* President suspends funds, follows donor pressure
* Agriculture employs 70 percent of labour force
KAMPALA, July 7 (Reuters) - Ugandan President Yoweri Museveni on Wednesday froze about 120 billion shillings ($53 million) in funds earmarked for the agriculture sector because of concerns the distribution process could be mishandled.
Museveni intervened after revelations that previous Agriculture Ministry funds were extensively mismanaged, his office said in a statement.
His action was prompted by "widespread complaints of financial impropriety, corruption, lack of transparency in farmer selection," the statement said.
The funds were to be spent under a national programme designed to increase farm output by providing fertilizer, high-breed livestock, high-yielding seeds and advice to farmers.
The Agriculture Ministry's budget for the 2010/2011 fiscal year is 346.9 billion shillings.
Although Uganda's economy has thrived and maintained strong growth over the last decade, Museveni, in power for 24 years, has faced mounting accusations from donors and civil society of widespread corruption and deteriorating public services.
Agriculture accounted for 23.7 percent of the country's GDP in the 2008/09 and employs over 70 percent of the country's labour force, according the Uganda Bureau of Statistics.
In March donors threatened to withhold aid to Uganda if the government did not act urgently to stem embezzlement of public funds.
(Reporting by Elias Biryabarema; Editing by Jeremy Clarke and Angus MacSwan) ((Email: nairobi.newsroom@reuters.com; tel: +254202224717)) (For more Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com)
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