Nestle suspends Zimbabwe operations - report

HARARE Wed Dec 23, 2009 2:10am EST

HARARE Dec 23 (Reuters) - Swiss food company Nestle's (NESN.VX) Zimbabwe unit has suspended operations, two months after pulling out of a deal to buy milk from a farm owned by President Robert Mugabe's family, state media reported on Wednesday.

"Nestle Zimbabwe has temporarily decided to shut down its factory," the state-controlled Herald newspaper quoted a company spokesperson saying.

Nestle Zimbabwe was not available to comment.

In October, Nestle stopped purchasing milk from the Mugabe family's Gishungo dairy farm after international media criticism of the deal entered into in February.

At the time, Nestle said its business with Gushungo Dairy Estate accounted for 10-15 percent of its local milk supply. Nestle said it had a long-term commitment to Zimbabwe.

Mugabe's seizure of white-owned commercial farms to resettle landless blacks has been blamed for ruining the southern African country's once prosperous economy.

The veteran leader, in power since independence from Britain in 1980, denies the charges, saying the economic crisis was caused by Western countries opposed to his land reforms.

In February, Mugabe formed a power-sharing government with bitter rival Morgan Tsvangirai, now prime minister, following disputed elections in 2008. (Reporting by Nelson Banya; Editing by Dan Lalor)