09 Aug 2022

Farmers warned to guard their margins as Nestle aims for 18.5% profit margin by 2020


Taoiseach, Leo Varadkar with ICMSA President John Comer at the ICMSA stand at the National Ploughing Championships

The President of ICMSA has drawn attention to the announcement by the Nestle corporation that it intends working to a profit margin of 17.5 to 18.5 per cent by 2020.

“It could not be more clear as to who will be expected to ‘cough up’ to enable Nestle meet this very significant profit margin,” said John Comer before pointing to recent reports that suggested that Nestle had decided to ‘set’ a margin, under pressure from investment fund shareholders.

“At the same time the company has given no indication of hiking retail prices in this era of low inflation;  there is only one option for them to achieve this kind of generous double-digit profit margin and that is a relentless attack on the margins of those supplying raw ingredients into Nestle for processing.”

Mr Comer went on to say that Nestle was essentially planning to cut margins backwards to the primary producers while maintaining or increasing margin achieved through final retail price.

“Nestle is telling anyone who is 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,” ICMSA’s president fumed.

“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.”

Concluding, Mr Comer said that Nestle should spell out - in a transparent way - how it intends to achieve these margins and who will pay the cost.

“They should also explain how this fits any coherent model of sustainability,” he added.  

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