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" in what is an unstable position for the company.
It comes as Fonterra Sri Lanka is subject to a court "enjoining order" following claims the company’s milk powder contains 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 under way 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 has 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."
Sri Lanka is a key market for the New Zealand dairy industry, which has been providing dairy products to that country for more than 35 years.
Spierings said Fonterra also played an important role in helping develop the local dairy industry. This year the co-operative 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, and have escalated since the New Zealand exporter’s problems this year with a string of food safety scares and alerts.