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16-Sep-03Nophadol S.-

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SUSTAI NABLE AGRI CULTURAL

INITIATIVE

NESTLE

Olt en, Sw it zerland

16 September 2003

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Sustainable Agriculture Initiative Platform

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Presentation structure

SAI Platforms approach

What is SAI Platform

SAI Platforms environment

SAI Platforms members

Unique characteristics

Background

Why SAI Platform

What is sustainable agriculture

The 3 pillars of sustainable agriculture

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Presentation structure

SAI Platforms activities

Key actions & tools

Expected results

Case Study Nestle Thailand

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Why SAI Platform?

The Food Industry relies on long-termsupply ofagricultural raw materials

However, damages on natural resources & the

environment affect agricultural productivity

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

Need for the development of sustainable agriculture

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Sustainable agriculture (SA) is aproductive, competitive and efficient way toproduce agricultural raw materials, while at

the same time protecting and improving thenatural environment as well as the socio-

economic conditions of local communities

What is sustainable agriculture?

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food quality & safety rural socio-economicconditions

The 3 pillars of sustainable agriculture

farm income & viability sustainable food supply

water, soil, air, energyuse & conservation

biodiversity

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What is SAI Platform?

Support the development of SA

Aiming to actively :

Involving food chain stakeholders & other

interested parties

An Initiative launched by the Food Industry

Communicate worldwide about SA

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SAI Platforms members

Campina

Danisco

Dole

Ecom

Efico

Findus

Friesland Coberco

Groupe Danone

Kraft

McCain Europe

McDonalds

Nestl

Neumann Kaffee Gruppe

Tchibo

Unilever

VOLCAFE

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Unique characteristics

An action-oriented Initiative

A common work with competitors

Including all valuable initiatives & conceptscontributing to SA

Open to food chain stakeholders & other interestedparties

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Key actions & tools

1) Build & manage knowledge on SA

Information collected from internet, literature, meetings

Knowledge & experience gathered from members andstakeholders (workshops, discussion forum)

Specific studies from experts & organizations

Information stored at SAI headquarters and in database

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Key actions & tools (contd)

3) Involve stakeholders, build cohesion

Individual consultations with stakeholders

Thematic working groups

Meetings, events

2) Raise awareness, communicate about SA SAI website, newsletter, documents

SAI participation in workshops, conferences, meetings

Communication through medias (articles)

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Key actions & tools (contd)

4) Support implementation of SA practices

Development of SA tools

notably crop-specific guidelines for sustainable agricultural

practices, see next slides

Recommendations provided to members & stakeholders

Workshops, conferences & events

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SAI Platforms expected results

Catalyst for dialogue & common work between all foodchain stakeholders

Significantly contribute to sustainable development

of agriculture

Minimise the risks in food supply chain

Reinforce confidence in everyday food products

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Food qualityFood quality

& safety& safety

Food security

Better dialogue

Stable markets

Reputation

Defend interests

Confidence

PP

PP

PP

PP

PP

SAI delivers benefits to everyone

ConsumerConsumerTrade

Retail

TradeRetail

FoodIndustry

FoodIndustry

TradeProcessor

TradeProcessorFarmer

FarmerInputIndustry

InputIndustry

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

PP

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A Case Study

Nest le Thailand

Procurement of Coffee

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Sustainable Agricultural InitiativeSustainable Agricultural InitiativeNestle ThailandNestle Thailand

Case study on procurement of agricultural

raw material :

COFFEE

l 6 Agronomists Coffee Developmentl 4 Animal Husbandries Dairy Development

Nestle Agricultural Services Department

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ThailandThailand Coffee Growing areaCoffee Growing area

Arabica Coffee- 1,000 hectares of plantation- 1,200 coffee farms- Average output 0.8 ton/farm

- Total production 2002/03 : 1,000 tons

Robusta Coffee- 10,000 hectares of plantation

- 28,000 coffee farms- Average output 2.5-3.0 ton/farm- Total production 2002/03 : 58,000 tons

Bangkok

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Nestle ThailandNestle Thailand Coffee AgronomistsCoffee Agronomists

l On-Site, full-time technical assistant to Coffee farmersl Support sustainable farming practices, comprehensive

training on Good Agricultural Practices (GAP)

l Research co-operation with Department of Agriculture

to improve yield and quality of local Robusta Coffee

l Experimental & Development Farm (Arabica) with theRoyal Doi Tung Development Project

l Direct procurement from more than 15,000 farmers

l Premium price offered as incentive for qualityimprovement.

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Technical Assistant / Sustainable Farming PracticesTechnical Assistant / Sustainable Farming Practices

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Research co-operation with Department ofAgriculture

Research coResearch co--operation with Department ofoperation with Department ofAgricultureAgriculture

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Experimental & Development Farm (Arabica)Experimental & Development Farm (Experimental & Development Farm (ArabicaArabica))

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0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

1990/911991/921992/931993/941994/951995/961996/971997/981998/991999/002000/012001/022002/03

Production Direct Procurement

Thai Production and Nestle Direct ProcurementThai Production and Nestle Direct ProcurementThai Production and Nestle Direct Procurement

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27.6 28.6

60.5

46.6

34.5

78.5

59.3

34.8 34.5 34.7

38.6

24.8 25.7

58.2

40.2

30.7

63.5

48.4

24.231.2

24.830.2

0

10

20

30

40

50

60

70

80

90

1992/93

1993/94

1994/95

1995/96

1996/97

1997/98

1998/99

1999/

00

2000/

01

2001/

02

2002/

03

Average price paid by Nest le Local average pr ice

Quality Based Premium PricingQuality Based Premium PricingQuality Based Premium Pricing

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Summary on Direct Procurement EvolutionSummary on Direct Procurement Evolution

1988/ 89 Since 2001/ 02

l Direct procurement / 28% 100%

local Nestle requirement

l Number of farmers 2,000+ 15,000+

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THANK YOUTHANK YOU

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