Smithfield Packing Environmental Programs Collapsible Vats and Plastic Vats Smithfield Packing-Tarheel July 15 th 2011

Project Scope and Purpose Project Purpose: This project combines two separate efforts to achieve a single goal of reducing the use of corrugated cardboard COLLAPSIBLE VATS –This project eliminates all one time use of corrugated combos in shipment of WIP raw materials from Tar-Heel to Wilson and Kinston facilities by utilizing re-usable plastic collapsible vats. PLASTIC VATS – The second portion of this project utilizes approximately 300 white plastic vats to replace corrugated cardboard combos used in transfer of product inside the plant

Collapsible Vats Prior to this project, shipping of raw material WIP product from Tar-Heel to Wilson and Kinston required the use of corrugated combos. During CY2010, 191,100,000 pounds of WIP product were shipped in 98,000 single use combos; this equates to 686 tons of cardboard per year. Additionally, they have an additional capacity of 200 pounds per bin. This allows us to ship the same quantity of WIP materials in 266 less trailer loads thus reducing freight cost.

Project Implementation The project scope consisted of purchasing 540 collapsible vats to ship all WIP raw materials to Wilson and Kinston facilities. Tarheel loaded all WIP product in the Collapsible storage vats. Each vat utilized the same combo liner that is used to line our existing corrugated combo.

Logistics Wilson and Kinston would receive and unload the vats, rinse them out, and place them on a truck to be returned to Tarheel. The vats were returned on trucks that would have already been returned to Tarheel at the end of the production shift All of the vats would be tracked within SAP

White Plastic Vats cardboard combos were being used to transport product within the facility Purchased 300 plastic white bins, with each bin replacing the need for two cardboard combos In CY2010, the Tar Heel facility purchased 1,301,537 cardboard combos or 1,197 tons of cardboard; this project will reduce this figure by 171,000 combs or 13.1%.

Collapsible Vats Savings Cost per individual cardboard combo = $3.23 / each Savings by eliminating 98,000 combos: = $316, Cost of 540 collapsible vats = $91, Total loads saved by additional weight = 266 loads Freight Savings (from reduced loads) = $75, Payback for Collapsible Vats = $299,

Plastic Vats Savings # of plastic vats used daily = 300 Cost for the plastic vats = $ (freight only) Savings generated per plastic vat = $7.26 Savings by using the plastic vats = $620, (300 vats x $7.26 per vat x 285 production days) Payback for Plastic Vats = $620,030.00

Total Project Savings Total Annual Savings (Plastic/White Vats & Collapsible Vats) Cost Savings = $300,000 + $620,000 = $919,840 Cardboard Use Reduction = 686 tons + 1,197 tons = 1,883 tons/year Overall Cardboard Combos Reduction = 20.6 %

Applicability of Project Collapsible Vats –This Project is applicable to any facility that transfers raw product to another location on regular basis. Plastic Vats –Project is applicable to any facility that transfers product inside the plant.

Challenges to Consider Tracking system is essential in order to ensure vats and bins are not lost during transportation and sanitation. Can be tracked through SAP There is an additional cost associated with vat washing (water, chemicals, and labor). Large Storage Space required

Environmental Impact The potential to not only reduce cardboard consumption, but effectively eliminate it from a particular process Reduction in fossil fuel emissions due to the reduction in shipping trailers between the different facilities Great initiative towards the implementation of sustainable packaging

Questions?