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Transcript of Nestle CSV Summary Report 2010
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Creating SharedValue and RuralDevelopmentSummary Report
2010
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Figures highlighted throughout the report
with this symbol are tracked as Key
Perormance Indicators and summarised in
the Rural Development section o the KPI
The brands in italics are registered
trademarks o the Nestl Group.
Annual Report 2010
Accompanying reports
A message rom our Chairman and CEO
About this report
Material issues
Global ood security and rural poverty
Nestls contributions to rural development
Overview: Rural impact o Nestls actories and armer programmes
Impact o Nestl actories on rural development
Impact o Nestl armer programmes on rural development
Nestl Creating Shared Value Advisory BoardChallenges and opportunities
Nutrition
Water
Table of contents 2
4
5
6
9
10
12
20
3234
36
38
This is a summary report.A ull online Rural Developmentreport is available on our updateCreating Shared Value websiteat www.nestle.com/csv
Cover: Farmers Jaswinder Singh
and Jasveer Kaur deliver milk to
a chilling centre in Nestls milk
district in Rajasthan, India.
Corporate Governance
Report 2010;
2010 Financial
Statements
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Nestl has developed perormance indicators to provide a ocus or measuring and reporting Creating Shared Value, sustainability
and compliance. The summary below orms part o our Communication on Progress on the United Nations Global Compact Principles.
Unless stated otherwise, perormance indicators are or the year ending 31 December 2010.
Please see www.nestle.com/csv/kpis
Creating Shared Value Key Performance Indicators GRI 2009 2010
Economic
Total Group sales (CHF million) EC1 107 618 109 722
Net proft (CHF million) EC1 10 428 34 233
Nutrition
Nestl Nutrition sales (CHF million) 9 963 10 366
Products meeting or exceeding Nutritional Foundation profling criteria (% o total sales) (a) 71 73.2
Renovated products or nutrition or health considerations (b) 7 252 6 502
Products with increase in nutritious ingredients or essential nutrients (b) 3 878 3 847
Products with reduction o sodium, sugars, trans-atty acids, total at or artifcial colourings (b) 3 374 2 655
Products analysed and improved or confrmed via 60/40+ programme (sales, CHF billion) (c) 16.8 36.4
Products containing Branded Active Benefts (sales, CHF million) 5 045 5 922
Products eaturing Nestl Nutritional Compass labelling (% o sales worldwide) (d) PR3 98 97.
Products in EU with Guideline Daily Amounts (GDA) labelling on ront o pack (% o sales) (e) PR3 91 98.7
Products with specifc portion guidance (sales, CHF billion) () 21 21.3
Nestl television advertising to children under 12 in compliance with policies on responsible marketing (%) (g) (PR7) 99.9 99.5
Nestl contraventions o inant ormula marketing requiring remediation (h) PR7 6 7
Inant ormula marketing sta in higher-risk countries trained in the WHO Code (% o sta) (i) 100 100
Popularly Positioned Product (PPP) SKUs 3 950 4 860
Popularly Positioned Products (sales, CHF million) 8 770 11 070
Employees trained on nutrition (cumulative since 2007) 121 360 145 922
Water and Environmental Sustainability
Production volume
Total production volume (million tonnes) 41.17 43.74
Materials
Total raw materials used (million tonnes) EN1 21.18 23.27
By-products or reuse or recovery (kg per tonne o product) EN22 32.79 32.16
Waste or disposal (kg per tonne o product) EN22 8.72 8.45
Energy
Total on-site energy consumption (petajoules) 85.2 88.6
Total on-site energy consumption (gigajoules per tonne o product) 2.07 2.03
Direct energy consumption by primary energy source (petajoules) EN3 61.0 63.0
Indirect energy consumption by primary energy source (petajoules) EN4 65.1 67.6
On-site energy generated rom renewable sources (% o total) (EN3) 12.2 12.3
2010perormancesummary
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GRI 2009 2010
Greenhouse gases (GHGs)
Direct GHG emissions (million tonnes CO2eq) EN16 3.98 3.98
Direct GHG emissions (kg CO2eq per tonne o product) EN16 96.6 91.0
Indirect GHG emissions (million tonnes CO2) EN16 3.00 3.14
Indirect GHG emissions (kg CO2 per tonne o product) EN16 72.8 71.9
Water
Total water withdrawal (million m3) EN8 143 144
Water withdrawal (m3 per tonne o product) EN8 3.47 3.29
Total water discharge (million m3) EN21 91.3 94
Quality o water discharged (average mg COD/l) EN21 91 78
Safety, health and environment governance
ISO 14001 / OHSAS 18001 certifed sites (% o total manuacturing sites) 83 91
Packaging
Total packaging materials (million tonnes) EN1 4.17 4.59
Packaging weight reduction (tonnes) 58 995 70 828
Reduction o packaging weight (per l o product) Nestl Waters over fve years (%) 24 19
Rural Development
Farmers trained through capacity-building programmes 165 553 144 926
Markets covered by Sustainable Agriculture Initiative Nestl (SAIN) programmes 35 45
Direct procurement markets covered by SAIN programmes (%) 77 100
SAIN projects associated with water 10 12
Suppliers audited or ood saety, quality and processing 3 864 3 345
Suppliers who received and acknowledged the Nestl Supplier Code 165 497 164 969
Key vendors within scope o the responsible sourcing audit programme (j) N/A 1 481
Key vendors covered by a responsible sourcing audit (%) (j) N/A 66
Key vendors audited and compliant with Nestl Supplier Code (%) (j) N/A 56
Quality key suppliers approved through vendor approval process (%) (j) N/A 61
Our People
Total workorce (number o employees) (LA1) 278 165 281 005
Key Business Positions 1 319 1 379
Employees with potential to fll Key Business Positions 3 922 8 741
CARE gaps identifed related to Business Integrit y and HR 500 425
O which: Minor 425 393
Major 75 32Critical 0 0
Lost time injuries among employees and contractors (per million hours worked) LA7 2.0 1.8
Total injury rate among employees and contractors (per million hours worked) LA7 5.1 4.2
Fatalities o employees and contractors LA7 4 11
Employees receiving ormal classroom training in developing countries (LA10) 93 146 102 292
Leadership positions held by women (%) (LA13) 27 27.3
Local Management Committee members native to country in developing countries (%) 42 48
Note: GRI indicators shown in brackets correspond in part to a GRI G3 indicator. Those not in brackets correspond in ull.
(a) 2010 assessment scope: 69.9% total ood and beverages sales.
(b) Based on reports o approximately 75% o worldwide product development teams.
(c) Starting in 2010, this KPI better reects the dynamic nature o our 60/40+ programme. Assessment results are valid or a maximum o three years, only i all
parameters remain equal. Within the repor ted sales, some products were requently re -assessed. The comparable KPI or 2009 would be CHF 32.9 billion.
(d) Excludes total petcare and, or USA only, Dreyers and newly acquired Pizza business.
(e) Across EU 27 plus Norway and Switzerland. Excludes plain coee, tea and water, products or Nestl Proessional, giting chocolate, petcare, and Nestl Nutrition.() Products sold as single servings and meeting/exceeding Nutritional Foundation, OR sold with/via a device or equipment delivering a serving meeting/exceeding
Nutritional Foundation, OR sold to caregivers with detailed instructions on adjusting servings to evolving nutritional needs.
(g) The compliance rate reported in 2009 corresponds solely to Nestls commitment not to advertise to children under 6 years o age.
The compliance rate in 2010 also reects the uller commitment to only advertise better or you products to children aged 612 years.
(h) Based on internal and external audits.
(i) Higher-risk countries are those with mortality rates or under-fves o more than 10 per 1000, or more than 2% acute malnutrition (moderate and severe wasting)
among under-fves. All other countries are lower-risk.
(j) New in 2010.
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Rural development 25 million+ people involved in
Nestls entire upstream value chain
USD 45 million in fnancial ass
extended to armers in 2010
The Nescaf Plan CHF 500 million investment by 2020
220 million high-yield coee plantlets
distributed to armers by 2020
90 000 tonnes o Nescaf coe
grown according to Rainorest A
and Sustainable Agriculture Net
(SAN) principles, to be procured
by 2020
The Cocoa Plan CHF 110 million investment over the
next decade
600 000 high-yield, disease-resistant
plantlets distributed to armers byJune 2011
1 million plants will be distribut
to armers in 2012
10 million plants will be distrib
to armers within ten years
Highlights 2010
144 rurally located Nestl factories
in developing countries
33% oer literacy and numeracy
programmes
37% run entrepreneurshipprogrammes
44% provide skilled trades
58% oer ormal apprenticeships
32% provide clean drinking wat
to local communities
58% contribute to local educatiacilities
41% invest in other local inrast
70% have a Nestl-built water
treatment plant
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Creating Shared Value and Rural Development Summary Report 202
It is our frm belie that, or a company
to be successul over time and create
value or its shareholders, it must also
create value or society. We call this
Creating Shared Value. Based on
strong oundations o compliance and
sustainable business practices, this
is our basic way o doing business.
Given the nature o our activities
and our ambition to be the worlds
leading Nutrition, Health and Wellness
company, we have identifed three
areas where Nestl can, in particular,
optimise the creation o shared value:
nutrition, water and rural development.
In this report, we will ocusspecifcally on rural development, which
is one o the most important drivers o
global development. With an estimated
70% o global poverty concentrated
in rural areas, investment in building
agricultural capacity is crucial, as the
world additionally aces the serious
challenge o providing ood security
or growing populations. Indeed, global
poverty reduction eorts must ocus
increasingly on rural development.
Nestl has been engaging witharmers and rural communities since
its inception over 140 years ago. As
early as the 1920s, we were building
actories in rural areas in Brazil and
South Arica; and creating milk districts
to supply them. Today, we deal
directly with nearly 600 000 armers
worldwide, aecting the lives o
A messagerom ourChairmanand CEO
millions more by helping to create bet
living conditions or them or exam
by establishing milk districts in about
30 countries, training armers in anim
husbandry, water and eed technique
and extending about USD 45 million
fnancial assistance in 2010.
Today, we have 443 actories
all over the world. Most o them are
in rural areas and more than hal are
in developing countries. We have
long been aware that they are magne
or development, creating a large
skilled labour orce in rural areas,
but also educating small business
operators who supply our actories,as well as acilitating the building
o inrastructure such as roads and
water treatment systems.
Specifcally in 2010, we made
signifcant new commitments in rural
development. In addition to new
actory investments in Indonesia,
southern Chile, India, the Philippines,
Sri Lanka, Mexico, Ghana and Equato
Arica, we launched The Nescaf
Plan, with substantial investments in
coee-growing regions worldwide.The Nescaf Plan takes a holistic
approach to arming which includes:
doubling the amount o coee
bought or Nescaf directly rom
armers to 180 000 tonnes over the
next fve years;
sourcing 90 000 tonnes o coee
according to Rainorest Alliance and
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Creating Shared Value and Rural Development Summary Report 2010
Peter BrabeckLetmathe
Chairman o the Board
Paul Bulcke
Chie Executive Ofcer
Sustainable Agriculture Network
principles by 2020;
distributing 220 million high-yield
coee plantlets in order to raise quality
and hence revenues to armers.
The Nescaf Plan ollows closely
in the ootsteps o The Cocoa Plan,
where we are:
working closely with cocoa-arming
communities, particularly in West
Arica and South America, to improve
their livelihoods, including access to
schools or their children;
putting our plant science
expertise to work and distributing
millions o high-yield, disease-resistantcocoa plantlets.
Together, The Cocoa Plan and
The Nescaf Plan will see over
CHF 600 million invested in these key
rural development initiatives between
now and 2020.
Meanwhile, the Nespresso AAA
Sustainable Quality Program a part
o the wider Nespresso Ecolaboration
platorm with high-quality coee
armers in Latin America, streng
collaboration with a cluster o
organisations, including the Rai
Alliance. In addition, we have en
in various bilateral and multi-late
consultations with international
organisations and NGOs such a
partnership with The Forest Tru
to ensure that Nestl products d
have a deorestation ootprint.We know that all these are po
steps. But we also know that m
has to be done. We are perman
challenging ourselves to look o
answers to the many problems
all acing together. In the ollow
pages, we describe key challeng
rom locating actories in rural a
the issue o child labour in agric
to deorestation. There has been
progress to date, but we need t
continue our eorts, because th
is still considerable work to be d
Conscious that we do not ha
all the answers, we remain open
new ideas rom outside stakeho
and the Nestl Creating Shared
Advisory Board, comprised o g
experts in nutrition, water and r
development, has given us inva
outside perspectives and challe
us on where we can do better.
recommendations this year incl
increased advocacy to stimulate
based investment in rural develowhile continuing to raise serious
concerns about issues such as t
deorestation eects o biouels
As a global community, we a
with the need to double ood pro
by 2050, and Nestl is committe
playing its part in a multi-stakeh
eort. We welcome your input a
ideas, and hope that you fnd th
to be stimulating and inormativ
Opposite: Nestl Chairman
Peter BrabeckLetmathe visits the
Reta Grande dairy farm in Brazil,
where Nestl provides technical
assistance and advice on farming
best practice.
Above: Nestl CEO Paul Bulcke
attends a school in Peru, where the
children learn about healthy eating
in an enjoyable way through NestlsCrecer Bien programme.
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Creating Shared Value and Rural Development Summary Report 204
Company profle
Nestl is the worlds leading
Nutrition, Health and Wellness
company. It was ounded in 1866,
and is headquartered in Vevey,
Switzerland.
CHF 109 722 million total Group sales
CHF 34 233 million net proft
281005 employees worldwide
More than 4 million people
beneft economically rom Nestls
commercial operations
443 actories
29 research and development centres
Nestls uture reporting with the
Global Reporting Initiative (GRI) G3
guidelines and have been involved
in the development o the GRI Food
Processing Sector Supplement.
Furthermore, James Singh, Nestl
Chie Financial Ofcer, became a
member o the International Integrate
Reporting Committee (IIRC), ormed
by The Princes Accounting orSustainability Project (A4S set up b
HRH The Prince o Wales in 2004) an
the Global Reporting Initiative (GRI) in
August 2010.
Boundary and scope
The inormation contained in our
latest online report and this summary
covers Nestls global operations
or the year ending 31 December 201
unless otherwise stated, and has
been subject to external assurance
by an independent third party
(see www.nestle.com/csv/
assurancestatement or the ull
assurance statement) with the
exceptions o the opinion pieces
by Robert L. Thompson and the
orward-looking recommendations
o the CSV Advisory Board. Data is
provided or Nestls wholly owned
companies and subsidiaries, excludin
joint ventures and suppliers, unless
specifcally stated. The environmenta
data reers to actories only, andhealth and saety fgures cover all
281 005 Nestl employees, as well
as the equivalent o more than
25 000 contractors working on
Nestl sites.
About this reportOur reporting history
Our aim is to report on Nestls
long-term impact on society and
how that relates to the creation o a
successul long-term business. Since
1995, we have regularly published
reports on environmental matters
(see www.nestle.com/csv/downloads)
and in 2001, we began to report on
issues related to rural developmentand armers, employees and social
and economic development in Latin
America and Arica. We have been
issuing global Creating Shared Value
Reports every two years since 2007,
since whenwe have continued
to ocus on progress against key
perormance indicators (KPI) across
our value chain and outline the actions
we have taken to address the key
challenges acing our business.
In alternate years, we have reported
in more depth on one o our three
ocus areas: nutrition, water and rural
development. These in-depth reviews
included the Nestl Water Management
Reportin 2006, Nutritional Needs and
Quality Diets in 2008 and this current
report on Rural Development.
To enable stakeholders to more
easily analyse our reports and make
comparisons between them, we have
replicated the ull KPI table rom our
2010 Annual Reportinside the ront
cover o this summary, and have alsoincluded short sections at the back o
this report on our other key ocus areas:
nutrition and water (pages 3640).
Our wider communications
This summary, and the case studies,
audio content, videos and downloads
that accompany our ull CSV update
online (www.nestle.com/csv), are
companions to our 2010 Annual
Report, which outlines our overall
business and fnancial perormance.Together, they orm an integral part o
our overall communication on Creating
Shared Value perormance.
Future reporting
Our objective is to align our external
reporting with good practice
guidelines. We plan to urther align
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Creating Shared Value and Rural Development Summary Report 2010
For several years, Nestl has
worked with SustainAbility,
an independent think tank and
strategy consultancy, to undertake
a systematic prioritisation of the
issues deemed most critical to
the Company. This draws on the
opinions of investors, civil society
groups and the media, assessing
them with Nestl executives.
Materiality analysis
For our 2009 report, SustainAbility
concluded that external interest had
increased or all issues and that climate
change had become a major priority
alongside water, across each stage o
the value chain. In 2010, SustainAbilitys
qualitative review again examined major
global developments, NGO campaigns
and industry activity. Given Nestlscommitment to long-term leadership in
Creating Shared Value, SustainAbility
also commented on how Nestls
material issues are expected to change
in the medium term and how industry
leadership is evolving.
External interest continues to
heighten or all issues particularly
with respect to Nestls impacts on
its value chain (consumers, producers
and suppliers) and the broader natural
and social environment in which it
operates (environment and community).
Environment, or example, has once
again become a major priority due to
increasing ocus on the societal and
business value o ecosystem services
(the resources and processes that are
supplied by natural ecosystems)
and biodiversity.
This year, global ood security is
taking centre stage as an overarching
theme, requiring Nestl to take an
integrated approach to managing
its CSV ocus areas (nutrition, ruraldevelopment and water) as well
as certain material issues (climate,
agriculture, supply chain and
community impacts). Furthermore,
while security o supply will remain
important, distribution and availability
will also matter, particularly in urban
areas due to an increasing ocus on
ood waste and the impact o poverty
on access to nutritious ood.
Other important themesPressure continues rom government
and NGOs on the ood and beverage
industry to reormulate products in
response to the obesity epidemic;
meanwhile, global organisations are
looking to the industry to partner on
addressing malnutrition. In 2009-2010,
marketing responsibly and making
accurate claims remained a cha
or the industry overall, with Ne
no exception. Food and beverag
industry leaders are seen as tho
who are transorming product
portolios to contribute to bette
health outcomes and using mar
and branding to infuence consu
values and behaviour towards m
positive choices.Water and climate change
continue to rise in importance a
linked regional and global issue
that also relate strongly to publi
health and agriculture. Agricultu
increasingly being viewed throu
a value lens (what contribution
can agriculture make to improve
health / livelihoods / climate / wate
as well as a risk lens (how do w
manage environmental and labo
risks?). In 2009-2010, palm oil,
child labour in cocoa, and bottle
water were also high-prole top
or Nestl.
O the remaining issues,
environment, community impac
and workplace wellness have
all risen in relative importance a
companies are increasingly exp
to address issues outside o the
direct ootprint and immediate
value chain.
Material issues
Please note: This section is based on the advice
and opinion o SustainAbility and represents
their views and recommendations.
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Creating Shared Value and Rural Development Summary Report 206
Global oodsecurity andrural poverty
Global challenges and
opportunities
There are two principal ways to expand
agricultural production: increase the
area planted or increase the production
per unit o land. Firstly, most o the
potentially arable land is inerior to that
already in production and is located
in remote areas o sub-Saharan Arica
and South America, where localinrastructure is minimal. Secondly,
to double agricultural production
sustainably, it will be necessary to
increase the production per unit o
land already in production.
The availability o resh water to
agriculture may be an even greater
constraint to doubling production than
the availability o land. Farmers use
about 70% o the worlds resh water.
As urbanisation increases, cities will
outbid armers or available water
and 60% o the worlds population
will live in cities by 2030.
Variations in crop yield
There are great dierences among
regions o the world in crop yields,
which should mean that it is possible
to signicantly increase productivity
per unit o land. These dierences
refect dierent genetic potential
embodied in the seeds planted;
availability o water in the root zone
o the plants rom precipitation orirrigation; the adequacy o the nutrition
available to the plants rom the soil
or ertiliser; and the eectiveness o
control o weeds, insects, birds and
disease that reduce productivity.
Farming is inherently risky, as revenue
depends on two random variables that
armers cannot control: price and yield.
Low household incomes
Most o the worlds agricultural
production is conducted on amilyarms, where the arm household
provides most o the labour. In addition
to providing part o the amilys
annual ood supply, arming provides
the household cash income. Most
o the worlds arm households earn
signicantly less than those whose
income comes rom other economic
activities. In act, 75% o the extreme
poverty and associated hunger in the
world is in rural areas where people
live ar away rom roads, markets,
schools and health services.
Rural poverty and rural
development
The objective o rural development
in low-income countries is to reducepoverty and hunger, and improve
the quality o lie in non-urban areas,
where the majority o poverty resides
Increasing productivity in agriculture
essential to reduce rural poverty and
ensure greater national ood security
and a global supply o ood.
However, rural development
must also create non-arm earning
opportunities to diversiy the
economic base o rural communities
and to benet national economic
development. This could involve
working away rom the arm, or
moving out o agriculture completely
to non-arm employment. By reducin
the number o people working on
small pieces o land, outmigration
enables both those who leave as wel
as those who continue arming to
have higher incomes. It is essential to
create more non-arm employment
opportunities within rural areas to
avoid urban problems o overcrowdin
unemployment, crime and pollutionassociated with excessive rural to
urban migration.
To solve the problem o poverty
in low-income countries, the private
sector needs to create jobs and
governments need to provide a
positive investment climate beore
local or international investments
will be made. There must also be
reasonable macroeconomic and
political stability, rule o law, denitio
and protection o property rights, andenorcement o contracts.
In addition, a number o rural publ
goods need investment rom the pub
sector, ocial development assistanc
(oreign aid), and / or international
development bank lending. Investme
in rural inrastructure, education
and health services, and agricultural
Global demand or ood is
expected to double in the frst
hal o this century, as a result
o population growth, poverty
reduction and urbanisation. Will
the worlds armers be able to
meet this doubled demand without
damaging the environment?
By Robert L. Thompson
Robert L. Thompson holds the Gardner
Endowed Chair in Agricultural Policy Emeritus,University o Illinois at Urbana-Champaign,USA; member, Nestl CSV Advisory Board.
Please note: The views expressed in this article
are the authors alone and are not necessarilyshared by Nestl. Its content has not beenveried by our independent assurers.
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Creating Shared Value and Rural Development Summary Report 2010
research and technology transe
help to reduce rural poverty thro
development o agriculture and
rural non-arm sector.
Rural infrastructure
Poorly developed inrastructure
the requent lack o roads imped
rural development as it raises th
o transporting goods and peopand rom the area. Most improv
technologies are embodied in in
the armer must purchase. High
transport cost raises the cost o
and reduces the price armers r
or the products they sell, makin
it unproftable to adopt improve
technologies that could otherw
increase their household incom
Until recently, rural areas o m
low-income countries have had
little, i any, telecommunication
with the outside world. Such m
do not work very well as they c
opportunities or unscrupulous
middlemen to exploit armers w
have no way o knowing the pri
in other markets. However, this
has changed rapidly with the ad
o the cellular telephone and
construction o towers througho
many low-income countries.
Education and health
Education and health services aless accessible in rural areas o
most low-income countries. Ma
areas lack sae drinking water a
sanitation, which can lead to dis
and nutritional defciencies can
to stunting o mental and physic
development. There may be no
available source o certain esse
nutrients in the diet, or example
vitamin A, iron, iodine or zinc.
Educational opportunities are
oten limited or rural children.Illiteracy is widespread among
populations, particularly among
women, and educating girls hel
to reduce the rate o population
growth in low-income countries
In addition, educating the arme
the uture will acilitate adoption
improved agricultural technique
The objective o ruraldevelopment in low-incomecountries is to reduce povertyand hunger, and improve the
quality o lie in non-urbanareas, where the majority opoverty resides.
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Creating Shared Value and Rural Development Summary Report 208
health, and in agricultural research
is extremely high. In low-income
countries 75% o the people in extrem
poverty and hunger are in rural areas
and those countries agricultural
sectors are contributing less to their
national ood supply and to world oo
security than would be economically
efcient and environmentally
sustainable. Nevertheless, over thelast several decades, investment in
agricultural and rural development
has declined to negligible levels.
Moreover, until recently the
governments o many low-income
countries, through policy intervention
in markets, turned the terms o trade
against their armers, orcing them to
pay more than the world market price
or their inputs and receive less than
the world market price or their outpu
This reduced the incentive or armer
to adopt productivity-enhancing
technologies. This discrimination
against armers has been remedied in
the developing world, except sub-
Saharan Arica and Argentina.
In 2000, 189 countries meeting at
the United Nations adopted several
Millennium Development Goals
(MDGs), the frst o which was to
reduce hunger and poverty in the
world by hal by 2015. To achieve
this, poverty and hunger must
be reduced in rural areas, where themajority o them reside requiring
a much stronger commitment to
agricultural and rural development in
low-income countries.
With the projected doubling o
global ood demand, low-income
countries, with their history o
underperormance in their agricultura
sectors, need to undergo change and
improvement so they can contribute
more signifcantly to their national an
the global ood supply.
Educating the next generation can
also help outmigration rom agriculture
to non-arm employment.
Agricultural research
and technology
Public and private investment in
agricultural research and technology
transer are important actors when
looking at global dierences in cropyields per hectare. Agricultural research
can increase the genetic potential
o the varieties planted, improve
understanding o crop nutrition and
develop better, more cost-eective
ways o controlling weeds, insects
and diseases that reduce productivity.
A century ago, cereal grain yields in
Western Europe and the United States
were little higher than those observed
in sub-Saharan Arica today. The
large increases in productivity since
then have reduced the unit cost o
production and kept the price o ood
lower, beneftting armers through
higher household incomes and
low-income consumers who spend
the largest raction o their incomes on
ood. Moreover, this has made amine
a rarity in the world and has allowed
millions o hectares o trees to remain
standing in the worlds orests instead
o being cut to make way or an
expanded area under cultivation.
However, there is no point inincreasing productivity or shiting
to higher value per hectare crops i
there is no market to buy the output
at a remunerative price. Thereore,
marketing institutions are necessary
to connect armers to regional and
national markets or their products.
Finding buyers or their products is a
particular problem or smallholders
who only have a small quantity o
product to sell. Securing credit to buy
inputs at planting time is a particularproblem to smallholders who have
little or no collateral to pledge against
the loan, i credit providers exist at all.
Investing in the uture
The social rate o return on public
sector investment in rural
inrastructure, education and
Reducing poverty
the fve ways
There are fve ways or a poor arm
household to increase its income
other than rom social welare
support, which rarely exists in rural
areas o low-income countries:
increasing productivity by
growing varieties with greatergenetic potential, irrigating crops
i water is available, providing
sufcient nutrients and controlling
weeds, insects, birds and disease;
changing to higher value crops
per hectare, replacing staples such
as cereals, roots and tubers, with
ruits, vegetables and livestock;
gaining access to more land
through purchase, rental or land
reorm, or other income-generating
assets, e.g., literacy, numeracy
and specialised skills;
members o the household
obtaining non-arm income, by
producing something at home
or sale or getting alternative
employment away rom the arm;
members o the household
moving to non-arm employment,
reducing the number o people
trying to make a living on
uneconomically small pieces o
land and increasing the incomes
o those who stay behind.
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Creating Shared Value and Rural Development Summary Report 2010
Nestlscontributionsto ruraldevelopment
To help armers to increase output,
improve product quality and reduce
their environmental impacts, Nestl
has established world-class plant
research acilities in France and
Cte dIvoire, where higher yielding,
disease-resistant varieties are
being developed. The Company
also runs feld trials and employs a
large number o agronomists whoprovide training and consultation
on arming practices.
Because rural credit markets are
not always developed, and small
armers may have little or no collateral
to pledge to get a loan, Nestl has
oten acted as the provider o credit
so that armers could use improved
technologies. The Company has
also helped armers to produce and
sell higher-value products than they
previously grew. In Yunnan Province,
China, or example, Nestl introduced
the opportunity or armers to produce
coee in an area with no previous
history o coee-growing.
Nestl buys over 40% o the milk
it processes directly rom armers,
and much o it rom smallholders.
This increases armer income and
improves the nutritional status o
children in the household.
Nestl also has processing and
packaging unctions close to the point
o raw material supply, improvingood saety and reducing spoilage.
These plants add to the local tax base,
diversiy the local economy and create
non-arm employment opportunities
close to arm households, an essential
step towards eliminating rural poverty.
Individuals earning potential increases,
and the area becomes more attractive
to other employers, suppliers and
service providers.
Quality o lie has improved in
the rural communities where Nestlhas actories, with investments in
inrastructure, education and sae
drinking water (see page 10). Its
Popularly Positioned Product (PPP)
programme also provides aordable
sources o nutrition or lower-income
consumers, oten ortifed with
essential nutrients such as iodine,
vitamin A, iron, and zinc to over
defciencies in the local diet (rea
on page 36).
When the majority o the wo
poor live in rural areas and mos
armers, ocusing more attentio
agricultural development and ru
poverty reduction will both ensu
sustainable supply o raw mater
Nestls actories, and also accepoverty reduction and growth in
demand or ood products tru
example o creating shared valu
Value or Nestl
More secure supply o better-qu
raw materials; lower procureme
costs; consumer preerence or
products; proftable growth.
Value or society
Advice and technical assistance
greater yields; higher-quality cro
lower resource use; increased
income and reduced rural pove
wider employment and econom
development opportunities; con
aware our products are sae and
high quality.
Read our Creating Shared Value
Advisory Boards opinion on wh
Nestl could or should do more
page 34.
Nestl has contributed
signifcantly to poverty reduction
and rural development in a number
o lowincome countries, while
ensuring an ample uture supply
o raw materials or its actories
to satisy the global demand
or ood. By doing this, Nestls
sustained, longterm commitment
is helping to ensure ood security
at household, national and global
levels, creating shared value
or everyone.
By Robert L. Thompson
Robert L. Thompson holds the Gardner
Endowed Chair in Agricultural Policy Emeritus,University o Illinois at Urbana-Champaign,USA; member, Nestl CSV Advisory Board.
Please note: The views expressed in this article
are the authors alone and are not necessarilyshared by Nestl. Its content has not beenverifed by our independent assurers.
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Creating Shared Value and Rural Development Summary Report 2010
Overview:Nestls factoriesin rural areas
Direct employment Indirect
employment
(contractors,
collection agents)
Direct purchasing
o locally grown
commodities
Energyefcient
equipment and
practices
Procurement o
local services
Contributions to
local educational
acilities
Employee
volunteering
and charitable
donations
Nestl products
or local sale and
consumption
Investment in local
transport
inrastructure
Employee training
and apprenticeships
Clean drinking
water and hygiene
projects
Nestlbuilt waste
water treatment
plants
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Creating Shared Value and Rural Development Summary Report 2010
Overview:Nestls farmer programmesin rural areas
Improved status
o women
Creation o
demonstration and
training arms
Investment in
collection, cooling
and storage
acilities
Technical
assistance by
Nestl agronomists
Improved a
to educatio
children
Water conservation
and irrigation
programmes
Research
& Development
o highyield,
diseasetolerant
plants
Direct purchasing
o locally grown
commodities
Distribution o
plants to armers
Access to f
assistance
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Creating Shared Value and Rural Development Summary Report 2012
Impact o Nestl actorieson rural development
Performance
Roughly hal our 443 actories are
located in the developing world and
60% are located in rural areas.
They provide local employment to
148 370 people, give local consumers
greater access to Nestl productsand oer other indirect economic
benets across the community.
Goals
The wellbeing o the communities
rom which we draw our agricultural
commodities and local labour is vital
to our success as a business and to
delivering value to our shareholders.
Actions
In contributing to the reduction
o poverty (see page 9), Nestl
considers two approaches to be
the major growth engines or rural
areas: investing in new actories,
and strengthening the links between
armers and markets through
Key challenges
As well as nding actory sites with
access to energy, water, transport and
capable, trainable human resources,
we also need to engage with the
relevant local authorities to build trust
and ensure our presence meets local
needs. We nance low-cost biogas
Through rural development, providing
local employment and encouraging
sustainable production practices, we
not only seek to protect the supply and
quality o our raw materials, but also
ecient supply chains. All over the
world, Nestl actories drive rural
development and high environmental
standards, especially in developing
countries. Our principle is to source
commodities, where possible, in
the countries in which we have
A typical actory is a long-term
investment and has many touch
points with society, rom employment
creation and inrastructure to
environmental management, training,
education and community involvement(see page 10). Based on a recent
sample o 422 actories (summarised
digesters, which collect the methane
emitted rom cattle manure as energy,
to provide dairy armers with an
economic incentive to manage manure
more eectively thereby avoiding the
contamination o groundwater and
where access to clean drinking water
to have a positive, long-term impact
on the local economy and standards
o living o rural people.
manuacturing acilities. In this way,
quality improves, supply is ensured
and higher margins at the arm level
are obtained, thereby generating cas
fow into rural areas.
on page 16), around 70% o our rural
actories in developing countries
have a Nestl-built waste water
treatment plant, 58% have contribute
to educational programmes in the
local community and 58% oerapprenticeships.
is limited, we und wells, storage tank
and drinking ountains. We also run
awareness campaigns about water a
hygiene in schools and villages near
our actories.
Driver Leonel Lpez Gonzlez and transport
coordinator Enrique Lozano Muoz at the
Lagos de Moreno dairy factory in Mexico,
which provides employment and invests
in transport infrastructure.
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Creating Shared Value and Rural Development Summary Report 2014
Nestl dairy actories
The dairy industry is one o the most
powerul engines or rural development,
and many o Nestls rural actories are
within our milk districts. In 2010, 87 o
our 254 rural actories were linked to
our milk business and o these, 62%
were located in developing countries.
The impact of rural factories
Although 40% o our actories are
now dened as being in urban
areas, their developmental eects
over time have attracted businesses,
investment and inrastructure into
a cluster around them and made
their once-rural locations increasingly
urban or industrialised in nature.
For example, when it was rst built,
local people built their houses against
the wall around the Nestl actory
in Moga, India.
Such an eect takes time to evolve,
but as rural actories expand, they oer
more opportunities or contractors,
suppliers and other businesses as
well as employees themselves.
For example, the Rumo Seguro
programme coordinated by Nestl,
Fonterra and Dairy Partners o America
has improved the saety perormance
o contractor drivers serving the dairy
industry in several South Americancountries by 25%, by helping to set
international standards o excellence
regarding rest periods, sae behaviour,
medical and alcohol testing, vehicle
inspections and feet maintenance.
The project led to a similar road
saety programme or the drivers
that serve Nestl Pakistan, or which
Nestl nanced a purpose-built track,
classrooms and high-tech simulator at
the National Highway and Motorway
Police (NHMP) centre. Since 2008,
when the training centre opened,
888 Nestl contract drivers, as well as
more than 500 drivers rom 14 other
organisations, have been trained
and Nestl-related road accidentshave allen by 40%. The programme
also won the Gold Award in Nestls
Workplace Saety awards in 2010.
Factories in urban areas
Even when our actories are located
in urban areas, they can have a
signicant development impact on the
rural communities they source rom.
One example our Kejayan actory
in Indonesia is supplied by around
32 000 dairy armers and in addition
to improving arming practices to
increase productivity and to comman
a premium or higher-quality milk, the
actory has also:
provided employment inthe production process ranging
rom cooperative managers to
grass collectors;
ormed a three-year partnership
with the Humanist Institute or
Development Cooperation to give
dairy cooperatives access to biogas
units, to capture and convert
443Nestl actories worldwide. 46%o Nestls actories are locatedin developing countries. 74%o actories in developing countriesare located in rural areas. 58%o Nestls rural actories indeveloping countries contributeto local educational acilities.
On arrival at the Lagos de Moreno factory, tanker driver Leonel Lpez Gonzlez takes
a sample of milk for testing.
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Creating Shared Value and Rural Development Summary Report 2016
Rural development impact of Nestls factories
422 actories
respondingto survey(1)
195 actories
in developingcountries
144 rural(2) actories
in developingcountries
51 urban actories
in developingcountries
Sourcing from local/national supplier:
Milk 28% 33% 38% 22%
Coee 13% 16% 17% 16%
Cocoa 16% 19% 22% 14%
Training programmes in past ve years:Literacy and numeracy 25% 30% 33% 22%
Entrepreneurship 26% 33% 37% 24%
Skilled trades 48% 43% 44% 39%
Formal apprenticeship 52% 57% 58% 55%
In the past ve years:
Provided clean drinking water to local community 30% 33% 32% 35%
Contributed to local educational acilities 53% 57% 58% 55%
Invested in other local inrastructure 33% 39% 41% 33%
Nestl-built water treatment plant 53% 67% 70% 59%
(1) Based on a survey conducted in autumn o 2010. Questionnaires were sent out to managers o Nestl actories. 422 responses were received rom 443 actories (95%
When calculating these igures, 21 actories were discounted: 8 dairy actories in Latin America are joint ventures w ith Dairy Partners America; 10 actories were openor acquired in 2010 and are not yet ully unctional; and the responses rom 3 pharmaceutical actories were not considered relevant to the CSV Report.
(2) Our actories are deined as rural i: they were originally located in an area deined as rural by national statistics concepts; they are located in an agricultural region;
they are not located in or within 5 kilometres o a large centre o population (above 100 000 inhabitants). Factories where the number o arms or other entities that
directly supply our acilities with commodities exceeds the number o actory employees such as our dairy actories are also categorised as having a signiicant
rural development impact. Using these criteria, 60% o our actories are in locations deined as rural.
methane rom their cattles manure
into useable energy, as well as improve
groundwater quality;
renovated the local State
Elementary School, in partnership with
the Indonesian non-proft organisation
Yayasan Nurani Dunia, donated
books to other schools in the area,repaired the main road near the actory
and donated 1000 trees or a local
reorestation project.
Key challenge
Water and hygiene
Many dairy communities are located
in rural areas with limited access to
clean drinking water, and low levels
o awareness about water scarcity,
conservation and pollution. Improving
rural community access to clean
drinking water and hygiene is an
important impact o our actories. For
example, in Sri Lanka, we und water
acilities and run awareness campaignsin villages near our manuacturing
operations, and our School Sanitation
Project develops basic acilities such
as toilets in schools surrounding
our Kurunegala actory. And around
our Moga actory in India, we
have provided local schools with
113 drinking water ountains.
40%reduction in accidents througha road saety programme or thedrivers serving our Kabirwala andSheikupura actories in Pakistan.
58%o Nestls rural actoriesin developing countriesprovide ormalapprenticeships.
887tonnes o milk bought daily romlocal dairy armers by our actoryin the Moga milk district, India.
70%o Nestls rural actories indeveloping countries have aNestl-built watertreatment plant.
Nestls Harmandeep Kaur leads a water
awareness programme at a primary scho
in Bilaspur village, near our Moga factory
in India.
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Creating Shared Value and Rural Development Summary Report 2010
15%reduction in ossil uelconsumption by using the latestood processing technology at ourCerelac actory in Tema, Ghana.
Other Nestl actories
The remainder o our rural acilities
are linked to the processing o other
commodities, including coee,
cocoa, cereals, vegetables, ruit and
spices. Ninety (67%) o these are
located in developing countries. Like
our dairy actories, these plants helpto drive socio-economic development
in local economies, through direct
and indirect employment, training
and education, inrastructure and
community investment.
Environmental benets
In many countries, Nestl was the
frst company to set up a wastewater
treatment acility. While these
investments have added to production
costs in the short term, they have
raised expectations and led to stricter
regulations over time, thus levelling
the playing feld and giving Nestl a
competitive advantage.
We have used spent coee grounds
as a renewable energy source or many
years, and at the same time, beneftted
rom a reduction in waste. Currently,
21 Nestl actories use spent coee
grounds as a renewable energy source.
One o the most recent acilities to
make this investment, the Cagayan de
Oro Nescaf actory in the Philippines,uses a state-o-the-art boiler to recycle
and burn spent coee grounds and
other biomass such as sawdust and
coconut shells. In 2010, the emissions
associated with the combustion o
ossil uels ell by 62%. The actory
also has a solid waste management
programme and a communal eco-
garden, which sells recyclable
materials made rom household waste
and organic ertiliser made rom
biodegradable waste.
Direct and indirect employment
Our manuacturing plants naturally
bring direct employment to local
people, such as our ready-to-drink
acility in Anderson, Indiana, whichhas been a signifcant stimulus to the
local economy since the decline o
the US car industry in the region.
We have also generated 25 000 indirect
jobs in Chiapas state, Mexico, where
our renovated Chiapa de Corzo
Coffee-mate actory is located. In
addition, a CHF 150 million investment
in Equatorial Arica over the nex
years will see new actories bui
Angola, the Democratic Republ
Congo and Mozambique, and e
actories expanded. Nestl will
increase its distribution capacity
the region with 13 new distribut
acilities and 750 new jobs by 20
more than doubling its workorc
In many cases, other, moreentrepreneurial job opportunitie
are also created as a result o ou
presence. For example, when N
built a manuacturing plant in L
in the Philippines, local unemplo
women were given unding by
Nestl to have sewing training.
Cut and Sew project that was c
25 000indirect jobs currently generatedby Nestl in the Chiapas state,Mexico.
62%reduction in oil consumption byour Nescaf actory in thePhilippines by using spent coeegrounds and biomass or energy.
150minvestment in new and exactories in Angola, the DeRepublic o Congo andMozambique over the nexyears, in CHF.
Discarded coconut shells are used as a source of renewable fuel for the boiler at t
Nanjangud factory in India.
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Creating Shared Value and Rural Development Summary Report 2018
now handles sewing jobs or the
actory, such as uniorms, lab coats,
hairnets and shoe covers, worth
around CHF 33 000 every year. The
actory also has a Yard and Garden
project, where women produce
organic vegetables or sale to the
canteen, and ornamental plants which
they rent to the actory and even
individual employees.
Other indirect benefts to the
communities around our actories arealso evident. For instance:
delivered in partnership with the
NGO Gawad Kalinga, 50 disadvantaged
amilies live in a Nestl-built
eco-village in Lipa City where rainwater
is recycled, reed bed technology
processes sewage without the use
o chemicals and Nestl-sponsored
educational activities and livelihood
programmes are delivered;
at our Antigua actory in Guatema
sta helped to reconstruct buildings
ater an earthquake and provide
350 schoolchildren with a glass o m
and a bowl o soup every day;
ollowing the earthquake in
February 2010, our actories in Chile
assisted communities by supplyingwater, providing access to electricity
and using their gyms and social
areas as shelters and stores or
peoples belongings.
Key challenge
Factories in rural areas
Having made a strategic decision to
locate a actory in a particular locatio
we need to identiy a site with suitab
access to energy supplies, water,
transport networks and capable,
trainable human resources. The early
engagement o, and communication
with, the relevant local authorities an
agencies is also crucial to building
trust and gaining a greater
understanding o what the local
community actually wants.
Aligning new ood production
processes with the needs and culture
o those who live in those locations
also remains a challenge, especially
where new actories are sited in area
dominated by small villages, poorsanitation and limited inrastructure,
and employees used to dierent way
o doing things oten need ongoing
support to ensure they can maintain
Nestls standards.
41%o Nestls rural actories indeveloping countries invest in localinrastructure.
67%o Nestls non-dairy actorieslocated in developing countries. 32%o Nestls rural actories indeveloping countries provideclean drinking water to localcommunities.
18 000tonnes o inant cereal per year wbe produced by Nestl Ghana,double its current capacity.
Farmer Emmanuel Lefebvre harvests potatoes grown for the Nestl Maggi Mousline
factory at Rosires-en-Santerre, northern France.
Nestl agronomist Bertrand Rault (left)
advises local potato farmer Pierre Buisset
on water use and soil fertility.
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Creating Shared Value and Rural Development Summary Report 2010
Above: Nestl agronomist
Klutse Kudomor (left) with
farmer Nesa Abdulai, whose
grain is checked for mycotoxin
levels at our infant cereal
factory in Tema, Ghana.
Local sourcingand environmental
improvementsin Ghana
emissions and production
costs. This production
acility is closely connected
to Nestls Grains QualityImprovement Project, which
is designed to ensure our
A CHF 36.2 million
investment in our Cerelac
inant cereal production
plant in Tema, Ghana,will double its production
capacity and oster rural
development by sourcing
more locally produced
maize, rice, wheat, four
and sugar rom local
Ghanaian suppliers.
Nestl Ghana aims
to double its capacity to
18 000 tonnes o inant cereal
per year, having increased
production to 9000 tonnesalready. The plant is also
equipped with the latest
ood processing technology,
which will reduce ossil
energy consumption by
around 15%, while the
new chillers use natural
rerigerants to lower both
actories receive a ste
supply o sae, high-q
agricultural commod
and allow rural commto generate higher in
as a result.
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Creating Shared Value and Rural Development Summary Report 2020
Impact o Nestl armerprogrammes on rural development
PerformanceIn 2010, Nestls 1014 agronomists
and 17 273 extension workers and
contractors supported 144 926 direct
armer suppliers through
capacity-building programmes ,
technical assistance and knowledge
transer, and provided fnancial
assistance, without conditions or
GoalsIncreasing agricultural productivity is
essential to reducing rural poverty and
ensuring greater ood security, both
nationally and globally. Strengthening
ActionsDuring the year, we enhanced our
approach to supplier development
and armer training, and developed
more Sustainable Agriculture Initiative
Nestl (SAIN) initiatives, alongside
the ongoing communication o,
Key challengesMany raw materials have a high
potential impact on orests, but
we have publicly committed to
ensuring our products do not have a
deorestation ootprint. To this end,
our Chairman Peter Brabeck-Letmathe
repeated our support or a moratorium
on the destruction o rainorests at
our April Annual General Meeting,
our eorts to link armers and
smallholders to markets through
efcient supply chains thereore leads
to greater yields o higher-quality
and assessment against, our Nestl
Supplier Code. SAIN now covers
45 markets and 100% o our direct
procurement markets . We also
consolidated our support or the cocoa
industry under The Cocoa Plan and,
obligation, worth CHF 45.3 million to
more than 32 000 armers. In parallel,
976 key suppliers have undergone
independent, third-party audits to
demonstrate their compliance with
our Supplier Code, which has been
communicated to 164 969 suppliers
and displayed at 65% o collection
and in May 2010, we announced a
partnership with The Forest Trust,
through which we have established
Responsible Sourcing Guidelines.
In coee- and cocoa-growing areas,
child labour remains a signifcant
challenge, and we partner with
organisations such as the International
Cocoa Initiative (ICI) on projects that
crops or Nestl, and higher incomes
and living standards or our suppliers
(see pages 68).
under a similar ramework, we are
committing CHF 350 million over the
next ten years to coee initiatives
through The Nescaf Plan.
and buying stations . Combined with
ongoing dialogue with government
agencies and NGO partners, this
assistance leads to long-term poverty
reduction and rural development on
a wide scale.
combat unacceptable labour practice
Advocating against the production
o crops such as palm oil as biouels
rather than ood, and ensuring the
traceability o commodities rom
small-scale arming systems, are also
ongoing issues.
In Colombia,Nespresso agronomistLiliana Franco Rodrguez (right) helpscoffee farmer Luis Alfonso ngel Jaramilloto meet the standards of the NespressoAAA Sustainable Quality Program.
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Creating Shared Value and Rural Development Summary Report 2022
Farmer programmes: milk
The milk district model
In terms o sales value, Nestl is the
worlds largest milk company, sourcing
almost 12 million tonnes o resh milk
equivalent rom about 30 countries
in 2010. Our approach involves the
widespread use o our milk districtmodel, which dates back to the
1870s. The essence o the model is to
work directly with smallholder dairy
producers and cooperatives to build
a supply chain.
Nestl purchased 3.4 million tonnes
o resh milk directly rom armers
and cooperatives in 2009, helping to
ensure a better price or their milk,
regular payment and a sustainable
link to the processing industry, and
providing Nestl with a regular supply
o high-quality milk with which to
meet consumer demand. Nestls
close relationships with armers mean
we can advise them continuously on
the quality o milk production. We
also have the same stringent quality
control system in place across all our
actories around the world, and more
than 70 dierent tests are routinely
conducted when producing inant
ormula and other milk products toensure the highest-possible quality and
avoid the risk o contamination.
Our direct milk sourcing
programmes help to address rural
development and poverty in many
developing countries, including
Brazil, Chile, China, India, Mexico
and Pakistan. In addition to a secure
market or their milk, communities
beneft rom local collection, storage
and chilling acilities, better transport
networks, technical assistance by
Nestl specialists (agronomists and
veterinarians), and feld technicians
to improve their arming practices,
quality control systems and access
to fnancial assistance.
Milk districts in action:
India and China
In India, or example, Nestl has
invested approximately CHF 11 million
in storage tanks, chilling centres,
veterinary aid and other dairy
development projects or the armersin Moga. Our milk actory collects
over 887 tonnes o milk per day rom
over 110 000 armers, and works
with them to increase their yields
through improved arming methods,
better irrigation, and scientifc crop
management practices. In this vibrant
milk district, Company veterinarians
and agronomists advise dairy
armers on a range o issues, and
provide assistance with artifcial
insemination, subsidise the purchase
o equipment and help with access
to fnancial assistance.
Additional programmes have
ocused on technical support o
irrigation techniques, rainwater
harvesting and water management
on dairy arms; the supply o clean
drinking water in local schools; and t
promotion o sanitation and hygiene
the villages that surround the actory
Similarly, some 25 000 dairy arme
supply three Nestl actories in China
One, our milk actory in Hulunbeir,
in the Inner Mongolia Autonomous
Region, is situated in an area o
high-quality natural grasslands, and
provides a reliable market or locally
produced resh milk, which is used tomeet the rising local demand or milk
powder and other dry, condensed
and evaporated dairy products. Nestl
also provides 54 collection centres in
the milk district, and aims to transer
milk rom each collection centre to th
actory within two hours.
12mtonnes, approx. o resh milkequivalent sourced by Nestl romabout 30 countries in 2010.
38%increase in average monthly armprofts since 2008 through theSilvopasture project in Colombia,as new cattle breeds and betteragricultural practices improvepasture land, and milk qualityand quantity.
17 273Nestl extension workerswork directly with armers. 155 000amilies in Kenya and Ugandawill receive arming advicethrough Nestls partnershipwith the East Arican DairyDevelopment Board.
At a Nestl chilling centre in Rajasthan,
India, milk is tested and added to the chilling
tank, ready for transport to our factory.
Dairy farmers in Kenya receive technical
advice through Nestls partnership with
the East African Dairy Development Boar
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Above: Dr Maria Mubarak,
dairy hub manager (right), with
Naseem Akhtar, a livestock
worker and village milk
collection agent in Pakistan.
Right: Dr Muhammad Qasim,
a Nestl vet, offers advice,
feed and vaccines to help
farmers to rebuild agricultural
capacity in ood-affected
areas of Pakistan.
Farmer trainingin Pakistan
involves the three-year
project teaching rural
women about livestock
healthcare and giving
them access to nancial
assistance. Around 60% o
the 3400 women trainednow work as sel-employed
livestock managers, milk
collection agents and animal
eed suppliers, and more
than 600 have direct links
with the dairy industry.
In August 2010, foods
across Pakistan killed more
than 1600 people. The
Companys nancial support
o CHF 700 000 has brought
ood and relie to mo
than 50 000 people a
unded the vaccinatio
300 000 animals.
Working with the
Agency or Developm
and Cooperation (SDwe jointly committed
CHF 440 000 in mone
and resources to ben
10 000 people in sout
Punjab, in the orm o
rations, eed concent
vaccinations and vete
support or 14 000 co
and bualoes, and se
and ertilisers or bot
and grazing pasture.
response exempliesour approach suppor
term reconstruction a
enables capacity-bui
The Rural Poverty Reduction
Through Livestock
Development Project,
launched in March 2009
and co-unded by Nestl
Pakistan and the Swiss
Agency or Developmentand Cooperation (SDC),
oers dairy armers training,
technical assistance and
veterinary services, and links
with local businesses.
Nestl Pakistan has
built two demonstration
and training arms. Under
our Farmers Development
Programme, over 4000
armers have been trained
and are part o the milkvalue chain.
Community
Empowerment through
Livestock Development
and Credit (CELDAC), a
public-private partnership
between UNDP-Pakistan
and Nestl Pakistan,
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In Puebla, Mexico, coffee seedlings provided through The Nescaf Plan are loaded onto
a truck, ready to be planted.
Farmer programmes:coee
Our approach
The coee supply chain is extremely
complex, with 80% o all armers
being smallholders. Around 25 million
smallholders depend directly on
coee arming or their livelihoods,and a urther 100 million people
are involved in the industry as a
whole. Nestl is the worlds largest
purchaser o coee.
Through our direct buying system,
our long-term commitment allows
tens o thousands o armers and
small-scale intermediaries to deliver
coee directly to our buying stations.
They also secure a higher price
and gain access to ree technical
assistance. This is a win-win-win
partnership, as it:
helps armers to improve the quality
o their yields and to diversiy their
activities, giving them higher incomes
and improving their living standards;
provides Nestl with a reliable
supply o high-quality raw materials;
brings sustained growth or the
local economy.
It also helps to train the next
generation o coee growers,
and ensures that coee remains a
commercially attractive crop to grow.In 2010, Nestl purchased
82 000 tonnes o green coee directly
rom armers and intermediaries
in China, Cte dIvoire, Indonesia,
Mexico, the Philippines, Thailand and
Vietnam. Around 10% o the coee
beans used in Nescaf are acquired
through direct procurement.
The Nescaf Plan
In August 2010, we launched
The Nescaf Plan, bringing together
all our Creating Shared Value coee
arming and production practices
throughout the value chain, under
one umbrella. This global initiative,
urther strengthened by external
partnerships, will help us to optimise
our coee supply chain and reach
specifc targets on coee arming,production and consumption
(see below).
By increasing our direct
procurement operations (which we
term Farmers Connect), we will
enable armers to increase production,
quality and processing techniques and
generate higher incomes; it will also
ensure Nestl continues to receive a
supply o high-quality raw materials.
In addition to the CHF 200 million
we have invested in coee projects
over the past fteen years, we will
invest a urther CHF 500 million
by 2020. Around CHF 350 million wil
support The Nescaf Plan and a urth
CHF 150 million will be invested in
Nespresso. Through this investment,
we will: double the amount o directly
procured Nescaf coee by 2015;
by 2015, ensure all directly
purchased coee meets the
sustainability standards o the
Common Code or the Coee
Community (4C) Association,
a voluntary code o conduct to
350minvested in The Nescaf Planby 2020, in CHF. 220mhigh-yield plantlets distributedto coee armers by 2020. 1500coee growers rom Tezonapa,one o Mexicos poorestlocations, trained through theMicro-Region SupportingProgramme, a governmentinitiative supported by Nestl.
80%reduction in water consumptionat Nestl Chinas Experimental aDemonstration Farm in JinghongYunnan Province, through newcoee-processing equipment.
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At the Nestl Experimental
and Demonstration Farm
near Jinghong, Yunnan
Province, China, the coffee
cherries are picked (above),
washed and processed.
CSV initiativesin China
procurement supports up
to 19 000 people, and since
1995, nearly 4100 farmers
have received training on
planting, quality control and
processing techniques.
Traditional coffee-processing methods require
a lot of water approximately
150 litres per kilogramme
Even before the opening
of the Nescaf factory in
Dongguan in 1992, Nestl
China had established
an Agriculture Technical
Assistance Service in
Yunnan Province toencourage and support
coffee cultivation, and
created an Experimental
and Demonstration
(E&D) Farm in Jinghong.
Almost twenty years on,
Yunnan traditionally a
tea-growing area has
become a quality Arabica
coffee-growing region.
Nestl purchases
directly from localfarmers, 80% of whom are
smallholders. Nestl also
supplies plantlets suited
to local soil conditions
and climate, and advises
farmers on techniques
to improve both quality
and yield. Nestls coffee
of green coffee. New
equipment introduce
2003 and 2010 at the
E&D Farm has decrea
water consumption b
than 80% and also se
demonstrate best prato other coffee farme
the region.
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90 000tonnes o Nescaf coee grownaccording to Rainorest Allianceand Sustainable AgricultureNetwork (SAN) Principles to beprocured by 2020.
27 000litres o water per arm will besaved by the Jardn Antioqua millin Colombia, a joint undertakingbetween Nespresso, local NGOsand coee cooperatives to providecoee-milling services or armersin the region to share.
60%o the total green coee beansNespressopurchased came via itsAAA Sustainable Quality Programin 2010.
1-2%o the worlds green coee cropmeets the specifc taste and aromprofles and the demanding qualstandards o Nespresso.
improve efciency, proftability,
transparency and sustainability in theproduction, processing and trading o
coee through training and verifcation
(see www.4c-coeeassociation.org
or more inormation);
by 2020, procure 90 000 tonnes o
Nescaf coee grown according to
Rainorest Alliance and Sustainable
Agriculture Network (SAN) principles.
Nespresso
Only the top 12% o the worlds greencoee crop meets the specifc taste
and aroma profles and the demanding
quality standards o Nespresso. Over
the last seven years, we have worked
with the Rainorest Alliance to develop
the Nespresso AAA Sustainable
Quality Program o integrated
coee arm management practices,
ensuring compliance with quality and
sustainability requirements.The programme encourages
armers to adopt best practice
in sustainability, requiring certifcatio
to the Sustainable Agriculture
Network (Rainorest Alliance)
standard; and Nespresso pays a
premium to the armers who supply
the highest-quality beans.
A coffee mill at Jardn Antioqua, Colombia an initiative between Nespresso, local NGOs and coffee cooperatives avoids the need
for milling equipment at each farm.
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Farmer programmes:cocoa
Our approach
As a major buyer o cocoa
(380 000 tonnes last year, or 10% o
the worlds supply), we play a key
role in improving the cocoa industry
and the wellbeing o the armerswho supply us, as well as the rural
communities they live in. We strive
to reduce poverty in cocoa-arming
regions, ensuring we have reliable
access to the high-quality, responsibly
armed materials we need or our
chocolate businesses.
Nestl has undertaken a range
o initiatives to improve arm
proftability, cocoa quality and
traceability in the cocoa supply chain.
In 2009, we brought them together
under one programme: The Cocoa
Plan. While The Cocoa Plan initially
covers just 1.5% o our cocoa supply,
we will use our learnings rom the
frst year to roll it out to have a more
substantial impact.
The Cocoa Plan
In committing CHF 110 million over
the next decade, Nestls investment
under The Cocoa Plan will ocus
on plant science and sustainable
production in Cte dIvoire andEcuador (the worlds largest sources o
cocoa and fne cocoa respectively).
This investment builds on the
CHF 56 million already invested in
the past fteen years and ocuses on
our key areas:
training armers to increase
their yields, reduce cocoa disease,
adopt better agricultural arming
practices and produce a better quality
crop through armer feld schools and
group sessions;
investing in plant research to
improve the quality, quantity and
sustainability o cocoa production
around 225 000 plants were
produced in 2010 in Ecuador and
Cte dIvoire, and we aim to
produce 600 000 plants in 2011; improving the supply chain
by working closely with armer
cooperatives, simpliying the supply
chain, increasing armers incomes
and improving the quality o cocoa
or Nestl;
partnerships to improve access
to education, water and sanitation.
110minvestment in The Cocoa Planover the next decade, in CHF. 40 000cocoa armers tobe trained on armingand post-harvestpractices.
10mhigh-yield, disease-resistantplantlets to be distributed toarmers over the next ten years.
50-200more cocoa (up to 1500 kgcocoa beans per hectare) trees typically provided thThe Cocoa Plan.
These partnerships include
being a ounding participant in
International Cocoa Initiative (IC
up specifcally to address orced
child labour practices, and work
with the International Federatio
Red Cross and Red Crescent So
(IFRC), in support o its Global W
and Sanitation Initiative, to und
water and sanitation in schools
cocoa-growing areas o Cte d(see page 28).
Nestl also co-ounded the
World Cocoa Foundation (WCF
and supports the Sustainable Tr
Crops Programme, which trains
armers across West Arica and
educates them about HIV/AIDS
and malaria prevention.
The Cocoa Plan boosts the quantity and quality of cocoa produced by a womens
cooperative in Divo, Cte dIvoire.
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in Cte dIvoire that supply cocoa or
our conectionery business.
Nestl recognises that child labou
is an issue that also concerns other
agricultural commodities. Using our
RISE (Response-Inducing Sustainabil
Evaluation) tool, we have already
made labour conditions assessments
in around 200 dairy arms, covering
production systems that represent
over 70% o our milk supply. In coe
we address the issue o child labour
under The Nescaf Plan. Beyond this,
we will continue over the next two
years to assess a range o social and
environmental actors including child
labour in other commodities supply
chains. This includes assessmentsat arm level and action plans with
suppliers and their supplying armers
We also recognise that, in addition
to individual actions along the supply
chain, companies, governments and
NGOs need to work together to creat
the conditions to eectively address
the root causes o this issue.
International Federation of Red
Cross and Red Crescent Societies
As part o its overall partnership with
the International Federation o Red
Cross and Red Crescent Societies
(IFRC), Nestl has been working
with the IFRC and the Red Cross
Society o Cte dIvoire since 2007,
beginning with a project to construct
and rehabilitate water and sanitationacilities (50 water points and
8 hygiene blocks) or 50 000 people.
A second project in 2009-2010, with
some 10 000 beneciaries, ocused on
access to clean water and sanitation
in the schools o 10 cocoa-growing
villages, as well as participatory
hygiene and sanitary transormation
(PHAST) training or children and
teachers, the establishment o school
hygiene clubs and the training o
50 masons to build amily latrines.
In November 2010, Nestl and the
IFRC signed a new global three-year
partnership agreement to contribute
CHF 2.25 million to water and sanitation,
ood security and emergency relie
initiatives, and to explore cooperation
between Nestl markets and Red
Cross and Red Crescent Societies.
Nestl will also sponsor the production
o the IFRCs fagship publication, the
annual World Disasters Report (WDR).
CHF 1.5 million o the partnerships
unds will be dedicated to urther
developing the school water, sanitation
and hygiene work in Cte dIvoireover the next three years, expanding
it to 55 schools, with 65 water
points and sanitation acilities or
53 000 beneciaries.
Key challenge
Child labour in the
agricultural sector
The International Labour Organization
(ILO) estimates that 132 million
children aged 514 work in agriculture
around the world. In industries such
as cocoa and coee, smallholder
armers ace many pressures. The root
causes o child labour are poverty, low
incomes, inadequate inrastructure
and lack o awareness. In Cte dIvoire,
or example, where we source much
o our cocoa, over 50% o armers
have not had a primary education.
Schools are oten ar rom villages and
where they do exist, lack capacity.
Child labour is unlikely to be totally
eliminated but at Nestl, we can
make a contribution to reducing itsincidence in our supply chain.
As a ounding participant in the
International Cocoa Initiative (ICI),
Nestl is helping to address child
labour and its causes, and improve
access to education. For example, a
new anti-child labour initiative with the
ICI will support 20 communities
53 000beneciaries o water andsanitation acilities at 55 schoolsin Cte dIvoire, through apartnership with the IFRC and theRed Cross Society o Cte dIvoire.
20communities in Cte dIvoirethat supply cocoa or ourFairtrade-certiedKitKatsupported by a new anti-childlabour programme with the ICI.
10 000hectares o old cocoa treesreplaced with varieties thatproduce three times morecocoa beans.
70amilies rom cocoa-armingcommunities given ree healthchecks and dietary advice througa Nutrimovilinormation standset up in Ecuador.
Nestls clean drinking water projects help
to provide facilities wells and hand-pumps
like this one in Ghana.
Schoolchildren in Divo, Cte dIvoire,
where local farmers receive technical
advice and high-yield plantlets through
The Cocoa Plan.
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A farmer in Cte dIvoire
tends to cocoa plants (above)
that were developed using
somatic embryogenesis at
Nestls R&D Centre in Abidjan.
Research andDevelopmentin Cte dIvoire
An agreement with the
Ivorian Government, via
the National Agronomical
Research Institute (CNRA),
to contribute to the renewalo old cocoa plantations has
seen our state-o-the-art
Research & Development
Centre in Abidjan become
a centre o excellence or
plant propagation and a
ocus or our work with
armer cooperatives.
As part o the frst
large-scale cocoa plant
propagation in Cte dIvoire,
our laboratory produceshigh-yielding, disease-
resistant plants via somatic
embryogenesis (SE). By
June 2011, 600 000 cocoa
plants will have been
distributed to about
1245 armers, rising to
1 million plants in 2012.
By promoting best
practice techniques or
harvesting, ermenting,
drying and storing cocoa to
over 30 000 cocoa armers,the R&D Centre will drive a
qualitative improvement in
the cocoa beans supplied
to Nestls actories and
an increase in production
levels. And by replac
10 000 hectares o ol
trees with varieties th
produce three times
cocoa beans, annual incomes are likely to
rom USD 480 per he
to USD 1800.
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Other Nestl armerprogrammes
More than hal o Nestls expenditure
on raw materials goes towards the
procurement o commodities other
than milk, coee and cocoa.
This includes the purchase o ruit,
vegetables, grains and cereals, sugar,edible oils, meat and spices. S