds, all employees shower before enterng the farm and wear desgnated unforms whle performng ther daly routnes. At brth, each pure lne anmal s tagged wth a unque bar code. All genetc nformaton about the anmals s entered nto a database to help the scentsts zero n on the pgs that wll yeld the best offsprng. Smthfeld Premum Genetcs wll analyze approxmately 100,000 breedng pgs annually across eght genetc lnes. For the growng pg, the scentsts seek superor features such as growth rate, feedng effcency (.e., how much food t takes for the pg to reach market weght), and the marblng and texture of the meat once processed. On the mother s sde, mportant characterstcs nclude reproductve effcency (.e., ltter sze and brth weght) and the mother s ablty to produce mlk and rase healthy pglets. Culbertson s team tracks a percentage of the offsprng of the pure lnes through the commercal operatons to evaluate ther growth performance, and then follows them through to the processng plant for analyss of ther product value after slaughter. Each week, about 1,500 pgs are examned at the processng plants for features ncludng leanness and tenderness. The nformaton s recorded n a database that can trace an anmal s pedgree back as far as 15 generatons. Through careful gene selecton, hog genetcsts have been able to ncrease ltter szes from an average of 10 or 10.5 pglets per ltter sx or seven years ago to an average of 12 to 13 pglets today. Yet, whle the number of pglets has ncreased, the average brth weght of close to three pounds has stayed the same, or even ncreased slghtly resultng n healthy, vgorous pglets. (Larger ltters wth smaller brth weghts would have been consdered a genetcs falure.) Over recent years, the Smthfeld scentsts have mproved other trats as well. As one example, scentsts were able to elmnate a gene known as the Rendement Napole or RN gene whch caused low ph and water holdng capacty n pork. On average, t takes approxmately two years for a genetc advance to make ts way through from the nucleus group to the market hogs. Most swne genetcs companes are stand-alone busnesses. Smthfeld benefts from an nternal genetcs team that can follow pgs from farm to processng. Whle the nformaton we gather undoubtedly helps us mprove our busness, t also helps to advance overall hog welfare by elmnatng dseases and genetc defects. Culbertson s team s focusng on fndng the genetc lnes that wll maxmze effcences on the farms, partcularly as the prce of feed ncreases. They want to see whch pgs utlze ther feed most effcently and stll grow to healthy and productve weghts. The team s also lookng for more reslent breeds. Of course, luck stll comes nto play wth genetc samplng, just as t does for any parents who pass along genes to ther progeny.

OUR COMMITMENT TO FOOD SAFETY FOOD SAFETY Food safety s our hghest prorty. Smthfeld Foods companes worldwde work together to produce the safest products possble, ensure the traceablty of the majorty of our lvestock, and delver hgh-qualty meat products. Our vertcal ntegraton strategy helps us mantan control of the safety of our products throughout our supply chan through proper management, strct polces, and dedcated employees. We collaborate wth ndustry, government, and ndependent experts to create and mplement rgorous food safety practces n all our facltes and manufacturng processes. Snce 2006, Smthfeld Packng has been 100 percent USDA Process Verfed, assurng the followng: All facltes mantan an envronmental management system. All lvestock sent to Smthfeld Packng facltes can be traced back to the anmal s farm of orgn. Anmals are rased where management systems address health, welfare, and proper use of antbotcs. Supplers are certfed accordng to Natonal Pork Board Pork Qualty Assurance Level III gudelnes and are encouraged to become complant wth the Pork Board s new PQA Plus qualty assurance program by the end of 2010. Drvers who transport lve anmals are certfed by the Natonal Pork Board s Transport Qualty Assurance gudelnes. We also provde nformaton on nutrton and safe food handlng to consumers through our product labels, our Web ste, and other outreach efforts. MANAGING FOOD SAFETY All Smthfeld companes take a comprehensve approach to food safety that addresses faclty, equpment, and process desgn; operatng and santaton procedures; employee tranng; and audtng of our facltes. Food safety s ntegrated nto our busness practces through our captal fundng revew process. We requre a Food Safety Checklst for every captal fundng request. Ths checklst must be sgned off by the food safety representatve for each faclty to ensure that we re addressng product safety ssues as part of every captal expendture. We have a senor-level, cross-functonal Food Safety Councl, representng our major subsdares, to provde decson makng, gudance, and drecton to the company. Members of the councl consult wth each other on an ongong bass and meet formally throughout the year to dscuss current scentfc and techncal food safety nformaton, as well as evaluate the soundness of our food safety practces. The Councl also advses on emergng food safety technologes and pertnent government regulatons. 55 t FOOD SAFETY

Furthermore, the Councl develops and mantans polces, standards, and best practces for all Smthfeld Foods companes that meet or exceed all regulatory requrements. The Councl developed our Food Safety Polcy, whch was orgnally based on the Hazard Analyss and Crtcal Control Pont (HACCP) system. HACCP s a comprehensve food safety control system desgned to keep potentally hazardous products from gong to market. The system s mandatory n all European Unon countres and s dscussed n more detal n the Internatonal secton of ths report. Ths year, the Councl requested that all facltes pursue Global Food Safety Intatve (GFSI) certfcaton. Ths audt scheme certfes a plant s complance wth a set of food safety standards that are recognzed domestcally and nternatonally, elmnatng the need for multple food safety and qualty assessments. Once certfed, companes may dsplay the GFSI seal on all ther products. Smthfeld s food safety strategy s to antcpate ponts n the producton process at whch food safety challenges exst and then develop programs to avert problems. For example, the Food Safety Councl worked wth our Engneerng Councl to develop comprehensve engneerng standards for the constructon of new plants and the renovaton of agng facltes. These standards help to ensure strct adherence to personal hygene, mnmze drect human contact wth food, and enable precse trackng of products across our operatons. Smthfeld nvests mllons of dollars each year n captal mprovements to mprove the safety of our products and our employees, whle smultaneously mprovng producton at exstng and new facltes. Captal nvestments slowed ths past year due to economc condtons, but we have not compromsed our food safety commtment. Tranng Keepng our food safe requres people who know what to do and how to get the work done. All Smthfeld employees receve extensve tranng n the polces and procedures we use to keep our foods safe. Each worker s traned upon hrng and s retraned annually, dependng on hs or her job descrpton. Our Food Safety Tranng Polcy outlnes requred and suggested food safety tranng topcs, traner qualfcatons, and the frequency of tranng at all of our subsdary processng facltes. The Polcy also requres that food safety tranng be documented and that employees be tested to evaluate the tranng program s effectveness. We are workng to further standardze our food safety tranng and have successfully mplemented an electronc tranng system n many of our facltes. FOOD SAFETY t 56

Audtng and Inspectons Our comprehensve audtng protocols, ntroduced n 2006, help ensure that the products we delver are of the hghest qualty and meet all nternal and government standards. Our facltes are subject to a varety of nspectons and audts, as follows: Each faclty s n the process of GFSI certfcaton. Ths nvolves audts by a thrd-party audtng organzaton at least once a year for adherence to the nternatonal standard. Many of our facltes have already acheved certfcaton, and we expect all wll be certfed n the near future. Each faclty must also successfully conduct a mock product recall performed by food safety professonals four tmes a year. Plants are requred to locate and collect 99.9 percent of affected food products wthn four hours. Plant personnel conduct self-audts and mock product recall scenaros throughout the year. Many of our larger customers have ther own food safety offcals perform audts at our plants and/or request that we send them the results of the thrd-party audts that are conducted at our facltes and pad for by Smthfeld. Government offcals based at our plants contnually nspect our facltes and products. Typcally, our facltes are audted about eght tmes each year, n addton to ongong government nspectons. Any nonconformance dentfed by any audt s addressed promptly at each faclty. A follow-up s conducted after the ntal audt to ensure that any problems have been addressed. Nutrton At Smthfeld, we beleve t s mportant to provde consumers wth a range of detary choces. We offer a wde varety of foods customzed to dfferent needs and tastes, from low-salt hams to full-flavored bacons to fresh pork products. Our Research and Development team of nutrtonsts and food scentsts works wth our customers such as supermarkets and restaurant chans to develop new products that respond to evolvng customer requests. In March 2009, we hosted the Vrgna Agroterrorsm Conference, organzed to address growng concerns of boterrorsm and anmal dsease outbreaks. The event, sponsored by the FBI and the Vrgna Department of Agrculture, was attended by more than 130 law enforcement and agrculture offcals from across the state. Because of the varablty n consumer preferences and wants, we produce an assortment of products so that consumers can make ther own choces to match ther ndvdual lfestyles. Over the years, we have developed leaner cuts of pork and have modfed many products to be lower n fat, salt, and/or sugar. Several of our products meet the Amercan Heart Assocaton s certfcaton crtera for foods that are low n saturated fat and sodum content. We are proud to provde affordable products that offer a sgnfcant source of proten. Although the current economc envronment has lmted some of our R&D efforts, we contnue to focus on products that provde a pleasurable eatng experence whle meetng consumer expectatons on nutrtonal requrements. 57 t FOOD SAFETY

Very few of our products are marketed to chldren. Less than 1 percent of advertsng and promoton s geared toward chldren under the age of 12, accordng to an analyss we conducted n 2007. Consumer Health and Safety We beleve our food safety responsbltes contnue even after our products leave our facltes, so we developed the followng Web page to educate consumers on proper food handlng and preparaton: www.smthfeldfoods.com/consumers/prep.aspx. Product and Servce Labelng Smthfeld strves to ensure that our consumers receve the most current nformaton about the ngredents and nutrtonal value of our products. Our product labelng s clear and accurate, conformng to the unque labelng requrements of each country n whch we sell our foods. Smthfeld dd not have any penaltes or fnes assocated wth product labelng regulatons snce our last report. Complance Smthfeld Foods had one recall durng the latest reportng perod. In January 2009, Patrck Cudahy Incorporated recalled approxmately 3,590 pounds of bacon bt products for possble contamnaton wth Lstera monocytogenes. The bacon bt products were produced on November 13, 2008, and were dstrbuted to restaurants and nsttutons n Calforna, Colorado, Florda, South Dakota, Texas, and Wsconsn. The problem was dscovered through testng by an establshment that had receved the product. The USDA s Food Safety and Inspecton Servce receved no reports of llness. Patrck Cudahy conducted an extensve nvestgaton to understand how ths problem arose. Based on the fndngs, the company made sgnfcant captal nvestments and mplemented a number of operatonal changes to prevent smlar occurrences. Several Smthfeld facltes were affected by trade-related actvtes n Chna, Russa, and Mexco, whch banned the mport of products from specfc plants. None of these actons, however, was related to food safety. Many of our domestc compettors were smlarly affected by mport bans from those countres. New rules on Country of Orgn labelng were fnalzed n early 2009, after years of debate. Accordng to ths law, meat packers are requred to provde nformaton to retalers wth the name of the country from whch anmals are produced. Smthfeld s U.S. operatons began processng only U.S.-born-and-rased hogs startng n Aprl 2009. Durng the development of ths report, Congress was consderng legslaton to brng sgnfcant change to the FDA and USDA food safety system. Smthfeld s payng close attenton to the debate. FOOD SAFETY t 58

OUR COMMITMENT TO OUR COMMUNITIES HELPING COMMUNITIES Gvng back to our communtes s an mportant part of our msson at Smthfeld Foods especally n tough fnancal tmes. Although the past fscal year was a dffcult one for our company, we mantaned our commtments to our communtes, contnung to focus n partcular on programs that noursh both the body and the mnd. In many of the rural areas where we do busness, Smthfeld s the prmary employer n the communty. Helpng our employees and those who lve around our farms and our plants helps us become a stronger, more vtal company. From a busness standpont, our phlanthropc efforts also correlate drectly wth our ablty to recrut and retan good workers. In the town of Tar Heel, North Carolna, where we have the largest meat processng plant n the country and where our employees make up the majorty of the communty, we bult a state-of-the-art medcal center across the street from our plant for Smthfeld s employees and ther famles. Offce vsts are $10 no matter the medcal ssue. In 2008, we opened the faclty to the publc to help address a regonal need for more physcans. The subsdzed offce copayments, however, are avalable only for Smthfeld employees. We re passonate about our educatonal ntatves, whch offer learnng opportuntes for those who may not otherwse have them, and we re proud of our ongong support of food programs. In addton to hunger- and learnng-related ntatves, we provde sgnfcant support for local and nternatonal envronmental stewardshp efforts. In our headquarters communty of Smthfeld, Vrgna, for example, we recently funded a research project to study the extent, and possble causes, of the loss of marshes along the Pagan Rver. Norfolk State Unversty and the James Rver Assocaton conducted the study n the fall of 2008 at the request of The Smthfeld Tmes newspaper. The marshlands, whch are essental to estuary health, have been steadly dsappearng, as evdenced by comparson aeral photographs taken n 1937, 1958, and today. We are well aware of the rpple effects our operatons can have on a communty, partcularly when we make the dffcult decson to close plants and reduce jobs. For more nformaton on the mpact of our 2009 restructurng, see the Employees secton on page 64. Corporate-Level Educatonal Programs The Smthfeld-Luter Foundaton The Smthfeld-Luter Foundaton, the phlanthropc wng of Smthfeld Foods, was founded n 2002 to provde educatonal scholarshps for our employees chldren and grandchldren at select colleges and unverstes. Over the years, the Foundaton has grown to fund educatonal partnershps n the communtes where our employees lve and work. 59 t HELPING COMMUNITIES

Smthfeld Program Shows You re Never Too Old for School Alferd Wllams s 10 tmes the age of hs elementary school classmates. But he s lvng proof that you re never too old to learn. The son of sharecroppers, Wllams was 68 when he began learnng to read. As a chld, he worked the felds wth hs father and never had a chance to go to school. But he always longed to learn. Mama cred that I couldn t go to school, Wllams told People magazne n a 2008 ntervew. She made me promse that someday I would learn to read. He began makng good on that promse n 2005, when he started recevng specal nstructon from Alesa Hamlton, a teacher at Edson Elementary School n St. Joseph, Mssour. Eventually, Hamlton persuaded her prncpal to allow Wllams to be a regular student n her frst-grade class. In 2008, after hearng Wllams story, Smthfeld s Learners to Leaders program presented hm wth a $10,000 check to offset hs lvng expenses as he works toward hs GED. The donaton was made to a trust fund admnstered by Edson Elementary School. Smthfeld Foods also gave $2,500 to the school lbrary. Alferd Wllams sets a great example of what our Learners to Leaders program s all about, says C. Larry Pope, presdent and chef executve offcer of Smthfeld. In 2008, the Foundaton awarded 48 scholarshps totalng $290,000 for the educaton of our employees chldren and grandchldren. To be elgble, a student must be a dependent of a Smthfeld employee, demonstrate fnancal need, and be accepted by one of seven schools we have named as partners. Snce the ncepton of ths program, we have awarded 127 annual scholarshps worth nearly $1.2 mllon. We recently expanded our collegate partnershp program to nclude three hstorcally black unverstes: Fayettevlle State Unversty n Fayettevlle, North Carolna; Norfolk State Unversty n Norfolk, Vrgna; and Vrgna Unon Unversty n Rchmond, Vrgna. In 2007, we gave $25,000 to each school to fund scholarshps and wll gve up to $100,000 to each school over several years. Learners to Leaders Launched n 2006, Learners to Leaders s a natonal educaton allance funded by the Smthfeld-Luter Foundaton. Wth addtonal support and expertse from our ndependent operatng companes and local educatonal partners, the program works to close the educaton gap for underprvleged students n our employees communtes. Over three years, the Foundaton has made $980,290 n contrbutons to Learners to Leaders. The frst Learners to Leaders program began n Soux Falls, South Dakota. Over the past three years, we have funded programs n Green Bay, Wsconsn; Denson, Iowa; Northwest Iowa; Norfolk, Vrgna; and Mlan, Mssour. Our Learners to Leaders program n Northwest Iowa s an allance wth the Natonal FFA Organzaton, formerly known as the Future Farmers of Amerca. Smthfeld Foods commtted $200,000 to enroll hgh school students n FFA programs that emphasze agrbusness. We also recently launched a new Learners to Leaders student development program to help economcally dsadvantaged hgh school students n Lumberton, North Carolna, prepare for college. Students who complete the program, whch ncludes laptop computers for every partcpant, receve a $1,000 scholarshp and up to $500 for books f they attend Robeson Communty College after graduaton. In 2008, our Soux Falls partnershp was honored by the state of South Dakota for helpng area hgh school students advance ther educatons beyond hgh school. The State Drector s Award s gven to programs that ncrease student achevement and nvolvement, partcularly among nontradtonal or specal-needs students. The Foundaton s fundng Southeast Techncal Insttute s Assocate of Appled Scence degree program for students selected by the Soux Falls School Dstrct. The students many of whom never magned they would go to college begn the program durng ther junor year n hgh school. Other Communty Outreach Programs Smthfeld proudly sponsors and supports a range of programs and communty organzatons. The followng are just a few examples: HELPING COMMUNITIES t 60

In addton to our new Learners to Leaders FFA partnershp, we support the Natonal FFA Organzaton s career development events. In 2008, we sponsored our thrd FFA Envronmental and Natural Resources Career Development Contest, n whch hgh school students test ther agrcultural and envronmental conservaton sklls, such as water and ar qualty analyses and sol testng. We are a corporate sponsor of the Hampton Roads Urban League n Vrgna and are actvely explorng drect partnershps for work force development and tranng. The partnershp enables us to recrut a more dverse work force. Smthfeld s a corporate sponsor of An Achevable Dream Academy, a year-round, extended-day school for economcally dsadvantaged chldren n Newport News, Vrgna, that beleves educaton s the key to breakng the cycle of poverty. In 2009, Smthfeld was a sponsor of the Captal Area Food Bank Blue Jeans Ball, a fundrasng event that supports the food bank s outreach programs and generates awareness about the ssue of hunger. The Captal Area Food Bank s the largest publc nonproft hunger and nutrton educaton resource n the Washngton, D.C., area. In 2008, Smthfeld rased $135,000 for breast cancer awareness through sales of our Lean Generaton Del lne of meats. Through a partnershp wth the Natonal Breast Cancer Foundaton, Smthfeld donates a porton of every Lean Generaton purchase for early breast cancer detecton and treatment. Chef Jeff and Smthfeld Inspre At-Rsk Kds Dr. Wanda Brown, assstant superntendent for secondary educaton n Columba, Mssour, vvdly recalls recent motvatonal talks gven by Chef Jeff Henderson at two of her hgh schools. What came across most was hs passon to make a dfference n the lves of young people, says Brown. I watched several faces n the audence that were captvated by what he sad and how he sad t. Smthfeld Foods, whose commtment to educaton can been seen n other ntatves such as the Learners to Leaders allance, sponsored more than a dozen such appearances by Chef Jeff durng the past year. Smthfeld sponsors a seres of baseball clncs for students from Washngton, D.C., as part of our effort to promote educaton, exercse, and proper nutrton among young people. More than 500 kds, aged four to 18, partcpated last year n monthly clncs taught by coaches of the Washngton Natonals baseball team durng the team s season. Smthfeld recently began to sponsor a jont program between Lons Club Internatonal chapters n Vrgna and n Tms, Romana, that sends prescrpton eyeglasses from the Unted States to low-ncome patents n Romana. Smthfeld s coverng the shppng costs for the glasses. Corporate-Level Hunger Relef Efforts As a global food company, t makes sense for us to focus many of our communty efforts on hunger relef. More than 35 mllon people lve n households consdered to be food nsecure, ncludng 22.9 mllon adults and 12.6 mllon chldren and the numbers have been rsng as the naton s economy has worsened. Our programs support famles faced wth food nsecurty ssues through four man actvtes: Food banks. We provde ongong support to Feedng Amerca (the natonal network of food banks formerly called Amerca s Second Harvest) and to local food banks through product and monetary donatons and/or awareness campagns. Host of hs own show on the Food Network, Henderson learned to cook whle spendng 10 years n prson for drug traffckng. He regularly shares hs story wth students across the Unted States, encouragng at-rsk kds to reach ther potental and escape the cycle of poverty. Talent and persstence helped hm turn hs lfe around, and he eventually became the frst Afrcan-Amercan Chef de Cusne at Caesar s Palace n Las Vegas. Henderson s stops also ncluded East Bladen Hgh School n Elzabethtown, North Carolna. Wth a predomnantly mnorty populaton at East Bladen, Jeff Henderson s vst was partcularly sgnfcant to our young people, notes Rob Spanhour, the school s prncpal. 61 t HELPING COMMUNITIES

Food Banks Welcome Smthfeld Donatons The number of people requestng assstance s ncreasng at a rate Harvesters hasn t seen n our 30-year hstory, wth our network agences reportng a 40 percent ncrease n need compared wth the same perod n 2008, says Ellen Feldhausen of Harvesters, the food bank based n Kansas Cty, Mssour. We re grateful for the meat donatons that we have receved from Smthfeld Foods because proten s mportant for good nutrton and s much needed. Smthfeld Foods donated more than 86,000 pounds of proten n just the frst four months of 2009 to Harvesters, whch feeds approxmately 60,000 people weekly n Greater Kansas Cty. That contrbuton was part of the more than 3 mllon pounds of meat Smthfeld provded to Feedng Amerca s member food banks across the Unted States durng the 2009 fscal year. Lke Harvesters, many are strugglng to keep up wth unprecedented demand brought on by the current recesson. In Charlotte, North Carolna, the Second Harvest Food Bank of Metrolna supports almost 650 partner agences that feed the hungry n a 19-county regon across North and South Carolna. It has dstrbuted more than 80,000 pounds of Smthfeld products durng ts latest fscal year. We place specal emphass on meetng the needs of chldren and senors, notes Kay Carter, the food bank s spokesperson. School nutrton programs. We supply food to the chldren who need t most through school-based nutrton programs such as Kds Café, whch provdes free meals and snacks to low-ncome chldren. Dsaster relef. We support relef efforts n the wake of natural dsasters. Communty outreach. We assst communty-based groups that reach out to local famles n need, ncludng famles of solders servng overseas. Helpng Hungry Homes The Helpng Hungry Homes ntatve s Smthfeld s own corporate-level effort to provde food for those n need. In early 2008, celebrty cook Paula Deen helped us kck off the sgnature program wth a 10-cty Helpng Hungry Homes tour, whch ncluded donatons totalng 250,000 pounds of food n Deen s hometown of Savannah, Georga, as well as Phladelpha, New York, Atlanta, Kansas Cty, Los Angeles, Chcago, New Orleans, Washngton, D.C., and Detrot. Later n the year, Deen brought delveres of food for dstrbuton n Washngton, D.C.; Savannah and Atlanta, Georga; Rchmond, Vrgna; and Wnston-Salem, North Carolna. Together, these delveres totaled 118,000 pounds of meat. To enhance our efforts to rase awareness of hunger ssues, we contnued to make donatons to local food banks and also partnered wth Chef Jeff Henderson, the author and Food Network celebrty who found hs passon for cookng whle ncarcerated for drug traffckng. After servng 10 years n federal prson, he rose through the ranks of top restaurants n Las Vegas. Henderson, who s also workng wth Smthfeld s Learners to Leaders program, delvered hs frst donaton wth Smthfeld Foods n December: 25,000 pounds of meat to the Second Harvest Food Bank of Metrolna n Charlotte, North Carolna. Overall n 2009, Smthfeld Foods dstrbuted approxmately 3.7 mllon pounds of meat, or nearly 15 mllon servngs, wth an estmated value of more than $4.6 mllon. Smthfeld Packng made the largest donaton, totalng nearly 1.6 mllon pounds. Donatons were dstrbuted prmarly through food banks afflated wth Feedng Amerca, the naton s largest hunger-relef organzaton and our charty of choce for product donatons. Subsdary Communty Involvement Hghlghts Our subsdary companes have numerous programs that support ther local communtes, rangng from food donatons to charty road races to rver cleanups. However, Smthfeld Foods does not currently have a method to quantfy the total dollars contrbuted or number of employee volunteer hours contrbuted across all our ndependent operatng companes. Last year, we assembled a corporate-wde commttee to coordnate donatons across our enterprse. We are makng progress on ths effort and hope to be able to report more fully on our subsdary nvolvement n the future. HELPING COMMUNITIES t 62

Typcally, our subsdares phlanthropc efforts mrror our corporate emphass on educaton, hunger relef, and envronmental stewardshp. Hghlghts durng ths reportng perod nclude the followng: Smthfeld Packng s Tar Heel Dvson donated $100,000 to the Amercan Cancer Socety. John Morrell donated $471,000 to the Unted Way, ncludng a corporate pledge of $75,000. John Morrell employees have donated $2.1 mllon to the Unted Way snce 2005. Patrck Cudahy and ts employees donated more than $150,000 to the Unted Way, whle Farmland Foods Monmouth, Illnos, faclty rased $30,000 for the organzaton. Armour-Eckrch Meats donated three days worth of food to help support rebuldng efforts n the town of Chapman, Kansas, followng a devastatng June 2008 tornado. Eghteen Armour-Eckrch employees lved n Chapman; two of them lost ther homes. Armour-Eckrch also donated a year of free groceres to one famly chosen by the televson program Extreme Makeover: Home Edton. North Sde Foods contrbuted approxmately $124,000 to the Ronald McDonald House Chartes through drect contrbutons and scholarshps. 63 t HELPING COMMUNITIES

EMPLOYEES OUR WORK FORCE Our 52,400 global employees are Smthfeld s greatest asset. In addton to protectng ther health and safety, Smthfeld s commtted to the far and ethcal treatment of our employees. We work to provde them wth opportuntes for further educaton and advancement wthn the company. The majorty of our workers can be found rasng anmals on farms, drvng transport trucks, and preparng food n processng plants. There s no doubt that these are demandng jobs. That s why we place such great emphass on workplace safety and employee health and wellness. In our ndustry, employee turnover can exceed 50 percent. Although we are always seekng to mprove employee retenton rates, our turnover rate at Smthfeld s consstently below the ndustry average. Our success as a company depends n large part on our ablty to mantan a sklled work force. Durng ths reportng perod, we announced a restructurng of our busness that wll result n the loss of approxmately 1,800 jobs. Layoffs and plant closngs are dffcult but necessary decsons, and we empathze wth the employees negatvely mpacted by the restructurng. Whenever possble, Smthfeld s offerng transfers to other company facltes, and we are workng wth employees and wth applcable unon offcals to help employees affected by the restructurng to fnd new jobs. For example, we are holdng job fars and are coordnatng wth area busnesses and government agences to help fnd local opportuntes for employees. We are also coordnatng wth unemployment offces to assst wth clams and job applcatons. Smthfeld fully compled wth the federal Worker Adjustment and Retranng Notfcaton (WARN) Act, whch requres 60-day notfcatons of plant closures to employees. Under the WARN Act, the company also notfed state-level dslocated worker unts so they could offer prompt assstance. Immgraton We have many valued employees who are legal mmgrants, so we pay close attenton to federal and state debates over new mmgraton legslaton. Our mmgrant work force brngs a rchness and dversty to our operatons and the communtes n whch we lve. We would lke to see comprehensve U.S. mmgraton reform that ensures we can mantan an adequate and stable work force and provde opportuntes for legtmate workers who seek jobs at companes lke ours. We beleve the Unted States should protect legal mmgrants and ther employers and provde paths to ctzenshp for those wllng to work. We are commtted to complyng wth all federal laws and welcome opportuntes to enhance our complance. In September 2008, U.S. Immgraton and Customs Enforcement (ICE) awarded us an assocate membershp n ts new IMAGE program ICE Mutual EMPLOYEES t 64

Agreement between Government and Employers. The voluntary program, whch began n 2007, works n targeted sectors to reduce unauthorzed employment. As an assocate member of IMAGE, we are commtted to workng wth ICE to strengthen our hrng practces and develop a more secure work force. In addton, all of our plants are members of E-Verfy, a voluntary, Internet-based program run by the U.S. Ctzenshp and Immgraton Servces to help determne employment elgblty. We do everythng we can to ensure the ntegrty of our work force. However, we and other employers face sgnfcant challenges n determnng the elgblty of employees due n part to dentty theft and the ncreasng avalablty of hgh-qualty forged documents that allow undocumented workers to thwart even the best hrng practces and skrt the laws. Collectve Barganng Smthfeld Foods has both unonzed and nonunonzed facltes. If a faclty has unon representaton, we honor and comply wth the terms and condtons of the collectve barganng agreement. Approxmately 50 percent of our work force n the Unted States s covered by collectve barganng agreements. Well over half of those n our pork segment are covered by collectve barganng agreements. We have hstorcally enjoyed good relatons wth the unons that represent our employees. Ths past year, we were able to greatly mprove a long-standng stuaton ted to the attempts of the Unted Food and Commercal Workers Internatonal Unon (UFCW) to organze the hourly work force at our Tar Heel, North Carolna, processng plant. In 2006, the UFCW launched a corporate campagn aganst Smthfeld, callng on our customers and consumers to stop buyng our products. In October 2007, we reluctantly fled a cvl acton aganst the UFCW and ts agents under the Racketeer Influenced and Corrupt Organzatons (RICO) Act to stop the unon s corporate campagn. The dspute wth the UFCW was settled on the eve of tral on October 27, 2008. The settlement was sealed by mutual agreement. A jont statement reflected that the two sdes agreed to hold a unon electon at the Tar Heel plant. In return, the UFCW sad t would end ts corporate campagn aganst Smthfeld, ncludng the calls for product boycotts. In addton, the company and the unon would work together to establsh and operate a Feed the Hungry program. The employees subsequently voted n favor of unonzaton 52 percent for, 48 percent aganst n a secret-ballot electon that was supervsed by the Natonal Labor Relatons Board. Our goal had always been to gve employees the opportunty to vote on the unon ssue n a far electon, by secret ballot. We respect the decson of our employees to unonze, and we look forward to workng wth the unon. Followng a seres of collectve barganng contract negotatons, workers at the plant accepted a four-year labor contract that took effect July 1, 2009. The agreement ncludes wage ncreases of $1.50 per hour over the lfe of the contract, as well as contnued famly health care coverage, mproved pad vacaton benefts, and guaranteed weekly hours, among other benefts. 65 t EMPLOYEES

On a related matter, Smthfeld has been montorng the progresson of the Employee Free Choce Act, known more colloqually as the card check bll, whch was ntroduced n Congress n early 2009 and would allow workers to unonze wthout a secretballot electon. Smthfeld beleves the secret ballot should be protected, and company executves have spoken out about the mportance of affordng employees the rght to a secret-ballot electon when decdng whether or not to form a unon. EMPLOYEE RELATIONS All human resources and employee relatons ssues are managed at a subsdary level by each of our ndependent operatng companes. Smthfeld Foods does not currently nclude a corporate-level human resources functon. We re workng hard to engage our employees through management safety commttees and have taken steps at our ndependent operatng companes to evaluate and enhance employee satsfacton. We ask a lot of our employees, but we beleve that we gve them a lot n return. We provde compettve wages and benefts, educatonal scholarshps, and a varety of programs that go beyond ndustry norms. Dversty Smthfeld s commtted to promotng and cultvatng a work force that wll enhance the company s compettveness n an ncreasngly dverse and nterconnected world. Our Dversty Advsory Commttee, whch we establshed n 2007 to help the company dentfy opportuntes and strengthen relatonshps wth our employees, customers, and external stakeholders, s composed of eght senor-level managers from subsdares and the corporate offce. Our full Dversty Statement can be seen on our Web ste at www.smthfeldfoods.com/responsblty/dversty.aspx. Smthfeld Foods does not dscrmnate aganst any employee or any applcant because of race, color, relgon, ethnc or natonal orgn, gender, sexual preference, age, dsablty, veteran status, or any other status protected by federal law. The company works hard to provde employees of all backgrounds wth opportuntes for tranng and advancement at all levels. All Smthfeld Foods facltes adhere to our Equal Employment Opportunty polces and programs. As of September 2008, women represented an estmated 34.8 percent of our U.S.-based employees and 17.5 percent of management. Mnortes represented 65.7 percent of employees and 23.3 percent of management. To determne the representaton of women and mnortes for reportng to the federal government, each Smthfeld Foods subsdary wth more than 50 employees produces the requste report usng a standard methodology. The nformaton s then centralzed for corporate analyss and the development of future employee programs. EMPLOYEES t 66

MINORITIES AT SMITHFIELD FOODS percentage of employees 2004 2005 67.1 69 2006 67.4 2007* 66.5 2008 65.7 04 08 change 2% 04 08 change percentage of percentage management of 24 26 24.4 22.8 23.3 3% employees 67.1 69 67.4 66.5 65.7 2% Data reported as of September each year * Due to an error n data complaton, we ncorrectly reported the 2007 mnorty percentage percentage of n last year s CSR report. The 2007 numbers are accurately represented here. management 24 26 24.4 22.8 23.3 04 08 3% change 2004 2005 2006 2007 2008 percentage of WOMEN employees AT SMITHFIELD 33.7 FOODS 35 35 35.3 34.8 3% 2004 2005 2006 2007 2008 management 15.9 17 16.8 17.8 17.5 10% employees 33.7 35 35 35.3 34.8 3% percentage of percentage of 2004 2005 2006 2007* 2008 Data reported as of September each year 04 08 change Data reported as of September each year percentage of management 15.9 17 16.8 17.8 17.5 10% Data reported as of September each year Human Rghts In 2007, we mplemented a new Human Rghts Polcy to ensure the far treatment of our employees throughout the company and n all of our subsdares. Although we long had a Code of Busness Conduct and Ethcs to protect the rghts of workers, we felt t was mportant to develop a formal polcy to specfcally address human rghts. We have provded copes of the polcy to all of our employees, ncludng new hres, and encourage our workers to call our tollfree Smthfeld hotlne to report any volatons. The polcy spells out expectatons n the areas of equal opportunty; health, envronment, and safety; harassment and volence; rghts of employees; and other key topcs. The polcy can also be vewed on our Web ste at www.smthfeldfoods.com/employees/human.aspx. Our Code of Busness Conduct and Ethcs, whch s also communcated to all employees, sets forth our expectatons for approprate employee behavor, as well as corporate hrng and dscplnary polces. We also communcate our Human Rghts Polcy to all major supplers. Employee Engagement Several of our operatng companes use employee engagement surveys to dentfy, measure, and prortze ssues that affect our workers and drve busness results. The surveys, whch are typcally offered n Englsh and n Spansh, evaluate topcs such as communcatons, safety, supervsory relatonshps, benefts, and leadershp. Results and follow-ups from 2008 nclude the followng: 67 t EMPLOYEES

Smthfeld Packng conducted ts thrd annual employee survey, whch yelded an 81 percent partcpaton rate. The survey found that trustng mmedate managers, and feelng valued by them, reman the two top drvers of employee engagement across the organzaton. In response, Smthfeld Packng developed leadershp tranng to address specfc sklls. In Murphy-Brown s Western operaton, department managers are developng acton plans for mprovement followng the company s second annual employee engagement survey. Scores mproved from 2007 to 2008. Farmland Foods has been workng to address many of the concerns rased n the frst round of an employee satsfacton survey. For example, after 37 percent of respondents at the Lncoln, Nebraska, faclty sad that employee common areas needed attenton, Farmland responded by cleanng and pantng locker rooms, bathrooms, and the cafetera, and assgned an employee to mantan these areas. Farmland also engaged wth employees to develop a customzed job evaluaton program to determne f a mechanc has the sklls requred for promoton to the next grade level, removng all subjectvtes from the revew process. And followng an employee focus group survey at Farmland s Denson, Iowa, plant, the faclty s plotng a Strategc Wellness Plan to mprove the overall health of employees. North Sde Foods dstrbuted a survey n October 2008 to all salared employees to establsh a baselne measurement for communcaton feedback, leadershp assessment, and organzatonal enhancement. More than two-thrds of employees responded, generatng over 330 comments for revew and consderaton. North Sde Foods s now workng to address the comments to mprove communcatons. For example, over the past year, the assstant vce presdent of operatons of the Arnold, Pennsylvana, plant has been holdng open meetngs wth hourly employees. And n Cummng, Georga, North Sde Foods formed a labor management commttee to enhance organzatonal communcatons. In June 2008, North Sde Foods was recognzed by the Pennsylvana Psychologcal Assocaton for ts employee nvolvement n tranng and assessment programs to buld a better work envronment. Employee Beneft Programs Smthfeld Foods offers compettve wage and beneft programs that vary accordng to operatng company, locaton, and poston. Employees n Tar Heel, North Carolna, for example, earn a startng wage of $10 per hour, sgnfcantly hgher than the current federal and North Carolna mnmum wage of $7.25 (the new mnmum as of July 24, 2009). We offer comprehensve health nsurance and other tradtonal benefts, ncludng 401(k) plans, lfe nsurance, and vson and dental care. Several of our subsdares provde on-ste medcal care and preventve health screenngs. At our packng faclty n Tar Heel, we bult a dedcated Famly Medcal Center for employees and ther famles, now operated by the nonproft Tr-County Communty Health Councl Inc. For just $10 per vst, Smthfeld employees receve access to prmary care, laboratory, X-ray, and pharmacy servces sx days a week. In 2008, we opened the faclty to the publc. EMPLOYEES t 68

Employee Educatonal Assstance Smthfeld Foods offers tuton rembursement to help employees pursue ther educatonal goals from Englsh as a second language courses through graduate degrees. Tuton programs vary by subsdary and typcally cover between 50 percent and 100 percent of tuton and lab fees. Many of our ndependent operatng companes also provde money for educaton programs. The followng are some examples: Armour-Eckrch Meats offers a tuton rembursement program (up to $5,000 per calendar year) to help further the educaton of select employees. Tuton assstance totaled $58,000 n 2008. Over the past year, Patrck Cudahy provded scholarshps more than $26,000 n total to chldren of employees and Cudahy (Wsconsn) Hgh School graduates. John Morrell granted $56,600 n tuton assstance to employees n 2008. In 2008, two Farmland Foods facltes provded $14,500 n scholarshps to chldren of employees, usng funds generated from recyclng programs. EMPLOYEE HEALTH AND SAFETY The hog producton and meat-processng ndustry as a whole has made substantal advancements n worker safety and protecton over the past decade, sgnfcantly reducng the rate of njury. Nonetheless, on average, U.S. beef and pork processors report 8.4 njures per 100 employees more than twce the average rate for all prvate ndustry occupatons, accordng to 2007 data from the U.S. Department of Labor s Bureau of Labor Statstcs. Smthfeld s rate s nearly 25 percent less than the natonal meat-processng average, at 6.48. We do not accept that worker njures are a standard cost of dong busness. Our safety systems and programs, whch go well beyond regulatory complance, yeld measurable results, protectng employees whle reducng our workers compensaton costs. Audts and assessments conducted n early 2009 dentfed many opportuntes for health and safety mprovements, whch we are n the process of mplementng. Durng ths reportng perod, we contnued to enhance our safety systems as follows: Conducted Web-based tranng for engneerng and safety personnel Completed baselne Employee Injury Preventon Management System (EIPMS) audts to fnd mprovement opportuntes for the system 69 t EMPLOYEES

Safety Award Goes to Armour-Eckrch Faclty The 2008 Presdent s Award for Safety and Health went to the Armour-Eckrch locaton n Peru, Indana, for ts performance and for buldng a culture where employee health and safety s a core value n how busness s conducted. Smthfeld s Presdent s Awards recognze the outstandng efforts of safety professonals and facltes that have created and mplemented exemplary workste safety and health management systems. The nternal awards are gven based on an evaluaton of an ndvdual locaton s overall health and safety management efforts. Last year we ntroduced a new set of crtera to nvolve employees and reflect management efforts more accurately. An evaluaton s conducted of the followng: Level of mplementaton of all EIPMS elements Results of ntervews n whch hourly employees grade the level of commtment of management at ther locaton Employee engagement n safety actvtes Workplace analyss and hazard preventon Health and safety tranng Injury rates and Notces of Volaton Began EIPMS refresher tranng for locaton health and safety professonals and operatons management Held monthly conference calls wth ndependent operatng company and corporate safety personnel to revew opportuntes to enhance systems Smthfeld Foods contnued to reduce our Total Injury and Illness Frequency rate (TIFR), although we dd see a slght ncrease n our Days Away, Restrcted, Transferred (DART) rate and Days Away from Work (DAW) rate. Most of our njury and llness rates reman well below the ndustry averages, wth the excepton of the DAW rate. (See pages 72 73). MANAGING EMPLOYEE SAFETY At Smthfeld, employee safety sn t just a prorty; t s a core component of our busness. Our Employee Safety Polcy was revewed and reauthorzed ths year and defnes safety responsbltes for all levels of the company. Our polcy communcates our desre to lead the ndustry n health and safety practces and performance through hazard dentfcaton and rsk assessment, tranng programs, measurng and montorng, and assessments to ensure complance wth regulatory and other requrements. Smthfeld has a corporate drector of health and safety, as well as senor-level safety managers at each operatng company. At the supervsory level, all Smthfeld managers from lne supervsors to plant managers are traned n health and safety ssues. Across the company, we have 59 professonals whose prmary responsbltes nvolve provdng techncal nformaton and resources to assst wth health and safety management and employee welfare. A corporate-level steerng commttee, composed of 10 senor health and safety offcals from Smthfeld Foods and our ndependent operatng companes, holds monthly teleconferences to dscuss safety ntatves, best practces, upcomng regulatory changes, and any problems dentfed at the company. Several of these commttee members also st on an Amercan Meat Insttute commttee that s workng to foster an ndustry-wde culture of njury preventon. Gong forward, the steerng commttee wll place greater emphass on preventng ncdents assocated wth non-routne actvtes, such as producng seasonal products or makng changes to equpment, machnery, or procedures. Employee Injury Preventon Management System All Smthfeld Foods operatng companes are expected to mplement our corporaton-wde Employee Injury Preventon Management System (EIPMS), whch bulds on the success of our Envronmental Management System. The EIPMS s based on Occupatonal Health and Safety Assessment System (OHSAS) 18001 supplemented by the Amercan Natonal Standards Insttute s Z10 and OSHA Voluntary Protecton Program gudelnes. (contnued on opposte page) EMPLOYEES t 70

The EIPMS was desgned to mnmze potental rsks to employees and others, mprove busness performance, assst us n leadng the ndustry, and buld a responsble mage wthn the marketplace. We fully mplemented the EIPMS at all locatons n July 2007. Under the gudelnes of the EIPMS, each wholly owned or subsdary Smthfeld faclty must do the followng, among other requrements: Develop effectve safety operatng control measures and tranng programs Set safety objectves wth performance ndcators and management plans to acheve objectves Establsh procedures to dentfy and control potental rsks Develop emergency acton plans Establsh, document, and communcate responsbltes for all nvolved staff Identfy nonconformance, accdents, and near msses to prevent future ncdents Regularly assess the management system The EIPMS s founded on open communcaton between ndependent operatng companes, the sharng of best practces, and a strong focus on the employees well-beng. Tranng and audtng are also ntegral parts of the EIPMS. Tranng Each new Smthfeld employee must complete a new-hre safety tranng program, conducted n Englsh and other languages where necessary, whch emphaszes machne and tool safety and the correct use of personal protectve equpment. Mentorng programs also gve new employees the opportunty to dscuss safety ssues wth and learn technques from experenced staff. Safety tranng contnues regularly throughout an employee s career at Smthfeld. Locatons conduct ongong tranng n topcs ncludng emergency plans, ergonomcs, control of hazardous energy, chemcal safety, personal protectve equpment, and hearng conservaton, for example. As employees move nto more specalzed occupatons, addtonal tranng s conducted to meet safety needs on topcs such as process safety management, hot work procedures for cuttng, weldng, and grndng, electrcal safety, confned space entry, and many others. We have worked hard ths year to ncrease employee engagement n safety actvtes, for example, by encouragng employee partcpaton n safety program revews and development of new systems. Many locatons began developng employee safety teams to focus on ergonomcs, emergency response and evacuaton plannng, ncdent nvestgatons, health and safety awareness, hazardous energy solaton, machne guardng, chemcal awareness, moble equpment, personal protectve equpment, and safety awards and recognton. Employee engagement s now beng measured on a formal bass. The type of safety-related actvtes conducted and number of hourly employees nvolved are documented as part of a new monthly EIPMS scorecard we have mplemented for each Smthfeld Foods locaton. (contnued from opposte page) Safety professonals at the Armour-Eckrch locaton mplemented the Employee Injury Preventon Management System wth excellent results. Wth close to 600 employees and only 16 recordable njures last year, Peru s njury and llness rates are among the lowest not only wthn Smthfeld, but wthn the entre ndustry. Ths year, the Peru faclty reported a total OSHA Recordable Rate of 2.82, well below the ndustry average of 8.4. Peru s safety professonals are workng toward acceptance nto the OSHA Voluntary Protecton Program (VPP), whch promotes effectve workste-based safety and health. In the VPP, company management, employees, and OSHA offcals work cooperatvely at facltes that have mplemented comprehensve safety and health management systems. VPP recognzes the efforts of employers and employees who have acheved exemplary occupatonal safety and health. Stes accepted nto the VPP typcally have njury and llness rates that are nearly half the natonal average. 71 t EMPLOYEES

Budget constrants prevented us from holdng our annual Smthfeld Safety Conference last year. However, onlne tranng semnars, led by company personnel and outsde experts, were conducted throughout 2008 on mportant safety subjects. Audtng and Inspectons Our success n reducng njury rates can be attrbuted n part to our ongong audtng. Each locaton has developed an nternal audt program to assess whether the EIPMS s workng effectvely. The EIPMS audt focuses on hazard dentfcaton and njury preventon, supplemented wth a hgh-level revew of regulatory complance. These efforts help us dentfy hazards and rsks and employ solutons to fx them. These ste-specfc audts are complemented by annual audts conducted by teams traned and led by Smthfeld-certfed lead audtors. Our audtors and our drector of corporate safety contnuously evaluate our domestc facltes for complance wth OSHA and company-specfc safety polces. The fndngs of each audt are scored, documented, and shared wth ste operatons and safety managers and senor management at the subsdary and corporate level. We use the frst year of audts as a baselne and expect annual mprovement as audts contnue. Facltes that do well are encouraged to share ther best practces wth other Smthfeld stes. Those that show poor results are expected to correct ther practces and are subject to more frequent audts. Falure to mprove audt scores results n ncreased nvolvement from the drector of health and safety and hgher-level corporate leaders, f necessary, to facltate mprovement. Performance In fscal 2008, Smthfeld s TIFR, DART, and DAW rates contnued to compare favorably wth ndustry rates, as detaled by the charts that follow. OSHA Total Injury and Illness Frequency Rate (TIFR) [Reportng Facltes: 55] The number of work-related njures and llnesses per 100 employees. 2004 9.48 2005 2006 2007 8.96 8.74 6.76 04 08 change 2008 6.58 31% 2007 Industry Average: 8.4 All values reported by fscal year EMPLOYEES t 72

OSHA Days Away, Restrcted, Transferred (DART) Rate [Reportng Facltes: 55] The number of work-related njures and llnesses per 100 employees that result n an employee mssng work, havng restrcted duty, or beng transferred from hs or her regular duty work assgnment. 2004 2005 2006 2007 2008 04 08 change 6.08 6.40 5.83 4.04 4.40 28% 2007 Industry Average: 5.5 All values reported by fscal year OSHA Days Away from Work (DAW) Rate [Reportng Facltes: 55] The number of work-related njures and llnesses that result n one or more days away from work per 100 employees. (NOTE: The DAW rate was labeled the Lost Workday Case Rate pror to 2006.) 2004 2005 2006 2007 2008 04 08 change 1.47 1.53 1.49 1.27 1.29 12% 2007 Industry Average: 1.2 All values reported by fscal year OSHA Volaton Notces Although substantal mprovements were made n our ndustry s njury and llness rates over past years, the Occupatonal Safety and Health Admnstraton (OSHA) stepped up ts enforcement efforts n 2008. Ths year, Smthfeld had 25 regulatory nspectons conducted at locatons across the country, up from 18 nspectons n 2007. Overall, Smthfeld s total number of OSHA volatons decreased by 23 percent between 2005 and 2008 a trend we hope to contnue. OSHA NOVs and Penaltes 2005 2006 2007 2008 05 08 change OSHA Inspectons 19 26 18 25 32% OSHA Notces of Volaton 52 32 12 40 23% OSHA Penaltes $55,192 $41,404 $11,037 $38,787 30% All values reported by calendar year 73 t EMPLOYEES

Smthfeld Introduced New Awards n 2008 Safety Professonal of the Year Award Maurce Lavoe In 2008, we added a new award for safety professonal of the year. Maurce Lavoe, safety manager at Farmland s Sprngfeld, Massachusetts, faclty, was chosen as the frst wnner of the award for hs overall knowledge and expertse, for hs ablty to lead n health and safety culture, and for hs contrbutons to the safety professon. External Recognton Amercan Meat Insttute Awards The Amercan Meat Insttute (AMI) Foundaton s Annual Safety Awards are based on safety performance as well as mplementaton of an effectve health and safety program. The subsdares represented n the Aprl 2009 awards program ncluded Farmland Foods, Smthfeld Packng Company, John Morrell & Company, Armour-Eckrch, and North Sde Foods. The number of Smthfeld Foods facltes recognzed ths year by the AMI Foundaton s Annual Safety Awards rose by approxmately 38 percent over the prevous year to a total of 18 plants. HREVOLUTION Awards In October 2008, The Natonal Provsoner magazne awarded Smthfeld Foods ts HREVOLUTION Award for the development and ongong mplementaton of our Employee Injury Preventon Management System (EIPMS). The HREVOLUTION Awards recognze human resources departments at meat and poultry processors natonwde that employ best practces, effectvely solve human captal ssues, and mprove the work envronment for employees. Organzatonal Excellence Award for Health & Safety Farmland Foods, Inc. Farmland Foods, whch receved our new organzatonal excellence award for overall health and safety, was recognzed for ts demonstraton and understandng of the mportance of worker health and safety. Farmland s commtment to the health and well-beng of ts work force begns wthn the hghest ranks of Farmland s leadershp team. EMPLOYEES t 74

Smthfeld Foods wholly owned nternatonal operatons consst of four subsdares n Poland and Romana as well as a much smaller food dstrbuton operaton n the Unted Kngdom. AgrPlus s one of Poland s largest hog producers and provdes a substantal porton of ts hogs to our Polsh meat-processng afflate, Anmex. Smthfeld Ferme, whch was recently recognzed by a leadng Romanan fnancal meda group as the largest nvestor n Romanan agrculture, rases hogs prncpally for the pork processor Smthfeld Prod. Together, our hog-rasng operatons n Poland and Romana own more than 110,000 sows that produced approxmately 1.7 mllon market hogs n fscal 2009. Ths year, we are pleased to report baselne data and other nformaton about our nternatonal operatons.* INTERNATIONAL OPERATIONS ENVIRONMENT ENVIRONMENTAL MANAGEMENT The envronmental goals of our nternatonal operatons are smlar to those of our domestc operatons: Achevng 100 percent complance wth relevant envronmental laws Implementaton and certfcaton of envronmental management systems for all stes Improved communcaton wth stakeholders (local communtes, governments, etc.) Reduced envronmental ncdents through tranng, preventve actons, and response measures Reducton of fuel consumpton and mprovements n energy effcency Complance wth European Unon (EU) drectves regardng asbestos, fuel storage, PCBs, and best avalable technques In 2005, AgrPlus was the frst Polsh hog-rasng operaton to obtan ISO 14001 certfcaton for ts 28 farms, whch passed re-certfcaton audts n January 2008. Anmex s processng plant n Elk has also acheved full ISO 14001 certfcaton, and Anmex s explorng optons for the certfcaton of ts other facltes. In Romana, Smthfeld Prod s plannng to acheve ISO 14001 certfcaton n 2009, and Smthfeld Ferme has started a process toward the certfcaton of ts envronmental management system n late 2009 or 2010. Our Polsh and Romanan operatons are regulated n accordance wth European Unon drectves, whch are admnstered by the natonal regulatory agences. For nstance, all of our processng facltes and our farms wth more than 750 sows or more than 2,000 fnshng hogs are requred to obtan Integrated Polluton Preventon and Control permts ssued by the Polsh and Romanan governments. These permts requre an ntegrated approach to preventng polluton and controllng the facltes emssons to ar, land, and water, ncludng drect envronmental releases. Our Polsh and Romanan operatons are also subject to natonal envronmental requrements that complement EU drectves. * We have other busness relatons n Europe, but our nternatonal operatons refer only to the wholly owned subsdares n Poland and Romana specfed n ths report. 75 t INTERNATIONAL OPERATIONS

Audtng and Montorng Smthfeld s nternatonal operatons dlgently manage rsks and the envronmental performance of plants and farms through regular montorng, nternal audts, and, n some cases, thrd-party audts. These revews verfy that the facltes envronmental management s effectve and assess complance wth all relevant envronmental regulatons. The results of all audts are reported to faclty management for correctve actons, as needed. External audts are conducted regularly at both farms and processng plants by the regulatory agences overseeng our operatons to assess complance wth faclty permts, EU drectves, and natonal regulatons. Internal audtors conduct perodc faclty-wde nspectons to ensure that the processes put n place to protect the envronment are beng mplemented effectvely. For example, Smthfeld Ferme has created an nternal audt department responsble for verfyng complance wth Romanan regulatons and nternal company procedures at least twce annually. Three employees became qualfed envronmental audtors, followng a 100-hour government-certfed tranng program. At Smthfeld Prod, nternally certfed audtors perform ther own nternal audts. We also cooperate wth any customers seekng to conduct ther own audts. For example, sx AgrPlus farms undergo annual thrd-party audts that complement those conducted as part of ther anmal welfare efforts. (See more on these efforts n the Anmal Welfare porton later n ths secton.) No serous envronmental rregulartes have been found n the tme Smthfeld has operated n Poland and Romana, although there were some nstances where facltes dd not have all the requred permts. Those ssues were ultmately resolved. In August 2007, followng an outbreak of classcal swne fever (CSF) at three of our locatons n Romana, government offcals began more regular nspectons of our farms that resulted n an ncrease n fnes and penaltes n 2007 and 2008 for envronmental permt volatons. All the pgs on these three farms were euthanzed to prevent further spread of the dsease, whch does not affect humans. For more on the outbreak, please see page 80. Contract Growers In Romana we currently have no contract farms. In Poland, AgrPlus supples lvestock, feed, and veternary care to ts roughly 630 contract farms. Anmex does not use contract farms. Contract farmers provde the ntal faclty nvestment, labor, and front-lne management. Our contract growers must comply wth all relevant envronmental laws and permt requrements. Volatons may result n contract termnatons or the removal of lvestock from a grower s farm untl the problem s resolved. INTERNATIONAL OPERATIONS t 76

ENVIRONMENTAL PERFORMANCE Data Collecton and Management For our U.S. operatons, we present data separately for frst and further processng facltes. Because the European facltes operate dfferently, we are reportng all data together. Snce ths s the frst year of reportng, we present absolute data to set a performance baselne; normalzed metrcs have not been developed. We calculated GHG processng emssons usng the WBCSD/WRI Global Greenhouse Gas Protocol, quantfyng scope 1 and 2 emssons, whch nclude ndrect emssons assocated wth the use of purchased electrcty and steam. In 2008, company plants n Poland and Romana emtted the equvalent of 197,859 metrc tons of carbon doxde. Coal, ol, and purchased steam were also used, but because we do not report ol consumpton domestcally, these values are not reported. However, these energy sources are reflected n the total GHG emssons. Our facltes seek to reduce the envronmental mpacts dentfed by our envronmental management systems. For example, some Anmex facltes have taken a proactve approach to reducng ther contrbuton to clmate change. They developed a heat-reuse system n ther boler rooms that provdes hot water for cleanng tanks and also reduces the amount of fossl fuels used. A smlar approach s employed n processes that use ammona, capturng otherwse wasted energy to heat water. Performance Summary [Reportng Facltes: Processng/9, Farms/50] Summary of Internatonal Processng Operatons Key Performance Indcators 2008 Anmex Smthfeld Prod Total Poland Romana Facltes 8 1 9 Electrcty (kwh n mllons) 135 16 151 Natural gas (ggajoules) 475,011 56,657 531,668 Drect & ndrect GHG emssons (metrc tons CO2e) 188,750 9,109 197,859 NOx emssons (metrc tons) 1 173 N/A 2 N/A 2 SOx emssons (metrc tons) 1 276 N/A 2 N/A 2 Water use (cubc meters) 3,670,455 365,360 4,035,815 Waste generaton (metrc tons) 84,193 5,040 89,233 Cardboard recyclng (metrc tons) 1,262 15 1,277 NOVs 0 3 1 1 Fnes ($U.S.) 0 4,474 4,474 All values reported by calendar year 1 NOx and SOx emssons were not recorded for Smthfeld Prod facltes. 2 Not Avalable. 3 Anmex s Ekodrob-Ilawa faclty receved legal notce that t needed addtonal permts to send wastewater nto the muncpal sewage system. The permts have snce been obtaned. 77 t INTERNATIONAL OPERATIONS

Summary of Internatonal Farms Key Performance Indcators 2008 AgrPlus Smthfeld Ferme Total Poland Romana Farms 15 35 50 Electrcty (kwh n mllons) 11 22 33 Natural gas (ggajoules) 39,270 5,841 45,111 Lqud propane gas (lters n mllons) 0 5 5 Water use (cubc meters) 401,817 1,286,930 1,688,747 NOVs 9 5 14 Fnes ($U.S.) 229 17,766 17,995 All values reported by calendar year Anmal Manure Treatment Systems and Crops Produced The followng descrbes the type of treatment systems and approxmate hectares of crops fertlzed wth hog manure from our farms n Europe. Hog manure was appled to 20,941 hectares (51,746 acres) of crops n 2008 between our Romanan and Polsh operatons. Treatment Systems and Crops Produced by AgrPlus 2008 [Reportng Farms: 15] CROPS PRODUCED (7,836 hectares total) TREATMENT SYSTEMS Wnter Trtcale (1,972 ha) Oats (96 ha) Grazng (276 ha) Sprng Trtcale (312 ha) Sprng Barley (335 ha) Corn Gran (1,253 ha) Wnter Wheat (373 ha) Sugar Beets (407 ha) Wnter Barley (797 ha) Rapeseed (1,068 ha) Rye (947 ha) Deep Pt and Land Applcaton 15% Straw Beddng and Land Applcaton 40% Slurry Store and Land Applcaton 20% Anaerobc Lagoon and Land Applcaton 25% All values reported by calendar year INTERNATIONAL OPERATIONS t 78

Treatment Systems and Crops Produced by Smthfeld Ferme 2008 [Reportng Farms: 35] CROPS PRODUCED (13,105 hectares total) TREATMENT SYSTEMS Corn (3,631 ha) Grazng (1,687 ha) Barley (804 ha) Rye (518 ha) Sorghum (480 ha) Sunflower (457 ha) Rapeseed (417 ha) Soybean (122 ha) Wheat (4,989 ha) Slurry Store and Land Applcaton 100% All values reported by calendar year Smthfeld Employees Test Waterways Smthfeld Foods has sponsored World Water Montorng Day, an nternatonal outreach program organzed by the Water Envronment Federaton, snce 2003. Every year, on or around October 18, the Federaton holds a seres of events to buld awareness and nvolvement n protectng global water resources. In 2008, employees from 31 Smthfeld Foods facltes n four countres led nearly 400 volunteers n the collectng and testng of water samples, from Tar Heel, North Carolna, to Tmsoara, Romana. ANIMAL WELFARE MANAGING ANIMAL WELFARE Our hog producton operatons n Poland and Romana employ an Anmal Welfare Management System (AWMS) that follows the same strct gudelnes as our hog producton facltes n the Unted States. The health and well-beng of our anmals s a top prorty. Neglect or abuse of anmals s not tolerated and s grounds for termnaton. Offenders may also be subject to crmnal prosecuton under applcable local laws. Our European AWMS, whch was formally mplemented n Romana n 2008 and n Poland n 2006, s based on fve fundamental elements: Anmals must have unlmted access to fresh water and adequate feed to mantan ther health. Anmals must have a safe envronment, ncludng barns and shelters, and a comfortable place to rest. Sck or njured anmals must be promptly dagnosed and treated. Anmals must be offered suffcent space and the company of anmals of the same breed. Anmals must be treated n a way that mnmzes fear and stress. 79 t INTERNATIONAL OPERATIONS

The elements are presented to all employees, who undergo tranng sessons at least twce a year. Under European Unon laws, all EU pork producers must acheve common standards for anmal welfare, agrcultural, and other ssues across all member states by 2013. To mplement the EU Rural Development Polcy 2007 2013, whch ams to put member states on an equal footng, Smthfeld Foods has been workng wth our nternatonal operatons to ensure that all companyowned and contract farms meet the 2013 standard. AgrPlus has 630 contract growers. Smthfeld Ferme and Anmex currently have no contract growers. In Poland and Romana, approxmately 80 percent and 90 percent, respectvely, of the raw meats used n our products come from farms that already meet the EU s 2013 standards; the remanng farms meet current EU welfare standards and are workng toward 2013 complance. Audts In Romana, each farm s nspected at least twce annually by the Local Veternary Drectorate, or DSV, under the supervson of the Natonal Veternary Authorty. These external audts verfy complance wth Romanan laws on anmal welfare and bosecurty measures. In 2008, our Romanan farms were nspected 144 tmes, wth only two fndngs of noncomplance. Both nstances were mnor nfractons, for havng too many pgs on a farm. We also conduct our own twce-yearly nternal audts of our Smthfeld Ferme operatons to verfy anmal welfare complance and approprate employee tranng. In Poland, anmal welfare ssues are regulated by Polsh Veternary Law. Internal farm audts are carred out at least once a year by traned audtors to evaluate anmal welfare, tranng programs, and transportaton systems. Volatons are subject to mmedate correctve acton. As major supplers to promnent supermarket chans, our Polsh farms must be certfed by Product Authentcaton Internatonal, whch s accredted by the Unted Kngdom Accredtaton Servce for food and farm product certfcaton. As part of ths process, Geness Qualty Assurance, a thrd-party audtor, revews our farms annually. In addton, these supermarket chans requre a random samplng of our farms to undergo external audts twce per year by Integra, an ndustry-recognzed thrd-party audtor n the Unted Kngdom. Classcal Swne Fever In August 2007, our Romanan farms had an outbreak of classcal swne fever (CSF) at three farms near the vllages of Cene and Igrs. All the pgs on the farms approxmately 53,000 were euthanzed to prevent further spread of the dsease, whch s fatal to pgs but does not affect humans. We ncnerated the pgs n accordance wth EU regulatons. CSF, commonly known as hog cholera, does not affect humans. CSF was eradcated from the swne populaton n the Unted States n the 1970s but remans endemc n many parts of the world, ncludng Romana. CSF s not related to the nfluenza A(H1N1) vrus that drew worldwde attenton n the sprng of 2009. INTERNATIONAL OPERATIONS t 80

We beleve CSF was ntroduced to our anmals n Romana from outsde our system most lkely from pgs rased on non- Smthfeld propertes n nearby vllages. Only Romanan authortes are allowed to dstrbute the CSF vaccne n that country, and they had been experencng nterruptons n ther supply durng the weeks before the CSF outbreak. To prevent the recurrence of the dsease, Smthfeld Ferme enhanced our bosecurty procedures, tranng, and practces, mplementng a new Bosecurty Management System at all company farms n the frst quarter of 2008. For example, new facltes were put n place to allow employees to change ther shoes and clothng upon enterng the fence lne of sow farms. The employees then walk to the farm buldngs, shower, and dress n yet another set of boots and clothng that are worn only on farm property. All Smthfeld Ferme farms are now equpped wth ther own ncnerators to avod the need to transport dead anmals and to prevent the spread of any future nfectons. We also developed a new contngency plan for CSF outbreaks. Housng of Pregnant Sows Begnnng n 2013 n the European Unon, ndvdual sow gestaton stalls wll be prohbted after the frst four weeks of pregnancy. Gestaton stalls are already banned n Sweden and n the Unted Kngdom. Our Romanan farms already comply wth the 2013 EU requrements. Sows are housed n ndvdual crates for a maxmum of 28 days followng nsemnaton; after that, the sows are housed n common pens. In Poland, 100 percent of our farms comply wth the EU 2013 standard; approxmately 40 percent of our Polsh farms have open stall gestaton durng a sow s entre pregnancy. Antbotcs Use Our European companes and contract farms do not use antbotcs to promote anmal growth. We use only lmted antbotcs to treat sck or njured anmals and to prevent dsease. In Romana, the antbotcs are delvered through feed, whle our Polsh operatons use water-soluble antbotcs. Our European farms comply wth all antbotc wthdrawal tmelnes and follow gudelnes ssued by the EU, whch n 2006 banned the use of antbotcs for growth promoton. Authorzed veternarans oversee the usage of antbotcs on company-owned and contract farms, montorng them on a weekly bass. Farm Operatons Feed-Grade Antbotcs Purchased Aprl '08 Dec '08 AgrPlus (kg per kg hog sold) 0* Smthfeld Ferme (kg per kg hog sold) 0.00162 * AgrPlus does not use feed-grade antbotcs. It does use some medcaton n the water system to treat sck pgs. 81 t INTERNATIONAL OPERATIONS

Safe Transportaton Smthfeld Ferme reported no transportaton accdents n fscal 2009. AgrPlus had one accdent n fscal 2009 nvolvng pgs hauled by an external transportaton company. Our European companes are n the process of developng accdent-response procedures modeled after those used by our U.S. operatons. TRANSPORTATION ACCIDENTS INVOLVING MARKET HOGS Number of Accdents Number of Hogs Involved Hog Fataltes AgrPlus Smthfeld AgrPlus Smthfeld AgrPlus Smthfeld Ferme Ferme Ferme 2007 0 0 0 0 0 0 2008 1 0 500 0 57 0 2009 1 0 500 0 100 0 All values reported by fscal year Enhanced Slaughter Methods In accordance wth European Commsson regulatons, all employees who work wth lve anmals n our European processng plants must undergo regular tranng to ensure the protecton and welfare of the hogs that arrve at our facltes. Veternary authortes provde ongong supervson and support. Our European pork operatons use a slaughter procedure known as CO2 anesthetzng, whch causes anmals to quckly lose conscousness n a process beleved to be less stressful for hogs than more common forms of electrcal stunnng. All four of our pork processng operatons n Europe use CO2 anesthetzng. FOOD SAFETY MANAGING FOOD SAFETY Smthfeld Foods nternatonal food processng operatons collaborate wth ndustry, government, and ndependent experts to supply safe, hgh-qualty foods that meet regulatory requrements and customer expectatons. We apply necessary resources INTERNATIONAL OPERATIONS t 82

to develop and mplement our rgorous food safety practces n all our facltes and manufacturng processes. We also provde nformaton on nutrton and safe food handlng to consumers through our product labels and other outreach efforts. At Smthfeld Prod and Anmex, food safety s a top prorty. We use a number of food safety processes and programs throughout our plants. Our hog producton and food processng facltes n Poland and Romana have mplemented a Hazard Analyss and Crtcal Control Pont (HACCP)-based Food Safety Polcy that addresses all reasonably occurrng physcal, chemcal, and bologcal hazards. HACCP, whch s mandatory n all EU countres, s a comprehensve food safety control system focused on preventng the rsk of sendng products to market that may jeopardze the consumer s health. Smthfeld s nternatonal HACCP systems are revewed and valdated annually by qualfed thrd partes. To develop and mplement the company s food safety goals, our Polsh and Romanan operatons have cross-functonal HACCP teams representng the qualty managers from each of our major dvsons. Team members consult wth each other on an ongong bass to dscuss current scentfc and techncal food safety nformaton and evaluate the soundness of our food safety practces. In addton to HACCP, all Smthfeld Prod slaughter operatons have acheved ISO 22000/2005 certfcaton for ther Food Safety Management System, as of February 2009. Smthfeld Prod s renderng operatons were expected to be certfed by the end of 2009. Tranng Our employees are the most mportant part of our food safety programs. All employees at Smthfeld s operatons n Poland and Romana receve ntroductory tranng n our polces and procedures related to food safety and legal complance, as well as product qualty, ncludng HACCP, Good Hygene Practce, and Good Management Practce prncples. Each worker s traned upon hrng, and retraned annually, dependng on hs or her job descrpton. In order to foster contnuous mprovement n food safety, the Food Safety Team constantly looks for new ways to ncorporate emergng food safety nnovatons nto our products and processes. The team also regularly presents scentfc papers at natonal conferences and attends educatonal semnars, professonal meetngs, and regulatory meetngs, usng the latest technques they ve learned to tran other employees. Anmex s developng a multmeda gude for best manufacturng hygene practces. Audtng and Inspectons All Romanan and Polsh processng facltes conduct a varety of tests as part of ther food safety programs. The followng are regularly tested and reported: 83 t INTERNATIONAL OPERATIONS

"The Tmsoara Regonal Envronmental Protecton Agency would lke to congratulate Smthfeld for ts nvolvement n cvc and envronmental educaton campagns n cooperaton wth a number of organzatons here n Romana. In partcular, we acknowledge your partcpaton wth the students of Wllam Shakespeare Hgh School n World Water Montorng Day, an nternatonal clean-water ntatve that took place n 70 countres durng the past year." Gabrela Lambrno Executve Drector Tmsoara Regonal Envronmental Protecton Agency Mcrobologcal counts Equpment cleanlness (wth mcrobologcal hygene tests) Personal protecton equpment Raw materals Fnshed products Our HACCP system s also revewed and valdated annually by qualfed thrd partes. Our goal s to score above 90 percent on these audts. Any nonconformance dentfed by an audt s addressed promptly at each faclty. Three to four months after the ntal audt, a follow-up audt s conducted to ensure that all ssues have been resolved. Nutrton Our European operatons offer fresh meats and packaged foods that satsfy a wde varety of consumer needs and tastes. Our fresh and packaged meat products from Romana and Poland meet all EU nutrton and labelng standards. Our Polsh plants also provde testng of nutrton values for our meat products to meet addtonal customer requrements from grocery store chans operatng n the Unted Kngdom. Antbotcs and Consumer Safety None of our European operatons or contract farmers use antbotcs to promote anmal growth. Antbotcs are used only to treat sck or njured anmals and to prevent dsease, and are always admnstered under veternary supervson, as dscussed n the Anmal Welfare secton of ths report. In addton, we comply wth all antbotc wthdrawal tmelnes, gvng any antbotcs enough tme to clear the anmal s system before slaughter. AgrPlus antbotc admnstraton process s overseen and controlled by the Polsh Veternary Inspecton. Product and Servce Labelng Smthfeld s operatons n Poland and Romana strve to ensure that our consumers receve the most current nformaton about the ngredents and nutrtonal value of our products. Our product labelng s clear and accurate, conformng to the unque labelng requrements of each country n whch we sell our foods. Smthfeld s European operatons are fully complant wth all EU labelng requrements, and dd not have any sgnfcant penaltes or fnes related to labelng snce our last report. Complance There were no recalls of any of our products n Europe durng the current reportng perod, nor any penaltes or fnes assocated wth food safety. INTERNATIONAL OPERATIONS t 84

HELPING COMMUNITIES Our nternatonal operatons support a wde range of programs that help people who lve n and around our communtes. Lke Smthfeld s U.S. operatons, much of the nternatonal effort focuses on educaton, hunger relef, and envronmental protecton. Some of the hghlghts from the 2008/09 reportng perod nclude the followng: SMITHFIELD PROD Food for Souls Inspred by Smthfeld Foods Helpng Hungry Homes program n the Unted States, Smthfeld Prod, the Romanan processng company, launched Food for Souls n February 2009 to gve fresh meats to dsadvantaged famles and ndvduals n the cty of Tmsoara and the surroundng area. More than a dozen local chartes have partnered wth Smthfeld Prod to dstrbute pork products to more than 2,000 people n need. Habtat for Humanty Smthfeld Prod recently partnered wth Habtat for Humanty to construct a house, adapted for the needs of fve people wth severe mental dsabltes, not far from the Smthfeld Prod plant. On March 19, 2009, 38 Smthfeld Prod employees, ncludng Smthfeld Prod s chef executve offcer and top managers, spent a day on the constructon ste, workng on what s the frst Habtat for Humanty project n Tmsoara. Employees volunteered to take part and receved pad tme off to partcpate. Local Festvals Smthfeld Prod s proud to support cultural actvtes n the local communty where we operate. In November 2008, 200 folk musc sngers and dancers attended Festvalul Sorocarlor, a local festval sponsored by Smthfeld Prod and amed at promotng the regon s cultural hertage through tradtonal folk musc and dances. SMITHFIELD FERME Back to School Over the past two years, Smthfeld Ferme has supported more than 2,700 local students n 15 vllages through ts Back to School educatonal program, whch supples backpacks, pencl cases, and other school essentals to preschool and prmary school chldren. Smthfeld Ferme also provdes the students and ther famles wth educatonal materals that promote a healthy lfestyle and a balanced det. 85 t INTERNATIONAL OPERATIONS

Mllons of People, Mllons of Trees Our operatons n Romana partcpated n Mllons of People, Mllons of Trees, an ntatve n partnershp wth the Romanan Mnstry for Envronment and the Romanan Natonal Envronmental Guard to encourage the plantng of trees around the country. Smthfeld s a prmary sponsor of the program, whch plants trees for three months each fall and sprng. Fall 2008 marked the thrd year of Smthfeld s efforts to brng forest cover n lne wth European Unon requrements. Currently, forests cover approxmately 26 percent to 27 percent of Romana s land. To acheve EU levels, Romana needs to plant trees on a surface of 2 mllon hectares over the next 25 years to cover 33 percent to 35 percent of the country. In 2008, Smthfeld Ferme employees planted more than 3,900 trees around 11 farms n Tms County. Meanwhle, Smthfeld Prod employees and a team of local kndergarten students spent one day plantng 456 trees n the vllage near the company s producton faclty. Smthfeld Prod employees showed the youngsters how to plant trees and take care of them. Each chld who partcpated receved one frut-bearng tree from Smthfeld Prod to plant at home. Vllage Festvals The western part of Romana s a culturally dverse regon wth ancent communty tradtons that are stll observed by communtes orgnatng from Romana, Hungary, Serba, Germany, and Bulgara. Smthfeld Ferme s proud to support a varety of vllage and folk festvals, ncludng concerts, dance contests, tradtonal craftsmanshp fars, and sportng events, such as horse cart racng. In 2008, Smthfeld gave funds to more than 15 vllages to help preserve ths unque hertage of European country lfe tradtons. For photographs of the festvals, please vst www.smthfeldferme.ro/ndex.php/responsblty/84/84.html. Communty Investment Smthfeld Ferme s the largest nvestor n agrculture n Romana. Wth the openng of a new pg farm ths year, we wll create an addtonal 100 jobs, brngng our total employment to more than 850 people. We beleve we serve a need by provdng employment wthn our communtes, partcularly n rural areas. We are also meetng wth local farmers who could serve as contract growers for our operatons. Farmers receve practcal tranng and are advsed on how to best develop ther farms. The goal s to contrbute to the development of a relable network of modern farms n Romana that comply wth EU regulatons. We hope ths leads to the development of prosperous rural communtes. ANIMEX Anmex Foundaton In 2007, our Polsh processng faclty launched the Anmex Foundaton to fund scholarshps for chldren of farmers from rural areas. The program, whch began wth 12 scholarshps n 2007, grew to 36 scholarshps n 2008, wth plans to expand the program to 100 scholarshps for the 2009/10 school year. Last year s scholarshps totaled about $18,000 (62,000 Polsh zloty). AGRIPLUS AgrPlus ams to support the economy of local communtes by decreasng the rate of unemployment through job creaton. In partcular, AgrPlus actvely seeks to employ local people who had once worked for state-owned farms and are now unemployed. We prortze our work wth local supplers and servce provders to stmulate local markets. The company also runs charty and sponsorshp programs focused on educaton and sports for chldren and teenagers who lve n the poorest rural areas where we operate. For example, we support school lunch campagns n a number of dstrcts and help schools purchase much-needed equpment. We also gve sgnfcant assstance to local sports clubs and sportng events. One good example s the volleyball team from Czaplnek, organzed and supported by AgrPlus, whch has won several compettons. We always try to support our local communtes, contrbutng to projects that are mportant to area resdents. Recently, we gave our assstance to help rebuld two churches n the communtes of Osek and Nelep. INTERNATIONAL OPERATIONS t 86

EMPLOYEES Smthfeld has approxmately 9,500 employees workng at our subsdares n Poland and Romana. Human resources ssues are handled wthn each ndependent company, just as they are n our U.S. operatons. AgrPlus n Poland, for example, has one central human resources department responsble for personnel ssues, payroll, and health and safety. At Anmex, approxmately 3,600 workers out of 7,650 are covered by collectve barganng agreements. All of Smthfeld Prod s 471 employees are covered by collectve barganng agreements. AgrPlus and Smthfeld Ferme do not have any labor unons or work councls at any facltes. WORK FORCE COMPOSITION In 2008, AgrPlus work force ncluded almost unformly Polsh natonals. Of 550 employees, approxmately 21 percent were women. Women made up 12 percent of senor management. Anmex employed 99 percent Polsh natonals and 1 percent Moldovans. Of 7,650 workers, 58 percent were women. Women made up nearly 20 percent of senor management. At Smthfeld Prod, of the 471 employees, 87 percent were Romanan natonals and 30 percent were women. Women made up 36 percent of senor management. Smthfeld Ferme s work force of about 850 people, whch was almost exclusvely Romanan natonals, ncluded 32 percent women. About 22 percent of managers were women. EMPLOYEE HEALTH AND SAFETY Worker health and safety s one of the most mportant and hghly developed aspects of European Unon polcy on employment and socal affars. Workng condtons have mproved for meat-processng facltes over the past decade, sgnfcantly reducng the rate of njury. Over the perod of 2000 to 2004 (the latest data avalable), the rate of fatal accdents n the EU fell 17 percent whle the rate of accdents leadng to more than three days of mssed work fell 20 percent. Despte these mprovements, pork processors stll have hgher njury rates than many other prvate ndustry occupatons. Anmex Helps Keep Teen s Dream Alve Each day, a gfted Polsh teenager s gettng closer to achevng her dreams, wth the help of Smthfeld. Katarzyna Brzozowska, ncknamed Kasa, began takng pano lessons when she was eght years old. Her muscal prowess was evdent rght from the start, and she began takng home top przes n musc compettons. At 17, Kasa longs to attend the prestgous Fryderyk Chopn Academy of Musc n Warsaw, one of the oldest and largest schools of musc n Poland and Europe. Yet wth three other sblngs to educate, her parents couldn t afford the cost of the addtonal lessons and tutorng that Kasa would need to reach her goal. Anmex, whch employs Kasa s mother on a processng lne, recently awarded the teenager a scholarshp to pay for the bus tckets, food, books, and prvate pano lessons that wll allow Kasa to contnue her studes and, she hopes, help earn her a coveted spot one day at the Academy. 87 t INTERNATIONAL OPERATIONS

MANAGING INTERNATIONAL EMPLOYEE HEALTH AND SAFETY Smthfeld s wholly owned nternatonal operatons have developed employee health and safety polces desgned to prevent njury, llness, and fataltes, whle promotng health and safety n the workplace. These polces are expected to algn wth emergng EU drectves and natonal regulatons. Management System In Romana, health and safety management s based on European Councl drectves that encourage mprovements n the safety and health of workers at work. Smthfeld Ferme s n the process of mplementng an ntegrated management system n accordance wth ISO requrements and OHSAS:18001. In Poland, Anmex, whch has a health and safety nspector on duty at each plant, sets safety targets to lower the accdent rate. Tranng At all our Polsh and Romanan operatons, each new employee completes a new-hre safety tranng program, focused on basc preventve measures, machne and tool safety, and the correct use of personal protectve equpment. Perodc follow-up classes contnue throughout an employee s career and nclude tranng n topcs such as emergency plans, ergonomcs, chemcal safety, personal protectve equpment, and hearng conservaton. Tranng materals are made avalable at all locatons. As employees move nto more specalzed occupatons, addtonal tranng s conducted to meet safety needs, such as process safety management, hot work procedures for cuttng, weldng, and grndng, electrcal safety, and confned space entry. Audtng and Inspectons Smthfeld s nternatonal operatons conduct regular nternal audts and work wth all thrd-party nspectons, ncludng regular audts by relevant regulatng bodes. Each locaton keeps health and safety records. All volatons dentfed by external audts are reported to ste managers for mmedate correcton. After two to three months, a re-nspecton verfes that the ssues were addressed. Internal audtors conduct faclty-wde nspectons bannually to ensure adherence to the processes put n place to protect our employees. Performance Smthfeld s workng on developng nternatonal safety metrcs that are consstent wth the way they are reported n the Unted States. We hope to present the nformaton n future CSR reports. INTERNATIONAL OPERATIONS t 88

CSR SPOTLIGHT 4 THE CSR ACTIVITIES OF A SMITHFIELD JOINT VENTURE Ths CSR report focuses on the operatons of companes n whch Smthfeld has a controllng nterest of at least 51 percent. However, our jont ventures have also made corporate socal responsblty a prorty. Ths year, we take a closer look at one of them: Granjas Carroll de Méxco, or GCM, headquartered n Perote, Mexco, n the State of Veracruz. GCM has a strong hstory of corporate socal responsblty, earnng the Mexcan Center for Phlanthropy s prestgous socal responsblty award, or Empresa Socalmente Responsble (ESR), for three consecutve years. In fact, GCM was the frst anmal producton company n Mexco to receve the ESR certfcate. GCM s CSR ntatves cover a varety of areas, some hghlghts of whch follow below: ENVIRONMENT GCM s on track n 2009 to earn a Clean Industry certfcate, the Mexcan equvalent of ISO 14001, through the Mexcan envronmental authorty PROFEPA (Procuradoría Federal Proteccón al Ambente). GCM facltes underwent rgorous PROFEPA audts to confrm ther leadng envronmental management systems and performance. WIND ENERGY Three years ago, GCM began constructng two wndmll generators to produce electrcty. Ths year, GCM s applyng for government grant money to mprove the wndmll technology and eventually generate enough electrcty to power one of ts pg nurseres. BIOGAS GCM has bult 11 bogas dgesters to capture methane gas from lagoons. One of the dgesters s connected to a generator wth a capacty of 60 klowatts enough to power a wean-to-fnshng unt of 7,500 pgs. GCM currently spends about $3.2 mllon annually on energy costs, whch t hopes to reduce by 60 percent wth the energy captured through these dgesters and others planned for future nstallaton. Because the dgesters reduce emssons of methane, a powerful greenhouse gas, the 11 exstng and 17 planned projects have been regstered for Clean Development Mechansm credts under the Kyoto Protocol. ANIMAL WELFARE GCM, whch follows the same anmal welfare polces developed by Murphy-Brown operatons n the Unted States, s movng toward open pen gestaton for pregnant sows. As of sprng 2009, approxmately 17 percent of GCM s farms used open pens rather than ndvdual stalls. GCM plans to convert ts other facltes to open stalls. GCM s also developng an accdent response program. COMMUNITY GCM s operatons are located n mpovershed areas of Mexco, where many local resdents battle a host of problems ncludng anema and malnutrton. GCM has focused ts communty outreach n three key areas: human health, communty health, and the envronment. HUMAN HEALTH The company has two full-tme staff physcans who work wthn the communtes and dspense medcnes suppled by the Veracruz government. When the physcans detect a serous problem, GCM pays for taxs to transport the patents to a hosptal about 45 mles from our facltes. GCM s also workng wth two leadng pharmaceutcal frms, Pfzer and Boehrnger Ingelhem, on early cancer detecton programs for communty resdents. COMMUNITY HEALTH GCM provdes pglets, as well as corn for feed, for a government program that gves anmals to poor famles. For reasons of bosecurty, the pglets are donated only to famles who lve at least 40 mles away from company facltes. Last year, GCM donated 500 pglets for ths program. ENVIRONMENT AND BIODIVERSITY GCM has been workng wth bologsts from the Unversty of Veracruz to provde nestng areas for mgratory brds n and around company lagoons. The company has been nvolved n envronmental management programs that support two endangered speces a small squrrel and an owl. GCM also partcpates n reforestaton programs and plans to plant 200 hectares of trees ths year on nearby mountans.

CONSOLIDATED STATEMENTS OF INCOME Fscal Years (n mllons, except per share data) 2009 2008 2007 Sales $ 12,487.7 $ 11,351.2 $ 9,359.3 Cost of sales 11,855.3 10,196.6 8,292.8 Gross proft 632.4 1,154.6 1,066.5 Sellng, general and admnstratve expenses 798.4 813.6 686.0 Equty n (ncome) loss of afflates 50.1 (62.0) (48.2) Mnorty nterests 7.8 6.2 6.0 Operatng proft (loss) (223.9) 396.8 422.7 Interest expense 209.1 184.8 133.6 Other ncome (63.5) Income (loss) from contnung operatons before ncome taxes (369.5) 212.0 289.1 Income tax expense (beneft) (126.7) 72.8 77.2 Income (loss) from contnung operatons (242.8) 139.2 211.9 Income (loss) from dscontnued operatons 52.5 (10.3) (45.1) Net ncome (loss) $ (190.3) $ 128.9 $ 166.8 Income (loss) per common share: Basc: Contnung operatons $ (1.72) $ 1.04 $ 1.90 Dscontnued operatons.37 (.08) (.41) Net ncome (loss) per basc common share $ (1.35) $.96 $ 1.49 Dluted: Contnung operatons $ (1.72) $ 1.04 $ 1.89 Dscontnued operatons.37 (.08) (.40) Net ncome (loss) per dluted common share $ (1.35) $.96 $ 1.49 Weghted average shares: Weghted average basc shares 141.1 133.9 111.7 Effect of dlutve stock optons 0.3 0.2 Weghted average dluted shares 141.1 134.2 111.9 90

CONSOLIDATED CONDENSED BALANCE SHEETS (n mllons) May 3, 2009 Aprl 27, 2008 ASSETS Current assets: Cash and cash equvalents $ 119.0 $ 57.3 Accounts recevable 595.2 738.1 Inventores 1,896.1 2,278.4 Prepad expenses and other current assets 174.2 119.7 Assets of dscontnued operatons held for sale 656.5 Total current assets 2,784.5 3,850.0 Property, plant and equpment, net 2,443.0 2,850.0 Goodwll and other ntangble assets, net 1,212.2 1,261.1 Investments 601.6 694.6 Other assets 161.2 212.2 Total assets $ 7,202.5 $ 8,867.9 LIABILITIES AND SHAREHOLDERS EQUITY Current labltes: Notes payable $ 17.5 $ 169.3 Current porton of long-term debt and captal lease oblgatons 320.8 239.7 Accounts payable 390.2 523.4 Accrued expenses and other current labltes 558.3 563.9 Labltes of dscontnued operatons held for sale 138.4 Total current labltes 1,286.8 1,634.7 Long-term debt and captal lease oblgatons 2,649.9 3,474.4 Other labltes 686.2 693.7 Mnorty nterests 18.2 16.9 Shareholders equty 2,561.4 3,048.2 Total labltes and shareholders equty $ 7,202.5 $ 8,867.9 91

MANAGEMENT CORPORATE OFFICERS C. LARRY POPE Presdent and Chef Executve Offcer GEORGE H. RICHTER Presdent and Chef Operatng Offcer, Pork Group JOSEPH W. LUTER, IV Executve Vce Presdent ROBERT W. MANLY, IV Executve Vce Presdent and Chef Fnancal Offcer RICHARD J.M. POULSON Executve Vce Presdent MICHAEL H. COLE Vce Presdent, Chef Legal Offcer, and Secretary JEFFREY A. DEEL Vce Presdent and Corporate Controller CAREY J. DUBOIS Vce Presdent, Fnance BART ELLIS Vce Presdent, Operatons Analyss MICHAEL D. FLEMMING Vce Presdent and Senor Counsel CRAIG R. HARLOW Vce Presdent and Chef Internal Audtor BRIAN J. HENNESSY Chef Fnancal Offcer, Pork Group JEFFREY M. LUCKMAN Vce Presdent, Lvestock Procurement HENRY L. MORRIS Senor Vce Presdent, Operatons KENNETH M. SULLIVAN Vce Presdent and Chef Accountng Offcer DHAMU THAMODARAN Senor Vce Presdent and Chef Commodty Hedgng Offcer DENNIS H. TREACY Vce Presdent, Envronmental and Corporate Affars VERNON T. TURNER Vce Presdent, Corporate Tax MANSOUR ZADEH Chef Informaton Offcer DIRECTORS JOSEPH W. LUTER, III Charman of the Board C. LARRY POPE Presdent and Chef Executve Offcer, Smthfeld Foods, Inc. ROBERT L. BURRUS, JR. Charman Emertus of the law frm of McGureWoods LLP HON. CAROL T. CRAWFORD Former Commssoner, U.S. Internatonal Trade Commsson PAUL J. FRIBOURG Charman, Presdent, and Chef Executve Offcer, Contnental Gran Company RAY A. GOLDBERG Moffett Professor of Agrculture and Busness, Emertus, Harvard Busness School WENDELL H. MURPHY Prvate Investor, former Charman of the Board and Chef Executve Offcer of Murphy Farms, Inc. DAVID C. NELSON Portfolo Manager, Altma OneWorld Agrculture Fund GAONING NING Charman, COFCO Lmted FRANK S. ROYAL, M.D. Physcan JOHN T. SCHWIETERS Vce Charman, Perseus LLC, a merchant bank and prvate equty fund management company HON. PAUL S. TRIBLE, JR. Presdent, Chrstopher Newport Unversty MELVIN O. WRIGHT Formerly a senor executve of Dean Wtter Reynolds, now Morgan Stanley MICHAEL J. ZIMMERMAN* Executve Vce Presdent and Chef Fnancal Offcer, Contnental Gran Company *Advsory Drector (non-votng) 92

CORPORATE INFORMATION COMMON STOCK DATA The common stock of the company has traded on the New York Stock Exchange under the symbol SFD snce September 28, 1999. Pror to that, the common stock traded on the Nasdaq Natonal Market under the symbol SFDS. The followng table shows the hgh and low sales prces of the common stock of the company for each quarter of fscal 2009 and 2008. 2009 HIGH LOW 2008 HIGH LOW Frst $ 32.18 $ 16.61 $ 35.79 $ 29.87 Second 26.75 11.82 35.13 27.85 Thrd 15.15 5.40 30.75 23.75 Fourth 11.95 5.55 29.56 24.34 HOLDERS As of May 29, 2009, there were 1,074 record holders of the common stock. DIVIDENDS The company has never pad a cash dvdend on ts common stock and has no current plan to pay cash dvdends. In addton, the terms of certan of the company s debt agreements prohbt the payment of any cash dvdends on the common stock. The payment of cash dvdends, f any, would be made only from assets legally avalable for that purpose and would depend on the company s fnancal condton, results of operatons, current and antcpated captal requrements, restrctons under then-exstng debt nstruments, and other factors then deemed relevant by the board of drectors. CORPORATE HEADQUARTERS Smthfeld Foods, Inc. 200 Commerce Street Smthfeld, VA 23430 757-365-3000 www.smthfeldfoods.com TRANSFER AGENT AND REGISTER Computershare Investor Servces LLC 2 North LaSalle Street Chcago, IL 60602 312-360-5302 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP One James Center, Sute 1000 901 East Cary Street Rchmond, VA 23219 FORM 10-K REPORT Copes of the company s 10-K Annual Report are avalable wthout charge upon wrtten request to: Corporate Secretary Smthfeld Foods, Inc. 200 Commerce Street Smthfeld, VA 23430 757-365-3000 r@smthfeldfoods.com ANNUAL MEETING The annual meetng of shareholders wll be held on August 26, 2009, at 2 p.m., at Wllamsburg Lodge, 310 South England Street, Wllamsburg, VA 23185. INVESTOR RELATIONS Smthfeld Foods, Inc. 499 Park Avenue, Sute 600 New York, NY 10022 212-758-2100 r@smthfeldfoods.com CEO AND CFO CERTIFICATIONS The company s chef executve offcer and chef fnancal offcer have fled wth the SEC the certfcatons requred by Secton 302 of the Sarbanes-Oxley Act of 2002 regardng the qualty of the company s publc dsclosure. These certfcatons are ncluded as exhbts to the company s Form 10-K Annual Report for fscal 2009. In addton, the company s chef executve offcer annually certfes to the NYSE that he s not aware of any volaton by the company of the NYSE s corporate governance lstng standards. Ths certfcaton was submtted, wthout qualfcaton, as requred after the 2008 annual meetng of shareholders. The company makes avalable, free of charge through ts Web ste (www.smthfeldfoods.com), ts annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on form 8-K, and any amendments to those reports as soon as reasonably practcable after flng or furnshng the materal to the SEC.

GRI INDEX Smthfeld used the 2006 G3 Sustanablty Reportng Gudelnes of the Global Reportng Intatve (GRI) at a GRI-checked B level. Ths ndex covers all core ndcators and those addtonal GRI ndcators (shown n talcs) on whch we have fully or partally reported. Please vst www.globalreportng.org for the full text of the ndcators and other nformaton on the Gudelnes. Key to Indcators: Reported Partally Reported Not Covered INDICATORS DESCRIPTION PAGES INDICATORS DESCRIPTION PAGES Corporate Profle Indcators Strategy and Analyss 1.1 1.2 Organzatonal profle 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 Report Parameters 3.1 3.2 3.3 3.4 Report Scope and Boundary 3.5 3.6 3.7 3.8 3.9 3.10 3.11 GRI Content Index 3.12 Executve statement Key mpacts, rsks, and opportuntes Name of organzaton Prmary brands, products, and/or servces Operatonal structure Headquarters Countres wth major operatons Nature of ownershp and legal form Markets served Scale of reportng organzaton Sgnfcant changes durng reportng perod Awards receved n reportng perod Reportng perod Date of most recent prevous report Reportng cycle Contact pont Process for defnng report content Report boundary Lmtatons on scope/boundary Bass for reportng on jont ventures, subsdares, etc. Data measurement technques Restatements Sgnfcant changes from prevous reportng perods GRI Index 94 4-7 3 9, 16 17 3, 11 11 13, 29, 76 11 16 11 Lead n map, 11 13 3 11 13 2, 11 17 4 5, 11, 15, 64 5, 44 45, 74, nsde back cover 3 3 3 96 3, 20 21 Insde cover map, 3, 11 14, 29 30 3, 29 30 29, 75 77 3, 29 31 67 3, 29 31, 75 94 95 Assurance 3.13 Governance 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 Commtments to External Intatves 4.11 4.12 4.13 Stakeholder Engagement 4.14 4.15 4.16 Economc Indcators 4.17 Management Dsclosures Economc Performance EC1 EC2 EC3 EC4 EC5 External assurance Governance structure Board charperson/executve offcer Independent and/or non-executve members Shareholder recommendatons Compensaton and performance Avodng conflcts of nterest Board of Drectors qualfcatons Msson statement/code of conduct Board of Drectors performance oversght Board of Drectors performance evaluaton Precautonary approach External prncples/ntatves Industry membershps Lst of stakeholders Stakeholder dentfcaton Stakeholder engagement Stakeholder concerns 3 18 20 18 18 20 96, Appendces* Appendces* Appendces* Appendces* 18 20, 66 67 18 20 20, Appendces* Appendces* 23, 48, 56, 64, 83 22 20 20 22 6 7, 20 22, 24, 67 68 6 7, 22, 24, 67 68 4 7, 18 20, 59, 64 2, 11, 59 63, 68, 88 24, 29 30, 77 65 16 68 * Appendces are avalable onlne at www.smthfeldfoods.com/pdf/governance-appendx2009.pdf and www.smthfeldfoods.com/pdf/sfd-org-member-partner2009.pdf

INDICATORS Market Presence EC6 EC7 Indrect Economc Impacts EC8 EC9 PAGES INDICATORS PAGES INDICATORS PAGES 59, 85 86 59 63, 85 86 Transportaton EN29 Expendtures/Investments EN30 Labor Indcators 17, 34 10, 38 Chld Labor HR6 Forced and Compulsory Labor HR7 Socety Indcators Envronmental Indcators Management Dsclosures Materals EN1 EN2 Energy EN3 EN4 EN5 EN6 EN7 Water EN8 Bodversty EN11 EN12 EN13 EN14 Emssons, Effluents and Waste EN16 EN17 EN18 EN19 EN20 EN21 EN22 EN23 Products and Servces EN26 EN27 8 9, 26 45, 75, 77 79 8 9, 39 40, 77 79 31 32, 77 78 31 32, 77 78 31 33 34, 89 29 31, 38 37, 77 78 46 46, 89 28, 89 56 34, 35, 77 34, 35, 77 34, 89 10, 34 35, 77 35 36, 77 31 39 41 41 26 30, 75 77 Management Dsclosures Employment LA1 LA2 LA3 Labor/Management Relatons LA4 LA5 LA6 Occupatonal Health and Safety LA7 LA8 Tranng and Educaton LA10 LA11 Dversty and Equal Opportunty LA13 LA14 Human Rghts Indcators Management Dsclosures Investment and Procurement Practces HR1 HR2 HR3 Nondscrmnaton HR4 8 9, 64 67, 72 11, 43, 67, 87 8 9, 64 66, 87 68 69 65, 87 15 70 71 72 73, 87 69 70, 89 8 9, 68 69 66 67, 87 67 8 9, 67 Management Dsclosures Product Indcators Communty Impacts SO1 Corrupton SO2 SO3 SO4 Publc Polcy SO5 SO6 Complance SO8 Management Dsclosures Customer Health and Safety PR1 PR2 Product and Servce Labelng PR3 PR4 Marketng Communcatons PR5 PR6 PR7 Complance PR9 8 10, 20, 24 25, 59 63, 67 59 63 20 24 25 25 42, 73, 77 4 9, 55 58, 82 84 55 58, 82 84 58, 84 58, 84 58, 84 4, 6 7, 49 19 22, 49, 57 58, 84 83, 56 57 57 58, 84 Complance EN28 10, 42, 77 Freedom of Assocaton/ Collectve Barganng HR5 65, 87

CONTACT US The feedback we have receved on our performance and communcatons efforts has proven very valuable to our company. We hope that you wll contnue to communcate wth us as we proceed along our performance-mprovement journey. For nvestor and meda nqures: DENNIS H. TREACY Vce Presdent, Envronmental and Corporate Affars WILLIAM D. GILL Assstant Vce Presdent, Envronmental Affars KEIRA L. ULLRICH Drector of Investor Relatons and Corporate Communcatons Smthfeld Foods, Inc. 200 Commerce Street Smthfeld, VA 23430 Tel: 757 365 3000 Fax: 757 365 3070 E-mal: dennstreacy@smthfeldfoods.com Smthfeld Foods, Inc. 111 N. Church Street Smthfeld, VA 23430 Tel: 757 356 6700 Fax: 757 356 6718 E-mal: bllgll@smthfeldfoods.com Smthfeld Foods, Inc. 499 Park Avenue, Sute 600 New York, NY 10022 Tel: 212 758 4048 Fax: 212 758 8421 E-mal: keraullrch@smthfeldfoods.com Created and produced by RKC! (Robnson Kurtn Communcatons! Inc) Text: BuzzWord and RKC! Executve Photography: Lee Poe (page 4), Russ Schlepman (page 6) Prntng: Hennegan

The Smthfeld Foods 2008/09 Corporate Socal Responsblty Report saved the followng by prntng on papers wth recycled content compared wth 100 percent vrgn paper. Trees 115.8 Wastewater Energy Carbon doxde emssons 48,822 gallons 82.45 mllon BTUs 10,118 net pounds THIRD-PARTY RECOGNITION Smthfeld Foods s proud to have receved external recognton from a number of busnesses and organzatons durng the past year. Amercan Meat Insttute Annual Safety Awards Sold waste Carbon emssons Waterborne waste 5,446 pounds 5,354 pounds 325 pounds Amercan Meat Insttute Envronmental MAPS Recognton Awards CRO (Corporate Responsblty Offcer) Magazne 100 Best Corporate Ctzens The covers are prnted on Eames Pantng Canvas Fnsh 120 lb. cover stock, produced by Neenah Paper. Ths stock s Green Seal Certfed, whch means that t contans a mnmum of 30 percent recycled content and that the mll's processes, ncludng packagng, are envronmentally preferable. FTSE4Good Index Member Company McDonald s Suppler Sustanablty Award Pages 1 through 96 are prnted on Astrolte PC 100 80 lb. text stock, produced by Monadnock Paper Mlls. Ths stock s made from 100 percent post-consumer recycled fber. Astrolte PC 100 s also manufactured carbon neutral usng 100 percent renewable electrcty. Ths report was checked by the Global Reportng Intatve to Applcaton Level B. REPORT APPLICATION LEVELS Natonal Provsoner Magazne HREVOLUTION Award Roberts Envronmental Center, Claremont McKenna College 2009 Consumer Food, Food Producton, and Beverages Sectors Analyss No. 4 Company Rankng / A Overall Grade n Corporate Envronmental and Sustanablty Reportng Vrgna Chamber of Commerce Torchbearer Award

SMITHFIELD FOODS, INC. 200 Commerce Street, Smthfeld, VA 23430 757.365.3000 www.smthfeldfoods.com Smthfeld Foods s the world s largest pork processor and hog producer, wth revenues exceedng $12 bllon n fscal 2009. In the Unted States, we are also the leader n turkey processng and several packaged meats categores. From natonal brands and regonal powerhouses n the Unted States to some of the best-known European brands, Smthfeld Foods products are przed by retal, foodservce, and del customers alke.