Fonterra suspends operations in Sri Lanka

Despite suspending its operations in Sri Lanka, Fonterra is committed to paying the salaries of their 755 strong staff and compensating 4000 odd dairy farmers who sold them milk till the factory restarts operations, an official said here on Monday. Fonterra, which is the world's largest dairy exporter, has been accused by a Sri Lankan government research institute of having dicyandiamide (DCD) in its milk power, a chemical used in fertilizers to prevent them from soaking into rivers, which can be toxic in large amounts. Fonterra has denied the accusation but decided to suspend operations citing "unstable situations" on Aug. 23 after hundreds of people protested outside the factory blaming it for selling " poisonous milk". "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," Fonterra Chief Executive Theo Spierings was quoted as saying in a statement last weekend. However, Fonterra is adamant that it will return to operations, though that date has not been announced yet, a spokesperson for the Fonterra Lanka told Xinhua. "All the employees and dairy farmers will be retained by the company. Workers will still be paid their salaries and the dairy farmers will be adequately compensated," spokesperson Mihiri Wickramanayake said. Two batches of Fonterra's imports were banned by Sri Lanka's Health Ministry two weeks ago for containing DCD but the company has rejected the charge. The 39 metric tons of milk powder was recalled and products such as chocolate that could also contain contaminated milk powder or whey protein has also been ordered off shelves. Sri Lanka is the fifth largest purchaser of Fonterra products in the world. Fonterra has a large footprint in Sri Lanka with 65 percent market share that climbs to 76 percent when yogurt is included. According to the Fonterra website, its powder plant in Colombo' s outskirts packs 475,000 packs of milk each day and blends 5,270 metric tons of milk powder every month. Its liquid counterpart processors half a million yogurt cups a day producing 10,370 tons of cultured products, 850 tonnes of pasteurized milk and 2,460 tons of UHT products every year. Some of the liquid dairy is procured from 4,000 odd local farmers.