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
More informative.

3. Coffee Industry Background
Philippines’ Coffee Situation
Coffee output is less than 1% of global production (95 TMT, P5.5 Billion)
Continually declining from
More than half of total supply of coffee beans are imported
From 2010 to 11, coffee farm area dropped from to 122 thousand hectares (6% drop)
Show three-year decline.
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
60% of total local coffee production bought by Nestle. Who is 2nd to Nestle?

5. Background
CSR Programs
Buying Station
Change picture.

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)
Adjust sample size. Don’t abbreviate.

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
Adjust sample size. Don’t abbreviate.

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
More descriptive titles.

13. Results: Majority of farmers are male

14. Results: Small farm sizes

15. Results: Classification of Respondents
Number of Farmers
percent
Buying Station only 20
60.6
Training Program only 5
15.2
Both 8
24.2
Total 33
100.0
Add total.

16. Results: Is the Buying Station Program fair?

17. Fairness: Buying Station Program
Top 5 Fairness Indicators:
Top 5
Fairtrade Principle
Frequency of Yes Responses
We are able to use our earnings from the buying station for the education of our children and medicine.
Creating Opportunities
100%
I receive full payment for my beans on time.
Payment of a Fair Price
89%
All or substantially all of my beans are bought by Nestle.
Capacity Building
79%
Nestle explains how they compute for the price of my coffee beans.
64%
I have more income from coffee farming (that I can use to buy more land, equipment and materials).
Check third statement. Pareto chart.

18. Fairness: Buying Station Program
Bottom 5 Fairness Indicators:
Bottom 5
Fairtrade Principle
Frequency of Yes Responses
Nestle informs me how they determine the price of Nescafe instant coffee.
Transparency and Accountability
29%
I can say that my coffee beans have better quality because of the suggestions of the employees in the buying station.
Capacity Building
25%
Nestle provides a written contract regarding the sale of my coffee beans.
Nestlé buying station employees inform us of the principles of fair trade.
Trading Practices
11%
Nestle consults farmers when they plan to change policies in the buying station program. 4%

19. Results: Is the Training Program fair?
Explain the question for this graph.

20. Fairness: Training Program
Top 5 Fairness Indicators:
Top 5
Fairtrade Principle
Frequency of Yes Responses
Nestle informed me of the processes and objectives of the training program.
Transparency and Accountability
92%
I learned from Nestlé how to add more value to my coffee beans (like processing).
Capacity Building
I can say that my coffee beans have better quality because of my Nestlé training.
I have better support system in farming because of Nestlé (because I know people from the training program who can give me assistance).
I can plant other kinds of crops aside from coffee.
Non-discrimination

21. Fairness: Training Program
Bottom 5 Fairness Indicators
Bottom 5
Fairtrade Principle
Frequency of Yes Responses
Nestle consults farmers when they plan to change policies in the training program.
Transparency and Accountability
23%
Nestlé teaches us to allow our children to go to school and play even if they are used for our farming.
Child Labor and Forced Labor
31%
Nestlé tells us not to use forced labor.
Nestlé employees regularly visit my farm to check on the status of/update on my farming.
Trading Practices
38%
Nestlé has sent employees to my farm in order to inquire about how satisfied I am with their program.

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

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, 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:
Top 5
Fairtrade Principle
Yes No
Not Sure
Missing data
Total
We are able to use our earnings from the buying station for the education of our children and medicine.
Creating Opportunities
100% 0%
I receive full payment for my beans on time.
Payment of a Fair Price
89% 4% 7%
All or substantially all of my beans are bought by Nestle.
Capacity Building
79%
18%
Nestle explains how they compute for the price of my coffee beans.
64%
32%
I have more income from coffee farming (that I can use to buy more land, equipment and materials).
Check third statement. Pareto chart.

30. Fairness: Buying Station Program
Bottom 5 Fairness Indicators:
Bottom 5
Fairtrade Principle
Yes No
Not Sure
Total
Nestle informs me how they determine the price of Nescafe instant coffee.
Transparency and Accountability
29%
71% 0%
100%
I can say that my coffee beans have better quality because of the suggestions of the employees in the buying station.
Capacity Building
25%
68% 7%
Nestle provides a written contract regarding the sale of my coffee beans.
75%
Nestlé buying station employees inform us of the principles of fair trade.
Trading Practices
11%
18%
Nestle consults farmers when they plan to change policies in the buying station program. 4%
89%

31. Fairness: Training Program
Top 5 Fairness Indicators:
Top 5
Fairtrade Principle
Yes No
Not Sure
 Missing Values
Total
Nestle informed me of the processes and objectives of the training program.
Transparency and Accountability
92% 8% 0%
100%
I learned from Nestlé how to add more value to my coffee beans (like processing).
Capacity Building
I can say that my coffee beans have better quality because of my Nestlé training.
I have better support system in farming because of Nestlé (because I know people from the training program who can give me assistance).
I can plant other kinds of crops aside from coffee.
Non-discrimination

32. Fairness: Training Program
Bottom 5 Fairness Indicators
Perception of Training
Fairtrade Principle
Yes No
Not Sure
 Missing Values
Total
Nestle consults farmers when they plan to change policies in the training program.
Transparency and Accountability
23%
31%
46% 0%
100%
Nestlé teaches us to allow our children to go to school and play even if they are used for our farming.
Child Labor and Forced Labor
69%
Nestlé tells us not to use forced labor.
62% 8%
Nestlé employees regularly visit my farm to check on the status of/update on my farming.
Trading Practices
38%
Nestlé has sent employees to my farm in order to inquire about how satisfied I am with their program.
Because of the training program, I have more income from coffee farming (that I can use to buy more land, equipment and materials).
Creating Opportunities
54%