Fonterra suspends Sri Lanka consumer operations
Public protests outside Fonterra's offices in Sri Lanka have spurred the New Zealand dairy company to suspend its consumer operations in one of its most important markets.
Chief executive Theo Spierings said the move was to ensure Fonterra's 755 staff in Sri Lanka were "safe".
It comes as Fonterra Sri Lanka is subject to a court "enjoining order" after claims the company's milk powder contained traces of DCD, a nitrate inhibitor.
Fonterra has denied the claims. The Sri Lankan court order had shut down the company's ability to sell product, advertise it or make public statements in any way with customers or consumers in Sri Lanka, Spierings said.
Legal action is underway aimed at resolving the order, he said.
"The temporary suspension is the right thing to do. It is a precautionary measure to ensure our 755 people working there are safe.
"We have closed our plants and office in Sri Lanka, and have asked our people to stay at home.
"At the same time, we must do all that we can to protect our farmer shareholders' investment in Fonterra's Sri Lanka manufacturing and commercial operations."
Fonterra had provided every possible assurance to the Sri Lankan authorities about the safety and quality of Fonterra's products, he said.
"Recent events, however, have made it difficult to maintain day-to-day operations, and we need to get them resolved.
"We are also working with Sri Lankan and New Zealand government authorities on a long-term sustainable solution for our Sri Lankan customers, communities and dairy sector."
Acting Trade Minister Steven Joyce said it was difficult to make a judgment about the problems facing Fonterra from afar. However, some of the issues in Sri Lanka were "legitimate".
He had spoken to Foreign Minister Murray McCully by phone, who was working with officials in Sri Lanka to attempt to resolve the issues.
McCully was committed to working through the issues, and Trade Minister Tim Groser would also work on it when he returned from overseas at the weekend.
"There are some legitimate issues that have been raised in terms of DCD and so on, so I think from our government perspective, it's our job just to work through these with the Sri Lankan Government, with Fonterra, provide the opportunity to get the parties working together to seek a resolution for the benefit" of both Sri Lanka and Fonterra, Joyce told reporters in Parliament.
"Obviously, there's quite a lot of political discussion in Sri Lanka about the development of their dairy industry but Fonterra has a long association with that market.
"It's been there for 35 years, it collects milk and processes milk from, I understand, several thousand farmers, it has several hundred staff in Sri Lanka, it's a longstanding Sri Lankan brand," Joyce said.
Joyce's office said it understood about 4500 Sri Lankan dairy farmers supplied Fonterra's operations there.
Fonterra this year launched a farmer training and education programme to help develop dairy farming skills in Sri Lanka.
Industry insiders say the claims against Fonterra products are politically motivated. They had escalated since the New Zealand exporter's problems this year with a string of food safety scares and alerts.
- © Fairfax NZ News
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