2013 farm to fork report

CONTENTS of This Year’s Edition Page

Welcome Letter from GNP Company’s CEO, Michael Helgeson ............................................................................................ 1

The 4P Reporting Framework: People, Planet, Poultry, Progress Year-In-Review ...........................................2

Lead Stories & Highlights................................................................................... 3-6

About GNP Company ...............................................................................................7

2013

FARM TO FORK REPORTHighlighting Our Corporate Responsibility

New Challenges,Opportunities & Change

Year in Review

Maker of these premium natural chicken brands

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WELCOME...THANK YOU for your interest in GNP Company! For our industry, company, and for me, personally, 2013 was marked with NEW challenges and opportunities for the future.

While the number of consumers with direct ties to agriculture has dropped over decades, I’ve never seen more interest in where food comes from than I do right now. Much of that learning comes in the form of better understanding how companies like ours deliver quality chicken products safely, humanely and responsibly. It seems consumers are experiencing greater awareness for the impact food makes, from physical health and responsible practice standpoints.

It’s also important for them to know that products are made with integrity, every step of the way. This responsibility continues to motivate us to improve and achieve new levels of excellence and transparency. And this is the true spirit behind GNP Company’s Farm to Fork corporate responsibility report.

In the report, we share specific information to help external stakeholders gain a better understanding of who we are and what we do. For instance, many might be surprised to know that 64% of our local farm families have been working with our company for more than 10 years, and 43% of those for more than 20 years. What better way to get closer to one’s food than to know it’s produced consistently, and with a strong commitment to quality? And, to know that long-term partnerships play an important role in our ability to do that.

From personal and industry perspectives, I’m proud to have been elected to represent the chicken industry as Board Chairman of the National Chicken Council (NCC). Like our company, our industry is also making closer connections with consumers. Examples in this past year:

• The industry hosted a first-ever “Chicken Media Summit,” giving writers and news reporters an up-close, firsthand look at how chickens are responsibly raised and processed, so that they could share with their audiences; and• NCC launched a new consumer website, ChickenRoost.com, to help share key information about industry practices. It’s important for consumers to know that, first and foremost, the industry is made up of people whose passion, expertise and commitment make a difference, each and every day.

Going forward, the industry will continue on this path of bringing consumers closer to what it does by finding new ways to explain, show, and engage stakeholders.

Equally new in 2013, we made a strategic decision to sell GNP Company to The Maschhoffs, LLC, which is the largest family-owned pork producing company in North America. With a fifth consecutive, profitable year for

GNP Company, the sale comes from a position of strength and provides access to capital to keep our company growing and progressing toward our vision.

An excellent cultural and business fit for the future of our company, people, customers and consumers, I am optimistic about what this change will bring in the years to come. With the heart, dedication, and talent of our nearly 1,700 team members and 350 family farm partners, I believe there’s no limit to what we’ll achieve together. Ours is a vibrant company and industry, and we have an exciting future ahead of us!

To the Next Chapter in Chicken History—

Michael HelgesonCEO, GNP Company

Michael Helgeson, CEO

food,families & farms

~ dedicated to ~

To be the

Our Vision

for FRESH IDEAS in

NATURAL CHICKEN.

1st CHOICE NATIONALLY

PEOPLE

PLANET POULTRY

PROGRESS

Each year, GNP Company™ uses the 4Ps to organize important information about our company and share it with the key stakeholders critical to the success of our business. This includes our valued team members and family farm partners, as well as external customers, partners, suppliers and consumers.

Our operating principle is simple: to thrive by balancing the need for economic Progress with the needs of our People, Planet and Poultry. It’s what we call the 4Ps—which are interdependent elements that sustain the health and vitality of our business.

Corporate Responsibility By the 4Ps

PEOPLEBUILDING AND ENRICHING RELATIONSHIPS THROUGH MEANINGFUL ENGAGEMENT.

Our strong relationships with team members, family farm partners, customers, valued suppliers and community members are at the heart our business. We are passionate about what we do and how we impact the lives of people.

planetREDUCING OUR ENVIRONMENTAL FOOTPRINT ACROSS OUR VALUE CHAIN.

Maintaining a healthy ecosystem is critical to our survival as a company—and as a society! We’re committed to measuring and reducing environmental impacts within our own operations and across our supply chain.

poultryDELIVERING SAFE, NUTRITIOUS AND HUMANELY RAISED PRODUCTS TO THE MARKETPLACE.

We’re acutely aware that consumers entrust us with the health and well-being of their families. That awareness is what drives us to make no compromises when it comes to the care of our chickens and our promise of safe, relevant, transparent and truthfully labeled products.

progressENSURING THE ECONOMIC VITALITY OF OUR BUSINESS, SUPPLIERS, PARTNERS AND COMMUNITIES.

When we succeed as a business, we are committed to sharing that prosperity with our team members, family farm and business partners, and communities. We gauge our performance in Progress by our profits, business growth, and ability to invest in the local economies where we live and work.

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PEOP

LELiving our Mission, Vision, Values from the Inside Out

OTHER IMPORTANT PEOPLE HIGHLIGHTS FROM 2013:

TEAM MEMBER SAFETY COMMITMENT & PERFORMANCE• For the fifth consecutive year, the average injury/illness rate of our processing plants (3.7) was better than the poultry processing industry average (4.9), based on 2012 U.S. Bureau of Labor Statistics.

TEAM MEMBER ENGAGEMENT• GNP Company’s overall engagement results were better than 50% of all manufacturing organizations surveyed.• Improvement suggestions from team members through our Employee Suggestion Program (ESP) increased by 3%. Total company savings were $339,000, with $46,500 paid to team members for their participation. • Expanded Leadership Award Program to include the St. Cloud, MN area, in addition to our Arcadia, WI complex.

TEAM MEMBER TRAINING PARTICIPATION & EFFECTIVENESS• 90.1% of team members received training in areas designed to enhance business understanding and job effectiveness. • Added a dedicated resource for recruiting talented team members.• Defined our Business Management System (BMS). This system provides planning, controlling and reporting support to help us stay connected to our mission, vision and values in everything we do.

TEAM MEMBER SAFETY & WELLNESS• Grand Opening, in February 2013, of the company’s first-ever onsite Health & Wellness Center in Arcadia, WI.• Continued sponsorship of flu shot clinics, weight loss and physical activity challenges.• Added a Micro-Mart with healthy alternatives to traditional vending selections at the Luverne, MN processing plant. • Provided biometric screenings such as blood glucose and cholesterol to assess the risk of certain diseases and medical conditions.

LONGEVITY OF TEAM MEMBERS & FAMILY FARM PARTNERS• 34% of team members have worked for us for more than 10 years.• 64% of our family farm partners have been with us for more than 10 years; 43% of those for 20 years or more.

CUSTOMER SERVICE EXCELLENCE: PERFECT ORDER• Overall 2013 performance was 96.4% Perfect Order against a goal of 96.94%. Following are specific details: – Order Entry Accuracy, 99.8% (met goal); Warehouse Pick Accuracy, 99.6% (met goal); On-Time Deliveries, 99.7% (met goal); Orders Received without Damage, 98.3% (did not meet goal); and Case Fill Rate, 99.09% (did not meet goal).

CONSUMER AFFINITY & ADVOCACY• Successfully grew and/or maintained key brand measures for flagship Gold’n Plump® and growing Just BARE® brands. – Gold’n Plump: Ratings exceeded key competitors in core Minneapolis market on 3 of 5 critical brand measures; at equal standing on 2 of 5. – Just BARE: Ratings exceeded key competitors in core 4 markets on 4 of 5 critical brand measures; at equal standing on 1 of 5.• Critical brand measures include: Brand Awareness, Intent to Buy, Trial/Preference/Repeat Purchase, Brand Loyalty and Brand Advocacy.


~ dedicated to ~

3People Development, Engagement and Alignment.

The ESL Program helps enhance our team members’ work experiences through English language skills instruction that is specific to their work environment.

Occupational English as a Second Language (ESL) Program

2013 Joint Poultry Industry Safety & Health Council,Award of Distinction for Outstanding Safety Performance, Arcadia, WI Feed Mill.no

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2013 Corporate Responsibility Report year in review

Focus Forward for 2014:

“ ”A win-win for everyone, this

combined effort creates long-term relationships based on mutual

understanding and respect.

2013 ESL Class Graduates


~ dedicated to ~

PLANET

OTHER IMPORTANT planet HIGHLIGHTS FROM 2013:

lessEning our impact Across the Entire Supply Chain

LIFE CYCLE ASSESSMENT (LCA) COMPLETION• Continued to use the Life Cycle Assessment to guide our progress since the first one was conducted in 2010 and the second in 2012. The LCA helps us continue to measure the effectiveness of our improvement efforts.

CARBON TRUST RECERTIFICATION• In 2010, our Just BARE® brand was Carbon Trust certified— becoming the only U.S. poultry brand and one of the first U.S. food products to be certified and display the Carbon Reduction Label. • Widespread in the United Kingdom, Carbon Reduction labeling has been slow to catch on in the U.S. Though we remain committed to reducing our carbon footprint, we will not recertify in 2014. • Our goal: to find other ways of providing consumers with a means of comparing the environmental impact of the products they buy— using our LCA as the gauge for improvement.

COMPANY-WIDE CARBON EMISSIONS• In 2013, company-wide carbon emissions (CO2e) increased 4.98% per pound of chicken produced and 9.37% on an absolute basis. Total CO2e emissions were 99,876,374.

ENERGY CONSUMPTION• In 2013, GNP Company™ saw a significant increase in our Natural Gas and LP usage, due in part to a cool Spring and cold December. Although we did not achieve our 2013 energy goals, we remain committed to our 2017 goal of a 20% reduction in energy use.

WATER CONSERVATION • In August 2013, GNP Company developed a new partnership with Minnesota-based Ecolab® on water reuse. This system and other water conversation efforts have reduced water use by 5.3% in 2013 in our Cold Spring, MN processing plant. • We remain focused in leading the industry on water quality and conversation issues, as well as remain committed to our 40% reduction goal by 2017.

WASTE REDUCTION • GNP Company remains committed to becoming a zero waste company. In 2013, we joined Waste Wise and the Waste Reduction Collaborative.

PLANET AWARDS & RECOGNITION • 2013 Clean Water Award from the U.S. Poultry & Egg Association in the Full Treatment Category. • 2013 Operations Award for the Minnesota Section from the Central States Water Environment Association.

Ecolab® Partnership Progress on Water Reuse System.

Partnering with the Environmental Initiative, Conservation Marketplace Midwest, Kaiser & Associates, LLC and the Stearns County Soil and Water Conservation District, the RCC program helps incentivize corn and soy-bean producers to minimize their environmental impacts.

Learn more at www.environmental-initiative.org/projects/responsible-crop-certificate.

Responsible Crop Certificate (RCC)

2013 Clean Water AwardGNP Company raises the bar on wastewater treatment

PROCESSING

RAW MATERIALS

PACKAGING

DISTRIBUTION& RETAIL

POULTRYGROWOUT

MATERIALPROCESSING

NATURALENVIRONMENT

DISPOSAL

LANDFILL

INCINERATION

CHICKENLITTER

USER

THE LIFE CYCLE OF OUR PRODUCTS

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2013 Clean Water Award from the U.S. Poultry & Egg Association in the Full Treatment Category and Operations Award for the Minnesota Section from the Central States Water Environment Association.no

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“ ”Our environmental mission

remains focused on lesseningthe impacts across theentire supply chain.


poul

try

going above and beyond the Standard

OTHER IMPORTANT poultry HIGHLIGHTS FROM 2013:

ANIMAL WELFARE COMMITMENT• Conducted routine audits of performance against guidelines set forth by the American Humane Certified® Farm Program (AHC), the National Chicken Council (NCC) standards (updated in 2014), the American Veterinarian Medical Association (AVMA), industry experts and university scientists.• Drove accountability back to individual animal caretakers with regular internal audits. • Completed rigorous, regular training for team members responsible for animal care or handling in proper welfare practices; and • Strictly adhered to the humane slaughter standards of the AHC and NCC—using methods established and approved by the AVMA.

ANNUAL ANIMAL WELFARE AUDIT PROCESS & PERFORMANCE• Facilities audited against the more than 200 standards of the American Humane Certified® Farm Program—more than 30 of which focus specifically on the four major areas of processing. An independent auditing agency conducts the audits. An overall total score of at least 85% is needed to pass.• In 2013, all GNP Company primary production plants, hatcheries and audited family farm partners/grow-out barns PASSED with a score of 87% or better.

HAPPY, HEALTHY CHICKEN INITIATIVE PROGRESS• Official initiation of the project began in a select number of barns in 2013. This initiative is expected to enhance daily monitoring capabilities for the health and well-being of our chickens.• The future vision of this program includes the development of a “Happy Score” that will be calculated using objective, measurable inputs and data.CHICKEN FEED INGREDIENT QUALITY & COST• In 2013, we remained competitive in purchasing high quality feed ingredients.

ACTIVE GROWER MANAGEMENT AUDIT PROGRAM PROGRESS • Expanded Active Grower Management Program to include breeder barn management.• Streamlined the program for broiler barns in order to make audit data collected more accessible for analysis.FOOD SAFETY LEADERSHIP• All GNP Company production plants were recertified by the Safe Quality Food (SQF) Code, 7th Edition Level 2 Program—maintaining scores of “EXCELLENT” across the board.• 100% of our chicken products are produced in processing facilities that have been audited against Global Food Safety Initiative (GFSI) recognized programs.

NEW PRODUCT SUCCESS & DIRECTION• Launched 42 new products in 2013, including: – Two new Gold’n Plump Seasoned Whole Chicken flavors. – Just BARE Family Pack for consumers looking for larger packages of popular products. – Two exclusive Gold’n Plump product lines for key retail customers, greatly expanding our national distribution. TRUTHFUL LABELING COMMITMENT• GNP Company maintained its support of the Truthful Labeling Coalition (TLC). Learn more at www.truthfullabeling.org.

5More on our Happy, Healthy Chicken Initiative.

Since officially certifying our Just BARE® products under the rigorous American Humane Certified® Farm Program standards in 2011, we have transitioned to auditing based on these standards across all GNP Company™ broiler production processes and operations.

American Humane Certified® Expansion

Michael Helgeson named Chairman of the Board of the National Chicken Council. no

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In 2013, all GNP Company primary production plants, hatcheries and audit-ed family farm partners/grow-out barns PASSED with a score of 87% or better.



progress

OTHER IMPORTANT progress HIGHLIGHTS FROM 2013:

GROWING towards a strong future

PHILANTHROPIC MISSION• Supported sustainable partnerships and programs dedicated to healthy food, families and farms and building stronger communities in the areas we call home and distribute products.• 2013 marks the 27th year of GNP Company being recognized as a Minnesota Keystone Company for donating 5% of pre-tax profits to charitable causes.FINANCIAL & PRODUCT DONATIONS• Total financial and product donations exceeded $1.2 million. The breakout was as follows: 17% financial, 83% chicken.• Product donations equaled nearly four million meals’ worth of nutritious chicken for families in need.SPONSORED COMMUNITY & SUSTAINABLE FOOD CAUSES• Closely aligned our brand sponsorships to support the values, interests and concerns of each brand’s respective consumers. Examples: – Just BARE: Roots for the Home Team™, Mahtomedi Kids Community Garden, Renewable Choice Energy. – Gold’n Plump: United Way, Poultry Prince & Princess, local high school sports teams and tournaments, and local food banks like Second Harvest Heartland.PROCESS EXCELLENCE & CONTINUOUS IMPROVEMENT• 2013 Certification and Training included 42 team members being introduced to the principles of Continuous Improvement; 17 Gold Belt trained; 20 trained in Root Cause Analysis; 21 introduced to Lean Thinking; and 5 team members trained in A3 Thinking/Project Management.

PROFITABLE GROWTH & EXPANSION• Continued profitability and 10% growth in total revenue (have grown 10% to 15% over previous three years).• 16 new barns constructed, with 15 to 18 more barns planned for 2014.

NEW CUSTOMER GROWTH• 2013 was a record year for GNP Company sales revenue, with 3% of growth coming from new customers and the remainder from existing customers. LOCAL SUPPLIER COMMITMENT• 95% of corn used for feed was purchased from farmers within 75 miles of our feed mills, in addition to small town elevators.• 100% of our family farm partner payments were made to farms within 60 miles of our hatcheries and processing plants.

Growing and Expanding to Meet Increasing Customer Demand.

A strategic decision was made to sell GNP Company to The Maschhoffs, LLC, the largest family-owned pork producing company in North America. With a fifth consecutive, profitable year for GNP Company, there is more customer demand and growth on the horizon.

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GNP Company™ is acquired by The Maschhoffs, LLC

GNP Company wins “Best in Show Award” for 2013 fundraising efforts through the United Way of Central Minnesota.no

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United Way “Best in Show” Award

COMPLEMENTARY BUSINESSES

CommonPriorities

People

Raising Animals

Premium Quality

ServingCustomers

Sell Natural Branded& Strategic Chicken

Products to theRetail, Deli &

Foodservice Channels

Sell Market Pigs to Pork Processors

Co-pack Market Pigsfor Sale by the

Maschhoff Family

✗ ✗

✗

Business Focus Business Focus

“ ”This sale provides access to capital in

order to keep our company progressingtoward our vision: To be the 1st choice

nationally for fresh ideas in natural chicken.



WHAT WE DOFounded in 1926 as a seasonal hatchery, today GNP Company™ provides whole-some, naturally nutritious chicken products to customers and consumers domestically and for export internationally.

It requires accountability at every step, from farm to fork, to ensure safety and quality. But our accountability doesn’t stop there. As members of a global society, we must also commit to reducing the environmental footprint of our opera-tions—focusing both upstream and downstream of the supply chain.

OUR PEOPLE• A dedicated, diverse team that’s approximately 1,700 strong• More than 350 independent family farm partners who raise our chickens, some for three generations

OUR OPERATIONS• Fully integrated operations in and around the areas of St. Cloud, MN and Arcadia, WI including; – Farmer-owned broiler and breeder barns – Company-owned hatcheries, feed mills, primary processing plants, and distribution systems• Value-added processing plant in Luverne, MN

OUR SALES & DISTRIBUTION• Annual sales of more than $400 million projected in 2014• Branded and strategic retail, deli, foodservice, industrial and export sales – Brand labels include Gold’n Plump®, Just BARE® and Sunny Roost® – Custom products for strategic customers• Distribution area – Nearly all 50 states – International export

DISTRIBUTION CENTERS• RETAIL & DELI• FOODSERVICE

About GNP Company™

7

OVER THE LAST 3 YEARS WE HAVE GROWN

VERSUS THE PREVIOUS 3 YEARS*10%TO15%

*As measured by processed pounds

P.O. Box 1106St. Cloud, MN 56302-1106

320.251.3570GNPCompany.com

© 2014 JFC LLC All rights reserved. Published 4/22/14.

food, families & farms~ dedicated to ~

MISSION

STRATEGIC PLAN SHARED

VOICEVISION

of our Customers& Consumers

Integrated Systems& Thinking

Be the 1st Choicenationally for fresh ideas in natural chicken.

food,

GOALS & SUCCESS

families & farms

~ dedicated to ~

MISSIONVISIONVALUES

SAFETY

RESPECT

INTEGRITY QUALITY

VALUE

S I

NN

OV

AT

ION

2013 farm to fork report

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