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

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

Name of chairmanSustainable Agriculture & the Food IndustryOCTOBER 2006

*Sustainable Agriculture & The Food Industry

Name of chairmanSustainable Agriculture & the Food IndustryOCTOBER 2006

*Setting the Scene

The Challenge for the Food Industry

How is Nestl engaged?

Summarizing

ConclusionsSustainable Agriculture & The Food Industry14325

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*Emerging economies are set to boost the GLOBAL DEMAND and SUPPLY for consumer goodsSetting the SceneSource: OECD1

Name of chairmanSustainable Agriculture & the Food IndustryOCTOBER 2006

*Setting the SceneSource: OECDProcessed, storable food at high demand1

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*"What does it mean for the Food Industry?"Setting the Scene1Natural resources are limited and locally eventually overexploitedland, water, energy Caloric food demand increases fastGeographical decupling of supply and consumption (logistic / infrastructure / legislation)

Name of chairmanSustainable Agriculture & the Food IndustryOCTOBER 2006

* However, respecting the limits of natural resources and weakening of rural societies threatens agricultural productionThe Challenge for the Food Industry2 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

Name of chairmanSustainable Agriculture & the Food IndustryOCTOBER 2006

*The Food Industry Response:The SAI Platform 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 communitiesOur definition

Name of chairmanSustainable Agriculture & the Food IndustryOCTOBER 2006

*Principles Work on a pre-competitive basis between food chain stakeholders and other interested parties Include all valuable concepts and initiatives contributing to Sustainable AgricultureActivities Support the development of Sustainable Agriculture principles and practices Raise overall peoples awareness about Sustainable AgricultureSAI Platform

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*SAI Platform

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*How is Nestl engaged?3The The The Concept of Shared Value Creation

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*All inclusive value chain approach linking to markets3

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*Corporate Social Responsibility built into Nestls strategy3

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*Creating shared value in practice 3

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*3Our 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.

Name of chairmanSustainable Agriculture & the Food IndustryOCTOBER 2006

*Summarizing Current situation needs Harmonization for Sustainability, Food Safety and Quality Assurance Consumer Trade Retail Food Industry Trade Processor Farmer Input Providersnon exhaustive list...4

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*Summarizing Standardization Urgently NeededBenefits 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

Name of chairmanSustainable Agriculture & the Food IndustryOCTOBER 2006

*Summarizing The way forwardImplementation 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.

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*ConclusionsSustainability is a business case

Sustainable sourcing practices are widely accepted by leading Business Research Institutions as being the way forward to successful business5

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*5ConclusionsSustainable Agriculture leads to

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*5Conclusions

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_Responsibilityor/andhans.johr@nestle.com

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