embeddedness in the context of corporate sustainability at...

Embeddedness in the context of corporate sustainability at Nestlé

Hans Jöhr

Head of Corporate Agriculture

University of Zurich

January 19th, 2017

7 February, 2017 Corporate Agriculture

Planetary boundaries 9 control variables

Estimates of how the different control variables for seven planetary boundaries

have changed from 1950 to present.

7 February, 2017 Corporate Agriculture 2

Source: Steffen et al. 2015, Science

• Stratospheric ozone depletion

• Loss of biosphere integrity (biodiversity loss and

extinctions)

• Chemical pollution and the release of novel entities

• Climate Change

• Ocean acidification

• Freshwater consumption and the global

hydrological cycle

• Land system change

• Nitrogen and phosphorus flows to the biosphere

and oceans

• Atmospheric aerosol loading

The green shaded polygon represents the

safe operating space.

Feeding 9+ bio people by 2050 Threats or opportunities


Policy Interventions

Water in Agriculture

Training & Assistance

Soils & Soil Health

Energy Pricing

Biodiversity & Genetics

Nestlé In the context of Consumer Package Goods (CPG) companies


… but only 1.7% of the

global market

1.7% - Nestlé 9% - 20 largest companies

Our outreach has limits Despite our size


Partner Project

Sphere of

Control

Sphere of

Influence

Sphere of

Interest

Beneficiaries

Activity vs outcome monitoring & evaluation


Impact:

Changes in

the state

Outcomes:

Changes of

behavior

Inputs,

activities,

outputs

Sphere of

control

Sphere of

Influence

Sphere of

Interest

Activity, outcome and impact relationships


Participatory

research on

drip irrigation

techology at

demo farms

Farmers

participate in

field trials

Farmers learn how

to use technology

Extension workers

visit demonstration

farms

Training of

extension workers

Publication of

performance of

different setups

Increased

knowldedge of

techniqeuws

Farmers adopting

technology

Extension workers

promote drip

irrigation

Reduced numbers

of new wells

Greater quantities

of groundwater

available

Ambition: Shifting from activities to outcomes


Inputs Activities Outcomes Impacts Outputs

Our task: Responsible Sourcing


Corporate Agriculture / Nestlé Nutrition

FARMER CONNECT

TRACEABILITY

FARM ASSESSMENTS

AUDITING

Ensuring a minumum level of good sourcing practices for 12 raw material categories

in the upstream value chain.

Farmer Connect Definition & Justification


Ensured long-term supply of safe, quality assured, regulatory compliant and price

competitive agricultural materials to serve our brands to delight consumers

How do we operate?

With lean upstream supply chains from farm gate to factory gate, called “Farmer Connect”

What is “Farmer Connect”?

Traceability up to farmer level by buying either directly from farmers, cooperatives or

selective traders applying Nestlé good agricultural standards, principles and practices with

engagement in capacity building and training

Why and where?

46% of Nestlé factories are located in emerging countries (the fast developing world) and

74% of those Nestlé factories are located in rural areas

Sustainable Agriculture Initiative Nestlé SAIN


PEOPLE

LAND

WATER

ENERGY

CLIMATE

To ensure supply we have to smarter use natural

resources by

• Not wasting

• Not polluting

• Not destroying

and a good start is eradicating

the worst and promoting better

Sustainable Agricultural Practices.

Producing more food from the same area of land

while reducing the environmental impacts requires

what we call “Sustainable intensification of

Agriculture”.

Since 2001 – 278 SAIN

Cases across 53

countries published

SAIN Support instruments in Farmer Connect


Financial Support

Schemes

• Pre-financing

• Investment credits

• Bank guarantees

Technologies

• Fodder/feed production & conservation, planting material

• Animal health and welfare

• Biodigesters, irrigation

Economy of Scale

• Bargaining power

• Price reductions through scale effects in procurement of agricultural inputs

Market Access and Price Stability • Organisation of Supply Chain,

Logistics

• Transparent pricing schemes and improve price stability

Education, Training & Extension

• Good agricultural practices

• Standards (e.g. 4C, UTZ, Rainforest Alliance, Organic)

• Vocational schooling, further education, agripreneurship

Policy Dialogue & Advocacy • Government agencies

• Civil society organization

• Industry

• Conferences e.g. World Economic Forum

Farmer Connect Outreach

30 milk markets

11 coffee markets

7 cocoa markets

1’ 200

11’400

686’000

300’000

2013

1’290

12’100

695’000

375’000

2014

1’200

9’700

760’000

400’000

2015

Source: CSV Reports 2013, 2014, 2015; SAIN: Sustainable Agriculture Initiative Nestlé

Direct sourcing staff:

Supply chain support staff:

Farmers supplying directly to Nestlé:

Farmers received training:


Nescafé Plan Overview


Nescafé Plan builds on tangible facts

in the upstream (results 2015):

• 10 Farmer Connect Markets

• Green coffee sourced: 225’600 t

• Farmers delivering: 211,400

• Farmers trained: 88,771

• Plantlets distributed: 26.8 million

Nescafé Plan Theory of Change I


Activity vs outcome

monitoring & evaluation

= Theory of Change

Sampling size

Baseline Data Design of surveys Data collection

Frequency of

Data collection Data cleaning

Analysis

Reporting

= Monitoring &

Evaluation Target setting

Inputs ST Outcomes Impacts LT Outcomes

# Plantlets distributed

# Trainings Survival rates

Adoption rates of practices Farm economics

= KPI framework

Productivity increase

Level of changes

(e.g. production costs)


Nescafé Plan Theory of change II

Nescafé Plan Colombia 2010–2015 • FNC (Colombian Coffee Federation)

has been the Project Executor

• Good and reliable supplier of class 1.1

coffee for many years.

• Strong presence at the field (150+

Agronomists / Field Technicians )

• Good project execution capacity

• Severe Leaf Rust Outbreak in

Colombia 2009/2010

• Continuous downtrend in

national production


• Number of Plantlets Distributed (Mio) 28.9

• Number of hectares (Ha) renovated 4,804

• 4C Verified Coffee Delivered (Tons) 93,000

• 4C Verified Farmers 2,864

• Farmers Trained 7,222

• Fertilizer Distributed (Tons) 1,160

• Personal Protective Equipment Distributed 1,321

• Signs Distr. 2,156

• Soil Analysis 1,657

• Training Booklets 2,700

• Municipalities impacted: Tulua, Andalucia, Bugalagrande, Sevilla, Caicedonia, Bolivar, Roldanillo, Pradera & Trujillo 10

Total Investment (Nestlé) Mio CHF 2011-15 3.06

Main Project Indicators

Better Farming Practices Farmers’ adoption I


0

10

20

30

40

50

60

70

80

90

100

Adoption Level 2010 vs 2015

Better Farming Practices Farmers’ adoption II

Soil Conservation

• Doubled adoption of soil analysis 11.3 %

(82/699) still extremely low though higher

than 5% average country wide.

Solid Waste Management

• Increased adoption level in all six

indicators

• Collected 4.4 Tons of empty plastic

containers

Water Resources Management

• Knowledge/practices led to limited impact,

technological improvements needed that

require capital investment


Agrochemical Management

• Use of PPE almost doubled (from 22% to

41%)

• All six indicators had signifficant increase

in adoption

Economic Dimension

• 94% of farmers adopted leaf rust tolerant

varieties

• Record keeping on sales, purchases and

harvesting showed signifficant

improvement

• Not very keen on acivities chronogram or

farm map

Plan impact

• 1.87 Million kg additional Green Coffee

produced per year (>USD 5 Million

income)

• 35% Increase in Productivity

• 41% increase in net farmer income

• Production Cost increase: only 5%!

• Increase of leaf rust tolerant trees from

36 to 67% (2010-2015)

• Supply of fully traceable and lower cost

leaf rust tolerant plantlets

• Coffee farmers are more likely to stay

in business (next generation secured?)


Main Impact Indicators

2010 2015

Productivity 125 Kg Parch/Ha 10.8 14.6

Trees average age (years) 9.69 7.02

Trees Density (Ha) 4827 4997

Leaf rust resist trees NP (%) 36 67

Tech. Young trees NP (%) 57 75

% Decrease in Coffee Growing area 5.4 3.1

% of abandoned farms 2.4 1.4

Nestlé Cocoa Plan Overview


Results 2015:

• Cocoa sourced: 121,400 t

• Farmers delivering: 66,320

• Farmers trained: 66,320

• Plantlets distributed: 1.7 million

Improving cocoa quality and yield, and

thus the lives of cocoa farming

communities.

Based on three main action pillars:

• Enabling farmers to run profitable

farms;

• Improving social conditions;

• Sourcing responsible, good quality

cocoa.

Supplier Development Winning with consumers, Venezuela


“A seasoning that we have used from generation to

generation, that has delighted the palates of all

Venezuelans.”

More Info: Maggi on Facebook Venezuela

A testimonial that provides great insight in the making of

Maggi cubes and soups.

https://www.facebook.com/maggivenezuela

MAGGI - COLOR 30s.m4v

Supplier Development Culinary raw materials, Venezuela


MAGGI NATURALIDAD_EnglishSubtitle - Documental 4 min (854 x 480).m4v

Human resource Youth employment & next generation farmers


Nestlé has recognised that youth employment

and training of next generation farmers is key to

ensure long-term supply of agricultural raw

materials.

Worldwide, the average farmer age is 60 years!

In 2015:

• Nestlé trained more that

400 000 farmer

• Nestlé initated the

agripreneurship program to

accelerates development of

capable and willing farmers

• Farming by choice

Sustainable Development Goals


We all can contribute to make the Sustainable Development Goals happen!

embeddedness in the context of corporate sustainability at...

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