In terms of value of products sold, Nestlé is the world’s largest milk company. We believe that the dairy industry is one of the most powerful engines for rural development and the majority of Nestlé’s rural factories are within our milk districts.
The milk district model
Through our successful milk district model, which we first used in the 1870s and continue to use widely, we work directly with small-scale dairy producers and cooperatives to build a supply chain.
The essence of our milk district model is that farmers supply our milk factories directly, and Nestlé provides facilities and support to develop the local supply chain. This includes local collection, storage and chilling facilities, providing a reliable route to market and product quality assurance.
We also work at farm level: our agronomists and vets provide technical advice and training to farmers, and we provide access to financial assistance for them to expand their operations.
Uplifting the livelihood of thousands of dairy farmers every day across Sri Lanka
As one of Sri Lanka’s largest private sector collectors of fresh milk, we play a big role in helping to develop the local dairy industry and increase local fresh milk production.
Because Sri Lanka’s dairy industry is still an emerging one, where local milk production does not meet total market demand, we have been working closely with the government and farmers since the early 1980’s to promote good dairy farming practices such as cattle feeding and breeding, animal health and farm management. We further assist farmers by providing vital equipment, medicine, subsidies and micro-financing assistance to develop their farms. Our aim is to not only increase the supply and quality of milk but also to provide local farmers a livelihood that is profitable and sustainable.
We have also established crucial infrastructures and networks such as milk chilling centres and milk collection points across the island to facilitate the procurement of local fresh milk. The construction of these chilling centres help rural farmers store their milk at a temperature of 4 degrees Celsius and sell them to us as fresh as possible, thereby guaranteeing them more business. Previously, facilities for storing fresh milk were inadequate; resulting in low quality and wastage.
Each Nestlé chilling centre is equipped with testing equipment and farmers are paid for the quality of milk they provide – the higher the quality, the higher the price they receive.
These chilling centres and collection points are managed by people we appoint from the area, ensuring that it is not only the dairy farmers who gain a livelihood from these facilities.
Our determined efforts to train farmers and help them produce more milk of better quality has had an especially positive impact on the North and East, contributing to the economic prosperity of these areas. When the civil conflict ended in 2009, we were the first to begin large scale development of the dairy industry in the North and East provinces and we’re proud to say that we help many farmers in these regions today. We were also the first to open milk chilling centres in Jaffna, Kilinochchi, Mallavi and Oddusudan in 30 years.
Learn more about our efforts to develop the dairy industry in the former conflict affected North and East regions, profiled as a best practice by the United Nations Global Compact in a publication on "Responsible Business Advancing Peace" (pages 46 to 49).
Nestlé’s dairy infrastructure development has created significant employment and economic opportunities for 16,000 rural farmers and offers hope for renewed dairy cultivation.
Value for Nestlé, farmers and communities
For Nestlé, this means a regular supply of high-quality milk to meet consumer demand, and by building close links with local dairy farmers, we can also advise them continuously on quality and farming practices in order to maintain and enhance standards.
For farmers, the milk district model means a higher, more rewarding price, regular payment, a secure route to market and access to local facilities and infrastructure including collection, storage, chilling and transport.
There is also value for the local community, both in direct employment opportunities at our milk factories and indirect opportunities for local contractors and agents in our milk collection and chilling centres.
We remain committed to contributing to the rural economy, and providing our Sri Lankan consumers a portfolio of high quality products made with the goodness of local fresh milk.
Supporting diversity and gender equality
Our dairy value chain starts and ends with women, with females being represented at every stage. With our help, our female dairy farmers who are the breadwinners of their families have grown their businesses immensely. Our commitment to diversity has also provided other sources of income to women by training them to manage our milk collection points and milk chilling centers. Today, more than 30% of our dairy farmers are women. Read about Bandara Menike’s inspiring story on how we helped her overcome her challenges to grow her dairy business.