The influence of business on rural areas economic development: the Nestlé case

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Article(UKR)(.pdf)

Paper provides analysis of the interactions peculiarities between agricultural producers, foodmanufacturers and food products consumers. Author describes the key role of raw materials in the welfare ofagricultural producers and quality food products provided to consumer markets; suggested are the advantages ofall participants of the interaction process: to the farmers it is a stable market for food; to manufacturer it is aquality of agricultural raw materials in the right quantities; to consumers it isfood of high quality.

The advantageof such cooperation for rural environment is the farmers’ well-being, which affects the development of rural areasthrough employment opportunities for rural residents, development of rural infrastructure, the development of non-agricultural activities in rural areas. With the help of supply and demand curves, and production possibilities curesauthor reflect the influence of food quality on the demand volume for agricultural raw materials. According to themodel, the conclusion is made: to receive food products of high quality, the user needs to pay the ultimate price,which, however, will affect the amount of support that a food manufacturer will allocate to the supplier ofagricultural raw materials.

Paper shows analysis of support mechanisms for rural development by the companyNestlé, which is the world’s largest food manufacturer, with factories, offices and branches in more than 197countries around the world, including Ukraine.

The main support mechanisms include the provision of high qualityplanting material, technical support, training and financial assistance to farmers. Considered is the «Hospodar»programm, which operates in Ukraine and is aimed to help Ukrainian farmers to meet the standards of Nestlé’s rawmaterials, so that the company could use local raw materials exclusively in the production of food in Ukraine. Withthe example of Nestlé’s conclusions are drawn, regarding the feasibility of promoting collaboration between thefood producers and suppliers of agricultural inputs.

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