BEIJING - Swiss food giant Nestle has launched an investigation into a subsidiary in China, a company spokesman said Tuesday after reports surfaced of some milk farmers accusing the company of underpaying them for years.

"Nestle doesn't cheat farmers, nor does Nestle tolerate such practices," Nestle (China) Ltd. Spokesman Dong Yuguo told Xinhua. "We carried out the investigation together with the local government to make sure it is timely and effective. If there is a problem, we will surely solve it."

"We have also launched a new hotline for farmers in the city of Shuangcheng that will hear their inquiries and deal with their complaints," he said.

There have been reports that local milk purchasers working with Nestle in the city in northeast Heilongjiang province have paid farmers below government-mandated prices in addition to using a rounding system for weight on the point of sale device that favored the company.

The reports also said Shuangcheng Nestle Co., a local joint venture with Nestle, has a monopoly on milk produced in the city according to a pact signed in 2002 between Shuangcheng and Nestle, and the city government holds a 2.99-percent share in the company.

Shuangcheng, home to more than 20,000 milk farmers, produces 1,200 tonnes of milk every day. Shuangcheng Nestle currently operates 76 milk purchasing stations in the city.

The electronic weighing system was introduced to avoid human error and to protect farmers' interests, and Shuangcheng Nestle has already started to improve the system for more precise records, Dong said.

He denied Nestle having a monopoly in the city, where he said there are other dairy firms.

As for the city government's share in Shuangcheng Nestle, he said "it is a historical reality, which, in fact, has boosted the local economy."

"Nestle and Shuangcheng have mapped out a plan for the development of the local dairy industry, including mechanized production and large-scale cattle farming," he said.

Shuangcheng Nestle, which began operating in 1990, has long been a major taxpayer in the city. Last year, the company paid 280 million yuan ($43.8 million) in taxes, or 17 percent of the city's total revenue, figures from the city's animal husbandry bureau show.