Nestle is to build a farming “institute” in China to train local farmers and “accelerate the development” of the country’s dairy industry.
The world’s largest food maker hopes the institute, which will be based in the north-eastern city of Shuangcheng, will help farmers improve productivity by providing “much-needed management skills training”, a spokesperson for Nestle’s Chinese operations said.
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Nestle wants to set up a CNY2.5bn fund to invest in the project and is looking for cash from local investors. The company refused to be drawn on how much money Nestle would invest in the institute. “The funding will come from a shared partnership of Nestlé, local government, investors and farmers. Nestlé will take a leadership role in this process to modernize the Shuangcheng dairy district,” the spokesperson told just-food today (12 January). “I do not have the breakdown details to share at this stage though.”
The city of Shuangcheng has around 11,000 dairy farmers that work directly with Nestle, according to the company, which had a peak milk intake last year of around 1200 tons per day. Nestle has three dairy plants in China and its largest is in Shuangcheng.
In October, Nestle had to make changes to the way it weighed milk supplied by Chinese farmers after claims the company was under-paying its suppliers.
China’s dairy sector has been rocked by safety scares in recent years, the latest of which came last month when raw milk produced by local processor Mengniu Dairy was found to contain a cancer-causing chemical.
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By GlobalDataThe announcement of the new Nestle institute comes two weeks after the contamination at Mengniu emerged. However, the Nestle spokesperson said the investment was a “continuation” of the company’s “success story” in China.
“The objective of the plan is to accelerate what Nestle has been doing in Shuangcheng for many years, i.e., to move the milk district to modern dairy farming,” the spokesperson said. “So the plan is continuation of the success story.”
Industry watchers have said Chinese consumers have turned to multinational processors after the recent safety scares involving local producers but Nestle declined to comment on whether it expected its sales to increase in the wake of the Mengniu contamination.
“Nestlé has made consistent efforts to ensure the quality and safety of its product irrespective of what is happening in the marketplace. Consumers will decide which product they choose. We are pleased that the Nestlé brand enjoys a good reputation amongst the consumers,” the spokesperson said.
