How Nestlé is Creating Shared Value in Mexico

A few months ago, I was invited by the Nestlé Creating Shared Value team in Mexico to participate in a visit to their dairy producers in Aguascalientes, Mexico. We left bright and early for this day trip, which turned out to be an eye-opening experience. We saw first-hand the difficulties that small and growing dairy producers face on a daily basis, and could well understand the challenges that lay ahead for supporting their economic growth and the critical role that corporate value chains potentially have in creating impact.

The dairy producers, brothers Cruz and Toño, migrated to the United States and came back to their beloved Mexico with enough capital to invest in a small piece of land and some cows in Aguascalientes. Cruz and Toño were unique among their peers, as they had saved enough seed capital to buy the inputs needed to set up shop. A couple of years later, Nestlé identified them as milk producers for the nearby processing plant and committed to buying all of their milk, along with supporting the growth of their business. Now, Cruz and Toño have grown their dairy production and adopted new eco-friendly technologies to reduce the energy needed to refrigerate the milk. Nestlé picks up their fresh milk every day and frequently visits the rural entrepreneurs to help them identify new opportunities for growth. As a partner, Nestlé provides them with financing, business and sustainability strategies, and technological tools. They focus on innovations that could aid the business in becoming more sustainable, focusing on their energy usage, agriculture and water consumption, as well as their overall economic growth. Cruz and Toño are currently working on reusing their organic compost in order to create energy for their own consumption.

Having this first-hand experience with agricultural entrepreneurs in Mexico exposed the challenges of rural entrepreneurship: the nonexistent seed capital for most entrepreneurs to set up shop, the lack of infrastructure and dissemination of new technology, limited access to finance, and continuous support in developing business skills

This last area, access to business development skills, is where Nestle’s Creating Shared Value initiative has been most instrumental for Cruz and Toño.

It is important to note that Mexico is the biggest importer of milk in the world, importing half of what the local market (including corporates) consumes.[1] Therefore, there is an opportunity for corporates to play a vital role in the development of local dairy producers in Mexico. However, the lack of initial funding and available corporate partnerships for small and growing businesses are just some of the challenges that rural Mexico faces.

This is what many of what our members at the Aspen Network of Development Entrepreneurs (ANDE) are working on. They are working together to strengthen these entrepreneurs who are bringing economic, social and environmental benefits to their communities through technology, capacity building, financing and market opportunities. There are organizations like El Buen Socio and Root Capital providing access to finance; Technoserve Mexico and Fundemex working to support the capacity building of these small and growing rural businesses; and corporations like Walmart and Nestlé that have made a commitment to support local agriculture. The ANDE Mexican Chapter has established an Agriculture Working Group, which, in partnership with Ashoka’s Inclusive Agriculture program, is now innovating ways to bring together these different actors and strengthen the communication in order to create inclusive values chains. There is still room for opportunity and growth, however it is rewarding to see the direction in which we are now moving. The most rewarding part of all is that it seems that Cruz and Toño were expecting ANDE to visit all along.