Brasil Foods is conscious of its importance as a catalyst for socioeconomic development. For 72 years, the Company has sought to create the best living conditions for all who directly or indirectly participate in the growth of its businesses and contribute to transforming it into one of the most solid companies in the Brazilian food industry.

Even before the term social responsibility had become part of the business vocabulary, Brasil Foods was already alert to the social demands of the communities to which it was locating. In this context, it sought to identify mechanisms for developing actions that would improve the conditions of income, work, quality of life, education, health and the culture of its employees and, as a consequence, the residents surrounding its industrial units. Through the pursuit and practice of change, Perdigão has successfully achieved major transformations in the quality of life and health of its constituent public, with the emphasis always on transparency in its relationships.

The Company runs a series of active socially responsible programs, some apparently simple if looked at in isolation, but together forming a well protected and interlinked protective network for promoting the human development of its employees on an integrated and continuous basis, and on many occasions, extensive to the community as a whole.

The consolidation of Brasil Foods as a benchmark in the social area was one more reason for the setting up of the Perdigão Sustainability Institute in 2006. With the objective of analyzing the possibilities of maintaining the Company’s growth within balanced economic, social and environmental parameters, the Institute’s role is to deal with social and environmental questions, dedicating greater attention to the needs identified.

Catalyst for development

In some regions of Brazil where it operates industrial units, Brasil Foods features as the principal source of income for the local population, often employing several generations of entire families. This underscores the Company’s responsibility in creating a sustainable business model, which respects and enhances the needs of each region. With this challenge, the Company acts not only as a partner to government entities but also, not uncommonly, takes on the role of leader in supplying the population with basic needs that cannot be fully satisfied under the public sector umbrella.

An example of this is the successful partnership with the integrated outgrowers (producers that supply the Company’s raw material). This partnership system has been instrumental in providing the outgrowers with work, technology and guidance on how to manage their properties with quality and productivity. The Company ended the year with a total of nearly six thousand integrated outgrowers, thus dispersing economic activity among thousands of families. Thanks to this partnership system, it has been possible to intensify the economic turnover of the cities where Brasil Foods is located and contribute to the distribution of the country’s wealth.

Awareness of its role in the development of the municipal areas where it operates was a crucial factor in the creation of Prohab – Perdigão Housing Program. This program helps the Company’s employees acquire their own homes, the majority of these employees being hired in the region where the industrial unit is located. Since its inception in 1997, the program has already realized the dream of home ownership for 2,500 people. In Nova Mutum (MT) homes and apartments are in the final stages of completion. In Rio Verde, the keys to 50 of the 298 homes that will form the Parque das Paineiras development were delivered to the new owners already in March 2007. In addition to the homes, the new residents will enjoy the benefits of an infant education center, parents having the peace of mind that when they are at work, their children are being well cared for.

Of the total of 608 homes constructed under the Prohab scheme at an investment of about R$12.5 million, 44% came from the housing fund constituted by Crediperdigão (Brasil Foods Mutual Savings and Credit Cooperative), which is maintained by the employees.

Perdigão Institute for Sustainability

Work and life incentives
Brasil Foods has successfully extended and renewed its social programs, expanding their impact over time based on the same long-term vision that has enabled the Company to report annual growth rates of more than 10% over the past decade in a cycle of continuous and sustainable growth.

It is this principle which has guided and provided solidity to the Semear Project – Eggon João da Silva Agribusiness School. The purpose of the project is to prepare young producers in the sustainable development of their rural properties based on modern management techniques in agribusiness. Pioneered in the state of Santa Catarina, this middle school professionalization course concentrates on the creation of opportunities and innovative experiences for enhancing productivity and establishing the feasibility of new businesses. It is intended to contribute to retaining youngsters on the family farm and for supplying quality products to the Company. Based on these principles, the project in 2007 has an intake of 106 students between 15 and 22 – the school’s first group. In 2006, the initiative ceased to be exclusive to the children of Brasil Foods’ producers and suppliers alone, being extended to members of the community through the opening up of 50% of the places to this constituent public.

Besides technical qualifications, the Company seeks to enhance the intellectual level of employees and communities through such initiatives as the Adolescent and Adult Education Program. In 2006, the program celebrated its tenth year having benefited a total of 5,815 employees, 1,992 at the high school level and 3,823 at primary school education levels. In addition to Brasil Foods’ employees, the program is open to any interested party, reaching thousands of people from the communities where the company is located and providing access to knowledge and education.

Recognition of the effective value of people and the tools for retaining employees underscore the Company’s global management of the quality of life of its internal public – encompassing family members and employees. This is symptomatic of programs such as the New Being Program, begun in 2004 for facilitating a gestation period free of medical complications for the Company’s pregnant mothers. In 2006, 805 mothers took part in the program. This involves monthly meetings held at Brasil Foods in which the mothers-to-be receive instructions on a healthy gestation, information on natural birth procedures, as well as constantly encouraging breastfeeding.

Promoting equality

Perdigão believes that it is possible to contribute to increased productivity investing in actions covering basic needs but without being restricted to these initiatives only, the Company contributing to the increase in the quality of life in all its aspects.

This process includes the promotion of growth opportunities beginning at the earliest infant stages, a theme which is evident in projects such as Citizen of the Future – a partnership with the Jornal de Ponta Grossa (PR) newspaper and schools in Carambeí, responsible for transmitting information and reflective thought to the students of public schools, which are given subscriptions to the newspaper. Actions also include those of a more profound and durable nature such as the completion of the first and only Nova Marilândia Library in the state of Mato Grosso with 4,000 books, the result of volunteer work by Brasil Foods’ employees.

Child protection measures are another area of attention and include the Company’s external suppliers – exemplified by the ongoing rigorous verification employed by Perdigão for selecting suppliers and certifying the absence of unlawful child labor among them. The Company’s concern is also apparent in one-off actions such as the awareness campaign introduced in 2005 – and extended through to 2006 – to reduce the level of child prostitution on Brazilian highways. This campaign involved 800 transportation personnelproviding services to the Company and was run in parallel with lectures and training on prevention of traffic accidents.

With this series of measures, Brasil Foods aims to make its Vision 2020 a reality, broadening its horizons not only in relation to financial growth but also to individual and collective development of all those that are part of the future which the Company wishes to build. Consequently, Perdigão exercises its role with seriousness and responsibility in creating a more just society in which all are shown the respect and recognition for the part they play in the country’s construction and development.

Atende Project

Started in 2000, the purpose of this project is to provide the municipality of Rio Verde with the necessary infrastructure to meet the demand arising from the consolidation of the agroindustrial complex in the region. The project currently consists of nine integrated centers combining a healthcare and public safety function. These centers are available to the population for covering general clinical requirements, pediatrics, gynecology, curatives, vaccinations and dental treatment. Brasil Foods runs this initiative in partnership with the BNDES, which offsets the Company’s investments in the project against interest payable on the financing for the construction of the complex.

Personnel Management

The effectiveness of a personnel management policy is directly related to the solidity that gives sustainability to an organizational culture through fundamental values such as reciprocity, respect, reputation and altruism.

Brasil Foods’ policy of personnel management is focused on continuous growth through the enhancement of the personal and professional lives of its employees and its role as a source of motivation and promotion in formation and in the quality of life.

The Company ended the year with 39,048 employees, 3,500 new jobs being created in the period, substantiating its participation as an important catalyst for development and employment. Of this total, 86.8% work in the industrial area while 13.2% have an administrative and commercial function.

The productivity index per employee in 2006 was 39.7 tons/year, representing net sales per employee of R$133.4 thousand/year. Turnover during the period was 1.9%, with average absenteeism standing at 3.1%.

Development, Improvement and Professional Skills Upgrading

Year after year since its foundation, Brasil Foods has been developing and expanding mechanisms and resources for ensuring the continuous improvement of employee skills. More than merely complying with the prevailing requirements and legislation, the Company is constantly investing in the individual and collective growth of its workforce. In 2006, the value invested in training and skills upgrading amounted to R$9 million, generating 300,000 opportunities for development, and translating into 43 hours/training per employee and 77 hours/training per executive.

Brasil Foods understands the challenge of maintaining an extensive and diverse workforce fully up to date with the latest industry requirements. Aligned with its plans for expansion and internationalization, the Company has begun a new phase in the professional growth of its employees with the opening of the Perdigão Academy. Supported by the concept of corporate education, the project represents an integrated vision of the processes of personnel development, now more aligned to the strategies of the business and with the target of guaranteeing the sustainability necessary for implementing the plans summarized in the Vision 2020.

With this initiative, Brasil Foods reiterates its view of the future business based on responsibility and firmness, incorporating in its strategy the role as a catalyst for development in the individual-professional context as well. The Academy has as its main functions the guaranteeing of a source of skilled manpower to fill current and future strategic positions, developing and implementing the concept of high performance teams and increasing the sustainability of Brasil Foods’ growth.

To cover the various levels of skills considered as critical to the success of the Organization, this initiative is divided into two major dimensions: Management Development Program (PDG) and Perdigão Development Line (LDP).

PDG is made up of development programs for the executive levels of the Company, with a focus on technical and behavioral capabilities essential in the formation of a leader trained to command the front line as required by Brasil Foods’ strategies. In addition to the programs established in partnership with major centers of education, PDG was notable in 2006 for an accelerated development program designed for the Human Relations area: the Leadership Development Program (PDL). Besides six meetings, of 40 hours of immersion each, the participants undergo coaching over the entire program to ensure continued learning.

On the other hand, the LPD is made up of development programs for all levels – from leadership to operational areas – with actions concentrated on technical and operational skills training, leadership and institutional skills that contribute to the sustainable growth in the communities and improving relations with stakeholders.

An example of a program, a component of the LPD with this end in mind, is the Perdigão Way of Leading. The program was launched in 2005 and has become an efficient tool for improving the relationship between leaders and their subordinates. In 2006, 1,179 participated in this program, which realizes on average 10 meetings with 12 hours of training each.

Brasil Foods believes that by offering its employees all that is most modern in the market in terms of training programs in Brazil and overseas, it is fulfilling its commitment of becoming a world-class company.

Competences and Career Management

In 2006, Brasil Foods began a far reaching process of reviewing competences essential to the business as well as leadership skills as part of the goal of improving its information on the profile of its employees and, based on this analysis, creating the conditions for them to develop. In addition, the Company undertook a survey of a 150 strategic job positions in all the major business areas considered essential for meeting short, medium and long-term high performance targets. Personnel Planning allows potential to be identified and provides the clarity to invest with conviction in the development and preparation of people. The objective of this initiative is to ensure that the organization’s growth rates do not surpass skills-availability among the Company’s leaders.

Internationalization

Brasil Foods has been consolidating all facets of management processes with a view to assuring sustainable growth. In 2006, the Company fine-tuned its policy of preparing employees to work outside Brazil. One of the highlights of the year on this front was the redesigning and approval of the new policy for allocating professionals to overseas positions, opening up opportunities for any employee, irrespective of position in the corporate hierarchy. Brasil Foods ensures the use of good practices in alignment with the characteristics of each country by using the support of companies specialized in tax legislation and human resource practices, thus facilitating the process of decision-making on a country by-country basis.

Quality of Life

While Brasil Foods has a far-reaching vision directed towards the future, this does not prevent it from being alert to daily requirements, creating objective and immediate conditions for its employees to achieve the best performance and improve their quality of life in the present. It was with this in mind that the second Organizational Climate Survey was undertaken for employees to express their opinions on working at Perdigão.

The Company received responses to the survey – made up of 12 themes – from 88% of the employees. The results revealed general satisfaction levels in the region of 63%. Compared with data raised in 2002, employee satisfaction in relation to the Company rose in eight of the 12 themes evaluated. Based on the results, the Company has prepared action plans in cases where opportunities for improvement have been identified.

Another highlight of 2006 was the structuring of the SSMA Process – Occupational Health, Safety and the Environment, which consolidates and expands initiatives for protecting the employees. Through an integrated methodology of actions for accident prevention and for promoting the global health of the employees, the focus is on creating a culture of safety irrespective of the sphere of activity. The objective for 2007 is to implement the SSMA at all units, improving the quality of life and reducing the risk of accidents, which also translates into increased productivity.

Environmental Sustainability

If citizens, governments and industry were to maintain current levels of consumption of natural resources, then we shall need four more planets Earth to satisfy the needs of future generations. The global pact signed between companies and governments proposes the reduction of the impact of industrial activities on the environment – a strategic vision for the survival of the businesses, and a question that is continually exercising minds at Brasil Foods.

Environmental Management

The Company’s objective is to continue growing and expanding its operations on a globalized basis always respecting the principle of minimizing the environmental impact on the areas where it operates. In 2006, Brasil Foods implemented several measures for expanding and reasserting its commitment to the environmental sustainability of its activities. The Company’s view on the environment is that the work of today makes the world of tomorrow a better place.

Outstanding in the actions adopted by the Company was the creation of the Perdigão Institute of Sustainability. The Institute’s first project to be implemented was the Perdigão Sustainable Hog Farming Program. This involves a drive to mobilize integrated hog outgrowers in the states of Santa Catarina and Rio Grande do Sul to implement mechanisms for reducing the emission of greenhouse gases.

The Program meets the requisites of the Kyoto Protocol, signed in 1997 by 160 countries committed to a 5% reduction in the emission of noxious gases by 2012. While Brazil is not among the group of countries obligatorily required to comply with the protocol, Brasil Foods decided to adhere to the campaign to reduce the greenhouse gas effect through cutting methane gas emissions from animal manure resulting from one of the stages of its operations.

By anticipating compliance with this type of guideline established at a world level, Brasil Foods reaffirms its willingness year after year to renew its capacity to fully meet the rules of the international market, where environmental requisites are extremely rigorous.

Systems of control

A system of partnership with integrated outgrowers is one of the strategies used to ensure that Brasil Foods’ activities and those of its suppliers are performed according to world standards. The Company is responsible for its integrated outgrowers’ licensing projects, providing technical support and guidance on the best way to manage environmental issues.

An example of this work is the Reforestation Program for rural landowners. In the non-productive areas of the outgrowers holdings, the Company is responsible for the planting, forestry stewardship and harvesting of the trees, returning to the outgrowers part of the production in the form of compensation for the use of the land. In 2006, 2,212 hectares were reforested under this program.

Brasil Foods is also aware of the need to increase and expand its environmental control systems in line with the pace of growth and diversification expected over the next few years. All new investments involving an increase in production, must build enhanced effluent treatment plants and fuel and steam generation capacity to meet standards already reached elsewhere and, if possible, improving these indicators.

On World Environment Day, Brasil Foods unveiled a new Effluent Treatment Station (ETE) at the Capinzal (SC) unit. As a result of this initiative, Perdigão was presented with the Fritz Müller Award, sponsored by the Environmental Foundation (Fatma) of the government of the state of Santa Catarina, in the Pollution Control with Emphasis on Water category.

Non-renewable resources

The rational use of non-renewable resources is an item that is also very much at the center of the Company’s concerns and requires a continuous effort in improvements. In 2006, Brasil Foods grouped a series of initiatives under the slogan Perdigão Year of Water and Energy for promoting and preserving these natural resources.

This was the central theme to the Planet Water environmental education campaign that was held in 12 municipalities where Brasil Foods operates: Lages, Salto Veloso, Videira, Herval D’Oeste, Capinzal, Serafina Corrêa, Marau, Carambeí, Jataí, Mineiros, Rio Verde and Nova Mutum. Through the medium of workshops 12,164 people taught children between the ages of 8 and 12 the importance of water conservation.

In addition to the work of increasing environmental awareness in the communities, the Company also undertook a series of measures to rationalize the use of water resulting in a reduction of 6.85% in consumption per ton of finished product (TFP). Perdigão’s ratio of water usage fell from 915.0 m3/TFP in 2005 to 856.32 m3/TFP in 2006.

The Perdigão Energy Rationalization and Conservation Program (Procep) successfully reduced electricity consumption by 3% in 2006, the substitution of existing electric motors for more efficient ones being partly responsible for this performance.

More than merely complying with the prevailing legislation, Brasil Foods has been gradually adopting an increasingly proactive posture with respect to the environment. In 2006, this respect for nature was symbolized in the initiative to create the Cantos do Cerrado Ecological Park in the Mineiros (GO) region where the Company’s new agroindustrial complex has been unveiled. The park with an area of more than 76,000 square meters represents a company commitment to preserving the biodiversity in a region of headwaters of important rivers such as the Araguaia.