Fonterra suspends Sri Lankan operations

Chief executive Theo Spierings says Fonterra has two immediate priorities: protecting its people, and protecting 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.

"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."

Media reports say about 200 people collectively known as Lakmawa Diyaniyo or the Daughters of Lanka, gathered in protest after the court issued a subpoena to four of Fonterra Brands Sri Lanka's top officials.

Fonterra's local officials were charged with contempt of court for failing to comply with the court order issued by a Sri Lankan judge to suspend sales and advertising of Fonterra milk products.

A few weeks ago, the Sri Lankan Health Ministry claimed it had found the presence of DCD or agricultural chemical dicyandiamide in two batches of Fonterra's milk products after a government agency performed tests. Fonterra strongly refuted the claims and said its independent testing found no traces of DCD in any Fonterra branded products in Sri Lanka.

Spierings says Fonterra has provided every possible assurance to the Sri Lankan authorities about the safety and quality of Fonterra's products, and remains committed to the Sri Lankan people.

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

"Fonterra Sri Lanka is currently subject to a court Enjoining Order which has shut down our ability to sell product, advertise it or make public statements in any way with customers or consumers in Sri Lanka. Legal action is underway that is aimed at resolving the Enjoining Order."

Sri Lanka is one of the key markets for the New Zealand dairy industry. The New Zealand dairy industry has been providing high quality dairy nutrition to people across Sri Lanka for more than 35 years.

Fonterra also plays an important role in helping develop the local dairy industry. Earlier this year the cooperative launched a Farmer Training and Education Programme to help develop dairy farming skills in Sri Lanka.