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Our Commitment to Sustainability

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Our Commitment to Sustainability 2 014 Our Commitment to Sustainability We deliver the promise of dairy.TM WELCOME TO HILMAR CHEESE COMPANY Making cheese and whey products that contribute nutrition, enjoyment and value to people’s lives. Founded by 12 local dairy farming families and still privately held by those families, Hilmar Cheese Company, Inc. produces cheese and whey products that nourish more than 20 million people worldwide each day. From the shredded cheese in tacos to the whey protein and lactose in infant formula, Hilmar Cheese Company and our division, Hilmar Ingredients, deliver the promise of dairy to consumers around the world. ABOUT OUR COVER CONTENTS Reflecting our commitment to the environment, The Company the community and our employees Letter from CEO 3 Our History 4 LEED Platinum® Dedication Our Mission 5 with the California Department of Food Goals and Progress 6 Agriculture Secretary, Karen Ross Environmental Stewardship 8 Employees 10 100% of Our Economic Value 12 Reclaimed Water On the Farm 13 Community Engagement 14 is recycled and reused, most 100% of the for crop irrigation Dairy Farm SCOPE OF THIS REPORT Families This report for calendar year 2014 is our fifth annual report. It reflects total company efforts from our Dalhart, Texas, manufacturing site; and Hilmar, who have supply California, manufacturing site and Headquarters & Innovation Center. agreements with Hilmar Cheese Company are This report follows the industry-adopted Stewardship and Sustainability Guide certified participants for U.S. Dairy (www.usdairy.com), a voluntary framework for tracking and in the Farmers $42,000 29 Students communicating progress. It also incorporates the methodology outlined by the Assuring Responsible Global Reporting Initiative (GRI), a nonprofit organization that develops and raised for American received college ManagementTM animal publishes guidelines for reporting on sustainability performance. A third Cancer Society scholarships from care program and component supports the principles important to our customers. While some during Hilmar Cheese particpated in FARM information in this report may have been audited, the complete report has not Relay for Life Company workshops been audited and is not guaranteed. This report is not intended to be a solicitation or advertisement for the sale of Hilmar Cheese Company or Hilmar Ingredients products. The information presented reflects data collected for 2014 More about our sustainable practices can be found at hilmarcheese.com. 2 A LETTER FROM OUR CEO We’re celebrating an anniversary. Thirty years ago, 12 dairy farm families pooled their resources to start Hilmar Cheese Company, Inc. These farmers had strong family values – honesty, hard work, integrity, treating others fairly and always striving to improve. From these families’ dream and their values, the company has grown into a strong, modern business that uses new technologies to develop nutritious dairy products designed to add value for global customers. This is our fifth corporate sustainability report. Through this process, we recognize our accomplishments and make plans for improvement. Highlights this year include: • LEED Platinum® dedication of our corporate Headquarters & Innovation Center. LEED® (Leadership in Energy and Environmental Design) is the nationally accepted benchmark for the design, construction and operation of high- performance green buildings. LEED Platinum® has the most demanding building parameters. Construction of Turlock, CA, Manufacturing Plant • Construction began on our milk powder Richard Clauss and John Jeter plant in Turlock, California • Reduction in total water use at our facilities thrive and grow under David’s dedicated and experienced leadership and Jim’s thoughtful The years have brought great transformation guidance. to our company, yet we have much more to do. Helping to move us into the future is a planned I invite you to look through this 2014 report leadership transition. After serving for thirty and learn about other ways we are working for years, Richard Clauss, chairman of our board, the future. has passed this role to the experienced hands of Jim Ahlem, another founding board member. I also have plans to retire in 2015 and transition my role to David Ahlem, currently our COO. I am confident the company will continue to John Jeter 3 OUR FAMILY-OWNED COMPANY Hilmar Cheese Company owners and families OUR HISTORY In 1984, 12 Central California dairy farm families, seeking to maximize the value of their Jersey cows’ premium milk, created Hilmar Cheese Company, Inc. They invested heavily in research, the latest technology and employee excellence – a practice that continues to guide the privately held company today. A true “American Dream” business story, Hilmar Cheese Company becomes Hilmar Cheese Company was founded the largest single-site cheese by 12 dairy farm families processor in the world Constructed facilities to further Added additional process whey proteins (1992) New Visitor Center cheese processing and lactose (1994) opened 1984 1990 1992 1994 1996 1998 4 SUSTAINABILITY, PART OF OUR LEGACY HILMAR, CA, facilities OUR MISSION Commitment to sustainability is a core element of the mission statement that Hilmar Cheese Company follows: Through leadership-driven, high-performance teamwork, Hilmar Cheese Company and DALhARt, tX, FaciLity Hilmar Ingredients develop and convert in a sustainable manner our premium milk supply into innovative, top-quality dairy products for customers worldwide who further add value in their markets. turlock, CA, faciLity A new milk receiving 100% of dairy farm families who area was built to improve have a supply agreement with efficency and accommodate Grand opening of Texas Hilmar Cheese Company are Headquarters & Innovation Center additional milk trucks manufacturing site FARM certified for dairy animal care opens and is designated LEED Platinum® Launched Hilmar Hilmar Ingredients is Ingredients to market named Dairy Exporter Production of lactoferrin, whey products of the Year a bioactive whey protein 2000 2004 2007 2009 2011 2013 2014 5 GOALS AND PROGRESS Category Focus Goals 2014 Progress Future Plans Environmental Recycled 100% of reclaimed water 100% of reclaimed water recycled Increase total amount of Stewardship Water for is recycled for facility for facility landscaping, crop reclaimed water recycled Irrigation landscaping and irrigation and internal reuse for irrigation crop irrigation Well Water Minimize the amount 26% decrease in amount of well Continue with projects to further Use Reduction of well water used water used per thousand pounds reduce amount of well water used for production of production from 2013 for production Renewable 100% of the internally 59% internally generated biogas Increase amount of internally Energy available biogas (methane) (methane) was used as a fuel generated biogas (methane) used as a fuel source source in boilers; increase of 96% for use as a fuel source; in the amount of biogas produced continue to evaluate renewable over 2013 energy opportunities Energy Continually reduce 5% decrease from 2013 in total Identify areas to Efficiency energy use amount of natural gas used per implement improvements thousand pounds of product; 4% decrease from 2013 in total amount of electricity per thousand pounds of product Air Emissions Decrease the amount of total amount of greenhouse (GhG) Evaluate renewable energy greenhouse (GhG) direct direct emissions per thousand options to reduce GHG emissions emissions per thousand pounds of product remained pounds of product virtually consistent with 2013 Solid Waste Recycle and reuse to Bailing equipment added Continuous improvement Minimization create zero waste from to recycle plastic wrap in waste reduction the material stream Package Minimize product Reviewed alternative packaging Work with suppliers Minimization packaging while to continually improve maintaining quality packaging efficiency and material integrity Supplier Develop and maintain Reviewed sustainability Implement updated supplier Responsibility relationships with programs of key production audit system suppliers who have similar material suppliers sustainability goals Transportation Reduce miles Changed to 12-hour shifts Fully utilize options to reduce reducing employee transportation impact of transportation Supplier Dairy Develop and maintain Created Dairy Animal Care team, Purchase milk from dairy farms Responsibility relationships with supplying provided workshops for dairy who make a priority of sustainability, dairy farms who farmers, completed dairy FARM animal care and quality milk responsibly provide the reviews and provided annual highest quality milk recognition for quality 6 GOALS AND PROGRESS CCategoryategory F Focusocus GoalsGoals and Timing P2014rogress Progress FFutureuture Planslans Employees Safety Decrease incidents 3% decrease in overall total Continue to implement proactive of workplace injuries workplace injuries safety programs and continue emphasis on safe work practices Training Utilize best training Established new training team Update training program programs and methods and updated program Tuition Prepare employees for new Reimbursed more than Expand program to further roles and advancement $97,000 in educational fees develop talent CCategoryategory Focusocus GoalsGoals and Timing P2014rogress Progress FFutureuture Plans Economic Jobs and Stimulate local economy Added 70 positions and started Continue business success for Local Support construction on a new milk contribution to local economies
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