Supplier Responsibility Principles

At Hormel Foods, our multifaceted supply chain includes suppliers of hogs, turkeys, ingredients, packaging materials and transportation. We introduced our Supplier Responsibility Principles to our key suppliers in 2011, and we shared with all of our suppliers in 2015 to ensure everyone is operating in a sustainable and responsible manner.

Supplier Assessment

We expect all our suppliers (both those based domestically and internationally) to operate according to our ethical business practices. All of our purchases are derived from suppliers that are compliant with our sourcing policy, as we strictly enforce suspension of any supplier not in accordance with such policies. Additionally, 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, and in 2015, we awarded 87 suppliers for their performance.

To exemplify our commitment to supply chain sustainability management, we require third-party food safety audits for all of our ingredient suppliers. In addition to the third-party food safety audits, in 2015 we conducted an additional 50 food safety supplemental audits. If suppliers are found to be non-compliant, 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 2015, only 6 percent of our suppliers were new suppliers. We are continuously looking for ways to assess our current supplier relationships to ensure that environmental/social risks are addressed and mitigated. In 2014, we completed a category level assessment process to identify risks. As a next step, we are working with our suppliers in categories where risks have been identified. In addition, we assessed more than 30 suppliers on environmental and social risks.

Supplier Diversity Program

In addition to ensuring our suppliers comply with the food safety standards recognized by 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 product options that meet our company's growing business needs. As a result of our supplier diversity program, in calendar year 2015, we purchased 22 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.

Supplier Diversity Program

SO10:

Significant actual and potential negative impacts on society in the supply chain and actions taken.

Palm Oil Sourcing Policy

Hormel Foods recognizes the unique environmental and social risks associated with palm oil. These risks require additional due diligence in sourcing, education and training to ensure the palm oil in our supply chain is not associated with human rights issues, deforestation or plantation expansion on carbon-rich peatlands.

While Hormel Foods is a relatively minor user of palm oil, we realize that responsible sourcing of even the smallest amount of this ingredient can make a difference. Therefore, we are dedicated to only purchasing palm oil from suppliers who comply with our sourcing principles.

In 2015, the Hormel Foods Palm Oil Council updated our palm oil policy and action plan moving forward. We made an initial commitment to purchase only fully traceable palm oil by the end of 2014. We met this commitment by working with our suppliers and achieved traceability to the mill level. In the spirit of continuous improvement, our updated commitment is to purchase only sustainable palm oil that is fully traceable to the plantation level by 2020.

In addition, in 2015 all of our suppliers published sourcing policies for their entire operations that meet our principles and implementation timelines.

To read our full palm oil policy and action plan, please visit our corporate website.