Vevey, Switzerland (GenevaLunch) - Nestlé SA in Vevey says its subsidiary in Zimbabwe will stop buying milk Sunday 4 October from Gushunga Dairy, reportedly owned by Grace Mugabe, wife of Zimbabwe President Robert Mugabe. The Mugabes are both on Swiss and European sanctions lists which forbid financial transactions with over 200 individuals and some 40 companies in Zimbabwe, but the sanctions do not apply to transactions within Zimbabwe. The multinational in Vevey has been under pressure this week, particularly from British and South African media, for buying the milk.

The Vevey office issued a statement Friday morning 2 October: “The Dairy Board of Zimbabwe today informed the Gushungo Dairy Estate, and the seven other farms with whom Nestlé began working on a temporary basis in February 2009, that it is now in a position to resume purchasing their milk. Nestlé Zimbabwe therefore will no longer be receiving milk from these eight farms from Sunday 4 October.”

GenevaLunch asked Nestlé about the timing of the announcement from the board, coming right on the heels of public criticism of Nestlé.

Spokesperson Robin Tickle in Vevey told GenevaLunch that “the situation in Zimbabwe has normalized to a degree since the food and economic crisis in the country last February.” The company does not fund the Board “and no, we will not be buying milk from the Dairy Board; we are seeking to re-establish long-term relationships with individual suppliers”, which he says is the company’s ” normal, preferred course of action.”

The Dairy Board (Dairibord Zimbabwe Ltd) could not be reached immediately for comment, but a reliable source in the dairy industry told GenevaLunch that they were not aware of any sudden change in fortunes at Dairibord that might explain the sudden ability to resume purchases of milk from the eight farms.

British and South African media earlier this week reported widely that Nestle has been buying from the dairy. Nestlé confirmed this, saying it was buying on the open market, rather than through contracts as it has traditionally done, because eight of its 16 suppliers had gone bankrupt earlier this year and the national dairy industry was “at real risk of collapse.” Milk from the Gushungo Dairy Estate accounts for 10-15 percent of its milk, the company said.

Nestlé Zimbabwe employs some 200 people in the country and indirectly provides work to others through the milk it buys. The parent company emphasized in a press release 28 September that “Despite the ongoing crisis in Zimbabwe, Nestlé has not considered moving its operations out of the country. By providing basic food products to Zimbabwean consumers, Nestlé aims to meet the needs of the local population, many of whom are vulnerable and disadvantaged. Had Nestlé decided to close down its operations in Zimbabwe, the company would have triggered further food shortages and hundreds of job losses among its employees and milk suppliers in an already very difficult situation.”

Nestlé is Gushungo’s biggest buyer, according to South Africa’s Fin24 news service. Gushungo was one of eight companies that approached Nestlé in February when the Zimbabwe Dairy Board could no longer pay them, in February 2009. “The eight farmers that had been supplying the Dairy Board then approached Nestlé Zimbabwe to buy their milk,” Theo Mxakwe, communications director for Nestlé Zimbabwe is quoted as saying, adding that Zimbabwe 10 years ago produced 240 million litres of milk but by 2008 this had dropped to 30 million litres. He had no comment when asked if the company realized the farm belonged to Grace Mugabe.

Swedish dairy equipment provider DeLaval’s South African subsidiary learned this week that it may be at risk of breaking sanctions for selling to the Gushungo Farm, but said that it had no knowledge the company it was working with belongs to Grace Mugabe, or it would not have been doing business with them.

The previous owner of Gushungo, a farm that was then called Foyle, was once Zimbabwe’s largest producer of milk, according to Mzakwe. Traditionally, 98 percent of the country’s milk has been supplied by a limited number of very large farms, with smallholders very minor players in the market.

Links to other sites: Times Live, South Africa [ed. note: this repeats an earlier BBC mistaken report that Switzerland does not have sanctions: these are in fact identical to those of the European Union], Zimbabwe Times, South Africa

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