Sri Lanka suspends sale of Fonterra milk powder

Fonterra's Pahiatua milk powder factory.

Fonterra Cooperative Group has confirmed Sri Lankan health officials have suspended the sale of some Anchor milk powder, amid concerns it has made children sick.

The country's ministry of health suspended three batches of 400 gram Anchor full cream milk powder after receiving three customer complaints, Dr Sanath Mahawithanage, Fonterra Brands Sri Lanka associate director scientific and regulatory affairs, said in a statement. The Auckland-based company said it was working with the officials to lift the hold on the remaining product and was doing additional testing on the three batches related to the customer complaints. It said its own testing had cleared the product.

According to Reuters reports several children suffered food poisoning after consuming the product in the southern village of Girandurukotte, 224 kilometres from the capital Colombo. The newswire put the total quantity on hold at 76 metric tonnes.

In August last year, Sri Lanka's National Health Services Union won a temporary injunction to stop the sale of Fonterra products amid ongoing concerns over the levels of nitrates found in the milk powder. Fonterra subsequently suspended operations in the country after Sri Lanka's National Freedom Front, a hardline nationalist political party, protested against the dairy exporter in a push to boost local dairy farmers own business.

Sri Lanka's temporary ban came at a time of heightened food safety concerns for Fonterra, after it was forced to issue a global recall after finding a possible trace of botulism causing bacteria in its milk powder. Testing has since shown there was no bacteria.

In calendar 2013, $223 million of New Zealand's $13.6 billion exports of dairy, honey and animal produce exports went to Sri Lanka, according to Statistics New Zealand. Fonterra is the world's largest dairy exporter and makes up the majority of the country's dairy exports.

In September, Fonterra revised its 2015 forecast payout to farmers to a cash payout in a range of $5.55 to $5.65, as the international dairy price has fallen some 50 percent from February's peak. In the year ended July 31, sales climbed 19.5 percent to $22.3 billion.

Net profit tumbled 76 percent to $179 million, which Fonterra attributed to "constrained margins" in its food service, consumer businesses and non-milk powder products.

Units in Fonterra Shareholders' Fund, which give access to the dividend stream, were unchanged at $6.38 and have gained 10 percent since the start of the year.