No more Nestle? The call to end the exploitation of the world’s largest food company
- Unfiltered
- Mar 7, 2019
- 7 min read
Updated: Mar 11, 2019
By Phoenix Cronin
Mexican farmers and locals are on a mission to ban the unethical practices of Nestle. Fernando Morales and Cirilo Diaz are making it happen.
Advertising rules the western world, it is all around you. On the high street, on public transport, and in your home. If you go through your belongings, you’ll find hundreds, if not thousands, of different brand names. Your trusty silky-smooth L’Oréal shampoo, or that citrusy’ Ralph Laurent perfume you got for Christmas. Your Felix cat food, or ‘Nespresso’ coffee machine.
Even something as basic as your bottled water has something like ‘San Pellegrino’ sprawled across the front. Everything is branded, and we’ve come to accept that. What we forget to consider however, is just where our money goes. You wouldn’t imagine that buying your cat its dinner puts money in the same hands as those who supply you with your instant coffee.
But that is the reality – your money, more often than not, is going to the very same place. Every brand mentioned so far is part of the massive Switzerland corporate that is known as Nestlé, otherwise recognised as the biggest food company in the world.
Nestlé dominate a number of different industries, from perfume, to pet food, or cereal to chocolate and coffee. To say they’re a big company is an understatement, they are massive. With a market capitalisation of roughly $247 billion, the monolith corporation owns approximately 2000 brands in over 150 countries.
Although the company is famous for more than just its raw size, they are known for their questionable ethical practices. Their most recent controversy is to do with their latest coffee venture, or more specifically, their coffee production in Veracruz, Mexico.
On the 18th of December 2019, President Andrés Manuel López Obrador (AMLO) announced that Nestlé was planning a $153 million investment into a coffee processing plant into the state of Veracruz in Mexico. He spoke of the investment with great enthusiasm, promising the operation would bring jobs and money to Coatepec and its surrounding areas.
The president of the Business Coordinating Council in Coatepec, José Ortega, soon after reiterated his message. Calling it positive and welcomed the investment. However, this sense of optimism was by no means nation-wide and suffered a prompt pushback.
Mexican coffee producers from Veracruz and all of Mexico would voice their disagreement days after. They rejected the announcement, insisting that the “transnational company will only cause the price of coffee to go down.”
They continued to assert that the company has manipulated the price of coffee to the “detriment of the producers” for years. On the 24th of December, they rallied in an effort to demonstrate their disagreement with the project. It soon became apparent that Nestlé was unwelcome – but what is the merit to their claims?
Allegations like these are always tricky – but circumstances and history provide necessary context. Nestlé is no stranger to the firing squad and has been on the receiving end of assertions and scrutiny for their ethical practices a number of times.
In the 90s, for example, Nestlé launched a baby breastfeeding formula that was targeted at mothers in less economically developed countries.
The company failed to consider the illiteracy of their target audience, which led to the parents to mix the formula with unclean and unsafe water. Shortly after, allegations by a group called IBFAN claimed that Nestlé went as far to provide the formula for free in hospitals, but after the mothers were discharged, would reintroduce the full price of the formula.
The mothers would no longer be lactating and would not be able to afford the price of the powder. Leaving children with no source of nutrition or food and dependant on a formula they could no longer access.
Last year in 2018, Nestlé was in the spotlight for selling bottled water from a nearby Michigan lake whilst the state was in a level four drought. The company obtained the water for next to nothing and sold it for a healthy profit to people on the other side of the world.
Whilst nearby locals were regulating and rationing their water intake, Nestlé continued its operations, and Paul Bulcke, CEO of Nestlé at the time, only fuelled the flames by saying that “water is not a human right, it is a foodstuff commodity.”
In a 2010 documentary called ‘The Dark Side of Chocolate’, journalists discovered that the corporation was purchasing cocoa beans from plantations in the Ivory Coast that used child slave labour. Then a few years later in 2013, the company found themselves on the receiving end of a lawsuit for ‘price fixing’ chocolate.
They settled the allegations by paying a fee of $9 million, though they never actually admitted liability. These are just some of the controversies the company has been caught up in, and considering their track record, the accusations of the farmers of Veracruz seem to gain some weight.
Cirilo Elothán Diaz, the president of the Coatepec Regional Coffee Council (CRCC) spoke to Unfiltered about the recent pledged investment. He has been a coffee farmer all his life and stands firmly against Nestlé:
“Nestlé exploits us today, they pay prices for coffee that leave us hungry, they use the New York stock exchange as a weapon to encourage strong price volatility, they bribe the governments of coffee producing countries and they get their permits whilst sacrificing the coffee farmers.”
The coffee farmers of Mexico see Nestlé as a money hungry corporate and considering Nestlé’s past, it isn’t hard to see why. Fernando Morales Cruz is an activist, ex-journalist, and founder of numerous organisations that are fighting for change in the coffee industry. His activism has seen him published in reputable newspapers like The Guardian, BBC & The Huffington Post.
He, like Cirilo, believes that Nestlé is an evil corporation that “preys on the weak.” He is also the man who introduced me to a 2014 magazine called Kaffee Stern, in which Nestlé revealed their profit margins for their Nespresso pods range.
The graphic from German magazine Stern explains the distribution costs of the 35 cents that they charge for a Nespresso pod – and in this, they say that three cents is given to “Rohkaffee”, which translates to ‘raw coffee’.
The assertion made by Nespresso is that per pod, three cents is given to coffee farmers. Though the reality of this price is that the three cents is going to its parent company, Nestlé, and the price given to the farmers, according to Fernando Morales, is much closer to 0.008 cents.
“Today the coffee farmers are being paid a third of what they should be – Nestlé is deceiving its consumers in the west, the coffee price has gone up every year, but farmers haven’t shared this increase – the ‘shared value’ that Nestlé promises is a deceitful bit of marketing, there is no fair trade and it is exploitation.”
Shared value according to Nestlé’s official website is their belief that success will come by “creating value, both for our shareholders and for society." In 2015, Fernando attended an open forum where the CEO of Nestlé, Paul Bulcke, was speaking. Bulcke spoke of shared value and was questioned by Fernando Morales shortly after.
He asked Bulcke just how much was being given to the coffee farmers per Nespresso Pod, in other words, how much does Nestlé pay coffee farmers.
Bulcke couldn’t give a full response to the question, but after being pressured for a second time by Fernando, Bulcke blamed the undisclosed price of the beans on trade secrets, saying that he did not want to give his competitors a “free luncheon”.
These trade secrets, however, in the eyes of Fernando, the CRCC, and coffee farmers globally, are exactly what gives Nestlé the wriggle room to exploit third world countries and maximise their own profit margins. Dominant companies like Nestlé are privately-held and are not tied to any requirement to publicly share their data and figures.
The Coffee Barometer of 2018 (a yearly document that analyses the current global coffee production landscape) highlights that “Currently the average green coffee export value is less than 10% of the $200 billion revenues generated in the coffee retail market.
As it currently stands, a lot of people are asking for the same thing – transparency. Nestlé’s ethical claims and promises of ‘Fairtrade’ seem false and arbitrary because the figures that we can access seem contradictory.
This, alongside their unethical history and the allegations made by coffee farmers, call for an incredible shift in attitude towards monopolies and necessitates government intervention. But government’s like Mexico are understandably apprehensive, plagued by the willingness to attract corporate investment.
The 2019 Mexico budget saw cuts to Mexico’s integrated coffee plan by more than 50%, dropping from $39.4 million to $17.4 million. These sorts of cuts breed exploitation on coffee farmers. José Luis Guererro, a roaster from the ‘Mexican Coffee Roastery’ – told Unfiltered that this is another way “to monopolise the Mexican coffee industry at the low cost of Nestle, they cut our support and force our hands.”
Unfiltered conducted an online survey on ‘r/Mexico’ an online discussion forum where Mexicans debate current affairs in the country. When asked about Nestlé’s exploitation, 71% of users (from a pool of 70) concluded that they did exploit coffee farmers, with many suggesting that the biggest way of doing this was by reducing coffee prices.
Mexico’s people seem against Nestlé, but it will take an international agreement by all of the coffee producing nations to force a positive and necessary change in their practices. Profiteering off of low labour costs and forcing the hands of farmers is an unfair and wicked practice.
Although the farmers of Mexico are speaking out against the agreement, federal intervention is needed. Nonetheless it is people like Fernando Morales and Cirilo Diaz who are paving the way towards a healthier and ethically sound environment for the agricultural sectors of the world.
You can also find him on LinkedIn
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