Fonterra, NZ, Sri Lanka meet to resolve DCD protest issues

02-Sep-2013 - Last updated on 03-Sep-2013 at 10:25 GMT

Operations at Fonterra Brands Lanka's Biyagama processing facilities were temporarily brought to a halt as a result of the protest.

Fonterra, New Zealand and the Sri Lankan government have met to “discuss progress in resolving” the recent issues that led to the closure of all Fonterra Brands Lanka faculties last month.

New Zealand Foreign Affairs Minister, Murray McCully, and Fonterra chairman, John Wilson, recently met with Sri Lankan Economic Development Minister, Basil Rajapaksa, to iron out the details of a Dairy Sector Cooperation Agreement between the two countries.

The meeting followed a difficult few weeks for New Zealand-based dairy cooperative Fonterra in Sri Lanka.

Last month, Fonterra Brands Lanka - the cooperative's business in the country - took the “precautionary step” of closing its head office near Colombo and suspending operations at its liquid and powder processing plants in Biyagama, following a 200-strong demonstration outside its offices.

fonterra (2) — Around 200 people demonstrated outside Fonterra Brands Lanka's head office in Colombo last month.

Concerns about the presence of agricultural chemical dicyandiamide (DCD) in Anchor brand milk powder, and anger over Fonterra's alleged breach of a now-overturned ban on the sale and advertising of its milk products were pinpointed as the cause of the protest.

Fonterra Brands Lanka operations have since recommenced, after it was determined that the situation had been "stabilised."

"Greater certainty" for dairy trade

Despite the restart of operations in Sri Lanka, McCully accepted that there is still work to be done to completely resolve the issues.

“There is still considerable work to do to create greater certainty for our dairy trade in Sri Lanka,” said McCully.

“I believe we have established with the Sri Lankan Government a more positive basis for taking the relationship forward.”

As well as attempting to resolve the issues that led to last month's protest, New Zealand hopes to work with Sri Lanka to identify “future opportunities to expand cooperation in the dairy sector.”

“Sri Lanka is keen to substantially build its domestic capacity in the dairy sector,” said McCully.

“Mr Rajapaksa clearly understands the world-class expertise and experience that Fonterra can bring to that. He was very interested in hearing how Fonterra might be able to assist. We took the opportunity to underline the greater certainty that Fonterra will need in the Sri Lankan market."

"This will set out the ways both governments can support the growth of Sri Lanka’s dairy sector, and thereby assist in creating a more certain environment in which Fonterra can make a broader contribution to the sector’s development.”

McCully expects the parties to sign the discussed Dairy Sector Cooperation Agreement "a little later this year."