Nestle plans for 18.5% profit margin by 2020 will hurt farmers - ICMSA
An announcement by the Nestle corporation that it intends working to a profit margin of 17.5 to 18.5pc by 2020 has drawn criticism from the President of ICMSA.
John Comer said that it could not be more clear as to who will be expected to ‘cough up’ to enable Nestle meet this very significant profit margin.
Comer said reports that Nestle had decided to ‘set’ a margin under pressure from investment fund shareholders while at the same time giving no indication of hiking retail prices in this era of low inflation meant that there was only one option for them to achieve this kind of generous double-digit profit margin and that was a relentless attack on the margins of those supplying raw ingredients into Nestle for processing.
“What Nestle is announcing here is that it will be aiming to dictate and cut margins backwards to the primary producers while maintaining or increasing margin achieved through final retail price.
"Nestle is telling anyone who’s interested that it’s going to ‘jack-up’ its profit margins at the expense of those producing the milk, the grains and all the other raw materials provided by family farms.
"Sustainability is the buzz word being used by the large global food corporations but the simple question that needs to be asked is how sustainability can possibly be achieved based on policies like those adopted by Nestle which are overtly aimed at the already dwindling margins available to farm families.
"That an already powerful and rich corporation can feel so untouchable and beyond any appeals to fairness is revealing and shows how little – if any – trepidation these corporations feel about making their own market and dictating margins both forwards and backwards.
"If the EU Commission still had any doubts about the need for action on regulation of margins in the supply-chain, then this announcement must act as yet another wake-up call.