Case Example

How companies in the UN Global Compact are taking action to advance corporate sustainability around the world.

Nestlé Lanka’s commitment to local dairy farmers

Who are Nestlé Lanka?

Nestlé is a leading global nutrition, health and wellness company. Headquartered in Switzerland it has operations in 194 countries around the world. Nestlé’s subsidiary in Sri Lanka, Nestlé Lanka, has been operating in the country for over 100 years and is one of the top food and beverage companies in the country. Nestlé Lanka provides direct employment to almost 1,200 people and has an impact on the livelihoods of over 23,000 suppliers, farmers and their families.

What was the challenge?

The Northern and Eastern provinces’ dairy industry is underdeveloped due to the civil war and produces only 15 per cent of the nation’s milk, despite accounting for almost 34 per cent of the country’s cattle. During the conflict, many farmers fled, leaving their livestock behind. Upon their return, they found it difficult to locate their livestock and lands. Many of the cattle had been left to roam freely in the jungle during the conflict and most of the lands did not have a clear title/deed. Land for grazing was therefore difficult to obtain, as ownership was in question and there was no clear block of land allocated for a particular farmer and his herd.

How was it addressed?

Nestlé educated farmers on how to care for their animals to improve the quality and quantity of milk produced. Dairy farms in the North and East were producing at half the average national daily yield of two to three liters of marketable milk per cow per day. Training also focused on animal husbandry to ensure that both the farmers and Nestlé received the best milk. Nestlé also offered farmers environmental and financial training to help them build sustainable businesses.

Dairy farmers received numerous incentives from Nestlé, such as financial assistance and revolving credit. Interest-free loans were provided to purchase cattle, cattle sheds and pasture plots. Guarantees were provided so that banks could deliver funding to farmers for business development.

Nestlé Lanka works to increase the supply of local milk for its own use and for the wider market to support the national plan to be self-sufficient in milk production by 2016. It continues to build relationships with dairy farmers and to encourage improved farming practices across Sri Lanka.

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