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18 March 2011 | Angeline Albert

Nestlé’s milk suppliers are being encouraged to convert manure from their dairy cows into renewable energy for rural communities.

The global confectioner says in its latest Creating Shared Value report that is has developed biogas as well as dairy improvement projects with milk suppliers.

With around 32,000 farmers supplying milk to its Kejayan factory in Indonesia through 31 dairy cooperatives, Nestlé is helping them improve quality of milk to enable them to charge a higher price. It is also giving dairy cooperatives access to biogas units so they can convert methane from their cattle’s manure into renewable energy. 

The company provided financial assistance to farmers as part of a partnership with the Humanist Institute for Development Cooperation, which is building biogas units and training farmers to use them. A Nestlé fund enables cooperatives to buy the biogas units and the renewable energy is given to farmers to use in their communities. Nestlé plans is to set up 8,000 biogas units.

One biodigester at a Nestlé supplier’s dairy farm in Mexico is currently processing 1,200m3 of methane a day from nearly 2,400 cows. Another Mexican farm is processing 2,400m3 a day, which is expected to reduce the site’s electricity consumption by 90 per cent.

Nestlé, which has a 165 000-strong supplier base, reports that nearly 52 per cent of its raw material expenditure goes on the procurement of milk, coffee and cocoa. 

It plans to invest CHF500 million (£344 million) in sustainable coffee sourcing. Tens of thousands of farmers and small-scale intermediaries deliver coffee directly to Nestlé’s buying stations which helps them secure a higher price. Around 10 per cent of the coffee beans used in Nescafé are sold directly to Nestlé in this way, a figure the company plans to double by 2015 to 180,000 tonnes-a-year.

Meanwhile, the chocolate maker bought 380,000 tonnes of cocoa in 2010 – over 10 per cent of the world’s supply. It aims to invest CHF110 million (£75.6 million) in sustainability initiatives over the next decade. It will also to improve the supply chain by buying from cooperatives and paying a premium for high-quality cocoa. From October 2009 to September 2010, 6,400 tonnes of cocoa were bought from 9,056 farmers in 20 cooperatives but Nestlé plans to increase this in 2010/11 to 12,000 tonnes from 15,000 farmers in 34 cooperatives.

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