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SUSTAINABILITY NOW & INTO THE FUTURE


USTAINABILITY


Letter from our founders, David & Steven Gill

Table of Contents

When we peeled our first onion, we realized that waste was going to be a problem, but far from shying away from the challenge we set out to find a solution consistent with our values. The principles of sustainability are embedded in Gills Onions’ core values of doing what is right, accepting personal responsibility and always seeking to improve.

Founders’ Letter

Over the years we have grown into one of the largest onion growing and processing operation in the country. We have also embraced our role as a global citizen, including an obligation to the environment. As such, we are dedicated to providing the highest quality onion products, while ensuring the most efficient utilization of natural resources and raw materials, maximizing recycling and waste reduction efforts and minimizing our carbon footprint. We do this because we owe it to our customers, our employees and our community, but also simply because it is the right thing to do

People

Pgs. 5 - 6

Planet

Pgs. 7 - 10

Profits

Pgs. 11 - 12

Validation

Pgs. 13 - 16

Sustainability Resources

Pgs. 17 - 18

Education

Pgs. 19 - 20

Waste to Energy (AERS)

Pgs. 21 - 22

We have adopted ambitious and meaningful goals to continuously improve Gills Onions’ environmental profile, both for the near- and the long-term. We are already well on our way toward achieving some key goals — diverting 99.5% of our waste by 2011, generating 100% of our base load electricity from onion waste, and reducing our water consumption by 15% by 2012.

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Sustainability Mission & Vision Pgs. 1 - 2 Overview of Sustainability Pgs. 3 - 4 at Gills Onions

Sustainability and the Pgs. 23 - 26 Gills Onions Brand What the Future Holds Pgs. 27 - 28

Many of the steps we are taking to accomplish these sustainability goals are discussed in the following pages. We want to stay ahead of trends instead of be ahead of the trend. We encourage you to visit our website at www.gillsonions.com for continuing updates on progress, as well as for information about other initiatives. We established sustainability priorities to ensure the greatest impact across our operations. We face many challenges in our business, including minimizing our environmental footprint while also ensuring the safety and highest quality of our products. We are moving forward with innovation and great enthusiasm as we explore ways to do so. We are maintaining this focus even as we continue to navigate this challenging economic and regulatory environment. Our vision is for the long term. So is our commitment.

David & Steven Gill. Founders, Gills Onions

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Sustainability Mission & Vision Mission

As one of the nation’s largest Fresh-Cut onion processors, we serve our mission by continually striving for optimal operating efficiency to assure the sustainability of our business and preservation of our environment. By nurturing the land we farm and conserving our resources, we are able to consistently produce onions of the highest quality without compromising valuable resources necessary for future generations. We are committed to achieving maximum levels of energy efficiency, waste reduction, water conservation and sustainable land use while reducing costs. Vision Our Vision is to explore and implement new technologies and methods to maximize conservation and to improve operating efficiency in all areas of our business. By demonstrating responsibility and leadership we will motivate and encourage similar initiatives by the agricultural industry in California and beyond. We want to be ahead of the trend and in a position to help design reasonable and effective policies that benefit all stakeholders. The least desirable approach is to wait for government to impose strict and possibly unreasonable laws without understanding their full range of consequences. By operating in an environmentally sound, economically profitable, and socially equitable manner, Gills Onions seeks to meet and exceed its Sustainability Mission, Vision and Goals – for the benefit of present and future generations. Goals Through practice and patience, we’ve learned that adopting Sustainable practices is not only the right thing to do, but that it also makes good business given our increased efficiency and the lower consumption of costly resources. Our desire to be in harmony with the surrounding environment means that we accept responsibility to achieve and improve: • Energy efficiency • Reduction of waste, emissions and carbon • Water conservation • Efficient land usage and conservation • Environmentally preferable and safe packaging choices • Quality of life for our farmers, employees and communities

VISION

Provide our customers with the highest quality fresh cut onion products with the lowest environmental impact.

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Sustainability Overview Who We Are If you eat onions, you’ve probably eaten Gills Onions before. As a family-owned and operated agri-business, Gills Onions has grown into one of the largest producers of fresh cut onions in the United States over its 25 years of seeking and implementing sustainable growing, processing, packaging and transporting practices. Located in Oxnard, Gills Onions operates the most state-of-the-art, progressive fresh cut onion plant in the world. Gills grows onions on more than 15,000 acres of farmland and operates 100,000 square feet of processing and warehouse facilities. Gills Onions processes nearly a million pounds of onions each day in an energy-intensive food production process that supplies cut onions to food service, industrial and retail markets throughout North America. Why Sustainability Farmers have always been and continue to be closer to, and more protective of the resources they rely upon for their livelihood than nonfarmers in the “modern” post-industrial era. In order to not only survive, but thrive and develop a successful legacy, the Gill family created a vision in the mid-1980’s to “explore and implement new technologies and methods to maximize conservation and to improve operating efficiency in all areas of our business.” We created this philosophy not only as a way to ensure our longevity, but to also honor with tremendous gratitude, the responsibility we feel for the land, air and water that sustain us and all the future generations who will rely upon them too.

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From water conservation, green packaging, employee relations, recycling and waste reduction, to efficient land usage and community involvement, Gills Onions has always been an environmentally conscious pioneer in the fresh produce processing industry. With the opening of our Advanced Energy Recovery System (AERS) in July 2009, Gills Onions became Onions the first food processing facility in the world to produce ultra-clean energy from its own waste - converting 100% of our daily production waste (up to 300,000 pounds) into renewable energy and cattle feed, reducing greenhouse gas (GHG) emissions and saving energy costs. As one of the largest producers of fresh cut onions in North America, the reach of Gills Onions is far and wide, so our sustainable practices spool far beyond the boundaries of California. For example, Gills Onions was recognized for Climate/Energy and Waste Management practices in the McDonald’s 2010 Best of Sustainability Supply Chain-National awards. Beyond the far ranging reach of Gills Onions product line, the staff of Gills Onions is pro-active in reaching out beyond the lines of its production facilities and fields to increase awareness of the value and potential of integrating sustainable practices in a major food growing and processing operation. A partnership with the University of California-Santa Barbara Bren School for Environmental Science & Management to gather baseline data about California farming is a demonstration of our on-going commitment. Where We’re Headed Whether it’s quantifying the environmental impacts of our farming practices, improving the efficiency of our AERS by adding a 600-kilowatt energy storage system, designing water conservation and recycling systems to reduce and reuse water requirements for our processing facility, or working to achieve our Zero Waste goal in facility operations (we’re at 95.5% of goal already), Gill Onions is committed to process improvement in all areas of sustainability. Owner Steve Gills says it best as he describes the challenges ahead, “Achieving zero waste, improving water conservation and even developing effective nutraceuticals from onion waste are all achievable goals in the near term. We’re excited about our future.”

OVERVIEW

Where We’ve Been

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PEOPLE

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People Gills Onions would not be a leading grower and fresh-cut food processor without the dedication of our people, their families and the communities where we live and work. With more than 600 people employed at our processing facility and the growing operations of our sister company, Rio Farms, we are staffed with diversity – the majority of our processing facility employees are women, and most of our workforce is bilingual in English and Spanish. The ranks of our management continue to reflect this diversity as do the cities and communities in which we operate. Since the company’s creation in 1983, we have enjoyed a rewarding and strategic partnership with Oxnard, our headquarter city and one of California’s leading communities in delivering services and developing sustainability initiatives to benefit its citizens. We continue to actively participate in the city’s major yearly events: Earth Day and the Salsa Festival. And, since 2004 we’re proud of our continuing support of the Oxnard Boys & Girls club, which help provides a safe haven and programmed activities for over 7,000 young people between the ages of 6 - 18.

During the 2010 Christmas Holiday, we donated 500 bags of onions – 25,000 pounds – to the Salvation Army Golden State Division, located in Fresno. • 3,000 Christmas food boxes were delivered to families in Fresno County, Visalia, Tulare and Hanford • Each box also contained about eight pounds of onions per family

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PLANET 7


Planet Waste-To-Energy The centerpiece of our Sustainability efforts is the installation and operation of the Advanced Energy Recovery System (AERS), which converts 100% of our onion waste into ultra-clean, virtually emissions-free electricity and highvalue cattle feed. AERS produces 100% of the baseload electricity required at our Oxnard facility and has allowed us to reduce greenhouse gas (GHG) emissions by nearly 2,000 tons of CO2 per year. Water Conservation By converting to drip irrigation in our fields, we are conserving enough water to meet the annual needs of 2,400 homes in California. In our processing facility, we are developing water conservation measures to reduce water consumption by 15% in 2012. Air & Climate Change We continue to calculate, publicly report and verify our carbon footprint through The Climate Registry and an independent third party. We use our footprint to establish our GHG inventory and further reduce GHG emissions. Zero Waste Gills Onions has set a goal of achieving zero waste. Through the implementation of a comprehensive recycling program, expansion of our waste reduction initiatives, and quantification of material usage, waste diversion will amount to 99.5% by the end of 2011. We will continue to seek new opportunities to achieve our zero waste goals not only at our food processing facility but in all our business operations.

• When an onion is peeled, 35 – 40% is waste. We generate up to 300,000 lbs of onion waste per day

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LANET


Planet Land Stewardship Since its inception, Gills Onions has consistently researched and upgraded its growing practices to improve Sustainability. By converting 99% of our conventional irrigation methods to drip irrigation, we’ve reduced water consumption in our fields by 40%. By reconfiguring planting beds, we’ve been able to increase plants per acre by 15% while reducing the land required by 22% in the Imperial Valley. And, to date we have donated over 1,000 acres of highly productive farmland to the Monterey County Agriculture and Historical Land Conversancy, the Ag Land Trust and the California Department of Conservation to protect the land from development. This will ensure that the farmland will remain as such for this generation and many more to come. Transportation & Shipping Gills Onions has reduced its consumption of diesel fuel by converting its onsite onion waste to electricity and high-value cattle feed – eliminating 750 annual truck trips to haul the waste away. Moreover, we converted our transportation fleet to cleaner, more fuel efficient engines and lighter truck bodies, which allowed us to save up to 70,000 gallons of fuel and meet California’s 2017 smog regulations.

• Gills Onions 2009 carbon footprint amounted to 7,052 tons of CO2 e (equivalent) emissions

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ROFITS

Profits Gills Onions’ comprehensive sustainability model is a blueprint for managing both agricultural/food waste and distributed renewable energy in California and the world. According to Deaton & Associates, over 429 million tons of food processing waste is produced each year in California. The annual cost of managing this waste exceeds $1 billion. A significant amount of this waste stream could be converted into bioenergy using the technological innovations of Gills Onions’ Advanced Energy Recovery System (AERS), waste-to-energy system. Processing waste onsite to generate renewable, emissions-free electricity reduces greenhouse gas (GHG) emissions and disposal costs, Gills Onions’ Zero Waste initiative also provides a model for waste diversion/reduction and resource conservation in the food processing industry – saving both money and resources. Our AERS project and the Zero Waste initiative build upon California’s environmental leadership nationally and worldwide. Most importantly, Gills Onions’ efforts demonstrate that Sustainability can be good for the environment and great for business.

• Reduced our purchased electricity demand by 47% $700,000 in 2010 • Provides enough energy to meet the annual power needs of 460 homes

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VALIDATION AWARDS 13


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Validation Steve and David Gill receive a $2.7 million dollar check from California’s Self-Generation Incentive Program via The Southern California Gas Company at the grand opening of our AERS Waste to Energy project in July, 2009. Pictured left to right are: Nikki Rodoni - Gills Onions Director of Sustainability, Bill Deaton – AERS Project Engineer, Deaton & Associates, Steve Gill, David Gill, John Smith – Southern California Gas Company, Jane Doe – ACME Inc., A.G. Kawamura – California Department of Food and Agriculture Secretary. We are honored that our sustainability efforts have been extensively recognized and validated through prestigious awards, verifications, and favorable publicity – simply for doing the right thing. Awards Gills Onions became the first food processing facility in the world to produce ultra-clean energy from its own waste. In Spring 2010, the American Council of Engineering Companies (ACEC) awarded Gills Onions its coveted Grand Conceptor Award for our Advanced Energy Recovery System (AERS) Project at our Oxnard facility - beating out 163 other engineering design project competitors from around the world, including the new Dallas Cowboys Stadium in Arlington, Texas. Out of hundreds of submissions worldwide, Gills Onions won the McDonald’s 2010 Best of Sustainability Supply Chain Aware in the categories of Climate/Energy and Waste Management. Gills Onions earned the distinction of being one of 285 California businesses and organizations to be named a 2010 Waste Reduction Awards Program (WRAP) winner by the California Department of Resources Recycling and Recovery (CalRecycle). Further, Gills Onions received California’s highest and most prestigious environmental honor in 2009: the Governor’s Environmental and Economic Leadership Award (GEELA) for our AERS Waste to Energy Project. Other recent recognition includes: • 2010 Platts Global Energy Awards Recognition Finalist – chosen from over 200 worldwide nominations • Ventura County Resource Conservation District Recognition

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WARDS

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• 2010 California Green Leadership Award –Waste Management category winner in partnership with a grant from the California Energy Commission • 2009 Energy Solutions Center Partnership Award for Innovation Energy Solutions • 2010 Food Plant of the Year from Refrigerated Frozen Food Magazine • Pacific Coast Business Times 2009 Company of the Year • Cool Planet Project Winner 2008 Verification Gills Onions achieved the environmental leadership status of Climate Registered™ by successfully registering its comprehensive greenhouse gas (GHG) emissions inventory according to the rigorous standards of The Climate Registry. Participation in the Registry’s voluntary program demonstrates Gills Onions’ pioneering role within California’s Agriculture and Food Processing industries. In 2009, our verified direct emissions totaled 3855 tons of CO2 e. Publicity Gills has generated media interest on a local, regional and national level among many different communities. Those within the business, sustainability, produce, food processing, and energy industries acknowledge Gills’ innovative approach to sustainability. Among other media, Gills Onions is the feature on renowned television shows as well as in a children’s book on alternative energy. Huell Howser’s popular television show “California’s Green”, which investigates innovative and creative ways Californians are solving environmental challenges, aired a full episode on Gills Onions’ processing plant and our fuel to energy project. More recently, the cast and crew of television hit show “Dirty Jobs” visited our onion processing facility to record an episode scheduled to air in 2011 on the Discovery Channel. Our waste to energy project also appears in multiple on-line and print media. We recently became the subject of a book in the elementary schoolaged children’s Fact Finders book series on alternative energy. Check out “Onion Juice, Poop, and Other Surprising Sources of Alternative Energy”.

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USTAINABILITY RESOURCE USTAINABILITY RESOURCE USTAINABILITY RESOURCE USTAINABILITY

RESOURCES

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Sustainability Resources An extensive list of links to the following sustainability resources are all available in the “Sustainability Resources” section of the Gills Onions website at: http://www.gillsonions.com/sustain-resources Sustainability Educational Resources Links Business Case for Fuels United Fresh - April 28, 2010 Oxnard College Green Conference 2009 Geela Award PDF Sustainability Fact Sheets Links Water Conservation Fact Sheet Zero Waste Fact Sheet Waste to Energy Fact Sheet Transportation & Shipping Fact Sheet Education Fact Sheet Validation Fact Sheet Land Stewardship Fact Sheet Sustainability Links & Affiliations ATTRA – National Sustainable Agriculture Information Service Bren Project II Bren School of Environmental Science and Management California Stationary Fuel Cell Collaborative Fuel Cells 2000 Gas Technology Institute McDonald’s Social Responsibility Sempra Energy Stewardship Index for Specialty Crops Sustainable Agriculture Research and Education Sustainability - Produce Marketing Association Team Onion The Climate Registry The Governor’s Environmental and Economic Leadership Award

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EDUCATION Onion root tip cells in Mitosis

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Education Our Company has partnered with the University of California, Santa Barbara’s Bren School of Environmental Science & Management, to benchmark our sustainability efforts and to establish future direction for continuous process improvements. As part of this partnership, in 2009 a group of graduate students evaluated Gills Onions’ material, water, and energy flows and developed a comprehensive set of strategies that would move the company closer to its zero waste goal. Go to the Team Onion website at http://fiesta.bren.ucsb.edu/%7Eonions/ for the final report and more information. In 2010 another group thesis project started developing sustainability metrics for Gills Onions’ farming operations. Go to the GreenOnions website at http://fiesta.bren.ucsb.edu/%7Egreenonions/ for more information.

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WASTE TO ENERGY

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Waste To Energy Gills Onions’ award-winning Waste-to-Energy project, the Advanced Energy Recovery System (AERS), has allowed us to become the first food processing facility in the world to produce ultra-clean energy from our own waste – converting 100% of our daily onion waste (up to 300,000 lbs) into renewable energy and cattle feed, reducing greenhouse gas (GHG) emissions, and saving us in annual electricity costs. Everyone knows the power of onions: just one can reduce a person to tears. But now, we celebrate the power of onions in a new way that sets a precedent for food processors of all kinds to transform food waste into valuable, renewable energy. We engaged four important project participants - HDR Engineering, Inc., Deaton & Associates, LLC, Calkins Electric, Inc., and Hartigan/Foley to design, coordinate and construct a system to enhance our sustainable practices while reducing our environmental footprint. The Advanced Energy Recovery System (AERS) that went into operation in July 2009 converts all of our daily onion waste into a combination of renewable energy and cattle feed. The AERS eliminates the formerly labor intensive and expensive process of hauling onion waste to farm fields, where it was worked into the soil. Environmental benefits extend to the local community, the state of California and beyond, with profound implications for agricultural food processors around the globe. The new system extracts the juice from the onion peels and treats it in a high-rate anaerobic reactor to produce methane-rich biogas that powers two 300-kilowatt fuel cells. The resulting electricity is used to power the onion processing plant, saving an estimated $700,000 annually in electrical costs. The onion pulp that remains after the juice is extracted is processed into cattle feed cake that is sold to local cattle ranchers.

• The combination of the energy produced, cost savings generated and grant funding for renewable energy projects will result in a full payback of the $10.8 million total system cost in

Additional savings come from the elimination of $400,000 in annual costs associated with hauling onion waste to farm fields. Greenhouse gas emissions are reduced through the elimination of hundreds of truck trips on California roadways that moved this waste stream each year. The result is increased energy independence, elimination of a significant waste stream, reduced operational costs and a smaller carbon footprint, with an estimated reduction of 14,500 metric tons of CO2e (equivalent) emissions per year.

AERS

less than six years. • Earned grants and incentives of nearly $6 million for developing and using a renewable energy solution

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ILLS BRANDIN


Sustainability and the Gills Onions Brand Gills fresh-cut onions are 100% California grown and sold nationwide to Foodservice, Industrial, and Retail operations – providing the ultimate in flavor, quality and convenience. Consumers can find our products at their local grocer or supermarket in packaging made from eco-friendly, recyclable PLA material derived from plants to reduce fossil fuel use and Green House Gas (GHG) emissions.

Fresh Cut Onions for Foodservice

From packaging to website, public relations and sales materials, to promotions and merchandising, and from presentations to advertising, sustainability has become an integral part of our corporate identity – and will continue to define us into the future. Grower Direct

About Sustainability

ENERGY COMMUNITY

S U S TA I N A B I L I T Y

Gills Onions’ commitment to sustainability is a long-term investment in innovation that allows us to bring fresh-cut onions of consistent quality and value to our customers. You stay price competitive and enjoy the benefits of our greater efficiencies and reduced use of resources. When you buy Gills Onions you improve the sustainability of your operation. • We have reduced our annual greenhouse gas (GHG) emissions by the equivalent of

355 cars.

• 100% of our onion waste is converted, into ultra-clean, virtually emissions-free electricity to provide 100% of the baseload electricity required at our Oxnard facility.

• Gills Onions is reducingZero water Waste Goal

• We are dedicated to a

in our operations.

Gills Onions, founded in 1983, is a family owned and operated grower and food processor with one of the largest fresh onion processing plants in the world. In concert with sister company Rio Farms, the Gill brothers manage over 15,000 acres of farmland and 300,000 square feet of processing and warehouse facilities. Gills Onions is committed to continuous process improvement to positively impact the air, land, water, energy, and communities we rely upon for our livelihood. To learn more, visit

www.gillsonions.com/sustainability.

• California’s Department of Pesticide Regulation has one of the most comprehensive pesticide regulatory systems in the world according to the Western Farm Press, an agricultural trade publication. As such, Gills Onions’ sustainability efforts into seed development and integrated pest management (IPM) have been helpful in reducing and minimizing the impact of land application of pesticides in our fields.

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USTAINABILITY


Advanced Energy Recovery System (AERS)

Sustainability and the Gills Brand For years the Gills Onions brand has represented a sustainable choice and value in fresh-cut produce as we eliminate all the waste before our products reach market. Now that we convert our waste into energy for our processing facility, along with our other sustainability efforts… nothing is wasted. Being sustainable makes it easier for us to control our entire supply chain from the growing and processing operations perspective – allowing us to incorporate these and all the benefits to sustainability into our image and brand.

GROWER DIRECT

Fresh Sliced Onions

Printed on recycled paper

Gills Fresh-Cut Sweet Onions are known for their mild, even sugary, taste and are now available from April through September. They’re California grown to provide the ultimate in flavor, quality and convenience. It’s like giving your customers fresh, wholesome Farmer’s Market produce every day of the week. • Unsurpassed flavor and quality • Convenient, eco-friendly, compostable packaging • If your customers are still cutting onions, it’s a crying shame!

Grower Direct – Gills Onions, established in 1983, is a family-owned business that grows and operates the largest, most state-of-the-art, sustainable fresh onion processing plant in the world.

1-800-348-2255 • www.gillsonions.com ©Gills Onions, LLC 1051 South Pacific Avenue, Oxnard, CA 93030 USA

• Gills Onions also adheres to the California League of Food Processing guidelines for pesticide application. Our sustainability efforts lessen the burdens of compliance and reporting.

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THE FUTURE As we look to the future, continuous process improvement in many aspects of our business operations is our focus. Here’s what the immediate future holds: Energy Storage Project In December, 2010, Gills Onions awarded a contract to Prudent Energy of Washington, DC, to install a 600-kilowatt energy storage system to further reduce our electricity costs and provide emergency backup power for our Oxnard processing facility. The VRB-ESSTM will provide clean power on demand for periods of up to six hours – allowing Gills Onions to avoid charges, costs and fees for drawing electricity from the grid during times when rates are the highest. This energy storage project will become an essential component of our Waste to Energy (AERS) system to provide reliable, alternative energy and serve as a further refinement of a viable model for other energy-intensive food processors in California and the US. Because of our prior success with AERS, the $3.1 MM project will be funded100% by Prudent Energy. Neutraceuticals Quercetin, a plant-derived flavonoid found in fruits, vegetables, leaves and grains, is used as an ingredient in supplements, beverages and foods. Foods rich in quercetin include black and green tea, capers , apples, and onions. Several laboratory studies show quercetin may have anti-inflammatory and antioxidant properties, and it is being investigated for a wide range of potential health benefits. We are currently investigating the quality of, and practical applications for the quercetin content found in our onion residuals.

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E Sludge/Sulfur When an onion is peeled, we lose 35 – 40% of it. This daily onion waste – up to 150 tons per day – is 75% juice and 25% solid waste. We separate the juice from the solids and send it to the Anaerobic Digester of our Waste to Energy (AERS) system to create methane for two (2) 300 kW Fuel Cells - providing us with up to 100% of our base-load electricity requirements. The remaining solids are converted into high value cattle feed and have a high sulfur content. Because sulfur has value as a component in other materials like natural fertilizers and pesticides, antibiotics and topical skin treatments, we are researching practical economic alternatives for our solid onion waste. Water Reuse We have a target is to reduce water consumption by 15% by 2012 through the reuse of as much water at our Oxnard processing facility as possible. We are in the active process of exploring all our viable alternatives including technologies and economics best suited to our specific operations. Additionally, we are pursuing public grants to fund further academic studies on water conservation alternatives at food processing facilities.

What the Future Holds Gills Onions are grown and processed through a system of agriculture that conserves and promotes the well-being of natural and human resources – now and for the benefit of future generations.

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1-800-348-2255 • www.gillsonions.com ©Gills Onions, LLC, 1051 South Pacific Avenue, Oxnard, CA 93030 USA http://www.facebook.com/pages/Gills-Onions/49275253188


Gills Onions 2011 Sustainability Report