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”.
More than 100 protesters gathered outside the factory, upset that Fonterra products are still on sale. They want all dairy products to be locally made.
“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.”
Mr 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.
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.
Today, Fonterra was hauled before the courts, accused of breaching that order.
‘A lot of political discussion’
Economic Development Minister Steven Joyce refused to say this was a political move.
“It is a bit difficult to say from this distance…what is driving this issue,” Mr Joyce told reporters at Parliament.
Mr Joyce said there is quite a lot of political discussion in Sri Lanka about the development of their dairy industry, but Fonterra is a long standing Sri Lankan brand.
Fonterra has a long, 35 year association with the Sri Lankan market, collecting and processing milk from several thousand farmers and having several hundred staff there, he said.
“They’re committed to continuing their operations there but obviously there are some current issues that need to be worked through with the Sri Lankan Government and we’re helping with that,” Mr Joyce said.
He said he had spoken to Foreign Affairs Minister Murray McCully this afternoon and Mr McCully has been working with the Sri Lankan Government and Fonterra on resolving the issues.
Mr Joyce said Fonterra is concerned about security for its staff in Sri Lanka after a protest yesterday in the area of one of its factories.
“They’ve also go this court case which is making it very difficult for them to operate currently,” he said.
Mr Joyce said the decision is one for Fonterra to make but the Government respects it.