GMOs, water grab and ice cream for the masses - the EBRD gets involved with Nestlé Egypt

14 February 2014 by Sophie Delaval

The EBRD’s board of directors yesterday approved a USD 20 million loan for the expansion of Nestlé Egypt food production company. Leaving aside the question whether Nestlé – one of the world’s largest companies from one of the world’s richest countries – really qualifies for multilateral development finance, there are several reasons why this decision is problematic.

Nestlé is the largest artificial baby milk producer with 40 per cent of global market share Share A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings. and has been operating almost everywhere in the world under the label of “good food, good life”. But what about the highly questionable practices Nestlé has been implementing across the world for the past decades?

GMO Genetically Modified Organisms
Living organisms (plant or animal) which have undergone genetic manipulation in order to modify their characteristics, usually to make them resistant to a herbicide or pesticide. In 2000, GMOs were planted over more than 40 million hectares, three quarters of that being soybeans and maize. The main countries involved in this production are the USA, Argentina and Canada. Genetically modified plants are usually produced intensively for cattle fodder for the rich countries. Their existence raises three problems.

- The health problem. Apart from the presence of new genes whose effects are not always known, resistance to a herbicide implies that the producer will be increasing use of the herbicide. GMO products (especially American soybeans) end up gorged with herbicide whose effects on human health are unknown. Furthermore, to incorporate a new gene, it is associated with an antibiotic-resistant gene. Healthy cells are heavily exposed to the herbicide and the whole is cultivated in a solution with this antibiotic so that only the modified cells are conserved.

- The legal problem. GMOs are only being developed on the initiative of big agro-business transnationals like Monsanto, who are after the royalties on related patents. They thrust aggressively forward, forcing their way through legislation that is inadequate to deal with these new issues. Farmers then become dependent on these firms. States protect themselves as best they can, but often go along with the firms, and are completely at a loss when seed thought not to have been tampered with is found to contain GMOs. Thus, genetically modified rape seed was destroyed in the north of France in May 2000 (Advanta Seeds). Genetically modified maize on 2600 ha in the southern French department of Lot et Garonne was not destroyed in June 2000 (Golden Harvest). Taco Bell corn biscuits were withdrawn from distribution in the USA in October 2000 (Aventis). Furthermore, when the European Parliament voted on the recommendation of 12/4/2000, an amendment outlining the producers’ responsibilities was rejected.

- The food problem. GMOs are not needed in the North where there is already a problem of over-production and where a more wholesome, environmentally friendly agriculture needs to be promoted. They are also useless to the South, which cannot afford such expensive seed and the pesticides that go with it, and where it could completely disrupt traditional production. It is clear, as is borne out by the FAO, that hunger in the world is not due to insufficient production.

For more information see Grain’s website :

Nestlé openly acknowledges the fact that it uses genetically modified foods. Since 2009, Egypt has banned the import and export of GMOs.

While the country is seeking a way out of a difficult transition period, the regulatory framework on the use of GMOs or products deriving from GMOs has been the subject of a court order (released all in Arabic) and grassroots organisations have been fighting the work of GMO giants such as Monsantofor a few years. How can the company ensure that it is only using ingredients allowed for sale in Egypt? Does it even label products containing GMOs?

Let them eat ice cream

According to the EBRD,
«The operation will enable the Company to finance foreign currency working capital needs and investments into the expansion of the Company’s food production capacity (ice cream, confectionery) to meet the growing demand [...]» (emphasis added)

But what sort of priority is that? The majority of Egyptians cannot afford to buy the Nestlé and Movenpick ice cream produced by the company. Only the upper middle and high classes can afford this luxury whereas most Egyptians struggle just to afford bread, eggs or drinkable water.

If the EBRD can’t do better than financing Swiss multinationals in its new countries of operation, I’m not sure that the people of Egypt are going to be too convinced about its development impact.

Artificial milk

Nestlé, who has been operating in Egypt for more than a century, has been repeatedly criticised for unethical marketing practices of its infant formula milk. In addition, the artificial Nestlé milk sold in emerging countries is so expensive that mothers dilute it with water usually unfit for human consumption to make the artificial milk last longer. Unfortunately, these practices have led to fatal diseases and malnutrition when mothers should be supported and encouraged to breast feed their babies whenever possible. The baby milk scandal created such an uproar that a network was created in response to this, the Baby Milk Action who called for a boycott on Nestlé’s products “because it contributes to the unnecessary death and suffering of infants around the world by aggressively marketing baby foods in breach of international marketing standards.”

Water grab

Unfortunately, there is something much uglier about Nestlé and its practices, and it has to do with one of the most basic human rights, the right to water. Surprisingly, Peter Brabeck-Letmathe, Chairman and former CEO of Nestlé has on numerous occasions declared that “one opinion, which I think is extreme, is represented by the NGOs… As a human being you should have a right to water. That’s an extreme solution.” According to him, water is a commodity, just like any other commodity such as food, and therefore should have a market value. Nestlé is the biggest producer of bottled water worldwide so it seems obvious that the company has a major interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. in privatising water supply. I suggest you watch journalist Abby Martin debunk Nestlé’s water rhetoric as it is quite edifying.

It is clear to me that Nestlé puts the profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. of the world biggest food producer before basic human rights and basic health. I would be very curious to know what are the EBRD’s views on this specific topic and the EBRD’s true motivations to assess Nestlé as a suitable candidate to benefit from such a loan.

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