Farmers, Nestle land in tangle of milk payment

In response to accusations of buying milk at below-market prices from local?farmers, Shuangcheng Nestle Co, a joint venture?of Nestle SA , said on Tuesday it would improve its measurement practices.

The local milk farmers in Shuangcheng, a city in?Heilongjiang Province,?have claimed that Swiss food giant Nestle has pocketed part of their pay for years, in collaboration with local vendors, Xinhua News Agency reported over the weekend.

A?local farmer named Zhao Yongwu said he was shortchanged by 1 kg for every bucket of milk he sold to a purchasing station owned by the Shuangcheng Nestle Company, a subsidiary of Nestle,?the report said.

Most dairy farmers in Shuangcheng said they have been treated unfairly?by the Nestle plant over the?past decade or longer, complaining about the manipulation of measurements and scam on the scales in?their collection stations.

The farmers also complained that the company said some of their raw milk was substandard without further explanation and that local authority forbade them from selling milk to other dairy companies outside Shuangcheng.

The company issued their standards for milk quality in 1996, six years after it established its base in Shuangcheng. The company runs 74 collection?stations in the city.

An announcement by Shuangcheng Nestle Co came on Tuesday, saying that the company would improve its weighing procedures.

The announcement also said the local government would provide new scales to each collection station by Wednesday to guarantee fairness and the company would ensure that farmers' milk was fairly weighed.

The government would enhance supervision of the collection spots and the company would set up a hotline for farmers' complaints, said the announcement.

A pact signed in 2002 between the city and Nestle said that Shuangcheng, which is home to more than 20,000 dairy farmers, should have no other dairy firms and that all milk produced in the city must be delivered to Nestle, Xinhua reported.

He Tong, spokeswoman for Nestle China, said on Monday that the company would work with the local government to investigate into?the problems.

Shuangcheng Nestle is a joint venture between the Swiss food giant and Shuangcheng. According to the local city farming bureau,?the company?paid 280 million yuan in tax to the local government last year, representing 17 percent of the county's total tax income.

However, some local dairy farmers, such as 43-year-old Fu Peng, were taking their business elsewhere, secretly selling milk to buyers outside the city. "Though the offered price is not as favorable as Nestle's, I always got fully paid on time."

Wang Dingmian, chairman of the Guangzhou Dairy Association and a key figure in the national dairy industry, said the local government was responsible for protecting farmers' interests in conflicts with dairy firms.

"If they don't help dairy farmers negotiate with the companies, the farmers' interests have no way of being protected," he said.