The World Food Prize International Symposium October 2006
The World Food Prize International Symposium October 2006 - Des Moines, Iowa, USA Sustainable Agriculture & The Food Industry Dr. Hans Jöhr Corporate Head of Agriculture, Nestec SA.
Sustainable Agriculture & The Food Industry Disclaimer 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. 2 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
Sustainable Agriculture & The Food Industry 1 Setting the Scene 2 The Challenge for the Food Industry 3 How is Nestlé engaged? 4 Summarizing 5 Conclusions 3 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
1 Setting the Scene Emerging economies are set to boost the GLOBAL DEMAND and SUPPLY for consumer goods Speeding Ahead The Re-Emerging Model Emerging economies are growing faster than developed ones and catch up thirsts of their evergrowing population Fast growing economies represent: • 1/2 of the world energy consumption • 70% of world's Foreign exchange reserves Source: OECD 4 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
1 Setting the Scene Processed, storable food at high demand Expected development of Income groups Growth concentrated in developing countries and overwhelmingly urban Millions of consumers are expected to have higher purchasing power in the near future Source: OECD 5 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
1 Setting the Scene Consumer's expectations are changing faster than ever • 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) "What does it mean for the Food Industry? " 6 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
2 The Challenge for the Food Industry • The Food Industry relies on the increasing supply of safe agricultural raw materials in quality and quantity • However, respecting the limits of natural resources and weakening of rural societies threatens agricultural production • Consumers’ confidence depends on the quality & safety of the food supply chain Need for the development of Sustainable Agriculture 7 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
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 Our definition “ 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 communities” Name of. OCTOBER chairman 8 conditions of local 2006 Sustainable Agriculture & the Food Industry
SAI Platform 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 9 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
SAI Platform Common guidelines - tested in pilot projects 10 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
How is Nestlé engaged? 3 The The Concept of Shared Value Creation Value Chain Innovations for Nestlé and Society New innovative sourcing & purchasing practices Agriculture & Sourcing Building the Context for Growth 11 Agricultural & local supplier development Adapted environmental, labor and safety practices Manufacturing & Operations Food safety standards & workforce development Sustainable Agriculture & the Food Industry New/Renovated Products for Nutrition, Health and Wellness Consumers Nutrition knowledge & awareness Name of. OCTOBER chairman 2006
3 All inclusive value chain approach linking to markets Input Providers Farmer Trade Processor Food Industry Trade Retail Consumer Extension services on technical assistance & farm management advise 12 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
3 13 Corporate Social Responsibility built into Nestlé’s strategy Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
3 Creating shared value in practice Aimed at creating improved business conditions for the company: Ø reliable, high quality sourcing Ø improved government functioning regulatory Ø skilled, loyal workforce Ø superior products which successfully compete 1. 2/3 of all 250'000 employees receive formal training every year 14 2. For society, results in: Ø improved earnings of suppliers Ø increase skills, job stability Ø higher quality of life Ø greater stability, economic and social development Linking farmers to markets to generate regular cash flow Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
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. 15 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
4 Summarizing Current situation needs Harmonization for Sustainability, Food Safety and Quality Assurance non exhaustive list. . . Input Providers 16 Farmer Trade Processor Food Industry Sustainable Agriculture & the Food Industry Trade Retail Consumer Name of. OCTOBER chairman 2006
4 Summarizing Standardization Urgently Needed Benefits of Process / Verification Standardization Ø Safety, compliance and quality assurance at higher awareness level, decreasing risk potentials, Ø Lower overhead costs due to identical documentation, training material and information systems across the organization, Ø A company's supply chain with standardized processes presents one face to its suppliers and customers, reducing transaction costs to both, Ø More flexibility and responsiveness of the supply chain. 17 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
4 Summarizing The way forward Implementation of harmonization processes through Strategic Alliances throughout the food value chain. But, standardization is only successful if: Ø Communication between stakeholders is very effective and based on trust and credibility, Ø Agreement on which schemes, standards, guidelines being used is reached, ØFarmers, Cooperatives, Suppliers (trade & primary-processing companies) work together, in order to achieve common goals and to secure common interests. 18 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
5 Conclusions Sustainability is a business case Sustainable sourcing practices are widely accepted by leading Business Research Institutions as being the way forward to successful business 19 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
5 Conclusions Sustainable Agriculture leads to v. Enhanced food safety, quality assurance and regulatory compliance, v. Addresses world food needs, v. Creates business opportunities and matches with consumer expectations 20 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
5 Conclusions v 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 ! q Further information on http: //www. nestle. com/Our_Responsibility or/and q hans. johr@nestle. com 21 Sustainable Agriculture & the Food Industry Name of. OCTOBER chairman 2006
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