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UPDATED: Fonterra halts Sri Lanka operations after protests

UPDATED: Fonterra suspends Sri Lanka consumer operations after protests outside offices

(Adds reports of protests)

Aug. 23 (BusinessDesk) – Fonterra Cooperative Group says it has suspended its consumer operations in Sri Lanka, where sales of its products have been temporarily banned from sale, because of nationalist protests outside its local offices.

The company’s Sri Lanka business is currently prevented by a court order from selling, advertising or making public statement with customers or consumers, it said in a statement. The company has begun legal action to resolve the order. Its operations have been closed because of “the unstable situation at the moment.”

“The temporary suspension is the right thing to do,” chief executive Theo Spierings said in the statement. “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.”

Reuters reported yesterday 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, 30 kilometres north of Colombo. Farmers are key supporters of the government.

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

Spierings said his company “must do all that we can to protect our farmer shareholders’ investment in Fonterra’s Sri Lanka manufacturing and commercial operations.”

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

A Sri Lankan court last week imposed a 14 day temporary ban on Fonterra selling products in that nation amid claims they contained traces of a nitrate inhibitor. The ban followed news that Sri Lanka’s Industrial Technology Institute had found chemical dicyandiamide (DCD) in two batches of milk powder it tested in results that Fonterra is disputing.

Three workers representing Sri Lanka’s National Health Services Union won a temporary injunction to stop the Auckland-based company from selling its products in Sri Lanka.

Radio New Zealand yesterday reported a Sri Lankan court had issued a summons to Fonterra subsidiary Fonterra Brands Lanka and four of its officials for contempt of court for not adhering to the ban.

(BusinessDesk)

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