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Nestle’s Corporate Social Responsibility and the Farmers’ Perception Thereof

Nestle’s Corporate Social Responsibility and the Farmers’ Perception Thereof. A Preliminary Study by J. Sedfrey S. Santiago David Edward G. Jimenez John Carlos B. Clerigo John Gokongwei School of Management Ateneo de Manila University. Outline. Coffee Industry Background

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Nestle’s Corporate Social Responsibility and the Farmers’ Perception Thereof

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  1. Nestle’s Corporate Social Responsibility and the Farmers’ Perception Thereof A Preliminary Study by J. Sedfrey S. Santiago David Edward G. Jimenez John Carlos B. Clerigo John Gokongwei School of Management Ateneo de Manila University

  2. Outline • Coffee Industry Background • Problem Statement • Method • Results and Analysis • Preliminary Conclusion

  3. Coffee Industry Background • Philippines’ Coffee Situation • Coffee output is less than 1% of global production (95 TMT, P5.5 Billion) • Continually declining from 2008-10 • More than half of total supply of coffee beans are imported • From 2010 to 11, coffee farm area dropped from 131 to 122 thousand hectares (6% drop) Source: Gain Report, USDA-FAS, 2011

  4. Coffee Industry Background • Nestle’s hold of the market (more than 80%) • 75% of local coffee supply is Robusta • Nestle buys about 80% of this • Thus, 60% of the local coffee production is bought by Nestle • Nestle has the power to develop the coffee industry

  5. Background • CSR Programs • Buying Station

  6. Background • Training Program

  7. Problem • Is Nestle’s CSR Program deemed fair by the coffee farmers? • Did Nestle’s CSR Program improve the standard of living of the coffee farmers? • Are the farmers satisfied and what are their suggestions?

  8. Methods • Interviews with key players in the coffee industry (Philippine Coffee Board, Philippine Coffee Alliance, Nestle, Government and Coffee Farmers)

  9. Survey and Interviews

  10. Methods • Survey of Coffee Farmers (based on the objectives) • Purposive sampling method (gathered through contacts gained from interviews) • 45 each island group (Luzon, Visayas and Mindanao) • Currently, we have 33 coffee farmer respondents

  11. Methods • Survey Design • WFTO’s Fairtrade Principles • Creating Opportunities for Economically Disadvantaged Producers • Transparency and Accountability • Capacity Building • Payment of a Fair Price • Non-Discrimination, Gender Equity and Freedom of Association • Working Conditions • Environment • Trading Practices • Child Labor and Forced Labor • Alternative fairness standard • 4C – Common Code for the Coffee Community

  12. Results: Most coffee farmers are middle-aged

  13. Results: Majority of farmers are male

  14. Results: Small farm sizes

  15. Results: Classification of Respondents

  16. Results: Is the Buying Station Program fair?

  17. Fairness: Buying Station Program • Top 5 Fairness Indicators:

  18. Fairness: Buying Station Program • Bottom 5 Fairness Indicators:

  19. Results: Is the Training Program fair?

  20. Fairness: Training Program • Top 5 Fairness Indicators:

  21. Fairness: Training Program • Bottom 5 Fairness Indicators

  22. Results: Did the programs of Nestle improve the farmers’ standard of living?

  23. Results: Are the Farmers satisfied with the CSR programs of Nestle?

  24. Results: Comments/Suggestions of Farmers • On Pricing: • Increase price or make prices stable • Questions on the coffee grading system • Why are Arabica and Robusta priced the same? • On Payment: • Direct payment instead of thru the bank • On the Training: • Increase participants • Organic farming • Field Visits • Other Comments: • Location of Buying Station

  25. Conclusion • Coffee farmers are generally satisfied. • The beneficiaries perceive that the programs gave a positive effect to their standard of living. • But, there are some issues regarding fairness. • Buying Station Program • Transparency and Accountability • In order to be a true CSR program, Nestle must improve on its fairness.

  26. Reserve Slides

  27. Related Work • The basic responsibility of a company toward its suppliers like coffee farmers is to be fair in its dealings (Jamali, 2008 citing Papasolomou, 2005 at 218). • Thus, following the stakeholder approach, which asserts that “organizations are not only accountable to its shareholders but should also balance a multiplicity of stakeholders interests that can affect or are affected by the achievement of an organization’s objectives” (van Marrewijk, 2003 at 96 citing Freeman), it is important to determine whether Nestlé’s CSR programs address said inequities, or if they perpetuate the inequities despite the programs’ good intentions.

  28. Methods • 10 Fair Trade Principles • Creating Opportunities for Economically Disadvantaged Producers • Transparency and Accountability • Capacity Building • Payment of a Fair Price • Non-Discrimination, Gender Equity and Freedom of Association • Working Conditions • Environment • Trading Practices • Child Labor and Forced Labor

  29. Fairness: Buying Station Program • Top 5 Fairness Indicators:

  30. Fairness: Buying Station Program • Bottom 5 Fairness Indicators:

  31. Fairness: Training Program • Top 5 Fairness Indicators:

  32. Fairness: Training Program • Bottom 5 Fairness Indicators

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