Managing Rural Development
We depend on more than 5 million farmers who grow the raw materials that go into our products and 73% of our factories are located in rural areas (based on a survey conducted in 2010) – so their wellbeing, closely linked to rural development, is at the very heart of our Company and one of our three CSV focus areas. Furthermore, as the world becomes increasingly urbanised, the need for a strong rural agricultural resource base to grow and move food into cities is growing.
Our factories are major engines for rural development. They create employment, provide apprenticeships and training. They also contribute to local infrastructure, and the provision of clean drinking water and the treatment of wastewater.
Agriculture and rural development is one of our Corporate Business Principles that form the foundation of all we do. The Principles state:
“We contribute to improvements in agricultural production, the social and economic status of farmers, rural communities and in production systems to make them more environmentally sustainable."
We want to reduce rural poverty and ensure greater food security, and strive to do so through our established, robust policies and commitments. These include:
The Rural Development Framework
The Rural Development Framework, to be rolled out in 2013, was created to bring all our rural development activities under one roof. It builds on our commitment to Creating Shared Value through the development of rural communities. It is supported by the Rural Development Commitment (pdf, 214 Kb) and composed of four pillars that address the needs of three key stakeholder groups:
- Successful farmers
- Productive and respected workers
- Prospering communities
- Alignment, collaboration and advocacy
Much of the rural development debate has focused on raising environmental and social standards in farms, with little attention paid to farmers’ economic sustainability and social wellbeing. We believe that a sustainable model for securing a reliable supply of raw materials should ensure that what’s profitable for us is profitable for farmers.
To achieve this, we have to be confident that our farmer suppliers are ‘farmers by choice’, because it offers them a life worth living.
We need a profitable business model for crops and farming systems in different commodities and countries – which requires us to work with farmers and governments to improve net farm income, primarily through improving productivity, crop quality, input costs and paying fair prices.
Finally, we need to support local supplier development so that, over time, they can provide us with the raw materials that we use. As well as directly benefiting farmers, this will help build more prosperous local societies by providing employment, increasing skill levels and enabling technology transfer.
Productive and respected workers
Farm workers, as distinct from farmers, are particularly vulnerable to poor labour circumstances. As has already been observed in our work on responsible sourcing, the risks around human rights compliance often lie with farm workers rather than the farmers themselves.
Moreover, these workers are vital to agricultural sustainability. As countries develop economically, those in low-paid farm jobs often migrate to the cities, leading to labour shortages. It is essential that low labour productivity is addressed, as well as conditions of employment, including better health and safety and the use of technology to make work less onerous.
Successful farmers also need stable and reliable communities in which to operate. The community is a loose concept that could be a village, or set of villages; a valley, commune or farmer group; or, in the case of rural factories, nearby apartments and houses.
The interventions we make at the community level will be identified through a process in which the community assesses its needs, in line with its own government’s objectives. We know that there is much improvement needed in the areas of nutrition, education, access to clean water and improved sanitation and our priorities will be determined by the level of influence and impact our interventions will have, and their relevance to our operations and/or the business.
Alignment, awareness and advocacy
We’ll need to ensure that our trade partners and suppliers are aligned with this agenda, as in many cases they’ll be the ones delivering it. The same applies to our own business units and globally managed businesses.
In addition we’ll need technical partners and advocates to ensure that there is a supportive policy environment at a country level. Also, while remaining focused on delivering our rural development agenda on the ground, we need to engage the support of governments, consumers, customers, the media, investors, and civil society groups; and to help our staff to become its ambassadors. Strong technical partnerships between governments and business are particularly key to developing the necessary knowledge and technologies.
Scope of the Rural Development Framework
We have identified 21 countries that are both important for the business and have high social needs. These will be the focus of our work to implement the Rural Development Framework.
Our rural development work covers our activities in areas where we have direct interactions with farmers through 'Farmer Connect' and other long-term sustainability initiatives with our suppliers. As such, the Rural Development Framework plays an integral part in responsible sourcing, including the Cocoa Plan and the Nescafé Plan.
Governance and oversight
Our rural development activities come within the remit of Jose Lopez, our Executive Vice-President of Operations, and ultimate responsibility rests with our Executive Board and Chief Executive Officer.
One of the main departments involved is Corporate Agriculture (CO-AGR), which provides in-depth expertise to support the development of the business operations strategy, especially in the context of agriculture, rural development and water. With a network of more than 1,000 field staff and 10,625 extension workers, CO-AGR supports the countries we operate in implementing their direct sourcing programmes from farm to factory through Sustainable Initiative at Nestlé (SAIN) and other programmes.
The strategic businesses take overall responsibility for activities in their areas. For example, the Confectionery Strategic Business Unit (SBU) is responsible for the Nestlé Cocoa Plan, and the Beverages SBU is responsible for the Nescafé Plan. The SBUs report to Patrice Bula, a member of the Executive Board and Head of Strategic Business Units, Marketing and Sales.
Our work on rural development combines a human rights approach together with a human development approach. The intention is to deliver both business and societal value, by focusing on key gaps and the alignment of objectives along the supply chain and with stakeholders. It is consistent with the UN Millennium Development Goals on poverty, nutrition, education, gender equality, and environmental sustainability.
Monitoring and audit
We are developing a monitoring process to measure our impact in rural development. We have worked out a data series from which we can establish a baseline – enabling us to develop a needs-based work plan, and monitor our progress. We will start establishing baselines in 2013 and will report on progress on a regular basis.