Fonterra suspends Sri Lanka operations

FONTERRA has temporarily suspended its consumer operations in Sri Lanka, closing its plants and office, and telling workers to stay home.

The precautionary measure had been taken due to the "unstable situation at the moment," the dairy giant announced on Friday.

This follows reports of protests outside Fonterra offices in Sri Lanka, amid claims by Sri Lankan authorities that traces of the fertiliser chemical dicyandiamide (DCD) had been found in some Fonterra product, which the company and New Zealand scientists dispute.

Chief executive Theo Spierings says Fonterra's priorities are to protect its people and its farmer shareholders' assets.

"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," he said.

"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."

Reuters has reported that more than 100 members of Sri Lanka's National Freedom Front, a hardline nationalist political party in President Mahinda Rajapaksa's ruling coalition, protested outside Fonterra Brand Lanka's head office, 30km north of Colombo.

Farmers are key supporters of the government.

The protesters held banners saying: "We should make our own milk powder", and "Ban toxic yoghurt advertisement immediately", while carrying a coffin with pictures of Fonterra brands, Reuters reported.

Mr Spierings said Fonterra had provided every possible assurance to the Sri Lankan authorities about the safety and quality of its products.

"Recent events, however, have made it difficult to maintain day-to-day operations, and we need to get them resolved."

A court order has been imposed on Fonterra to ban it from selling product, advertise or make public statements in Sri Lanka.

Legal action has been taken to try to resolve the situation.

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