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Fonterra suspends Sri Lanka operations following angry consumer protests

By Mark Astley+

23-Aug-2013
Last updated the 23-Aug-2013 at 13:05 GMT

Fonterra has temporarily suspended operations in Sri Lanka in response to growing anger amongst consumers about the safety and marketing of the company's products, which culminated in protests outside Fonterra Brands Lanka’s head office yesterday.

The New Zealand-based dairy cooperative announced earlier today that it had taken the “precautionary step of temporarily suspending its consumer operations in Sri Lankan because of the unstable situation at the moment.”

The decision was sparked by a demonstration, attended by around 200 people, outside the company’s head office near the Sri Lankan capital, Colombo, yesterday.

On-going dicyandiamide (DCD) contamination concerns in the country, and the company’s alleged breach of a recent ban on the sale and advertising of its milk products were the likely cause of the protest, a Fonterra spokesperson told DairyReporter.com.

Commenting, Fonterra CEO Theo Spierings claimed that the “precautionary measure” will ensure the safety of more than 750 employees at its liquid and powder processing plants in Biyagama, and its head office

“The temporary suspension is the right thing to do,” said Spierings.

“We have closed our plants and office in Sri Lanka, and have asked out people to stay at home,” he said.

Daily operations “difficult”

“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,” said Spierings.

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

It emerged earlier this month that the Sri Lankan Ministry of Health had ordered Fonterra to pull  39 tonnes of Anchor brand milk powder from shelves in the country after tests detected low levels of agricultural chemical, DCD, in two batches of the product.

Last week, a District Court in the country issued a nationwide two-week ban on the sale and advertising of all Fonterra milk products following a complaint by the National Health Services Trade Union that the company’s marketing was misleading.

Yesterday, Fonterra was forced to deny reports that four Sri Lanka-based executives had been summoned to face contempt of court charges over the company’s alleged failure to adhere to the ban.

Legal action “underway”

Fonterra is, however, attempting to counter these challenges.

“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,” said Spierings.

“Legal action is underway that is aimed at resolving the Enjoining Order.”

“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,” he added.

Aside from its issues in Sri Lankan, it has been tough few weeks for Fonterra.

On 2 August 2013, the company was forced to issue a food safety warning to several customers over concerns that whey protein concentrate (WPC) potentially-contaminated with Clostridium botulinum had entered the supply chain.

Following the alert, related product recalls were ordered across Australasia, Asia and the Middle East, and the managing director of Fonterra’s NZ Milk Products business, Gary Romano, resigned.

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