SILVER FERN FARMS SUSTAINABILITY REPORT

Transcription

1 SILVER FERN FARMS OUR SUSTAINABLE CHAIN OF CARE SILVER FERN FARMS SUSTAINABILITY REPORT

2 A L C I ENVIRONMENTAL O S SILVER FERN FARMS OUR SUSTAINABLE CHAIN OF CARE F I N A N C I A L

3 WE BELIEVE Silver Fern Farms can create positive change for our environment, our people, our communities and the economic success of New Zealand. We call this Our Sustainable Chain of Care. THIS IS OUR SUSTAINABLE CHAIN OF CARE Our Sustainable 02 Chain of Care Our Vision 05 Our Beliefs 06 About Us 08 Our Goal and Key 10 Strategies to 2020 Our Material 11 Sustainability Issues The United Nations 12 Sustainable Development Goals The Sustainability 13 Leaders Group Engaged People, 14 Sustaining Communities Sustainable Future 16 for Farmers Food Safety 18 and Quality Operational 20 Efficiency Wastewater 24 Management Animal Treatment 26 and Welfare Market Access 28 Financial Performance 30 Memberships 31 01

4 OUR PURPOSE is to profitably and sustainably add value to New Zealand s natural grass-fed red meat. This first Sustainability Report introduces Our Sustainable Chain of Care to illustrate the way we work to achieve our purpose at Silver Fern Farms. It covers our progress in Our Sustainable Chain of Care is a framework to share our values, our goals and plans, and our progress towards becoming a more sustainable Silver Fern Farms. We have a wide group of stakeholders from our consumers and customers, farmer suppliers, government, service providers and our people who work for Silver Fern Farms from plate to pasture. They all care about the way we produce food. Our sustainability framework is integrated within our company s Plate to Pasture strategy and is focused on issues that are important to our stakeholders. Following an assessment of material issues impacting our business, we identified 8 relevant material sustainability issues. These are; Engaged people, sustaining communities, Sustainable future for farmers, Food safety and quality, Operational efficiency, Wastewater management, Animal treatment and welfare, Market access; and Financial performance. We believe our Plate to Pasture strategy is the right one. Our consumers needs drive how we do things. Clearly, we need to be close to the consumer in markets around the world so we can understand how best we meet their expectations of exceptional eating experiences, health and nutrition, and sustainable production processes with genuine integrity. The Silver Fern Farms brand is a powerful tool, and we are developing long-term additional value for our business through differentiated and branded products. We operate in a complex industry with a long history. We produce a very broad range of products which are supplied to uniquely diverse markets in more than 60 countries. It is important for us to reinforce the foundation that our business has been built on, but by enhancing our customer focus, be capable of responding to, and shaping a fast evolving consumer environment. Natural grass-fed red meat, with its eating qualities, nutritional and authentic characteristics, is increasingly enjoyed and valued by a wide range of global consumers. The high volume items, from primal cuts to trim, produced every day efficiently and at scale, give us a strong base to build from. Conscious consumers trust our products; so whether we are supplying lamb racks to Paris, diced venison for goulash in Prague or our high quality lean beef to be ground for burgers in New York, we need to be continuously focused on the expertise required to respond to the required product and market mix. Customers and consumers world-wide have an abundant range of protein choices. How well we execute our high-end consumer retail and restaurant range strategy through differentiated branded products is an ongoing 02

5 challenge which is critical to the success of our plate to pasture strategy. We need to deepen relationships with our customers and expand the understanding of our consumer s expectations, at the same time refining our products and processes to ensure we deliver to their needs. To be truly successful we will need to develop a deeper culture of innovation at every level of Silver Fern Farms. Disruption or emerging risks represent both opportunities and threats and through our Strategy and our Sustainable Chain of Care we will begin to speak more actively as to how we will manage these. The key to delivering on our strategy is our people. We have a talented and dedicated team who clearly care about the work they do, the quality of our product and the performance of our business. Sustainability is not negiotable for our business. We need to ingrain sustainability into everything we do; our environmental footprint, our communities we operate in and in our financial performance. Operating sustainably underpins our premium Silver Fern Farms brand. Simon Limmer Chief Executive Silver Fern Farms We are stepping up to the challenges that confront us and we do the right thing by our people, shareholders, suppliers, customers, communities and the environment. 03

6 The way food companies work has never faced so much scrutiny as it does today. We are watching, responding to, and in some cases shaping, a variety of global consumer trends. We are experiencing a period of supply chain transformation. The supply chain is becoming shorter in many of our key markets where we are seeing mergers and acquisitions creating an aggregation of retail chains. While this has benefits, many of these developments have stated aims of driving the cost of food lower. This in itself is an admirable objective, provided it does not compromise food quality and integrity. The challenge for us is to continue to reinvest in our business to lift standards and performance, while at the same time ensuring our farmer suppliers receive a sustainable return for their produce. Beyond the retail store there is growth in online channels to consumers, and direct delivery of packaged meal and food services. It is difficult to believe, but the future may be illustrated by drone deliveries already happening on a small scale as part of a fast convenience food offering. We are also seeing a rise in the development of old sources of protein (largely from pulses and soy) being packaged to consumers in innovative new ways to mimic red meat. At the same time, the world s population continues to grow. Middle classes across countries in Asia, the Middle East and Africa are also expanding and spending a greater proportion of their growing incomes on nutrient dense, top quality red meat. Along with population and income growth, the overall demand for protein is also increasing, presenting all protein producers with opportunities to meet the needs of their consumers across the entire value continuum. Consumers are increasingly interested in their holistic health and wellbeing. There is a large segment of consumers who want clean, safe, nutrient dense protein that makes them feel good about their bodies. They are after product produced here in New Zealand, as we are known for our high standards of food safety, quality and for our environment. Our natural grass-fed, red meat is well-positioned to meet the requirements of this segment of global consumers, but we have to retain our focus on maintaining our high standards of food production throughout our supply chain. The conscious consumer is looking for a connection to their food. There is an increasing focus on the authenticity of foods, with consumers wanting traceability to give them trust in its source. We are responding through Oritain proof of origin and QR code technology, on our consumer-ready retail range and premium food service packaging. Consumers will see a greater focus on how Silver Fern Farms demonstrates the provenance of our food from the plate through to our farmer partners who produce red meat with care, respect and expertise for their animals, land and communities. We want to show that we work through complex sustainability challenges responsibly, and through this greater transparency grow trust in the way we produce our natural, 100% made of New Zealand red meat. We trust through this report, and the others that will follow, you will be able to see more about how we responsibly address issues that are important to the communities around the world in which we work. Simon Limmer Chief Executive Silver Fern Farms 04

7 OUR VISION INSPIRATIONAL FOOD CREATED BY PASSIONATE PEOPLE 05

8 OUR BELIEFS We love food We do the right thing We are passionate people We put ideas into action 06

9 WE ARE 100% MADE OF NEW ZEALAND At our heart we are food people, making it well, taking care of it and where it comes from. We do the right thing by our people, shareholders, suppliers, customers, communities and the environment. We are individually accountable and collectively responsible. Our passion drives us to collaborate and inspire as effective teams. We have big ideas, take action and get it done. 07

10 SILVER FERN FARMS IS NEW ZEALAND S LEADING PROCESSOR, MARKETER AND EXPORTER OF PREMIUM QUALITY LAMB, BEEF, VENISON & ASSOCIATED PRODUCTS. The company was registered in 1948 as Primary Producers Co-operative Society, eventually trading as PPCS until it changed its name and its brand in 2008 to Silver Fern Farms. In December 2016, Shanghai-based food company, Shanghai Maling Aquarius Ltd invested $260m in Silver Fern Farms Limited for a 50:50 partnership with Silver Fern Farms Co-operative. 08

11 PRODUCES STARTED IN 30% 1948 OF ALL NZ LAMB, BEEF & VENISON BECAME SILVER FERN FARMS IN 2008 OVER 16,000 SHEEP, BEEF AND DEER FARMER PARTNERS 14 PLANTS THROUGHOUT NEW ZEALAND 2.2BN ANNUAL SALES 7,000 STAFF IN THE PEAK OF THE SEASON 09

12 OUR GOAL AND KEY STRATEGIES TO 2020 GOAL: DELIVER SUSTAINABLE PROFITABILITY The sustainability goals and targets we have set are integrated with the four pillars of our company strategy. Targets have been set and are reported on with senior leaders and managers in the business responsible for the delivery of initiatives that help us achieve our goals. BUILD MARKET LEADERSHIP POSITIONS WITH DIFFERENTIATED PRODUCTS BUILD A HIGHLY COLLABORATIVE, HEALTHY AND ENGAGED TEAM Grow consumer-led, branded, value added products Focus distribution in a few attractive markets Continue to grow branded chilled sales Invest in developing our people to create a collaborative, engaged and customeroriented culture Keep our people safe, healthy and well every day DIFFERENTIATE LIVESTOCK SUPPLY BY LEADING IN SERVICE, BRAND & VALUE- ADD PROGRAMMES ENSURE WE HAVE THE BEST CHAIN OF CARE IN NEW ZEALAND Build the scale of our value added supply programmes Work with the Co-operative to reward shareholder supplier loyalty Invest to create a highly efficient mainstream business Operate at best food safety, animal welfare and environmental standards Have highly effective systems to support decision making 10 SILVER FERN FARMS STRATEGY IS UNDERPINNED BY OUR SUSTAINABLE CHAIN OF CARE.

13 OUR MATERIAL SUSTAINABILITY ISSUES SILVER FERN FARMS USED A ROBUST INDEPENDENT PROCESS TO IDENTIFY OUR MATERIAL ISSUES. IT WAS CARRIED OUT FOLLOWING THE INTERNATIONAL INTEGRATED REPORTING COUNCIL FRAMEWORK AND THE GLOBAL REPORTING INITIATIVE (GRI) G4 GUIDELINES. We used the process to listen to a balanced and representative group of 30 of our stakeholders (internal and external). These people included our customers from around the world, our staff in roles responsible for significant areas of our business or technical expertise and people with expertise and interests in areas such as farming, animal welfare, energy, environment, food production and packaging and the communities in which we work. Global trends facing food producers and the red meat industry as well as local industry issues were factors considered by our stakeholder group. This group shared their views on Silver Fern Farms and where they saw the sustainability challenges and risks and opportunities for our company. This materiality research was completed in Materiality issues were ranked to determine our 8 core areas of focus. This is the first report where we are reporting on the material issues, our goals to 2020 and the targets we have established, and how we are working to achieve them. Throughout the report we provide additional depth on particular issues that we know, through our consumer market research, annual farmer supplier research and direct feedback, have grown in impact on our business. We intend to review our material issues in HERE ARE OUR MATERIAL ISSUES: 01. Engaged People, Sustaining Communities 02. Sustainable future for farmers 03. Food safety and quality 04. Operational efficiency 05. Wastewater management 06. Animal treatment and welfare 07. Market Access 08. Financial performance 11

14 THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (SDGS) As a food producer of scale who sends food to consumers around the globe, we recognise we have both a responsibility and an opportunity to contribute to achieving the United Nations Sustainability Goals. These 17 goals aim to transform our world and were adopted in You can learn more about them here sustainabledevelopment/ Throughout this report you can see where we have mapped our material issues to the 17 UN SDGs so we can better understand where we can make our greatest contribution. AS A RED MEAT FOOD PRODUCER OF SCALE IN NEW ZEALAND, WITH A GLOBAL REACH, OUR FOCUS IS PREDOMINANTLY ON THE FOLLOWING 12 AREAS: 12

15 THE SUSTAINABILITY LEADERS GROUP Silver Fern Farms is committed to operating sustainably. In 2016, we established a Sustainability Leaders Group to guide the way we work. This is an important group to provide on-going support to our Sustainable Chain of Care programme. The group provides depth of leadership on sustainability issues to speed our progress towards our 2020 Sustainability Goals. It is currently made up from technical experts from across our company. The group also includes a member of the Board of Silver Fern Farms Limited and a sustainability report is provided monthly to the Board. 13

16 01 ENGAGED PEOPLE, SUSTAINING COMMUNITIES 2020 BUSINESS STRATEGY GOAL Build a highly collaborative, healthy and engaged team Why we care We strive to be a highly capable business that supports and cares for our people and the communities we work in. Aspirational 2020 Goal what success looks like Attract, develop, and retain passionate people who live our values Keep our people safe, healthy and well using our Ora philosophy Develop initiatives that help strengthen the communities we live in. The following initiatives help us achieve our goals: We have developed a new People Strategy Our Ora Health & Safety programme has been reviewed We have developed a targeted regional sponsorship programme Targets Trending improvement in engagement Annual reduction in injury rates Targeted regional sponsorship programme that we report on. Our progress 2017 Our 2017 Staff survey shows staff engagement has lifted by 10.6% We achieved a targeted.5 annual reduction in our TRIF rate from 7.5 in At year-end we had a TRIF of 6.7, representing an 11.8% reduction in injuries We invested $249, in 301 regional and 106 national community sponsorship initiatives in

17 Health and Safety is at the forefront of everything we do. Our health and safety programme is called Ora, which means life, health, vitality, and wellbeing in Te Reo Maori, and we believe that is what is most important for all of us at Silver Fern Farms. We are committed to continually reducing our Total Recordable Injury Frequency (TRIF) rate from 7.5 per 200,000 hours worked in At year-end 2017 we had a TRIF of 6.7. Backing our Ora programme is our Ora Runanga (governance council). It represents our people from across the business and is made up of board members, plant staff, health & safety staff, office staff, and health and safety representatives. We strive to make sure we have safe machinery in our processing plants, to ensure our people use the right protective equipment so they can work safely, and to make sure all risks are known about and reduced. More than this, we are creating a culture where people look after themselves, and each other. In 2017 Silver Fern Farms announced the Plate to Pasture Youth Scholarship programme. The Plate to Pasture Youth Scholarships are awarded annually from a $30,000 scholarship fund set up to support young people who want to further a career in the food and farming industry. By the end of 2020 we aim to have supported 24 young people with $120,000 in funding towards polytechnic and university course fees, farm cadet training courses, food courses, conferences and other study and training opportunities that will help them realise their food career goals. The Plate to Pasture Youth Scholarship supports our vision: Inspirational Food created by Passionate People, and we look forward to seeing New Zealand s emerging talent taking up this opportunity to help them develop their passion for food. 15

18 02 SUSTAINABLE FUTURE FOR FARMERS 2020 BUSINESS STRATEGY GOAL Differentiate livestock supply by leading in service, brand & value-add programmes Why we care To be a sustainable food producer we need strong partnerships with our Silver Fern Farmers. Aspirational 2020 Goal - what success looks like Partnering with farmers to be successful for generations to come where they see our success as an extension of their own. The following initiatives help us achieve our goals: We strive to provide market leading service, competitive livestock payments and market-linked value added supply programmes Targets Increase supplier loyalty through a competitive and valued service offering Measured by: an increase in suppliers involved in programmes, an increase in programme scale, and an increase in premiums returned to farmers. Our progress ,153 farmers involved in market-linked, value-added supply programmes a 29% increase Over 1.2 million stock units were supplied across market-linked value added supply programmes a 13% increase This represented over 30 percent growth on the prior year $4m in programme premiums were paid to suppliers of this high quality product. 16

19 CREATING STRONG PARTNERSHIPS WITH OUR SILVER FERN FARMERS We have a supply chain from customers through to our farmer producers. Ensuring a sustained supply of lamb, beef and venison from our Silver Fern Farmers is crucial to the creation of food, and the ongoing success of Silver Fern Farms. In 2017, the company offered programmes for Silver Fern Farms Reserve Beef, Angus Beef, Venison and an Antibiotic Free US Lamb programme. Over 1.2 million stock units were supplied across these programmes. This represented over 30 percent growth on the prior year. In excess of $4m in programme premiums were paid to suppliers of this high quality product. The company is evolving these programmes further. The Silver Fern Farmers 100% Standard Programme has been introduced to support attributebased sales programmes targeting customers who want, and will pay a premium for, a 100% guarantee of product which is grass-fed (whole of life), antibiotic free, with no added hormones, is GMO free and has not been raised in a feedlot. We look forward to growing the scale of this programme in coming years. The Silver Fern Farms Co-operative s shareholder supplier benefits programme is another important initiative to differentiate livestock supply by rewarding loyal supply from Co-operative shareholders and to incentivise non-shareholder suppliers to become shared-up loyal suppliers. This is an important, long-term initiative to differentiate livestock supply. 17

20 03 FOOD SAFETY AND QUALITY 2020 BUSINESS STRATEGY GOAL Ensure we have the best chain of care in New Zealand Why we care People need safe, high quality food from food producers they can trust. Aspirational 2020 Goal - what success looks like Be recognised as a leading global producer of safe, high quality grass-fed red meat with integrity from farmer to consumer. The following initiatives help us achieve our goals: We have highly effective systems, processes and equipment to ensure food safety which are independently verified and certified Targets Maintain our 100% record for food safety. Our progress 2017 We maintained our 100% record for food safety in 2017 with zero food safety recalls. 18

21 TRUST YOU CAN TRACE BACK TO NEW ZEALAND Oritain is an independent company that works with Silver Fern Farms to scientifically prove, for our customers safety, that the origin of the product they are purchasing is New Zealand. Scientifically proving the origin of food products to protect brands from fraud, Oritain measures the naturally occurring elements inside the food to verify it is true to its origin claim. Because these elements are impacted by the environment in which the food grows and the characteristics of that environment differ geographically (water, sun, soil), Oritain can identify where it comes from. This is a powerful tool that, unlike a product s packaging, cannot be tampered with. The Oritain fingerprint mark on each of our beef packs symbolizes that the quality cut of grass-fed beef inside is a certified New Zealand product, grown on New Zealand pastures and brought to you by Silver Fern Farms. 19

22 04 OPERATIONAL EFFICIENCY 2020 BUSINESS STRATEGY GOAL Ensure we have the best chain of care in New Zealand Why we care Aspirational 2020 Goal - what success looks like By operating responsibly and efficiently we can lower our environmental footprint. Be a leading red meat processor in operational efficiency using energy, water and resources efficiently and minimising waste. The following initiatives help us achieve our goals: All sites have water use, energy use and waste reduction targets By the end of 2018 we will have a carbon reporting programme which independently verifies our carbon emissions Targets 10% reduction in water, energy use and waste to landfill per Kg of product produced By 2030 we will reduce the GHG emissions intensity of our operations by tonne of product on 2005 levels by 30%. Our progress 2017 Water Achieved a 7.4% reduction in water/kg product on 2016 levels. Energy Achieved a 3.9% reduction in energy use/kg product on 2016 levels. Landfill While all of our sites have a range of waste reduction and recycling initiatives, we are currently working on implementing a system to accurately calculate this target and will report on this metric in our 2018 report. 20

23 PLASTIC THE BALANCE BETWEEN FOOD SAFETY, FOOD WASTE AND RESPONSIBLE USE We are aware of the growing public concern around the damaging impact plastic has after its use on our environment and wildlife. Protecting chilled meat for international export, across multiple formats for retail consumers, and the restaurant trade at a level of hygiene required to maintain shelf-life is challenging. We use protective plastic films on many of our items to ensure the food safety of our product for the duration of its intended shelf-life. We also use packaging to prevent spoilage and food waste, which according to the UN is a greater problem than packaging. UN research shows one-third of all food produced for human consumption around the world is wasted*. Food waste is a waste of resources through the supply chain from the use of nutrients, land, water, energy and other inputs for no gain. While plastic currently serves a purpose of reducing food waste, we have made progress on reducing our plastic use in a variety of ways. Our primary focus is on reducing the material inputs entering our supply chain, followed by activities related to making our materials more recyclable, or made from recycled materials. We are working with our product packaging suppliers, so that in time we can transition to alternative packaging materials that can perform the meat shelf-life requirements we are asking of our films. In many of our frozen beef product ranges we have worked alongside customers to remove plastic carton liners. This initiative has reduced approximately 4.5 tonnes of plastic from our supply chain each year. For other customers we have reduced the total tonnage of plastic by changing to thinner, higher performance plastic film. In 2016 we down-gauged wrapping film which saved 19.3 tonnes of plastic per year. We also started to measure total plastic used with suppliers of plastic packaging to Silver Fern Farms, with the aim to track the downward trend of plastic use without sacrificing food safety, shelf-life and creating food waste. *Read about food waste on the UN FAO s website at 21

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25 OPERATIONAL EFFICIENCY AND OUR CARBON EMISSIONS WE HAVE COMMITTED BY 2030 TO REDUCE THE GHG EMISSIONS INTENSITY OF OPERATIONS BY 30% ON 2005 LEVELS. THIS IS IN-LINE WITH THE PARIS ACCORD ON CLIMATE CHANGE. By the end of 2018 we will have a carbon reporting programme which independently verifies our carbon emissions. This will help us measure and track our progress and take action to achieve this goal. We committed to the 2017 Climate Change Leadership Statement. In doing so we committed to the following: We measure our greenhouse gas emissions and publicly report on them We work with our suppliers to reduce their greenhouse gas emissions We believe the transition to a low emissions economy is an opportunity to improve New Zealand s prosperity We support the Paris Agreement & New Zealand s commitment to it We support the introduction of a climate commission and carbon budgets enshrined in law. We set a public emissions reduction target consistent with keeping within 2 of warming 23

26 05 WASTEWATER MANAGEMENT 2020 BUSINESS STRATEGY GOAL Ensure we have the best chain of care in New Zealand Why we care Clean water is highly valued by our people and the communities we live in. Aspirational 2020 Goal - what success looks like Treat our wastewater effectively going beyond compliance with respect for the environment. The following initiatives help us achieve our goals: All plants have wastewater quality improvement and reduction targets supported by operational plans Targets 10% reduction in wastewater per kg of product produced. Our progress 2017 We achieved a 1.76% reduction in wastewater per kg of product produced compared to 2016 During 2017, across Silver Fern Farms operations there were no environmental incidents that caused adverse environmental effects on the receiving environment, or those that resulted in regulatory enforcement. 24

27 MANAGING OUR WASTEWATER While our systems have been designed to operate within their legally defined consents, we know we need to do more on how we treat our wastewater. Investment in this area is significant with wastewater systems costing tens of millions to build. It is an area that requires long-term planning and investment, which we are currently assessing and committing to where we have proven and effective systems. In 2017, we made good on our promise to cease the use of our emergency consent to discharge treated wastewater from our Belfast site to the Waimakariri River in Christchurch. Following repairs, in December 2017, a year ahead of the expiry of the consent, we relinquished this emergency wastewater discharge consent. We did not need to use it during the consent period. All of our wastewater is now treated exclusively via the Bromley city system and we have no means of discharging treated wastewater to the Waimakariri. While this is a small step at one of our sites, we understand clean water is highly valued by our people and the communities we live in, and we will continue to make progress in this area across our business. When we applied for the renewal of this consent in mid-2014 following the Christchurch earthquake we discussed with the public the need for it as an emergency measure only in times of Christchurch City Council (CCC) system flooding. 25

28 06 ANIMAL TREATMENT AND WELFARE 2020 BUSINESS STRATEGY GOAL Ensure we have the best chain of care in New Zealand Why we care As a food producer, it is essential to have systems which ensure the care and respect for the welfare of animals through our chain of care. Aspirational 2020 Goal - what success looks like Demonstrate respect and care for the animal with best practice throughout the supply chain. The following initiatives help us achieve our goals: Agree to the National Farm Assurance Standards and implement by Targets 100% of livestock in market-linked programmes accredited to the National Farm Assurance Standards. Our progress 2017 We agreed to the NZ National Farm Assurance Standards (NZFAP). These replace our company Farm Assurance programme. 98.8% of farmers supplying programmes are Farm Assured up 3.9% on 2016 By 2020 all farmer suppliers will be accredited under the NZFAP. 26

29 NZFAP INDUSTRY COLLABORATION ON A NEW STANDARD FOR FARM ASSURANCE The objectives of the new single industry New Zealand Farm Assurance Programme (NZFAP) are to lift industry standards and remove duplication and costs of having multiple different company specific assurance programmes. Farm Assurance provides customers and consumers with an assurance of the integrity, origin, traceability, biosecurity, environmental sustainability and animal health and welfare elements behind the product. The NZFAP is a JAS-ANZ recognised assurance scheme for process and product verification (ISO17065). It is part of the Red Meat Profit Partnership funded by the government s Primary Growth Partnership. Silver Fern Farms adopted the New Zealand Farm Assurance Programme (NZFAP) in Silver Fern Farms Farm Assured suppliers will transition to the New Zealand Farm Assurance Programme over a three-year transition period as their three-yearly independent AsureQuality audit falls due. 27

30 07 MARKET ACCESS 2020 BUSINESS STRATEGY GOAL Ensure we have the best chain of care in New Zealand Why we care Fair access to global markets enables us to maximise returns for our natural, grass-fed red meat and co-products. Aspirational 2020 Goal - what success looks like Position our plants to access key markets through industry leadership working with our peers, industry bodies, governments and other partners. The following initiatives help us achieve our goals: We are developing a Market Access Plan to extend high-level relations with government and key market regulators to ensure our market access objectives are achieved efficiently and effectively Targets Viewed as a trusted partner by Government and industry bodies through involvement in brokering trade agreements and involvement in trade visits. Our progress 2017 In 2018 we are introducing a stakeholder survey to assess an external view of our contribution and performance. 28

31 CREATING OPPORTUNITIES TO ACHIEVE HIGHER MARKET RETURNS Opening access to higher-returning markets around the world is essential if we are to extract sustainable returns for our products. In 2017 Silver Fern Farms participated in the New Zealand and China Government sponsored chilled meat trial. The trial was designed to test chilled red meat access into the China market, which at that point only received New Zealand product in frozen form. Products in chilled form traditionally return a premium over frozen items. Silver Fern Farms had two plants in the 10 plant trial. We successfully exported chilled beef and lamb to a range of existing and new customers in order to trial the chilled supply chain from plant to customer. The country trial was considered a success and the industry is awaiting full accreditation of further plants. This will provide opportunity in food service and retail to deliver premium fresh product as the company currently does to a number of countries around the world. 29

32 08 FINANCIAL PERFORMANCE 2020 BUSINESS STRATEGY GOAL Deliver sustainable profitability Why we care Our goal is to be sustainably profitable over time so we can deliver on our vision of inspirational food created by passionate people. Aspirational 2020 Goal - what success looks like Achieve a sustainable return on capital employed to provide for reinvestment and the payment of dividends to shareholders. The following initiatives help us achieve our goals: Silver Fern Farms has developed a strategy to deliver on our purpose which is to profitably and sustainably add value to New Zealand s natural grass-fed red meat Targets Four years of profits and dividends. Our progress 2017 Silver Fern Farms Limited for the 12 month period ended 31 December 2017: Net profit after tax of $15.4m $12m dividend to shareholders Earnings before interest, tax, depreciation, abnormals and amortisation (EBITDA) including share of associate earnings of $50.9m Sales of $2.2 billion Return on capital of 3.8%. 30

33 MEMBERSHIPS We are active members of the following associations and groups, which inform our approach to sustainability issues in our sector: Sustainable Business Council of New Zealand Climate Leaders Coalition Meat Industry Association New Zealand Deer Industry New Zealand Sustainable Wealth Initiative Agricultural Leaders Health and Safety Action Group New Zealand Food Safety Science & Research Centre Red Meat Profit Partnership 31

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