Nestlé report reveals rural development impact of its factories

Mar 14, 2011
Chinese coffee farmers DRIVING DEVELOPMENT: New Nestlé CSV Report illustrates the Company's long-term impact on the rural communities where it operates.

The worldwide rural development impact of Nestlé’s factories, particularly in emerging markets, is revealed in a new Report released today.

The Creating Shared Value Report 2010 focuses on two main ways in which Nestlé contributes to international rural development: through investment in factories, and by strengthening links between farmers and markets.

The Report contains striking figures taken from the Company’s first ever worldwide survey of its 443 factories, illustrating their long-term impact on the communities where they are located.

For example, of the 144 Nestlé factories in developing countries that are rurally located, 70% have a Nestlé-built water treatment plant, 58% contribute to local educational facilities, 58% offer formal apprenticeship training, 33% offer literacy and numeracy programmes, 32% provide clean drinking water to local communities, and 41% invest in other local infrastructure.

The Report provides a fact based analysis of how, over time, our manufacturing plants have helped to create large, skilled labour forces in rural areas and educate the people who supply them, as well build important infrastructure such as roads and water treatment systems. Janet Voûte, Nestlé’s Vice President of Public Affairs

Janet Voûte, Nestlé’s Vice President of Public Affairs, explained the Report’s significance.

She said: “Half of all Nestlé factories are situated in developing countries and the majority of those are in rural areas. We have known for many years that our factories drive and attract development, but this is the first time we have begun to assess their collective influence.

“The Report provides a fact based analysis of how, over time, our manufacturing plants have helped to create large, skilled labour forces in rural areas and educate the people who supply them, as well build important infrastructure such as roads and water treatment systems.”

Mrs Voûte added: “It supports our conviction that a long-term commitment to the communities where we operate is, and always has been, part of Nestlé’s Creating Shared Value approach to business.”

The Report also underlines the extent of Nestlé’s geographical presence, with more than 25 million people involved in its entire upstream value chain, covering almost every country in the world.

It emphasises Nestlé’s commitment to agriculture, revealing that the Company provided more than USD 45 million (over CHF 48 million) in financial assistance – without conditions or obligation – to more than 32,000 farmers in 2010.

The Report shows that in the same year, Nestlé’s thousands of agronomists, extension workers and contractors supported almost 145,000 farmers through capacity-building, technical assistance and knowledge transfer programmes.

Coffee growers in China GROWING COFFEE IN CHINA: Farmers in the Yunnan Province have benefited from Nestlé’s expertise.

Developing rural communities

For example, the Report explains how the Company’s establishment of a Nescafé factory in the Yunnan Province in south west China in 1992 – as well as an agricultural assistance service and demonstration farm prior to this – enabled farmers to successfully grow coffee in what was traditionally a tea-producing region.

Now, almost 20 years later, Nestlé’s coffee buying supports up to 19,000 people, and almost 4,100 farmers have received training in planting, quality control and processing techniques.

In this video about the - one of five new short films released with the Report today - coffee farmer Su Huixian explains how coffee growing has “opened up her local region to the outside world” and given farmers a “new perspective”.

Urban connection

The Report also demonstrates that even Nestlé’s factories in urban areas can have a significant impact on the rural communities they source from.

For example, the Company’s dairy factory in Kejayan, Indonesia, is supplied by around 32,000 farmers who have not only been able to improve their productivity, but now also receive a better price for higher-quality milk.

The factory provides employment all along the production chain, from cooperative managers to grass collectors. Their contributions to the community include renovating a nearby school in partnership with a local non-profit organisation, repairing the factory’s main road, and supplying 1,000 trees for a local reforestation project.

Meanwhile, in the Philippines, Nestlé funded a group of local women to train in sewing techniques near its manufacturing plant in Lipa City.

They formed a business project called Cut and Sew, which now handles sewing jobs for the factory such as uniforms, hair nets and shoe covers.

Nestlé and Creating Shared Value

Nestlé has been issuing global Creating Shared Value Reports every two years since 2007.

In each report, Nestlé focuses on progress it has made against key performance indicators (KPIs) across its value chain, and outlines the actions it has taken to address the key challenges facing its business.

The 2010 Report has been published as a print summary, with a full version available online from the CSV pages of Nestlé.com. It is released today along with the Company's Annual Report.

Creating Shared Value is a fundamental part of Nestlé's way of doing business that focuses on three specific areas of the Company's core activities – water, nutrition, and rural development – where it can best create value both for society and shareholders.

Nestlé’s efforts to create shared value for its shareholders and society were recently highlighted as best practice in the featured cover story of the January/February 2011 issue of the Harvard Business Review, co-authored by Professor Michael E. Porter.

Along with Nestlé, the Harvard Business School Professor and leading business strategist has been influential in communicating the concept of CSV to a wider audience.

Related information:
The Big Idea: Creating Shared Value (Harvard Business Review article)