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SUSTAINABILITY REPORT vol 1 Sustainability is something that has been part of our family for generations. The word sustainability has had many meanings over the years and it continues to evolve. Being the fourth generation of Roys on our property brings with it special opportunities joys and responsibilities. We have tilled the land for well over one hundred years. Im honored as CEO to continue to see the land produce and see multiple generations of families helping to work the soil side-by-side with us. It is with great pride that I present to you our first sustainability report. It documents those things which we do naturally to sustain our family our employees families the environment around us and the landthe people and environment that makes us who we are. Leslie Roy CEO THE CEO LETTER PAGE 2 THE FARM ABOUT ROY FARMS........................................................................................5 PRODUCTS SERVICES................................................................................9 HOPS.............................................................................................................. 11 HARVEST FRESH PELLETS.......................................................................13 APPLES...........................................................................................................15 CHERRIES......................................................................................................17 BLUEBERRIES...............................................................................................19 BUSINESS OVERVIEW..................................................................................21 THE MISSION WHAT SUSTAINABILITY MEANS...................................................................23 WHY SUSTAINABILITY...................................................................................25 HOW SUSTAINABILITY HAPPENS................................................................27 TRACEABILITY...............................................................................................29 QUALITY SAFETY STANDARDS................................................................31 CERTIFICATIONS...........................................................................................33 THE PRACTICE PROCUREMENT............................................................................................37 STAKEHOLDER ENGAGEMENT...................................................................39 ENVIRONMENTAL STEWARDSHIP...............................................................41 SOFT FARMING..............................................................................................43 IRRIGATION....................................................................................................45 ORGANICS AOHGA ...................................................................................47 ORGANICS PROGRAM..................................................................................49 ENERGY.........................................................................................................51 GREEN BUILDING..........................................................................................53 WASTE MATERIALS...................................................................................55 BIODIVERSITY...............................................................................................57 LIFE CYCLE ASSESSMENT EXECUTIVE SUMMARY.................................59 LIFE CYCLE ASSESSMENT KEY FINDINGS................................................61 THE PEOPLE INDUSTRY CHALLENGES.............................................................................63 HEALTH SAFETY........................................................................................65 CAREER ADVANCEMENT AND EDUCATION...............................................67 BUILDING COMMUNITY................................................................................69 EMPLOYEE ENGAGEMENT..........................................................................71 COMMUNITY..................................................................................................73 THE SUMMARY THE TABLE OF CONTENTS PAGE 4 ABOUT ROY FARMS The story of Roy Farms begins in the dirt. In 1907 Joseph Roy bought 20 acres of land in Moxee WA and began to till the earthplanting hops and raising cattle. The Roy children were raised living and breathing the farm falling asleep at night to the sound of machinery. Driven by an adventurous spirit the family was determined to make something special out of the land. And through the generations the Roy family farm grew. What was once a small plot is now one of the highest quality producers in the country. Over the last century our farm has grown and our crops have changed but that original spirit remains. We are still determined to create something special from the earth. For 100 years we observed the natural characteristics of the valley around us and watched as markets grew or fell. And when it came we recognized the opportunity to plant a new crop or broaden our services. To date we expanded our operations to include apples cherries blueberries on-site storage and processinghops of course remain our legacy crop. Through it all we continue to be family-owned and operated. Our vision though is bigger than our farm. We seek to consistently improve agriculture for the good of all stakeholders without compromise through premium products services and a great work environment. To us doing what is right and doing what is profitable are one in the same. We take care of our employees our community and the land on which we farm. THE FARM VISION STATEMENT To consistently improve agriculture for the good of all stakeholders without compromise ... through premium products services and a great work environment. PAGE 6 ROYS 1ST HOP HARVEST BECAME INCORPORATED AS ROY FARMS INC. STARTED SELLING HOPS DIRECT TO BREWERS PLANTED APPLES HELPED PIONEER CONVERSION TO DRIP IRRIGATION IN HOPS PLANTED CHERRIES CONVERTED HOP KILNS TO NATURAL GAS BUILT FIRST COLD STORAGE FACILITY FULL TIME SAFETY OFFICER ACROSS ALL DIVISIONS GLOBAL G.A.P. CERTIFIED APPLES CHERRIES 1907 1966 1975 1978 1982 1983 1985 1986 1993 2005 THE FARM STARTED CONVERSION OF GASOLINE TRUCKS TO PROPANE FINISHED CONVERSION OF GASOLINE TRUCKS TO PROPANE GLOBAL G.A.P. CERTIFIED BLUEBERRIES IMPLEMENTED ADVANCED IRRIGATION TECHONOLOGY PROTOCOL PROPRIETARY IN NORTH AMERICA IQF FACILITY STARTED CONVERSION OF ALL BLUEBERRIES TO ORGANIC 1ST GLOBAL G.A.P. CERTIFIED HOPS IN USA LIFE CYCLE ASSESSMENT ON HOPS SQF CERTIFIED IQF FACILITY 1ST SQF CERTIFIED PELLET MILL GLOBALLY 1ST FULL SPECTRUM LCA ON HOPS IN USA INSTALLATION OF 1ST SOLAR PANELS STARTED ON-FARM HOP PELLETTING HARVEST FRESH PELLETS PLANTED BLUEBERRIES 2007 2010 2011 2012 2013 2014 2015 PAGE 8 PRODUCTS SERVICES Roy Farms prides itself on growing premium crops hops both alpha and aroma varieties apples blueberries and cherries by developing and implementing new farm technology that enhances harvest yields reduces labor and improves the quality of all our crops. Roy Farms also provides on-site processing. For hops we are capable of both hop baling and pelleting on-site offering from field to pellet in 36-48 hrs. We currently have three hop-production facilities in Moxee WA and one in Toppenish WA with grow sites in each location. On the fruit side our IQF Individually Quick Frozen facility produces high-quality frozen sweet cherries. This process locks in nutritional content color extends shelf life and reduces food waste. Our IQF facility operates under strict SQF Safe Quality Foods certification and guidelines. Warehousing processing and pelleting allow us to provide unique benefits for our industry partners our customers and ourselves. We provide storage opportunities such as drenching or dipping for apples hydro-cooling for cherries controlled atmosphere rooms cold rooms freezer rooms and dry storage for our products our supplies and our customers storage needs. THE FARM guiding principles human and food safety community and environmental stewardship employee empowerment innovation and creativity PAGE 10 HOPS Hops are our legacy cropthey started it all. The hop plant is a bine or climbing plant that produces cones which are primarily used as a flavoring and stability agent in beer. We produce varieties in every classification super-alpha high- alpha aroma and dual purposehigh alpha with unique desirable aroma properties. Hops are fast growers. They shoot aboveground in early May and race up to nearly 20 feet by July. Cones reach maturity in late August for the aroma crop and late September for super-alpha or bittering hops. At harvest hop bines are cut from their trellises and transported to the picking facility. Hop cones are separated from bines and sent to what are called hop kilns. Here cones are gently dried to remove most of their moisture before being sent to a cooling room for stabilization. Once hops are cool they are either compressed into bales or sent to the pellet mill for processing. VARIETIES In order to focus on high value products we grow both public and propriety varieties. Roy Farms is committed to the continual development of new hop varieties and weve contributed to the development of several unique new varieties through our part ownership of the ADHA American Dwarf Hop Association. As owners of the ADHA our breeding program has produced several new varieties including Summit Azacca Jarrylo and most recently Pekko. THE FARM 25.7 PROPRIETARY 7.0 LOW TRELLIS 4.9 ORGANIC 24.7 CASCADE 15 CENTENNIAL 13.8 OTHER 10.5 CTZ 10.3 CHINOOK committed to the continual development of new hop varieties PAGE 12 HARVEST FRESH PELLETS QUALITY In 2007 we introduced our Harvest Fresh Pellets brand. The pellets and the process to produce these pellets were designed to be a more efficient pellet for dry hopping. On a typical farm dried hops are compressed into bales shipped to merchants and then placed into cold storage before being converted into pellets. Those long delays with exposure to oxygen allow for unwanted oxidation and the decline in desirable aromatic properties. At Roy Farms we skip the baling process completely and pellet directly from the cooling room. Thats right. Picked dried pelleted packaged and in to cold storage all within 36-48hrs of harvest. This condensed process allows us to minimize oxidation while preserving the volatile components responsible for aroma and fresh hop flavor. We are proud to say that Harvest Fresh Pellets provide un-paralleled freshness every time you open a box. CARBON-FOOTPRINT The indirect benefit of a vine-to-pellet approach is the reduction of our carbon-footprint. By removing the baling process we are not only reducing the amount of energy and waste used to create and store the bale but also reducing the carbon emissions created in the transportation and storage of the bale while it is waiting to be pelletized. THE FARM MINIMIZE OXIDATION WHILE PRESERVING THE VOLATILE COMPONENTS RESPONSIBLE FOR AROMA AND FRESH HOP FLAVOR PAGE 14 APPLES Moxee located in the Yakima Valley is well suited to the apple production indus- try which is why we chose to diversify in 1978. We currently grow more than half a dozen varieties with an emphasis on high-value proprietary varieties. Strong relationships with global breeders and marketers allow us to continuously choose new apple varieties based on consumer demand. Apples require ongoing limb training and pruning to aid with efficient picking and allow nutrients to be focused on growing fruit. Nutrients are delivered with drip irrigation to carefully manage tree health while avoiding loss of water. Each apple variety has a particular harvest window from late summer through early fall. Our careful pruning pays off at this stage as workers can safely pick apples without excessive maneuvering. Apples are placed in pickers pouches and then placed into large food safe bins where they are carefully arranged to avoid bruising. Picked apples are taken to a drencher to remove field heat and receive preliminary cleaning. From there they are stored in refrigerated controlled atmosphere storage before being deliver to the packing house for final packaging. Mark Roy OwnerVice President Fruit Division Manager Curtis Roy Fruit Field Foreman THE FARM 27 GALA 19 ENVY 18 JAZZ 6 GRANNY SMITH 5 FUJI 25 HONEYCRISP Emphasis on High Value Proprietary Varieties PAGE 16 CHERRIES Washington leads the U.S. in sweet cherry production providing 45 - 55 percent of the nations production. We diversified into cherries in 1983 starting with dark red sweet cherries. We later added blush Rainier cherries to our acreage to meet the complete range of demand and quality requirements of the premium fresh market. We work to optimize planting density to soil type and topography. Appropriate trellising works to maximize cherry color sugar content and minimize disease and insect problems. We pay special attention to that process. Close monitoring tells us when cherries are ready to be picked. Washington cherry harvest is spread over a total of 45 days. Most cherries in the U.S. are bought and eaten around the Fourth of July so our harvest window is usually more like two weeks. Dark red cherries are picked into pouches then layered carefully into shallow food safe bins to avoid bruising. These bins hold only about 150 poundsdeeper heavier loading would cause crushing of the berries. Rainiers our blush type and the sweetest of all cherries are even more delicate. These are placed in flats of 15 to 20 pounds for their trip to the warehouse. At our warehouse and cold storage facilities the fruit is passed through a hydro-cooler for rapid chilling and rinsing prior to delivery to our IQF facility for processing or to the packing house for storage and final packaging. THE FARM 22 SKEENA 11 EARLYROBIN 10 CHELAN 7 BING 6 RAINIER 18 SWEET HEART 14 LAPIN 12 BENTON Washington leads the U.S. in sweet cherry production PAGE 18 BLUEBERRIES The blueberry market in the U.S. has doubled over the last 10 years primarily due to health attributes like antioxidants and vitamin C. Roy Farms contributed to this growth when we planted our first acreage in 2010. We grow northern high bush blueberries which are planted in raised beds covered in weed mat to reduce the need for herbicides. Similar to hops and apples our blueberries receive only the nutrients they need through careful drip irrigation targeted at the root zone where they can be absorbed. LABOR REDUCTION The covered raised beds in which our berries are grown not only eliminate the use of herbicides in the root zone but also eliminate much of the hand labor other- wise required for weeding. Roy Farms blueberry plots are carefully configured to facilitate gentle mechanical harvesting allowing us to reduce harvest labor and minimize damage to the fruit. THE FARM Our transition from conventional to organic blueberries began in 2013... Certification will begin in 2016 with all acreage certified organic by 2018 PAGE 20 BUSINESS OVERVIEW Our business philosophy at Roy Farms is rooted in a relentless commitment to quality pursuit of leading-edge technology a holistic outlook on sustainability and dedication to building long-term relationships with our employees customers and suppliers. Our hop customer base ranges between 55 to 60 breweries or merchants that we work with directly. The hop market is extremely dynamic. We aim to always remain agile so we can quickly respond to changes. In the past four years our portfolio has almost entirely shifted from being primarily composed of international sales to being mostly domestic due almost entirely to the huge growth in the craft beer market. This switch required substantial investments but we are dedicated to providing exactly what our customers want. We strongly believe in only doing something if you can do it best. Thats why we deal exclusively with a small group of marketers for our fruit sales because they are better positioned to deliver our product exactly where it needs to go. In terms of direct sales we stick to what we know besthops. THE FARM TO PUT IT SIMPLY OUR REASONS FOR PURSUING SUSTAINABILITY ARE TO MEET THE NEEDS OF OUR CUSTOMERS TO BE A LEADER IN SOCIAL AND ENVIRONMENTAL PRACTICES TO BE HERE IN ANOTHER HUNDRED YEARS PAGE 22 WHAT SUSTAINABILITY MEANS Its more than just a buzzword. It has always been woven into our way of doing thingseven though we didnt always have a name for it. Our farming practices involve finding that sweet spot between art and science. We balance our innate connection to the land and ability to read its needs with rigorous data tracking and analysis. This combination of heart and head allows us to work with nature rather than trying to control it. We recognize that at our core we are an entirely human organization. We value our employees like family and are extremely relationship-driven. Relationships with employees suppliers and customers are long-term for us. Sustainability then encompasses all we do cultivate strong human relationships deliver top-quality products and protect our natural world. THE MISSION cultivate strong human relationships deliver top-quality products and protect our natural world PAGE 24 WHY SUSTAINABILITY Why are we so focused on sustainability We believe local actions can have a global impact and we have the opportunity to lead. We understand that issues like climate change can have a substantial impact on our business. Extreme weather like higher temperature or drought will impact our yields. Many weeds pests and fungi also thrive under warmer conditions. We aim to pro-actively defend our crops against these future threats by establishing more sustainable practices today. TRANSPARENCY Roy Farms sees great opportunity in sustainable agriculture. More customers are asking for responsibly grown products and are demanding transparency. Consumers want to know where their food and drinks come from how they were grown and produced. By committing to industry leading environmental and social practices we are not only doing the right thing but also meeting the demands of our customers customer. THE MISSION We believe local actions can have a global impact and we have the opportunity to lead PAGE 26 HOW SUSTAINABILITY HAPPENS Sustainability is woven into everything we do at Roy Farms. Our JuniorSenior Management Team plays a large part in integrating and managing our sustainability strategies. Roy Farms JuniorSenior Management is comprised of representatives from a variety of departments including food safety sustainability marketing sales operations human resources corporate governance and accounting. Our employees as a whole are an integral part of our sustainability strategy process. We host multiple trainings each year to demonstrate to employees and managers how sustainability fits in to their department and directly applies to their job. In addition to providing examples we use this time to solicit feedback and ideas that can be incorporated into our program. Employees are encouraged however to share ideas that improve efficiency performance sustainability or cost savings at any time throughout the year. We believe that the people with the best ideas for making our operations more sustainable are the ones touching our products every day. THE MISSION JUNIOR SENIOR MANAGEMENT TEAM Carman McKinney Food Safety Sustainability Manager Justine Malland Marketing Coordinator Jim Boyd Vice President Hop Sales Sean Benson Hop Operations Manager Alicia Gagne Human Resources Manager Michael Roy OwnerSecretaryPresident of Hop Blueberry Operations Melissa Stiles Assistant Controller PAGE 28 TRACEABILITY For the past decade our customers began to ask more questions regarding how our crops are raised reflecting a demand for the same knowledge by consumers. Roy Farms believes in transparency and traceability. We want our customers and the end-consumers to know exactly what goes into our products. CROPS We record information about our crops at every stage of growing and processing including the fields they come from which chemicals have been applied how much when and how close to harvest. This allows our customers to trace 100 percent of our crops back to their field origin and chemical treatment a level of transparency not always common in todays food market. QUALITY Traceability is also important in maintaining the quality of our products. In order to recreate a high yield or high quality crop year after year we must be able to retrace the steps that we took to create it. Additionally to protect the integrity of our product we must be prepared in the event of a prod- uct recall. In the event of a recall we are able to trace the product back through its life cycle on the farm. This minimizes risk for our customers and us. FARMING HARVESTING PROCESSING PACKAGING STORAGE SHIPPING TRACEABILITY THE MISSION Centralized database accessible to all managers farm wide whether in the field or in the office PAGE 30 QUALITY SAFETY STANDARDS One of our highest priorities is to deliver exactly what our customers need under the most stringent food quality and safety standards. When we think of food quality we typically think of the inspection of finished products but the process starts much earlier for us. We utilize Hazard Analysis and Critical Control Points HACCP for all of our products. HACCP The name may sound daunting and the process can be but the underlying goal is simple analyze and control all risks biological chemical or physical all the way from growing harvesting processing storage and shipment of our products. Our dedicated HACCP team reviews all processes identifies control points and develops plans to reduce risks and keep quality high. Reviews are conducted annually or when a process step changes. Our HACCP plans are audited and certified annually under strict 3rd party certification programs. While we have an almost instinctive connection to the land and the work we do our approach to food quality and sustainability is highly science-based. In addition to HACCP we have pursued a number of additional certifications including GLOBALGAP Salmon-Safe USDA Organic Safe Quality Food SQF and OK Kosher. THE MISSION analyze and control all risks biological chemical and physical PAGE 32 CERTIFICATIONS These certifications arent requirements of our industry but theyve become part of the fabric of our day-to-day. We constantly ask ourselves what sets Roy Farms apart and always come to the same conclusion we want to be a leader. Our work to achieve these certifications brings us beyond best practices. It moves us to a place beyond compliance where we can constantly work to ensure high quality safe products maintain trust among our stakeholders and have the most positive impact on the environment that we can. Becoming certified has opened doors to markets where brewerslike New Belgium Brewery and Hopworks Urban Breweryare committed to sourcing 10 percent or more of their hops as Salmon-Safe Certified. It also introduces us to other markets worldwide that are looking to source certified sustainable ingredients. Despite what you may have heard farm life moves quickly. Every day we need to react wisely to changes influences and trends. Our certifications are part of what guides us gracefully through these challenges they help provide guidance and compel us to make decisions that reflect our core values. THE MISSION PAGE 34 GLOBALG.A.P. GLOBALG.A.P. is a Global Food Safety Initiative GFSI compliant on-farm standard that covers certification of the entire crop process from planting and harvesting to transportation and storage. GLOBALG.A.P. is a not-for-profit organization that seeks to achieve a universal standard for product safety environmental impact and the health safety and welfare of workers worldwide. Certification reduces food safety risks and non-compliance through the implementation of HACCP-based risk assessments conserves natural resources increases worker health and safety provides traceability and creates new market opportunities. Roy Farms apple and cherry acreage became GLOBALG.A.P. certified in 2005 blueberries followed in 2013 and in 2014 we became the first hop farm in the US to achieve GLOBALG.A.P. certification in hops. In 2015 Roy Farms became members of GLOBALG.A.P. North America. Member- ship allows us to network with other producer members to promote awareness for safe food production and sustainable resource management. USDA CERTIFIED ORGANIC USDA organic standards outline farming methods that recycle resources promote ecological balance and protect biodiversity. Of our 3500 acres of hops 135 acres are certified organic which means they do not use synthetic chemicals of any kind. All 250 acres of our blueberries are currently transitional and will become certified organic between 2016 and 2018. Roy Farms organic acreage is certified through Oregon Tilth. THE MISSION SALMON-SAFE All hop acreage is farmed and certified Salmon-Safe which is one of the nations leading regional eco labels that has certified more than 60000 acres for practices beneficial to salmon. The certification process involved submitting a years worth of pesticide fertilization irrigation and water-quality protection records biodiversity enhancement commitments and forces producers to take a detailed look at their practices. Blueberry acreage is scheduled to become certified in the 2016-2018 crop years. SAFE QUALITY FOOD The Safe Quality Food SQF standard is an internationally recognized GFSI food safety certification scheme. Certification is designed to provide organizations with a rigorous system to manage food safety risks and provide safe products. Through successful annual audits SQF certifies that our processing facilities quality management system conforms to the strictest food safety and food defense standards. In 2015 Roy Farms became the first hop processing facility globally to become SQF certified. OK KOSHER OK Kosher is the worlds leading kosher certification agency which signifies compliance with the laws of Kashrut including cleanliness purity and quality. Roy Farms IQF and Hop Pelleting facilities are all OK Kosher certified. PAGE 36 PROCUREMENT We have solid long-standing relationships with our suppliers some of whom have been our partners for over 40 years. We seek the highest quality products and suppliers. We incorporate sustainability into our procurement process by educating our suppliers about sustainable practices and purchasing local whenever possible. BUY LOCAL For example we analyzed our purchases from July 2013 through June 2014 and found that 69 percent of Roy Farms spending was within 100 miles of our farm. This means that our dollars are staying in the communities in which we live and work. If this analysis included local distributors who provide products that must come from out of state our percentage increases to 94 percent. Our switch to sourcing hop twine locally instead of from overseas provides a striking example of the benefits that come from local partnerships. We began purchasing local twine because of the risks inherent in shipping from overseas and the large energy footprint embedded. In the process we drove business for a local company and even switched to a more sustainable twine material. Instead of coir twine made from coconut husks we began using biodegradable paper twine and 100 percent of our twine is made from recycled cement bags. THE PRACTICE SUPPLIER FEEDBACK Over the past several years Roy Farms has moved toward a lower carbon footprint within its farming practices. We at BioTwine have been able to offer a local biodegradable alternative to traditional hop twine that has helped support Roy Farms overall sustainability effort. Roy Farms moved to 100 percent biodegradable paper twine in the past year as an alternative to traditional coir twine that is produced overseas and must be packaged and shipped via container freight lines. The BioTwine product however is produced 10 miles from the farm operation eliminating large transportation impacts and is produced with a renewable paper source with nearly no carbon impact. To add to the overall benefit Roy Farms has requested the paper twine be produced with trim paper or material left after manufacturing of our other products meaning we are able to utilize all paper in our manufacturing. The increased use of this trim product has led to conversations with additional papers mills to adopt the same total usage process and one additional mill has so far begun production with trim. Each mill adopting this total usage practice is a significant reduction in the overall manufacturing footprint in the US. Roy Farms and others are leading the way in sustainability and carbon footprint reduction in agriculture. Tom Sauve Managing Partner BioTwine Manufacturing 69 PERCENT OF ROY FARMS SPENDING WAS WITHIN 100 MILES OF THE FARM PAGE 38 STAKEHOLDER ENGAGEMENT We partner with our suppliers on more than just the delivery of products we need. Our suppliers report that one of the elements they value most about their relationships with Roy Farms is our sharing of sustainability best practices. And why wouldnt we To us being a leader means bringing others along with you. We are always happy to share our knowledge and stories related to sustainability in one- on-one meetings or at public forums so that others can learn from our experiences. WORKSHOP To have a more focused conversation with our suppliers about sustainability we recently hosted a Sustainability Workshop during which suppliers were invited to share their thoughts about sustainability at Roy Farms and brainstorm new ideas. Companies like Allan Bros. Fruit Packers Supply Growers Supply G.S. Long Co. and DM Chemical among others shared that Roy Farms has motivated them to follow a similar path on sustainability. EMPLOYEE RESULTS Employees are finding ways to discuss sustainability and implement it in their everyday jobs. Employees recognize a top-down change and a drive to thrive mentality. 2 ECONOMIC PERFORMANCE 3 NON DISCRIMINATION 4 WATER 5 LOCAL COMMUNITIES IMPACT 1 CUSTOMER HEALTH SAFETY 86 of suppliers and customers have interest in helping us make sustainability improvements 60 of suppliers and customers are more inclined to do business with Roy Farms if we make an effort to be more green WHICH ENVIRONMENTAL AND SOCIAL ISSUES WERE MOST IMPORTANT TOP 5 SUSTAINABILITY ISSUES... THE PRACTICE SUPPLIER FEEDBACK Change is commonly dictated by an outside force it happens to us - e.g. we are driven to change. Being comfortable in our ways most of us resist change especially when we adopt a weve always done it this way mentality. Its no surprise then that generally speaking we are often a reactive industry often times finding ourselves on the defense. Of course change can also be driven by the individual. This requires vision taking the hard look at what you measure yourself against and defining a standard to which you hold yourself accountable - being proactive. Roy Farms is a great example of this. Your commitment to consistently improve agriculture for the good of all stakeholders without compromise is evident in your actions. We at G.S. Long Company commend and support your efforts in innovation food safety sustainability community environmental stewardship and employee well-being. PAGE 40 ENVIRONMENTAL STEWARDSHIP Environmental stewardship is at our core here at Roy Farms. After all everything we do depends on the land soil and water we use. We know that if we take care of the environment well produce better healthier products while being better stewards at the same time. We call this approach soft farming and years of experience have taught us that healthy plants start with healthy soil. Our ultimate goal is to generate naturally pest-resistant crops from nutrient- rich soil that are less dependent on chemical fertilizers micro-nutrients and insecticides. In the last 7 years alone we have reduced our chemical use by about 30 percent per acre. Our experience has shown us maintaining a healthy ecosystem leads to thriving plants that naturally resist what nature throws at them. Our goal is not growth for the sake of growingwe seek to be as efficient and environmentally responsible as possible with each piece of land we have. IF WE TAKE CARE OF THE ENVIRONMENT WELL PRODUCE BETTER HEALTHIER PRODUCTS THE PRACTICE Carman McKinney Food Safety Sustainability Manager Our efforts and actions with farming sustainably cannot simply be defined by a jazzy slogan. Its defined by our actions. Its seen in the investments dedicated to protect and improve the use of our natural resources the time devoted to enhancing soil biodiversity employing multi-generation families for over 50 years and its the vested interest in our local communities. Its changing and sustaining agriculture for the good of our stakeholders without compromise. Stay tuned for what we have planned for the next 100 years. PAGE 42 SOFT FARMING The concept of softer farming has allowed us to take a more holistic approach to caring for our crops and it all starts in the ground. Sometimes we say that we specialize in dirt its our core competency. After all soil is what gives us our livelihood. Whether were giving our crops nutrients or water the basic concept is the same listen to the soil. Our approach to healthy soil is science-based and focused on carbon management microbiology and appropriate nutrient application. By paying attention to microbiology we are able to create soil conditions that lead to a better engine at the root of our plants reducing the need for synthetic chemicals. Nutrient application involves daily soil monitoring which allows us to adjust application amounts depending on a crops actual usage. Our system will even alert us any time nutrients are applied in excess so we can halt application and make adjustments. This level of precision means that we not only have healthier crops we ensure that most of our nutrients make it into our crops rather than ending up in waterways. Additionally we can forecast nutrient purchases more accurately which keeps costs down. Whenever possible we also use non-chemical controls such as raised beds and weed mats to discourage weeds and cover crops to introduce soil nutrients naturally. We have also practiced Integrated Pest Management since the 1980s by monitoring and encouraging beneficial insects to reduce pesticide use. true measurement is H2o per lb of product THE PRACTICE average gallons of water applied per acre JUNE MAY JULY AUGUST SEPT 185000 100000 PAGE 44 IRRIGATION Proper water application is equally important as nutrient application. As drought and water rationing become more common our responsible management of water resources becomes all the more imperative. Water really is our lifeblood. To allow for necessary adjustments to watering we rely on a large holding pond connected to our irrigation system. We hold water in the pond in case of drought or other emergencies. The pond and its monitoring system also enable us to track daily water input as well as excess water overflowing into the ditch. We can make adjustments to the amount of water we actually order from the water district and keep excess at a minimum. A growing percentage of our crops are armed with moisture sensors and 15 percent of our fields are equipped with a next generation water technology system. Through this system we can digitally control water application in real time using tablets and smart phones. As with nutrients our system also notifies us if we are watering in excess and we can quickly shut off the entire system if needed. We plan to expand this technology to all crops in the coming years. In addition to water monitoring we utilize drip irrigation which means water is fed directly into the soil through tubes rather than sprinklers or other methods. Drip irrigation allows water applications to be more focused eliminating excessively dry or excessively wet soil conditions and we led the implemen- tation of the technology in our region in the 1980s. It typically achieves over 90 percent efficiency while sprinklers hit only 50 to 70 percent efficiency. It also maintains optimum moisture levels over time which is better for our crops. THE PRACTICE German Gutierrez Automated Irrigation Coordinator Gabriel Pedroza Blueberry Field Foreman Keeping our water clean is just as important as preserving it. We conduct annual monitoring to ensure our water sources are high quality. Drip irrigation also guarantees that less of our water will run off and leech nutrients into water sources. Our work in nutrient and water monitoring has not only benefited the environment. With a reduction in nutrient and water use we have seen an increase in crop yield. More than that some of our least productive ground has been turned into our most productive due to our science-based approach. We aim to increase our farm wide water efficiency by 30 percent over the next 10 years by becoming even more granular in our application approach. Soil type can vary even within a single field. We are investigating ways to more precisely match water application to soil demand. aim to increase our farm wide water efficiency by 30 percent PAGE 46 ORGANICS AOHGA CERTIFICATION Our softer farming approach led us naturally into pursuing organic certification for some of our crops. Gaining USDA organic certification is not a simple process but we took the leap in 2006. We were one of the first hop farms in our state to take organic to a commercial level. Our commitment to limiting chemical-use began early but the organic certification process allowed us to take a more in-depth look at our practices for everything from soil health to biodiversity. NEW MARKET Despite our success with organics we soon saw a huge barrier to other farms growing organic hops. The USDA had declared that beer could be certified organic even if it did not contain organic hops. This essentially eliminated the demand for organic hops. We helped to establish the American Organic Hop Grower Association AOHGA and in 2010 the USDA reversed its decision. yearly acreage growth of US organic hops 2010 2011 2012 2013 2014 2015 365 339 207 87.64 97.06 240.54 A MARKET FOR ORGANIC HOPS WAS CREATED... THE PRACTICE AOHGA Today the AOHGA aims to raise brewer awareness of available hop varieties ensure brewer-sourcing needs are met and be an educational resource for organic hop farmers. Its membership is comprised of 8 growers and 22 associate members most of whom are brewers. The group serves as a pipeline between brewers and farmers through which they can share market reports acres farmed and other vital information. AOHGA PAGE 48 ORGANICS PROGRAM With our organic crops we are not only helping the environment we are meetinga market demand as more brewers fruit buyers and consumers alike demand organic ingredients. Sustainably grown products in general have become more popular in recent years. Our organic blueberries and hops open more and more international and domestic market doors every year. SCIENCE-BASED Our approach to growing organics is like everything else on the farm science-based. Roy Farms organics program relies heavily on sampling and analysis of the soil and the plants themselves. Because the pool of solutions is smaller than the options available for conventional crops each decision requires additional attentiveness and care as we implement a proactive approach to stay ahead of the problem rather than respond to it. CHALLENGES The greatest challenge to growing organic crops lies in the nutrients. While enriching the plants with the nutrients required for healthy and productive growth we must find a balance. Each plant requires a measured combination of nutrients for ideal health which must be monitored for both surplus and deficiency while avoiding leaching into the soil. THE PRACTICE we are meeting a market demand as more brewers fruit buyers and consumers alike demand organic ingredients PAGE 50 ENERGY While soil and water may feel more directly tied to farming energy use is still a large impact area for us which is why we are taking steps to manage it. We aim to reduce the impact of overall energy on our carbon-footprint by converting to cleaner and more efficient forms of energy whenever feasible to do so. Were taking steps in a number of ways and have converted 50 percent of our trucks to run on propane rather than unleaded gas. Not only does the fuel burn cleaner it is less expensive. We saved 58000 in harvest fuel costs in the first year. Our buildings and processing facilities are also a target area for us. We continue to replace traditional lighting with LED lighting and 25 percent of our burners have been updated to more efficient models. All new lighting installations are LED. We are also currently targeting energy use in our hops drying processes by experimenting with reducing time needed for drying. Weve even become creative with scheduling. Shifting the workweek for our pellet processing team to four 10-hour days reduces emissions from employee commuting and processing energy use. THE PRACTICE 2014 FARM WIDE USAGE 12156785 kwh ON GOING EMPHASIS- RENEWABLE ENERGY PAGE 52 GREEN BUILDING One of our largest most ambitious goals to date was the conversion of our shop into a cross-divisional field staff office which was refurbished with very stringent environmental standards. The structure incorporates recycled materials an extremely efficient envelope and 12.8 kW solar panels. Each material from layout to flooring to trim to paint was carefully chosen to embody green building stan- dards and create a healthy and productive work environment for our employees. The building was created in partnership with a local contractor and design company Leading Force Energy and Design with a shared sustainable purpose. The structure exemplifies the principles of green building combined with elements of feng-shui while incorporating natural light and an open-work design to encourage collaboration and interaction. This project reflects a synthesis of Roy Farms core values by combining environmental stewardship employee health and happiness and creativity. CERTIFICATIONS In 2016 Roy Farms is seeking several certifications for the building including THE PRACTICE A synthesis of Roy Farms core values by combining environmental stewardship employee health and happiness and creativity PAGE 54 WASTE MATERIALS Our environmental stewardship extends to the materials we use and where they go when were finished with them. Weve established extensive guidelines for our materials when it comes to end-of-life. As a result about ninety percent of the waste we produce is either recycled or composted. We recycle everything from traditional materials like plastic metal cardboard and to more unusual items like old tires drums drip tubing pesticide and fertilizer containers oils and excess fertilizer. COMPOST A fair amount of unusable organic waste is generated in any farming operation. Weve established on-site composting for excess plant material and switched from using coir twine for our hops trellises to using paper twine that can be composted. All plant materials that are not transformed into our end-product are turned into compost that we then apply back on our fields during non-producing months. SOURCING Source reduction is as important to us as recycling. As much as possible we aim for bulk orders and bulk packaging to reduce packing material use as well as reduce emissions for transportation associated with multiple shipments. ABOUT 90 PERCENT OF THE WASTE WE PRODUCE IS EITHER RECYCLED OR COMPOSTED THE PRACTICE RECYCLED TIRES 15.5 TONS CHEMICAL CONTAINERS 3.9 TONS 2014 STEEL 73 TONS WOODEN PALLETS 29 TONS PLASTIC 7 TONS PAGE 56 BIODIVERSITY NATIVE SPECIES Being a good farmer means having respect for the natural environment which is why we seek to preserve the biodiversity of our land. We are committed to enhancing biodiversity farm wide by 5 percent and established a Conservation Plan in 2013 to guide this commitment. As much as possible we have reintroduced native wildflowers to field borders and in between rows. This benefits not only the land as a whole but our crops as well because these native species contribute nutrients to our soil. We partnered with native landscape restoration company BFI Native Seeds to develop a biodiversity enhancement plan. The plan identifies three sites on our farm on which we plan to restore habitat and biodiversity. Restoration will involve removing non-native plants and replacing them with native species which will in turn attract pollinators like butterflies and bees. PREDATORS Our focus on softer chemicals and increasing conserved land has led to better conditions for beneficial insects like ladybugs. They add to our biodiversity while eating pests that harm our crops. We control bigger pests in a similar way. We encourage coyotes hawks owls and snakes to control meadow moles and gophers and falcons to keep birds from eating our fruit. Windbreaks and natural vegetation also provide habitats for these animals and encourage a more diverse and thriving ecosystem. THE PRACTICE As part of our sustainable farming practices at Roy Farms we rely on the expertise of Vah Alaverdian and his team at Falcon Force. The team of professional falconers and their trained crew of raptors practice falconry-based bird abatement to prevent bird damage to our more fruitful crops on the farm. Along with being more economical and effective than other options we find falconry to be safer than some other pesticide options available to farmers. Each summer Alaverdian joins us on the farm. Rising with the sun he makes his way out into the field and individually assesses each situation and which bird from his crew will provide the best fit for the contexta low close flyer a speedy high-flying stalker or a large diving predatorto get the job done. PAGE 58 LIFE CYCLE ASSESSMENT EXECUTIVE SUMMARY The Institute for Environmental Research and Education IERE was commissioned by Roy Farms to conduct a cradle-to-gate Full Spectrum Life Cycle Assessment for our hops production. Roy Farms was the first hop production company to participate in a Full Spectrum LCA study. The Full Spectrum LCA included all materials and processes from the planting growing and harvesting of hops through processing and packaging. The majority of our hop cones are converted into pellets. The pellets have several advantages over whole cones and this study found that the pellet process does not significantly increase environmental impacts when compared to the whole cone. This is largely because the process of growing and harvesting the hops dominates the environmental impact of hops production. Electricity consumption was also a large contributor to several impact categories due to the relatively high proportion of coal generation in the electricity supply. This study was performed in accordance with ISO 14044 the international standard that governs LCA studies ISO 2006. IERE is a non-profit with a mission to support fact-based environmental decision-making it is a globally recognized expert in the field of LCA. A screening LCA was performed in 2013 and this present Full Spectrum study was performed to validate the results and provide a higher quality more detailed life cycle assessment of our operations. POWER PLANT SUPPLY coal 63 natural gas 15 hydroelectric 8 wind 4 biomass 1 other 9 other 23 processing direct 20 farm direct 18 ELECTRICITY PRODUCTION 18 composting 11 IMPACT CATEGORY global warming eutrophication water use land use ozone depletion smog acidification human health respiratory effect ecotoxicity fossil fuel UNIT kg CO2 eq Kg N eq liter m2 year kg CFC-11 eq kg 03 eq kg SO2 eq CTUh kg PM2.5 eq CTUe MJ surplus HOP FLOWER KG 4.6E00 5.5E-02 2.7E03 5.6E00 2.1E-07 2.2E-01 2.1E-02 6.9E-07 1.8E-03 1.4E01 5.4E00 HOP PELLET KG 5.1E00 5.8E-02 2.8E03 6.2E00 2.3E-07 2.5E-01 2.3E-02 8.2E-07 2.0E-03 1.6E01 5.9E00 LIFE CYCLE IMPACT RESULTS PER KG OF HOPS global warming THE PRACTICE The analysis provided us with real data to show where our biggest impacts are in terms of energy water land use pesticides and othersthe areas in which weve made the most progress to date and where we have the biggest opportunities for improvement. The LCA was quite an undertaking and required commitment throughout our farm. The data Roy Farms gained though was invaluable and allowed us to make better-informed environmental and business decisions. In response to our findings we have so far upgraded our kiln burners invested in solar energy reduced the use of nitrogen fertilizers and engaged in green building. PAGE 60 LIFE CYCLE ASSESSMENT KEY FINDINGS Although hops comprise only about three percent of beer ingredients by mass the associated environmental impact of hops effects like ozone depletion eutrophication and water use is higher than the impact of other ingredients. Conclusively using premium hops like ours produced with a smaller carbon footprint is a step in reducing a beers overall environmental footprint. Because 78 percent of our local electricity mix comes from fossil fuels any improvements in energy efficiency have a large positive impact on GHG emissions. This finding is guiding our research into on-site renewable energy. IMPACT CATEGORY climate change eutrophication water use land use ozone depletion smog acidification toxicity UNIT kg CO2 eq g N eq liter m2 year g CFC-11 eq g 03 eq g H eq CTUe VALUE 0.69 1.40 60 0.43 32 26 0.11 2.2 INGREDIENT 18 66 75 91 74 59 68 93 LIFE CYCLE IMPACTS FOR 16FL. OZ. OF A HYPOTHETICAL IPA In terms of climate change our three largest emissions are electricity 28 direct processing 20 and direct farming 18 THE PRACTICE A recipe for a hypothetical IPA was created in the Earthsure Brewer automated environmental product declaration EPD system. The goal was to assess how the production of hops pellets contributes to the total impacts of typical beer. The recipe was for a fairly hoppy beer that uses two pounds of malt and one ounce of hops per gallon of beer. The beer was assumed to be served as draught form at the location where it was brewed. The impacts calculated by the software for one U.S. pint 16 fl. Oz of the hypothetical IPA are shown in the table. The table also includes a column that shows the contribution to total impacts that come from the production of the ingredients hops malt and yeast. Please note that the software uses units for some impact categories that are different than those used in this study. TOXICITY ACIDIFICATION PHOTOCHEMICAL SMOG OZONE DEPLETION EUTROPHICATION CLIMATE CHANGE LAND USE WATER USE 0 10 20 30 40 50 60 70 80 90 100 INDIVIDUAL INGREDIENT CONTRIBUTION TO UPSTREAM INGREDIENT IMPACT YEAST HOP PELLETS MALT OTHER PAGE 62 Our employees are our number one priority. Taking care of them means taking care of our products. We are first and foremost committed to their health and safety. We also strive to create an open inclusive culture that values every employee as a part of the Roy Farms family. INDUSTRY CHALLENGES RETENTION Each year the agriculture industry is challenged with sourcing and retaining seasonal part-time employees to harvest crops. Roy Farms has diversified our crop portfolio allowing us to sustain our labor pool by providing work for our employees nearly seven months out of the year. Divisions share employees throughout the year which reduces the amount of time spent training new employees. This not only provides consistent employment for our workers it ensures that the best people continue to work on our farm with safety and sustainability already embedded into their work. ABOVE STANDARD Generally speaking farm work can be very demanding with long hours few breaks and exposure to the elements. By offering a competitive wage frequent free meals shaded break areas clean and safe facilities we strive to provide above standard working conditions for our employees. Roy Farms has two permitted temporary migrant houses offered to seasonal employees and owns over 30 homes that are provided to full-time employees and their families who need secure housing. LONGEVITY Roy Farms has cultivated a culture of longevity and sustainability. We are proud of the number of employees who have stuck with us over the years. We have 30 employees who have been with us for over 25 years. NarcisoGutierrezFarmManager-HopDivision THE PEOPLE Narciso Gutierrez has worked for Roy Farms longer than anyone else even longer than our president Leslie Roy The Gutierrez family has been with our farm for three generations and Narciso himself has dedicated an incredible 51 years and counting. Narciso grew up in Mexico but his father was a U.S. citizen and worked at Roy Farms. In 1961 Narcisos father helped his family move to be with him in the U.S. and a few years later Narciso joined his father at Roy Farms. It was at Roy Farms that Narciso says he learned everything he knows. Lester Roy who was president at the time took Narciso under his wing and taught him all about hops. Narciso remains one of the few people perhaps in the world who can look at a hop field and immediately identify the variety. In his 51 years Narciso has worked in a variety of roles from irrigation to making bales to working as a foreman and now as a field manager. Hes seen vast changes in the farm from their first Ford diesel tractor in 1964 to drip irrigation in the 1980s to high-tech water tracking systems today. Narciso learned more than how to farm when he started out at Roy Farms. Dan Holman a foreman at the time taught him English. When Narciso thinks back on his time at Roy Farms its moments like those when employees came together to help one another which matter most to him. Narcisos skills knowledge and passion are invaluable to Roy Farms and we are continually grateful to have him as part of our tribe. Narciso matters greatly to Roy Farms. Hes the cornerstone in our foundation says Food Safety and Sustainability manager Carman McKinney. When asked what has kept him at Roy Farms for so long his answer is simple We are a family. PAGE 64 HEALTH SAFETY Everyone is responsible for safety at Roy Farms. In fact we have a zero-tolerance policy when it comes to anything that leads to unsafe conditions. For us safety doesnt stop at the policy level. During monthly crew meetings safety is a key topic and employees use that time to raise questions and propose ideas to improve safety. Outside of monthly meetings employees are encouraged to get in touch with our safety officers at any time for questions or suggestions. Employees receive regular safety training especially when they are moved to a new team or area. Safety information boards are located throughout our property with emergency contact information first aid materials safe chemical information emergency plans and other important information. Roy Farm is serious when it comes to our employees welfare and wellbeing and work to provide a pleasant work environment for them. All worksites include eating facilities and shade spots so employees can easily take breaks and get out of the sun. ALL EMPLOYEES HAVE THE RIGHT TO safe healthy work environment void of harassment sexual verbal and physical be trained in a consistent thorough manner immediate feedback on performance and recognition for great performance ask any question without fear of reprimand or reprisal work in an environment that does not discriminate be treated no less than any other employee THE PEOPLE Nancy Rodriguez Safety Manager 2950 TRAINING HOURS 1486.5 LIGHT DUTY HOURS 42 TOTAL ACCIDENTS 4 TIME LOSS ACCIDENTS 2014 PAGE 66 Maria Delgado Food Safety Coordinator CAREER ADVANCEMENT AND EDUCATION We want our employees to never stop growing so we invest in their continuous development. All employees receive regular training on new processes and programs. Training not only gives employees the tools and information they need to perform their work but also provides them the opportunity to ask questions and provide suggestions. We provide payment for external training and tuition reimbursement for classes. THE PEOPLE WE ARE CURRENTLY SPONSORING THE FOLLOWING EMPLOYEES EDUCATIONAL GOALS Maria Delgado Agriculture AA Yakima Valley Community College German Gutierrez Agriculture AA Yakima Valley Community College Nora Espinoza Business Management Human Resources BA Heritage University Jamie Coggins Horticulture M.S. Washington State University PAGE 68 BUILDING COMMUNITY Roy Farms is not only family-ownedwe see all employees as part of one family. And there is a great deal of energy behind our no compromise attitude. For our business to thrive we must have a holistic viewpoint. We dont see employee health and happiness environmental stewardship and business performance as competing idealsthey are equally important elements of our long-term success. Part of being a community is taking the time to have fun together and enjoy one anothers company. We come together to eat and to celebrate. During harvest this year we partnered with a local food vendor to come by our farm during the week. Employees received two free meals every week as a thank you for all of their hard work. End of harvest barbecues are also a time when everyone can take the time to eat together and get to know one another. great deal of energy behind our no compromise attitude THE PEOPLE full time as defined by government standards within the ACA program FULLTIME 3MONTHS-FULLTIME 1MONTH-3MONTHS 1WEEK-1MONTH 1HOUR-1WEEK 26 74 126 WOMEN 367 MEN AVERAGE BASED ON PEAK HARVEST TIMES FULL TIME VS. SEASONAL WORK 53OF MANAGERIAL POSITIONS ARE WOMEN OR MINORITIES 21 15 26 29 9 PAGE 70 EMPLOYEE ENGAGEMENT OPEN-DOOR COMMUNICATION POLICY For us respect is the name of the game. We foster an open and frank atmosphere in which any problem complaint suggestion or question receives timely response. Managers at Roy Farms have an open-door policy and our employees are encouraged to discuss any concerns or ideas with their managers. In fact we lay this out explicitly in our Problem Solving Procedure which provides guidance for employees that need to discuss an issue with their managers. We also encourage open dialogue among employees. Weekly meetings and take fives at the beginning of every shift allow employees to take a break and regularly discuss ideas challenges and questions. IDEA SOLICITATION Our employees are empowered to both share and act on everything from safety to sustainability to product quality. In return we get some of the most innovative solutions in the industry. For example one of our employees proposed and built two cover crop rollers for our blueberries fields to flatten cover crop for weed control. Normally this process would require two tractors and two drivers but the new roller could be mounted to one tractor eliminating the need for a second. The innovation cut labor and fuel costs by 250 per day. In addition to ad hoc improvements we host regular sustainability trainings during which we invite employees to share ideas on how we can improve our sustainability performance. THE PEOPLE Fausto Manrique Shop Foreman The innovation cut labor and fuel costs by 250 per day PAGE 72 COMMUNITY Roy Farms cares deeply about our community. Having been here for over one hundred years our community is just as much a part of us as we are it. Our communityis not only where we work but it is where we live shop raise our families and where our children go to school. Our community supports us and allows us to do the work we love. So we strive to give back our time and donations as much as possible. Our Stewardship Committee coordinates our community efforts and our mission is We are committed to providing service to the mentors and volunteers of our community who enrich the lives of our future generations through education promoting a better life and environmental stewardship. While there are many deserving organizations in our community we seek to partner with those that are compatible with our vision business ethics conduct policy and our sustainability program. We are especially focused on youth and education. Weve supported many organizations for years through scholarships volunteers and in-kind product contributions. IN FY 2015 WE DONATED 0.46 OF TOTAL CASH REVENUE TO LOCAL ORGANIZATIONS AND CHARITIES THE PEOPLE PAGE 74 Here at Roy Farms we love what we do. As a business we have built a community around us. As individuals we find personal connections to our work. For some it may be a connection to the land the crops the valley the industry or to the different aspects of sustainability. As we bring others into the fold and invite them to join our community we encourage them to do the same. We are passionate about the work we do. We foster that passion year after year. We have been offering premium products for more than a century. And we have been practicing sustainability for decades. Roy Farms believes that farming and sustainability are naturally intertwined. Having a positive impact on our environment whether it is the land the water or the people around us requires commitment and hard work. It is this commitment that allows us to continue doing what we love. By committing to soft farming organic and science-based approaches we can preserve soil health and essential nutrients for our crops. Water conservation and irrigation accuracy provide significant fiscal and environmental benefits as well as contributing to yield potential and product quality. Streamlining processes and equipment reduce energy consumption increase efficiency and minimize our environmental impact. And holding ourselves accountable through a myriad of third party certifications guides us by providing high standards of quality and safety. Likewise investing in the people around us by providing education opportunity and sharing our values facilitates the entire process. Over the last century our farm has evolved. With each move our sustainability story develops. Like our crops we cultivate it as it grows. Because it is important to us. For Roy Farms the future is bigger than just our company. We are looking beyond ourselves into the community the industry the environment the world. As we stated before we believe local actions can have global impactour future at Roy Farms as individuals and as a company is built around these actions. We have been producing premium quality hops for one hundred years and we plan to continue for another one hundred years. farming and sustainability are naturally intertwined THE SUMMARY PAGE 76 Increase implementation of irrigation system management technology TO INCREASE SYSTEM COVERAGE BY 5 IN PRODUCING ACREAGE Build our new state-of-the-art hop harvest picking machine at our Toppenish Land location TO INCREASING OUR CLEANING CAPACITY BY 600 AT OUR TOPPENISH LOCATION AND 17 OVERALL Establish a measured baseline for employee satisfaction TO FACILITATE FUTURE MONITORING Expand data collection by developing more internal measurement systems and practices TO INCREASE MEASURABLE AND MONITORED DATA TO MORE ACCURATELY IMPROVE OPERATIONS 2016 - 2018 TARGET GOALS OBJECTIVE PURPOSE THE SUMMARY Increase employee engagement through periodic newsletter communicating company culture and achievements as well as recognizing individual accomplishments TO BETTER INVOLVE EMPLOYEES IN COMPANY CULTURE AND FACILITATE INCREASED PERSONAL INVESTMENT AND RECOGNITION Seek green building certifications for our newly remodeled office space TO SOLIDIFY AND VALIDATE OUR GREEN BUILDING EFFORTS WHILE SETTING A STANDARD FOR FUTURE PROJECTS Install solar panels at our main facility and our Desserault hop harvesting facility TO DECREASE OUR OVERALL POWER CONSUMPTION BY AT LEAST 6 AT EACH FACILITY PAGE 78 It may be cliche - but from an early age I felt an indescribable connection with farming. The land. The opportunity. I have always loved what Roy Farms and its surrounding countryside had to offer me. Over the years I have grown to love the challenge the diverse nature of farming which demands you balance a variety of disciplines in order to remain successful. You have to confront the challenges of modern day business while remaining fluid in the face of Mother Nature. Roy Farms gives all involved the opportunity to contribute in ways beyond their individual abilities. At Roy Farms I believe its about more than who we are or what we are doing as individuals. As a group we can truly influence change. It is one of lifes great adventures. Michael Roy OwnerSecretary President of Hop Blueberry Operations THE SUMMARY PAGE 80 PERFORMANCE DATA ORGANIZATION INFORMATION SCALE OF ORGANIZATION Total number of employees 320 average Total number of operations Roy Farms is located in Moxee Washington. On that property we house our offices and ware- houses including drenching and hydrocooling 49 controlled atmosphere rooms capacity to hold 650 - 2500 bins 2 cold rooms 48820 combined sq ft and 4 freezer rooms 78817 combined sq ft dry storage 138694 sq ft Quantity of products or services provided 5.5 million lbs hops 1.9 million lbs blueberries 2539850 lbs cherries 10395875 lbs of apples EMPLOYEES Peak total number of employees 534 Average number of employees 320 Total male employees 426 Total female employees 108 Total full-time employees 52 Peak temporary employees 482 Ratio of entry-level wage to minimum wage 1.05 Percentage of senior management from local community 100 Annual training hours per employee 20 Annual human rights training hours per employee 4 100 employees trained ABOUT OUR REPORT Though we have been engaged in sustainable practices for decades this represents our first public sustainability report. The content of this report reflects operations from our fiscal year 2014. September 1 2013 through August 31 2014 though historical information is included for context. The scope of this report is primarily the internal operations of Roy Farms. MATERIALITY PROCESS Materiality is about defining sustainability issues that reflect our largest impacts and the concerns of our stakeholders. We engaged in a materiality assessment to ensure report relevance and transparency. By consulting with internal and external stakeholder groups process described below we were able to define an initial list of material issues. These were further refined by our Junior Senior Management Team based on knowledge of our organizations impacts and information revealed in our 2013 Life Cycle Assessment. THE SUMMARY Number of discrimination incidents 0 ASSOCIATION MEMBERSHIPS Industry and local associations WA State Fruit Commission Director WA State Tree Fruit Association member WA State Tree Fruit Association Research Committee member International Tree Fruit Association member US Apple Association member Northwest Cherry Institute Director Yakima Pomological Club Officer WA State Blueberry Commission member Northwest Horticulture Council member WA State Farm Bureau member WA Growers League member WAAg Forestry Leadership Foundation member East Valley Community Enhancement Association member International Hop Growers Convention President WA Hop Commission Vice Chairman Hop Growers of America member Hop Growers Best Practices Advisory Committee member US Hop Industry Plant Protection Committee member American Organic Hop Growers Association Founding mem- ber Master Brewers Association of the Americas member Fowler Ditch Association Board member Selah-Moxee Irrigation District Board member GlobalGAP member Pink Boots Society member Society for Human Resource Management member Yakima Valley Human Resource Management Association member Farm Credit Board Local Advisor ANTI-CORRUPTION Percentage of operations assessed for corruption risks 100 Number of corruption risks identified 0 Percentage of governance body members employees business partners trained on anti-corruption policies 100 Total incidents of corruption 0 COMPLIANCE Incidents of non-compliance with regulations resulting in a fine or penalty 0 Incidents of non-compliance with regulations resulting in a warning 0 Incidents of non-compliance with voluntary codes Less than 10 PROCUREMENT Percent of suppliers screened using environmental labor and social criteria 50 PAGE 82 ENERGY CONSUMPTION NON-RENEWABLE FUEL Diesel 67818.40 gal Gasoline 35607.54 gal Propane 136900.75 gal ELECTRICITY HEATING COOLING Electricity 4090519 kWh Heating cooling natural gas 877214 therms Total energy consumption 132876077813000 joules Energy intensity 79335443.24 joules per pound of hops produced WATER CONSUMPTION Water allocated 4.3 billion gal Water used 3.4 billion gal All energy data has been compiled from utilities reports Geographic definition of local is within 100 miles of our headquarters in Moxee WA Definition of significant location of operations is Moxee WA THE SUMMARY GENERAL STANDARD DISCLOSURES INFORMATION OR LOCATION STRATEGY AND ANALYSIS G4-1 CEO Statement The CEO Letter page 1 ORGANIZATIONAL PROFILE G4-3 Name of the organization About Roy Farms page 5 G4-4 Brands products and services Products and Services pages 9-20 G4-5 Location of headquarters About Roy Farms page 5 G4-6 Number of countries where organization operates United States G4-7 Nature of ownership and legal form S Corporation G4-8 Markets served Business Overview page 21 G4-10 Total number of employees broken down by contract and broken down by contract and gender and employment type and supervised workers Performance Data page 81 Roy Farms operates in one region and due to limitations related to seasonal employment the following data cannot currently be tracked number of employ- ees by contract type and number of supervised workers. Peak and average numbers are reported due to seasonality G4-11 Percentage of total employees covered by collective bargaining agreements 0 G4-12 Description of supply chain Procurement page 37 G4-13 Significant changes during the reporting period regard- ing the organizations size structure ownership or its supply chain None The Global Reporting Initiative GRI is a nonprofit organization that promotes economic environmental and social sustainability. GRIs Sustainability Reporting Framework enables all companies and organizations to measure and report their sustainability performance. We self-declare this report is in accordance with the Global Reporting Initiative G4 Sustainability Reporting Framework core option. External assurance has not been sought for the contents of this report. PAGE 84 G4-14 How the precautionary approach or principle is ad- dressed by the or principle is addressed by the organization Roy Farms does not explicitly utilize the Precautionary Principle but our approach to sustainability is outlined in What Sustainability Means Why Sustainability and How Sustainability Happens pages 23-27 G4-15 External economic environmental and social charters principles or other initiatives to which the organization subscribes Quality Safety Standards Certifications pages 31-36 Organics AOHGA pages 47-48 G4-16 Memberships of associations maintained at the organi- zational level Performance Data page 82 IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES G4-17 Entities included in the report Roy Farms Inc. G4-18 Process for defining the report content and the Aspect Boundaries Stakeholder Engagement page 39 G4-19 Material Aspects identified in the process for defining report content Materiality Process page 81 G4-20 Aspect boundary within organization Materiality Process page 81 G4-21 Aspect boundary outside organization Materiality Process page 81 G4-22 Effect of any restatements of information provided in previous reports NA G4-23 Significant changes from previous reporting periods NA STAKEHOLDER ENGAGEMENT G4-24 List of stakeholder groups engaged by the organization Stakeholder Engagement page 39 G4-25 Basis for identification and selection of stakeholders with whom to engage Stakeholder Engagement page 39 G4-26 Approach to stakeholder engagement Stakeholder Engagement page 39 G4-27 Key topics and concerns that have been raised through stakeholder engagement Stakeholder Engagement page 39 REPORT PROFILE G4-28 Reporting period About Our Report page 81 G4-29 Date of most recent previous report NA THE SUMMARY G4-30 Reporting cycle Annual G4-31 Contact point for questions G4-32 The in accordance option the organization has chosen Core G4-33 Policy and current practice with regard to seeking external assurance for the report Roy Farms has not sought external assurance for this report GOVERNANCE G4-34 Governance structure of the organization How Sustainability Happens page 27 ETHICS AND INTEGRITY G4-56 The organizations values principles standards and norms of behavior About Roy Farms pages 5-6 Products Services page 9 The Summary page 77-78 G4-58 The internal and external mechanisms for reporting con- cerns about unethical or unlawful behavior and matters related to organizational integrity Our Human Resource Manager who is a member of the Society for Human Resource Management manages our internal and external systems for report- ing concerns of unethical behavior. Our Employee handbooks include company policies covering ethical and lawful behaviors hiring harassment complaints discipline organizational chart corrective actions etc. The Employee hand- book is reviewed by an external legal firm experienced in Agriculture and Agriculture labor laws and ethics prior to distribution to employees. Complaint forms in both English and Spanish are available in the main office foyer as well as through all division managers during business hours or may be sent electronically via email 247. Complaints are confidential and may be submitted anonymously. Employees are trained annually at a minimum on all company policies covered in our Employee Handbook and on our GP-Complaint Policy in both English and Spanish annually at a minimum. Division managers also hold numerous meetings and trainings on a weeklymonthly basis with employees. Employees are encouraged to provide feedback and that feedback is documented. Complaints are also trended and reported to management on an annual basis. Corrective Action is taken if necessary. PAGE 86 SPECIFIC STANDARD DISCLOSURES SPECIFIC STANDARD DISCLOSURES LOCATION IDENTIFIED OMISSION REASONS FOR OMISSIONS CATEGORY ECONOMIC MATERIAL ASPECT ECONOMIC PERFORMANCE G4-DMA Disclosure on Management Approach Business Overview page 21 G4-EC2 Financial implications and other risks and opportunities for the organizations activities due to climate change Why Sustainability page 25 MATERIAL ASPECT MARKET PRESENCE G4-DMA Disclosure on Management Approach Industry Challenges page 63 G4-EC5 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation Performance Data page 81 G4-EC6 Proportion of senior management hired from the local community at significant locations of operation Performance Data page 81 MATERIAL ASPECT PROCUREMENT PRACTICES G4-DMA Disclosure on Management Approach Procurement page 37 G4-EC9 Proportion of spending on local suppliers at significant locations of operation Procurement page 37 THE SUMMARY CATEGORY ENVIRONMENTAL MATERIAL ASPECT ENERGY G4-DMA Disclosure on Management Approach Energy page 51 G4-EN3 Energy consumption within the organization Performance Data page 83 Renewable fuel sources energy sold Roy Farms did not use renewable fuel within the reporting period and does not sell any energy Energy calculations are for 2013 hops operations only G4-EN4 Energy intensity Performance Data page 83 Energy intensity reflects 2013 hops operations only MATERIAL ASPECT WATER G4-DMA Disclosure on Management Approach Soft Farming page 43 Irrigation page 45 G4-EN8 Total water withdrawal by source Performance Data page 83 MATERIAL ASPECT EFFLUENTS AND WASTE G4-DMA Disclosure on Management Approach Waste Materials page 55 G4-EN23 Total weight of waste by type and disposal method Waste Materials page 56 MATERIAL ASPECT SUPPLIER ENVIRONMENTAL ASSESSMENT G4-DMA Disclosure on Management Approach Procurement page 37 G4-EN32 Percentage of new suppliers that were screened using environmen- tal criteria Performance Data page 82 PAGE 88 CATEGORY SOCIAL SUB-CATEGORY LABOR PRACTICES AND DECENT WORK MATERIAL ASPECT OCCUPATIONAL HEALTH AND SAFETY G4-DMA Disclosure on Management Approach Health and Safety page 65 G4-LA5 Percentage of total workforce represented in formal joint man- agement-worker health and safety committees that help monitor and advise on occupational health and safety Health and Safety page 65 MATERIAL ASPECT TRAINING AND EDUCATION G4-DMA Disclosure on Management Approach Health and Safety page 65 Career Advancement and Education page 67 G4-LA9 Average hours of training per year per employee by gender and by employee category Performance Data page 82 Hours by gender and employee category Hours are standard for all employ- ees G4-LA10 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings Career Advancement and Education page 67 MATERIAL ASPECT SUPPLIER ASSESSMENT FOR LABOR PRACTICES G4-DMA Disclosure on Management Approach Procurement page 37 G4-LA14 Percentage of new suppliers that were screened using labor practices criteria Performance Data page 82 THE SUMMARY SUB-CATEGORY HUMAN RIGHTS MATERIAL ASPECT INVESTMENT G4-DMA Disclosure on Management Approach The People pages 63-71 G4-HR2 Total hours of employee training on human rights policies or procedures concerning aspects of human rights that are relevant to operations including the percentage of employees trained Performance Data page 82 MATERIAL ASPECT NON-DISCRIMINATION G4-DMA Disclosure on Management Approach Health Safety page 65 G4-HR3 Total number of incidents of dis- crimination and corrective actions taken Performance Data page 66 SUB-CATEGORY SOCIETY MATERIAL ASPECT ANTI-CORRUPTION G4-DMA Disclosure on Management Approach Business Overview page 21 G4-SO3 Total number and percentage of operations assessed for risks related to corruption and the significant risks identified Performance Data page 82 Data not broken down by contract type or region Data not available G4-SO4 Communication and training on anti-corruption policies and procedures Performance Data page 82 Data not broken down by contract type or region Data not available PAGE 90 G4-SO5 Confirmed incidents of corruption and actions taken Performance Data page 82 Data not broken down by contract type or region Data not available MATERIAL ASPECT SUPPLIER ASSESSMENT FOR IMPACTS ON SOCIETY G4-DMA Disclosure on Management Approach Procurement page 37 G4-SO9 Percentage of new suppliers that were screened using criteria for impacts on society Performance Data page 82 SUB-CATEGORY PRODUCT RESPONSIBILITY MATERIAL ASPECT CUSTOMER HEALTH AND SAFETY G4-DMA Disclosure on Management Approach Quality Safety Standards page 31 G4-PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle by type of outcomes Performance Data page 82 MATERIAL ASPECT COMPLIANCE G4-DMA Disclosure on Management Approach Quality Safety Standards page 31 G4-PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services None THE SUMMARY send us your deep thoughts QUESTIONS COMMENTS CONFESSIONS DARK SECRETS WELCOMED not-so-deep thoughts also welcomed PAGE 92 artworkbymichaelroy