Fonterra suspends Sri Lanka operations after milk powder protests

Fri Aug 23, 2013 12:56am EDT
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By Naomi Tajitsu

WELLINGTON (Reuters) - New Zealand dairy giant Fonterra Co-operative said on Friday it had suspended operations in Sri Lanka after the world's largest dairy exporter faced product bans, court cases and angry demonstrators over its milk products in the country.

Sri Lanka's food safety authorities have said they found high levels of the agricultural chemical dicyandiamide (DCD) in two batches of milk powder it tested, an accusation that Fonterra has vigorously disputed.

This week Fonterra was banned by a Sri Lankan court from selling products, and its announcement was made as televised footage showed groups of protestors shouting negative slogans in front of the company's offices in Sri Lanka.

That followed protests by 100 members of the National Freedom Front, a hardline nationalist political party in President Mahinda Rajapaksa's ruling coalition, on Thursday. A Sri Lanka state institute said it would test all milk powder in the market.

"The temporary suspension is the right thing to do. It is a precautionary measure to ensure our 755 people working there are safe," Chief Executive Theo Spierings said in a statement.

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

Four of Fonterra's top officials face contempt of court charges, accused of not adhering to an earlier ruling that banned sales and advertising of all Fonterra milk products.

Fonterra has had a presence in Sri Lanka for around 50 years, and its Anchor brand commands a 65 percent market share of the country's milk powder industry.   Continued...

Sri Lankan demonstrators shout slogans during a protest against Fonterra products in front of the main factory in Biyagama, about 21 km (14 miles) from capital Colombo, August 22, 2013. REUTERS/Dinuka Liyanawatte