Perdue's 'green' giants
Photos by Vito Palmisano
Given its decades-long tradition of quality and industry leadership in a variety of areas, it should come as no surprise that a company as established as Perdue Farms could adjust to trends that are only a few years old.
Indeed, the Salisbury, Md.-based poultry processor appears to have been well-prepared, using longstanding company strategies around cost-efficiency and sustainable business to meet the demands for environmental stewardship and sustainability. Today, with environmental issues a hot topic across just about every industry, Perdue stands as an innovative leader in the protein industry, now reaping the benefits of environmentally sound decisions made over the last decade.
“At one time, I think the environment was not as important to the consumer or a customer,” says Jim Perdue, chairman of Perdue Farms. “For example, I’ll never forget going to New Jersey one time when we were thinking of getting out of Styrofoam trays and seeing a tube of Chapstick inside of a one-foot by six-inch paperboard carton with plastic wrapped over it.”
At that time, Perdue explains, he was convinced consumers weren’t putting their money where their mouths were.
“But, I think the consumer and the public in general were also changing, and it has become more and more an expectation of the consumer, our customer base, our communities and the government,” he says.
Despite consumers’ slow build toward sustainability concerns, Perdue Farms was convinced it needed to take care of the environment and make itself a force in sustainability: if not for the environment alone, then also to help the company maintain its level of success.
The crown jewel of Perdue’s “sustainability story” is the Perdue AgriRecycle plant in Blades, Del. an eight-year-old facility that converts poultry litter into nutrient-rich fertilizer.
Environment, business benefit
The Perdue AgriRecycle facility, a now-$30-million-dollar, long-haul investment, has kept Perdue at the top of its sustainability game over the years, helping poultry growers regardless of their affiliation maintain their environmental sustainability at all costs.
Perdue AgriRecycle is just beginning to have a positive impact on Perdue’s bottom line, and Jim Perdue says the company is beginning to see the fruits of its investment elsewhere.
“Perdue AgriRecycle has been a multi-year project that just now is getting to the point where it’s paying the benefits as far as significant, continuous removal of nutrients from the watershed of the Chesapeake Bay, which was the original intent of that facility,” Perdue told The National Provisioner during an early December 2009 visit to the company.
Perdue Farms opened the facility in 2001, when environmental regulations around the Chesapeake Bay were tightened in light of studies claiming elevated levels of phosphorus in agricultural runoff were polluting the waters of the bay and destroying the ecosystem.
Previously, farmers in the region based on the science of the times had tracked only the level of nitrogen in the fertilizer they applied to their lands, meaning the application of raw poultry manure was a widespread occurrence. But with new science in tow, regulators began to target levels of phosphorus another nutrient in poultry litter.
“Our producers were running into a dilemma,” Perdue explains. “That dilemma was, many of them didn’t have a place to go with their poultry litter … because of new rules on nutrient-management plans that would be a limitation on them.”
Perdue, clearly interested in its growers’ business health, teamed with Springfield, Mo.-based AgriRecycle Inc. to construct the plant and put AgriRecycle’s technology into real-world use.
“We built it as an option for the producers to take their litter somewhere at no cost to them, which was also very important,” Perdue continues. “We bore that cost in order to help them satisfy the new rules around nutrient management in the Chesapeake Bay region.”
Today, Perdue AgriRecycle stands as the only large-scale commercial plant of its kind in the United States, and 2009 was the first year that the plant turned what Steven Schwalb, vice president, Environmental Sustainability, for Perdue, calls a “marginal profit.”
The past nine years have been a lesson in trial and error a key reason for the long-haul investment figures for Perdue’s AgriBusiness team, which oversees Perdue AgriRecycle, among its myriad other duties. One of those trials that led to a change was the original go-to-market concept for the fertilizer produced by the facility, says Cathy Klein, vice president, Co-Product Sales.
“We thought we had a bit more of an edge to sell to the agriculture community,” she explains. “But our economics at the time were a little skewed from the standpoint of our concept, which was, we would bring in railcars of corn from the Midwest [for feed] and we would send back railcars of fertilizer pellets to customers out there, moving nutrients off the Shore and to those areas of the country that needed it.”
Perdue found out quickly that fertilizer needs, and thus sales, were a highly seasonal proposition and that chemical nitrogen-based fertilizer was a tough foe to battle in the ag sector, so that piece of the concept proved economically unfeasible.
“We amassed a large pile of pellets on our storage side of the building,” Klein says. “This is very seasonal business, but we clean out chicken houses every day of the week. We have to find a place for all of that to go.”
So Perdue modified its approach and found retail and commercial customers, such as Espoma, The Scotts Co. and an East Coast golf-course management company, to purchase the fertilizer and incorporate it into their blends. Another boon to the product’s allure came when the Organic Material Review Institute (OMRI) a private review board that bases many of its approvals on the USDA’s National Organic Program’s recommendations accepted MicroStart 60 as a “processed manure” that could be used in organic crop production without restriction. In other words, growers could use the fertilizer up until harvest and still label their product as “organic.”
“We finally provided enough data, samples and testing that the OMRI created a category for our product: Processed Manure,” Klein says. “All they had prior to that was ‘Compost’ or ‘Raw Manure.’”
Another “learn-on-the-fly” discovery the AgriBusiness unit made was that poultry manure doesn’t behave in the same fashion as feed ingredients beating up and significantly increasing repair and maintenance costs for equipment, specifically pellet mill dies and rolls.
“Manure, which has sand and silica, will reduce the life of that equipment by half,” Klein says. “So, all of a sudden, you have your assumed market price, but a cost that has tripled. We were replacing dies and rolls expensive items so here we were investing and relearning how to do this.”
Still, Perdue stayed the course and continued to invest in the concept, and today it has begun to return some of that investment in several ways.
The ‘nature’ of the company
Perdue’s environmental sustainability story may be dominated by the Perdue AgriRecycle facility, but it goes well beyond the manure-to-fertilizer process.
The Perdue family can trace its roots back several generations on the Delmarva Peninsula, and as such, the company founded by Arthur Perdue (Jim’s grandfather) has kept accountability to the environmentally sensitive Chesapeake Bay region among its top priorities. As demand for these initiatives has spiked recently, Schwalb says, the company needed to be certain that its projects and initiatives were truly making a difference.
“One thing that Jim [Perdue] has really taught all of us is, he wanted these things to be real he didn’t want any ‘greenwashing’ these things need to make sense and have a true environmental impact,” Schwalb says. Schwalb earned his position in 2007, when Perdue Farms made its Environmental Sustainability Initiative part of the company fabric.
“It was designed to pull our story together, given that we already were doing so many things for so long,” Schwalb explains. “We really just didn’t have an organized clearinghouse for measuring the effects, setting goals for improvement and discussing it all.”
Perdue’s strategic Environmental Steering Committee comprises Schwalb, Klein, an additional co-chair to represent the food products side and two additional members of Perdue’s executive team.
“The purpose of that committee is to say, ‘What direction do we want to take environmental sustainability? How ‘green’ on that continuum from, compliance, to greener than green, really makes sense for us from a true sustainability standpoint? What makes sense for the business as well as the environment?’” Schwalb says.
The committee has developed three platforms for the many environmental initiatives the company spearheads: (1) Reduce, Reuse, Recycle, (2) Research and Innovation, and (3) Community Outreach. Some initiatives, such as Perdue AgriRecycle, fit into all three platforms, while others fill needs on a more specific basis.
The Perdue Clean Waters Environmental Initiative, for example, is a partnership between Perdue, the Environmental Protection Agency (EPA) and Perdue’s independent poultry growers. It is designed to assist growers in understanding regulations that apply to poultry growing, and help them develope best practices for meeting federal, state and local clean-water regulations within the poultry production area. Perdue then assesses those growers through an environmental audit jointly developed by EPA and Perdue, with the assumption that growers who pass could then meet EPA requirements.
Having started this as a pilot program in 2006, Schwalb says the company is rolling it out across all independent growers producing chicken for Perdue in the EPA’s regions 3 and 4 over the next three to four years. This project, he adds, not only helps the environment, but helps the company’s bottom line, particularly in the face of potential challenges by environmental groups that might claim a lack of responsibility on the part of Perdue.
“There is no return on [our investment in] the Clean Waters Initiative it’s a cost of doing business,” he says. “But it’s a protection of our supply chain, because without people who can grow poultry for us, we can’t sell a lot of chickens.
“It’s an investment in those folks to ensure they can maintain their businesses.”
Perdue also encourages its associates to participate in environmentally sustainable projects, such as Project Clean Stream a partnership led by Klein with the Alliance for the Chesapeake Bay.
“We wanted to engrain this as a fabric of the company, to give our associates the opportunity to volunteer to do some of these projects,” Schwalb says. Through Project Clean Stream the past two years, Perdue associates cleaned up trash in eight “hot spots” in area waterways, logging nearly 500 volunteer hours in two separate events.
In the past year, Perdue has continued to step up its efforts in developing partnerships. In July 2009, Perdue announced it would work with the National Fish and Wildlife Foundation (NFWF) to support habitat restoration and water-quality improvement projects on the Delmarva Peninsula. Perdue committed $35,000 (which was matched by the foundation’s federal partners) to NFWF and embarked upon a pilot project that involved Perdue associates planting oyster gardens with bayside dock owners.
Perdue expects to increase involvement in the Oyster Recovery Project on the Nanticoke River, which gave associates the opportunity to volunteer 59 hours toward renovating the bay’s ecosystem.
Beyond the aforementioned, macro-level initiatives, Perdue practices what it preaches within its own walls. “Reduce, Reuse, Recycle” practices are evident in the processing facilities as well, from wastewater management and treatment to utility optimization and conservation, all on display during The National Provisioner’s visit to the company’s Salisbury plant in early December 2009.
From top to bottom, Perdue Farms does not appear to have “greenwashed” its products or strategies. Indeed, the company known most for its quality poultry products appears to also bleed green, and certainly stands among the industry’s leaders in walking the walk as far as environmental sustainability goes.