Supply Chain - Hormel Foods Corporate Responsibility Report

Ensuring sustainable and ethical practices

At Hormel Foods, our multifaceted supply chain includes suppliers of hogs, turkeys, ingredients, packaging materials and transportation.

Supplier Code of Conduct and Sourcing Policies

All of our suppliers are required to follow our Supplier Code of Conduct to ensure the products and services we receive from our suppliers adhere to our commitments to responsible environmental and social performance. In partnership, we deliver quality products and add value to society.

In addition, we work closely with our palm oil and South American beef suppliers to ensure that they comply with these principles as well as additional requirements we have outlined. We made a commitment to source only sustainable palm oil that is fully traceable to the plantation level by the end of 2020. We have made significant progress toward this commitment and reached 74 percent of our goal. We will continue to work with our suppliers to reach 100 percent traceability to the plantation level, which we estimate will be completed by the end of 2025.

If a supplier is found to be in violation of our Supplier Code of Conduct/sourcing policies, we require the supplier to implement corrective actions. If appropriate corrective actions cannot be agreed to or are not made, Hormel Foods will suspend or discontinue purchases from the supplier.

For more information about our palm oil and South American beef sourcing requirements, please visit our corporate website.

Supplier Assessment

We have established supplier quality management (SQM), which evaluates our suppliers based on quality, delivery, service, technology and price. Our ingredient suppliers are subject to additional measurements to further ensure quality and food safety. Suppliers that exceed our established standards are eligible for our annual Hormel Foods Spirit of Excellence Awards. In 2020 alone, we recognized 65 suppliers for their performance.

65

Spirit Of Excellence Awards

given to suppliers for performance

To exemplify our commitment to supply chain sustainability management, we require third-party food safety audits of all of our ingredient suppliers. In addition to the third-party food safety audits, in 2020 we conducted an additional 14 food safety supplemental audits. If suppliers are found to be noncompliant, appropriate action is taken — up to and including termination.

Hormel Foods values the long-standing relationships we have established with our suppliers. In fact, in calendar year 2020 only 5 percent of our purchases were from new suppliers. We are continually looking for ways to assess our current supplier relationships to ensure that environmental/social risks are addressed. In 2018, we completed a high-level water risk assessment of our top suppliers. In addition, we meet with our top suppliers annually to evaluate their initiatives and collaborate on projects to address key issues such as environmental and social risks. We also report our internal results through a third party for our customers.

Supplier Diversity Program

In addition to ensuring our suppliers comply with the food safety standards recognized by the Global Food Safety Initiative (GFSI), we make a concerted effort to give diverse companies such as small, women-owned, minority-owned and veteran-owned businesses the opportunity to supply quality products that meet our company’s growing business needs. As a result of our supplier diversity program, in calendar year 2020 we purchased 27 percent of our resources from diverse businesses (small businesses, women-owned businesses, minority-owned businesses and veteran-owned businesses). This percentage includes independent family-owned hog farms.