Nestle this week temporarily shut down its factory, citing harrassment by the authorities.
The firm said it had received an unannounced visit from government officials and police on December 19 and was forced to accept a milk delivery from non-contracted suppliers. Two of its managers were questioned by police and released without charge the same day.
On Friday the Herald newspaper quoted Industry and Commerce Minister Welshman Ncube — tasked by President Robert Mugabe and Prime Minister Morgan Tsvangirai to intervene in the matter — as saying a deal had been reached allowing Nestle to continue operating.
"The parties have collectively reached an understanding to work together in ensuring that milk produced at Gushungo Dairies is absorbed by the local dairy processors," Ncube told the paper.
"For its part, government has given its assurance on the safety of staff and management at both Nestle Zimbabwe and Gushungo Dairies."
Nestle officials were not immediately available to comment.
Business bodies Confederation of Zimbabwe Industries, Zimbabwe National Chamber of Commerce and the Chamber of Mines welcomed the news of a resolution to the row, which Tsvangirai said on Wednesday undermined efforts to rebuild investor confidence.
"We are relieved that due process is now under way… We wish to highlight our concern that the fragile economic recovery under way should not be adversely affected by perceptions of inappropriate actions to deal with simple commercial issues," they said in a joint statement.
"It is our sincere hope that Nestle will open very soon."
In October, Nestle bowed to international pressure and stopped buying milk from Gushungo Dairy Estates, a farm taken over by Mugabe’s family under his contrversial land reforms.
At the time, Nestle said the farm accounted for 10-15 percent of its local milk supply.
Nestle’s decision to close shop marks a setback for the unity government formed by Mugabe and his old rival Tsvangirai, which has actively courted foreign investors to return and help rebuild a state ruined by a decade of economic decline.