Page 5: Factors of production
The factors of production are:
- land - natural resources including water and the proportion of the planet given over to agriculture producing raw materials
- labour - the human effort involved in production
- capital - the money invested in business including equipment purchases
- enterprise - the process of bringing the above factors together to make a profit.
Any production process involves the use of all factors of production. The efficient and sustainable use of factors of production has long been tackled by Nestlé working with its agricultural suppliers. Nestlé helps suppliers in developing countries to increase their output. For example, in Pakistan sales of milk per farmer have doubled in the last three years as a result of the support from Nestlé Agricultural Services provided to more than 115,000 farmers.
Despite consuming only a tiny proportion of water, (see table) Nestlé still seeks to minimise water use. 70% of water usage is by agriculture, and agricultural raw materials provide the basis of Nestlé's finished products. It is important that the environment in which raw materials are grown is safeguarded and protected in a sustainable manner. Nestlé does not own farms but encourages sustainable agricultural practices amongst its suppliers. The company invests over £45 million per year in environmental protection, amounting to 3% of total capital expenditure on top of regular capital-investment projects that incorporate environmental components and factory environmental operating costs. Also, in certain parts of the world, Nestlé has invested in water education programmes and community initiatives to develop sustainable and safe water supplies. It partners EcoLink - a non-profit-making, non-government environmental education trust - in a water tank project to provide a reliable source of clean water to many South African communities. For example, in the Nkomazi and Nsikazi areas 20 water tanks have been provided at various women's groups and schools reaching over 10,600 people. For more information see www.nestle.co.uk/studentissues and follow the links to Nestlé in the Community and the Ecolink page.
Nestlé uses water in manufacturing (for example to wash raw materials). It limits the use of water in its various operations and, where this is not possible, re-uses or re-cycles waste water.