Prime Minister John Key is visiting Sri Lanka this week to open a Fonterra demonstration farm, promote other commercial links with New Zealand and to chair an executive meeting of the International Democratic Union, an umbrella grouping of conservative political parties.

It will be his first bilateral visit to Sri Lanka as Prime Minister although he attended the Commonwealth Heads of Government in the island nation in 2013.

Mr Key will meet President Maithripala Sirisena who was elected a year ago, and Prime Minister Ranil Wickremesinghe.

A business delegation from New Zealand is accompanying Mr Key, including Fonterra chairman John Wilson.

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Fonterra has had a trading relationship with Sri Lanka for 35 years although a food safety scare - a false alarm - in 2013 forced the temporary closure of Fonterra operations amid local protests.

The demonstration farm, in Pannala, is reportedly set to help train 2000 farmers a year to improve milk quality and production and will also cement relationships with the Sri Lankan dairy industry.

The business delegation with Mr Key consists of Mr Wilson, former Commonwealth Secretary General Sir Don McKinnon, Education New Zealand chairman Charles Finny, Tait Communication managing director Garry Diack, Anthony Wenceslaus who is establishing a NZ-Sri Lanka Business Association; PowerShield chief executive Len Thomas, and Patton Refrigeration managing director Sameer Handa.