1. The World Food Prize International Symposium October 2006 - Des Moines, Iowa, USA Sustainable Agriculture & The Food Industry Dr. Hans Jöhr Corporate Head of Agriculture, Nestec SA.

2. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 2 This presentation contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. Disclaimer Sustainable Agriculture & The Food Industry

3. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 3 Setting the Scene The Challenge for the Food Industry How is Nestlé engaged? Summarizing Conclusions Sustainable Agriculture & The Food Industry 1 4 3 2 5

4. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 4 Emerging economies are set to boost the GLOBAL DEMAND and SUPPLY for consumer goods Setting the Scene Source: OECD 1 Emerging economies are growing faster than developed ones and catch up thirsts of their ever- growing population The Re-Emerging Model Speeding Ahead Fast growing economies represent: 1/2 of the world energy consumption 70% of world's Foreign exchange reserves

5. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 5 Setting the Scene Source: OECD Processed, storable food at high demand 1 Growth concentrated in developing countries and overwhelmingly urban Expected development of Income groups Millions of consumers are expected to have higher purchasing power in the near future

6. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 6 Consumer's expectations are changing faster than ever "What does it mean for the Food Industry?" Setting the Scene 1 Natural resources are limited and locally eventually overexploited land, water, energy Caloric food demand increases fast Geographical decupling of supply and consumption (logistic / infrastructure / legislation)

7. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 7 However, respecting the limits of natural resources and weakening of rural societies threatens agricultural production The Challenge for the Food Industry 2 The Food Industry relies on the increasing supply of safe agricultural raw materials in quality and quantity Consumers’ confidence depends on the quality & safety of the food supply chain  Need for the development of Sustainable Agriculture

8. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 8 The Food Industry Response: The SAI Platform What is the SAI Platform? Overall objective Promote Sustainable Agriculture to meet the needs of today and future generations “ Sustainable agriculture (SA) is a productive, competitive and efficient way to produce agricultural products, while at the same time protecting and improving the natural environment as well as the socio-economic conditions of local communities” Our definition

9. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 9 Principles Work on a pre-competitive basis between food chain stakeholders and other interested parties Include all valuable concepts and initiatives contributing to Sustainable Agriculture Activities Support the development of Sustainable Agriculture principles and practices Raise overall people’s awareness about Sustainable Agriculture SAI Platform

10. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 10 Common guidelines - tested in pilot projects SAI Platform

11. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 11 How is Nestlé engaged? 3 The The The Concept of Shared Value Creation Manufacturing & Operations Food safety standards & workforce development Adapted environmental, labor and safety practices Consumers Nutrition knowledge & awareness New/Renovated Products for Nutrition, Health and Wellness Agriculture & Sourcing New innovative sourcing & purchasing practices Agricultural & local supplier development Value Chain Innovations for Nestlé and Society Building the Context for Growth

12. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 12 All inclusive value chain approach linking to markets Consumer Trade Retail Food Industry Trade Processor Farmer Input Providers Extension services on technical assistance & farm management advise Extension services on technical assistance & farm management advise 3

13. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 13 Corporate Social Responsibility built into Nestlé’s strategy 3

14. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 14 Creating shared value in practice 1. Aimed at creating improved business conditions for the company:  reliable, high quality sourcing  improved government functioning - regulatory  skilled, loyal workforce  superior products which successfully compete 2/3 of all 250'000 employees receive formal training every year 3 2. For society, results in:  improved earnings of suppliers  increase skills, job stability  higher quality of life  greater stability, economic and social development Linking farmers to markets to generate regular cash flow

15. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 15 3 Our Impact Purchasing of agricultural raw materials US $ 13'000 mio/yr. Interactions with more than 400 000 farmers directly supported by more than 800 sourcing agronomists and 3'500 technical staff working at farm level and in supply chain. Running more than 150 Sustainable Agriculture projects worldwide with many different stakeholders.

16. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 16 Summarizing Current situation needs Harmonization for Sustainability, Food Safety and Quality Assurance Consumer Trade Retail Food Industry Trade Processor Farmer Input Providers non exhaustive list... 4

17. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 17 Summarizing Standardization Urgently Needed Benefits of Process / Verification Standardization  Safety, compliance and quality assurance at higher awareness level, decreasing risk potentials,  Lower overhead costs due to identical documentation, training material and information systems across the organization,  A company's supply chain with standardized processes presents one face to its suppliers and customers, reducing transaction costs to both,  More flexibility and responsiveness of the supply chain. 4

18. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 18 Summarizing The way forward Implementation of harmonization processes through Strategic Alliances throughout the food value chain. But, standardization is only successful if:  Communication between stakeholders is very effective and based on trust and credibility,  Agreement on which schemes, standards, guidelines being used is reached,  Farmers, Cooperatives, Suppliers (trade & primary-processing companies) work together, in order to achieve common goals and to secure common interests. 4

19. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 19 Conclusions Sustainability is a business case Sustainable sourcing practices are widely accepted by leading Business Research Institutions as being the way forward to successful business 5

20. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 20 5 Conclusions Sustainable Agriculture leads to  Enhanced food safety, quality assurance and regulatory compliance,  Addresses world food needs,  Creates business opportunities and matches with consumer expectations

21. Name of chairman Sustainable Agriculture & the Food Industry OCTOBER 2006 21 5 Conclusions  The big challenge today is breaking the link between economic growth and negative environmental impact. There are clear limits to the earth's natural resources capacity. Thank you for your attention !  Further information on http://www.nestle.com/Our_Responsibility or/and  hans.johr@nestle.com