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Fonterra Suspends Sri Lanka Operations

August 23, 2013

New Zealand's dairy giant Fonterra Co-operative Group Friday temporarily stopped its operations in Sri Lanka after local authorities said its milk products were contaminated, a company spokesman said.

A court order this week banned the company from selling or advertising its products.

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

Chief executive Theo Spierings was quoted as saying the immediate priorities were protecting its employees and its farmer shareholders' assets.

The closure of the factory came a day after supporters of a nationalist coalition partner of the ruling United People's Freedom Alliance protested outside the Fonterra factory in Biyagama, 27 kilometres east of the capital.

The Industrial Technology Institute, Sri Lanka's food safety authority, earlier said it had found high levels of the agricultural chemical dicyandiamide (DCD) in two batches of milk powder it tested. The institute later admitted it was not sufficiently equipped to do the tests where they were carried out.

The company has denied claims its milk stocks contained DCD.

Tens of thousands of packets of milk powder already on the market have been withdrawn.

The development came in the wake of a campaign by local groups to promote the local dairy industry.

Last year Sri Lanka imported milk products worth 200 million US dollars from New Zealand out of total milk imports worth 300 million dollars.

Fonterra had to recall products in early August after whey processed in May 2012 was identified as being exposed to bacteria which causes botulism. It had been exported to customers in China, Australia, Malaysia, Saudi Arabia, Thailand and Vietnam and used in baby formula.

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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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