Footprint met up with Tim Innocent, Head of Purchasing Direct Materials, Nestle UK to talk about the companys approach to sourcing milk sustainably as part of its Creating Shared Value approach to business.
Nestles philosophy is to ensure that it takes the right solution to the right market-place and put things in the right place. As the worlds largest milk company (sales value) Nestlés aim is to give milk farmers greater access to markets, a fair price and bespoke training and support depending on local needs. It is a major endeavour along the lines of The Cocoa Plan and Beyond The Cup Nescafe Plan because it is so important that the company looks beyond just buying materials.
For Nestles, milk is a hugely important element of Nestles global offering and is tied in to its Creating Shared Value policy. It is worth visiting the principles behind this initiative as the policy is a fundamental part of Nestlés way of doing business. Creating Shared Value focuses on specific areas of the companys core business activities namely water, nutrition, and rural development where value can best be created both for society and shareholders. For a business to be successful in the long term it has to create value, not only for its shareholders but also for society and Nestlé has instigated the Creating Shared Value strategy as a framework to achieve this aim.
Creating Shared Value extends to the farmers who supply the company, its employees, consumers and the communities where it operates. As a necessary condition, Nestlé has to demonstrate responsible behaviour by assuring compliance and sustainability. This includes complying with Nestlé Business Principles, national laws and international norms, and ensuring that its actions are environmentally sound, socially just and economically viable.
Tim Innocent, Head of Purchasing Direct Materials, Nestlé UK, has the massive task of managing and supplying materials that come into Nestlé factories, including milk. He tells Footprint: There are 10 Nestlé factories around the UK and to ensure they work to their full potential my team have to make sure thousands of materials arrive on time. The heart of sustainability for Nestlé is to ensure we take it through the supply chain and get the flow of material to our factories correct in the short and long term. We engage with farmers around the world, making sure their community is sustainable, helping them by taking a holistic approach, says Innocent.
We support dairy farmers throughout the world and we buy 12 million tonnes of milk from over 30 countries in the developing world and 5 million tonnes direct from farmers. Its not just about getting supplies; its about looking at the core of these communities and improving their livelihood. We have to make sure we get the right products to the right market so that consumers have affordable nutritious products in developing regions, says Innocent, and there are measurable mutual benefits.
An example of the support Nestlé gives, via the East Africa Dairy Association in Kenya and Uganda, Nestlé helps to increase dairy production and give technical assistance on feeding, breeding, milking, food safety management as well as production and quality assurance with support from the Gates Foundation and Heifer International.
Another example of Nestlé working with communities is the womens livestock workers project with the UN Development Programme in Pakistan where 5,000 women have been trained in conjunction with the Swiss Agency of Development on managing healthy livestock. In certain countries it is left to women to look after animals and if the vets are men they often cant go into that community. The women have been empowered by the project to go forward to sell their animal nurturing skills into other similar communities, which is good for them, good for animal welfare and good for our products as we can ensure a regular supply of high-quality milk. The project is an innovative way to work within their communities to find a solution, says Innocent.
Nestlés Shuangcheng milk production plant in China is its fourth largest and has created a unique milk collection programme called Factory and Farmers over the past 20 years. Over 300 farmers a year receive free training sessions which introduce them to best practices, new tools and continuous skills development. And in Venezuela the Milk Production and Encouragement Plan helps farmers increase milk production and produce higher quality yields. Supported by the Venezuelan government the plan has resulted in an 80% increase in milk and generated 5000 new jobs since 2005.
In the UK Nestlé has forged a partnership with First Milk. First Milk is the largest cooperative producer of over 1.6 billion litres of milk each year: thats about 16 per cent of all milk produced in Great Britain. We have re-engaged with the supplier and chose First Milk as a partner to take on farms contracted by us, as they have the skills to manage them. I used to say milk was an ingredient like sugar but I guess Im wrong: ultimately its about relationships with suppliers. Farmers can struggle with volatile commodity prices so we have worked with them to develop a mutually acceptable pricing structure, says Innocent. We have to look beyond buying and look at sustainability of the product. Theres a sense of farmers wanting to work with us. Theres a sense of engagement - of getting to understand each other.
We are developing the Nestle First Milk Academy to drive standards and best practice forward. The pilot for this initiative is running at our Girvan plant in Scotland. In Girvan, our factory for chocolate crumb, we take 40 per cent of all milk produced locally its a good area for milk production. The partnership with First Milk delivers joint benefits:
- Sustain milk prices so theyre competitive in the area
- Develop programme for farmers ensure sharing of information
- Focus on water and best practices
We are working together to develop the UK Milk Roadmap and we are using our resources to assist the farmers. Even in the UK some areas suffer from water stress and thats why we want to introduce best practices for managing it even simple things like catching and conserving water off roofs. We shouldnt use water as if it is an infinite resource: theres a lot of water in milk production. Our aim, by working with First Milk, is to ensure we always have a sustainable milk supply in the UK.