October 26, 2011

Chinese dairy farmers denounce Nestle for underpaying

Dairy farmers in north-eastern China are protesting that Nestle SA has been buying milk at below-market prices, China's state-owned media Xinhua News Agency reported.

Farmers had complained about manipulation of measurements and an unfair grade payment system, the report said.

"Nestle doesn't cheat (farmers). Nestle does not tolerate such practices," Nestle (China) Ltd spokesman Jonathan Dong told Reuters on Tuesday (Oct 25).

"We have already launched an investigation together with the local authorities to make sure this investigation is fair, true and effective," Dong said, adding that Shuangcheng Nestle was operating normally.

An official with Shuangcheng Nestle was quoted by Xinhua as saying that the farmers were paid by the grade of their milk, but the system was only used until July.

Shuangcheng Nestle is a joint venture between the Swiss food giant and the city and contributed 17% of the city's revenue in 2010, Xinhua said.