Food
Nestlé released its half-year results for 2024 on 25 July, emphasising the achievements of its income accelerator programme.
In its first 18 months, Nestlé’s programme has increased cocoa yields of participating farmers by almost a third (32%) largely through adopting pruning practices and other sustainable farming strategies.
Thinking beyond price
“With our programme, we made the conscious decision to think beyond price and focus on direct cash incentives,” says a spokesperson for Nestlé.
The company created its income accelerator programme based on its work with the Nestlé Cocoa Plan. The programme aims to help close cocoa-farming families’ living income gap and reduce the risk of child labour and has so far supported more than 10,000 families in Côte d’Ivoire with plans to expand to Ghana later this year.
The plan focusses on encouraging cocoa-farming families to engage in positive practices in four areas: school enrollment, good agricultural practices, agroforestry activities, and diversified incomes.
How pruning boosts productivity
From a practical perspective, Nestlé is working with farmers to encourage regular pruning of diseased or degraded branches on cocoa trees. With a commercial lifespan of approximately 25 years, from the first year after planting, cocoa trees benefit from annual pruning which improves cocoa pod yields and helps limit crop disease and loss.
Shade and fruit tree planting has also formed part of Nestlé’s agricultural strategy that is successfully impacting the resilience of cocoa crops.
“We believe that incentivising practices and behaviour change will create long-term resilience at the farm and household level,” says Nestlé’s spokesperson.
Alongside its efforts to further reward farmers and their families for practices that benefit the environment and local communities, Nestlé pays a premium to cocoa producers for the certified cocoa it buys.
Improving income and output
A recent report by the KIT Institute showed that its programme has helped cocoa farmers substantially improve their cocoa productivity and net income. Its findings show that overall, the net income of income accelerator communities rose by 38%, leading to a higher proportion of households achieving a living income, growing from 10% in 2022 to 20% in 2023.
“Cash incentives are decoupled from the amount of cocoa produced and are proportionally more advantageous to smallholder farmers,” says Nestlé’s spokesperson about the nuts and bolts of its programme.
In a new and unique aspect of its programme, money goes straight to the farmers and their spouses through mobile payments, enabling this money to be distributed between farmers and their spouses. “This recognises the crucial role women play within cocoa-farming families and helps improve gender equality,” says Nestlé’s spokesperson.
Along with its income accelerator programme, Nestlé also supports the Côte d’Ivoire-Ghana Cocoa Initiative (CIGCI), which aims to identify long-term solutions that help cocoa farmers achieve and sustain a living income.
Goals for 2025
Over the coming year, Nestlé wants to expand the reach and impact of its income accelerator programme. By 2030, the programme aims to reach 160,000 cocoa-farming families in Nestlé’s cocoa supply chain.
“Our commitment is also reflected in our broader sustainability goals, such as achieving 100% cocoa sourced through the Nestlé Cocoa Plan by 2025,” says Nestlé’s spokesperson. The company’s Cocoa Plan includes mass balance and segregated Rainforest Alliance certified volumes and/ or verified mass balance Nestlé Cocoa Plan volumes.
Boosting its organic growth targets
As we reach the halfway point of 2024, alongside reporting the latest on its income accelerator programme, Nestlé has reported better-than-expected organic growth. The company’s organic growth has reached 2.1% despite sales of CHF 45 billion, down 2.7% compared to the first half of 2023.
Confectionery sales grew at a high single-digit rate, Nestlé reports, with KitKat as the leading global brand, driving this growth along with other local brands. In 2024, Nestlé released its first-ever KitKat bars made with cocoa grown by income accelerator farming families.
The company also states its growth is due to industry bounceback and the launch of innovations to address consumer trends and develop its large iconic brands. “Positive real internal growth is back,” says Mark Schneider, CEO of Nestlé.
Along with innovations and Nestlé Health Sciences’ ongoing recovery, the chocolate giant has seen prices come down, bucking the ongoing reality of rising raw material costs. “We have seen pricing come down faster than expected,” Schneider says. Organic sales growth for 2024 is now expected to be at least 3%.