the world food prize international symposium october 2006 - des moines, iowa, usa sustainable...

The World Food PrizeInternational SymposiumOctober 2006 - Des Moines, Iowa, USA

Sustainable Agriculture & The Food IndustryDr. Hans Jöhr Corporate Head of Agriculture, Nestec SA.

Name of chairmanSustainable Agriculture & the Food Industry OCTOBER 20062

This presentation contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.

Disclaimer

Sustainable Agriculture & The Food Industry


Setting the Scene

The Challenge for the Food Industry

How is Nestlé engaged?

Summarizing

Conclusions

Sustainable Agriculture & The Food Industry

1

4

3

2

5


Emerging economies are set to boost the GLOBAL DEMAND and SUPPLY for consumer goods

Setting the Scene

Source: OECD

1

Emerging economies are growing faster than developed ones and catch up thirsts of their ever-

growing population

The Re-Emerging Model

Speeding Ahead

Fast growing economies represent:

• 1/2 of the world energy consumption

• 70% of world's Foreign exchange reserves


Setting the Scene

Source: OECD

Processed, storable food at high demand

1

Growth concentrated in developing countries

and overwhelmingly urban

Expected development of Income groups

Millions of consumers are expected to have higher purchasing power

in the near future


Consumer's expectations are changing faster than ever

"What does it mean for the Food Industry?"

Setting the Scene1

• Natural resources are limited and locally eventually overexploited

• land, water, energy • Caloric food demand

increases fast• Geographical decupling of supply

and consumption (logistic / infrastructure / legislation)


• However, respecting the limits of natural resources and weakening of rural societies threatens agricultural production

The Challenge for the Food Industry

2

• The Food Industry relies on the increasing supply of safe agricultural raw materials in quality and quantity

• Consumers’ confidence depends on the quality & safety of the food supply chain

Need for the development of Sustainable Agriculture


The Food Industry Response:The SAI Platform

What is the SAI Platform?

Overall objective Promote Sustainable Agriculture to meet the needs of today and future generations

“ Sustainable agriculture (SA) is a productive, competitive and efficient way to produce agricultural products, while at the same time protecting and improving the natural environment as well as the socio-economic conditions of local communities”

Our definition


Principles• Work on a pre-competitive basis between food chain stakeholders and other interested parties

• Include all valuable concepts and initiatives contributing to Sustainable Agriculture

Activities• Support the development of Sustainable Agriculture principles and practices• Raise overall people’s awareness about Sustainable Agriculture

SAI Platform


Common guidelines - tested in pilot projects

SAI Platform


How is Nestlé engaged?3

The The The Concept of Shared Value Creation

Manufacturing & Operations

Food safety standards &

workforce development

Adapted environmental,

labor and safety practices

Consumers

Nutrition knowledge & awareness

New/Renovated Products for

Nutrition, Health and Wellness

Agriculture & Sourcing

New innovative sourcing & purchasing practices

Agricultural & local

supplier development

Value Chain Innovations for Nestlé

and Society

Building the

Context for

Growth


All inclusive value chain approach linking to markets

Consumer Trade

Retail Food

Industry Trade

Processor Farmer

Input Providers

Extension serviceson technical assistance &farm management advise

Extension serviceson technical assistance &farm management advise

3


Corporate Social Responsibility

built into Nestlé’s strategy3

COMPLIANCELaws, Business Principles, codes of conduct

SUSTAINABILITYProtect the future

CREATESHARED VALUEReduce poverty, Improve health

Empower people




Empower people




Empower people


Creating shared value in practice

1. Aimed at creating improved business conditions for the company: reliable, high quality sourcing improved government functioning -

regulatory skilled, loyal workforce superior products which successfully

compete

2/3 of all 250'000 employees receive formal training every

year

3

2. For society, results in:

improved earnings of suppliers

increase skills, job stability

higher quality of life

greater stability, economic and social development

Linking farmers to markets to generate regular cash flow


3 Our Impact

• Purchasing of agricultural raw materials US $ 13'000 mio/yr.

• Interactions with more than 400 000 farmers directly supported by more than 800 sourcing agronomists and 3'500 technical staff working at farm level and in supply chain.

• Running more than 150 Sustainable Agriculture projects worldwide with many different stakeholders.


Summarizing Current situation needs Harmonization for Sustainability, Food Safety and Quality Assurance

Consumer Trade

Retail Food

Industry Trade

Processor Farmer

Input Providers

non exhaustive list...

4


Summarizing Standardization Urgently Needed

Benefits of Process / Verification Standardization

Safety, compliance and quality assurance at higher awareness level, decreasing risk potentials,

Lower overhead costs due to identical documentation, training material and information systems across the organization,

A company's supply chain with standardized processes presents one face to its suppliers and customers, reducing transaction costs to both,

More flexibility and responsiveness of the supply chain.

4


Summarizing The way forward

Implementation of harmonization processes through

Strategic Alliances throughout the food value chain.

But, standardization is only successful if:

Communication between stakeholders is very effective and based on trust and credibility,

Agreement on which schemes, standards, guidelines being used is reached,

Farmers, Cooperatives, Suppliers (trade & primary-processing companies) work together, in order to achieve common goals and to secure common interests.

4


ConclusionsSustainability is a business case

Sustainable sourcing practices are widely accepted by leading Business Research Institutions as being the way forward to

successful business

5


5 Conclusions

Sustainable Agriculture leads to

Enhanced food safety, quality assurance and regulatory compliance,

Addresses world food needs,

Creates business opportunities and matches with consumer expectations


5 Conclusions

The big challenge today is breaking the link between economic growth and negative environmental impact. There are clear limits to the earth's natural resources capacity.

Thank you for your attention !

Further information on

http://www.nestle.com/Our_Responsibility

or/and [email protected]

the world food prize international symposium october 2006 - des moines, iowa, usa sustainable...

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