Nestlé’s divestment from the local dairy industry could ultimately benefit Trinidad and Tobago.
That assessment comes from the Minister of Planning, Economic Affairs and Development, Dr Kennedy Swaratsingh, while speaking on Trinidad and Tobago Today.
He said Nestlé’s decision to restructure its local portfolio is part of a broader global restructuring effort and not a move directed specifically at Trinidad and Tobago.
He confirmed that the Government has moved to engage both Nestlé executives and stakeholders in the local dairy industry.
“Currently, as you know, Nestlé made a decision, a global decision, to exit certain business lines in various jurisdictions. So, for example, they are getting out of water in the USA and Canada, getting out of ice cream in Chile and Brazil, and, of course, have made a decision to divest the liquids business in Trinidad and Tobago, juices and milk, and in Ecuador. So it is not simply a matter of Nestlé getting out of Trinidad. It is Nestle realigning its global portfolio.”
Earlier this month, Nestlé said that, in alignment with the company’s global business strategy, it intends to restructure its local portfolio, with particular attention to its dairy and juice operations.
Despite concerns about the impact on the local dairy sector, Minister Swaratsingh said the divestment presents an opportunity for growth and expansion.
“There are opportunities in all of this. So one of the things that people automatically interpret is that this will lead to a decline. And in our view, this can lead to an enhancement when large businesses like Nestlé realign their portfolio that we find people who can grow the portfolio, who have really a deeper interest. So my hope, and the Prime Minister’s expectation, is that this will lead to increased buoyancy in the dairy farming business.”
Agricultural analyst Donny Rogers echoed that sentiment, noting that Trinidad and Tobago imports approximately $350 million worth of liquid milk annually and that there remains significant untapped potential within the local industry.
“Milk production still remains a very viable industry in Trinidad. If it was not, we would not have the interest from the private sector as what we have now. Notwithstanding, we have had very significant declines in milk production for many reasons which are too extensive for this purpose. Nestlé’s position now provides the platform where we could now rebuild and develop the dairy sector and not just the farmers but the commercial aspects of dairy farming.”
Dr Swaratsingh also revealed that Prime Minister Kamla Persad-Bissessar appointed an inter-ministerial team to oversee the Government’s response to the divestment.
He said Nestlé informed the Government that its mergers and acquisitions team in Switzerland will lead the sale process and that any transition is unlikely to be completed within the next 12 months.
“Nestlé indicated, of course, that their M&A team in Switzerland would be spearheading the divestment process. As a consequence, it would not be completed under a 12-month time frame, which obviously Government was very heartened to hear. But also the fact that they are going to work assiduously to ensure that there is a smooth transition from their ownership of that plant to the new investors.”
Dr Swaratsingh assured that the Government intends to support dairy farmers, workers and all the other stakeholders in the dairy sector during Nestlé’s divestment process.