Fonterra back on track in Sri Lanka

SCCZEN_021115SPLCLEMENT1_480x270Fonterra’s Sri Lanka business has fully recovered after a 2013 food safety scare sparked public protests and forced the temporary closure of its operations in the country, the New Zealand Herald reports.

Leon Clement, managing director of Fonterra Brands Sri Lanka, said it was business as usual after the disruption of 2013, which saw Sri Lankan authorities ban the sale of Fonterra milk products after discovering what they said was the nitrate dicyandiamide (DCD) in two batches of milk powder.

Subsequent tests found that there was no DCD in the impounded product, or any other Fonterra product, but by then the damage was done.

The incident, which came as Sri Lanka looked to decrease its reliance on foreign dairy products and increase its domestic supply – forced the shutdown of Fonterra’s plants for a week, with its 750 or so local staff being sent home for their safety.

Clement said the company had recovered but the issue had highlighted the need for Fonterra to become more engaged in the local industry in the countries where it operates.

Sri Lanka’s dairy industry is in an emerging stage and Fonterra’s focus is on trying to make dairy farming families more profitable and sustainable.

Despite its small size, Sri Lanka is an important market for Fonterra. It counts as one of the co-operative’s four “leadership” markets – markets were it plays a leading role in the local dairy sector. The others are New Zealand, Chile and Malaysia.

Clement, who rose through Fonterra’s ranks through its unit Tip Top, said the DCD incident, while serious at the time, was a “blip” in the company’s successful history 35-year history in Sri Lanka.

“At the time, there was a lot of misinformation around about our products,” Clement said. “Thankfully, based on the strength of our brand here, and I think the real passion that our people displayed, we are able to turn the business around and get it back on track.”

“Within six months we were back – in terms of markets share – to where we were.

The economic impact took longer – about a year – to turn around.

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