October 28, 2011


Nestle vows swift actions in China's milk compensation scam


Swiss food giant Nestle will work with its partner city in northeast China to make improvements and replace a manager in charge of milk collection at a local subsidiary that has been accused of cheating local farmers for years, a company executive said.


Nestle does not tolerate cheating and is carefully investigating the matter, said Eldert Heijkoop, general manager of Shuangcheng Nestle Co, Nestle's joint venture in the city of Shuangcheng in Heilongjiang province.


Previous reports said that several milk-collecting stations run by Nestle in Shuangcheng have not been following government-mandated prices when paying local farmers. The reports also said that the stations have been using a rounding system that favours the company when weighing farmers' milk.


Shuangcheng Nestle has reset its point-of-sale (POS) devices to make them more accurate and abolished the rounding method, said Heijkoop, adding that the company will replace the manager in charge of milk collection with a new manager next week.


An investigation found that several milk collectors adjusted their POS devices to allow themselves to manipulate their measurements, according to Luan Xue, the chief of Shuangcheng's animal husbandry bureau.


Shuangcheng will welcome social supervision by placing a "fair scale" for weight verification in each of the 76 milk-collecting stations and launching service hotlines for farmers, Luan said. The city is also organising a vote by farmers to decide if the station chiefs should go or stay, Luan added. "A station chief must be replaced if he cannot get 30% of their votes," he said.


Nestle (China) Ltd Spokesman Dong Yuguo said late Tuesday (Oct 25) that Nestle and Shuangcheng have mapped out a plan for the development of the local dairy industry, including mechanised production and large-scale cattle farming.

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