Nestle offers dairy farmers sustainability bonus
© Tim Scrivener Dairy farmers supplying milk processor Nestle are being asked to adopt more sustainable farming practices in return for a price bonus.
“Every single one of our farmers is going to do something around biodiversity, soil or water next year,” company milk buyer Robin Sundaram told producers at the South of England Farming conference this week.
“Alternatively they can do something around helping the community – one or the other.”
See also: First Milk adds dedicated Nestlé farmer group
To encourage them, Nestle has introduced a new payment mechanism
Nestle dairy business
- Two factories – Girvan in Ayrshire and Dalston, Cumbria
- 105 aligned farmers with 13,500 cows, members of First Milk
- 100% of milk from sustainable farming model
“Previously the price was simply negotiated monthly with First Milk,” said Mr Sundaram.
“But there was no science to it.
“We were setting a price without really knowing how many farmers were making any money out of it.”
So a new mechanism was developed, in collaboration with four supplying farmers.
“First of all, we pay a base price, taking a basket of prices from the competition around us – Muller, Arla and Meadow Foods.
“We make sure that our base price is above that.
“Importantly, we then have a sustainability bonus. If our farmers carry out all of the things that they are committed to in terms of sustainability, they get a bonus.”
‘Stability’
Mr Sundaram would not be drawn on the levels of the basic price or bonus, but did add the new formula included a floor and a ceiling to ensure some stability.
He also pointed to the benefits of benchmarking, which were helping members take costs out of their farming practices and become more efficient.
Nestle’s five strategic aims
- Align milk quality to company needs – rewarding protein and fat delivery through price incentives. “The higher the level of protein and fat, the better our factories run,” said Nestle milk buyer Robin Sundaram.
- Lean dairy farming – helping to drive down cost and promote best practice by introducing benchmarking. “We are looking to take out waste wherever we can,” said Mr Sundaram.
- Future generations – involving seven young farmers and putting them on a two-year programme to give them a broad understanding of the whole dairy supply chain. “When they take over their farms, they will really understand the wider context,” adds Mr Sundaram.
- Engagement with communities – this involves encouraging farmers to host school visits and help alleviate flooding.
- Working with nature – encouraging farmers to improve biodiversity, soils and water. Mr Sundaram explained: “We have engaged with the Game and Wildlife Conservation Trust to work with our farmers.”