Grace Mugabe, right, is believed to own about 12,000 acres
The Swiss multinational Nestle is buying milk from a farm seized from its white owners and now owned by the wife of Zimbabwe's President Robert Mugabe.
Britain's Sunday Telegraph newspaper said up to 1m litres of milk a year are being sold to Nestle from the farm.
Nestle says it has no contract with the farm, but buys milk on a cash on delivery basis after other suppliers went out of business.
The company says its products help meet the food needs of Zimbabwean consumers.
Mrs Grace Mugabe is subject to US and EU sanctions, along with her husband and some other Zimbabwean officials.
But since Nestle is based in Switzerland it is not bound by those sanctions.
The newspaper said that Mrs Mugabe had taken over at least six of Zimbabwe's most valuable white-owned farms since 2002, including the Gushungo Dairy Estate in Mazowe, north of the capital Harare.
In a statement sent to the BBC, Nestle says that since the collapse of Zimbabwe's dairy industry it has been forced to buy milk on the open market "from a wide variety of suppliers on a non-contractual basis" for its factory in Harare.
Some farms were seized and others were looted and burned by angry mobs
"This includes milk from the Gushungo Dairy Estate which today accounts for between 10 and 15% of Nestle's local milk supply," the statement said.
"Had Nestle 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."
For many years Zimbabwe was a major tobacco producer and a major food producer for neighbouring countries.
But the forced seizure of almost all white-owned commercial farms - with the stated aim of benefiting landless black Zimbabweans - has led to the collapse of the agriculture-based economy.
The country has since endured rampant inflation and critical food and fuel shortages.
However the economy has stabilised in recent months.