11 Nov 2014

Fonterra-Sri Lanka relationship 'improving'

3:29 pm on 11 November 2014

Primary Industries Minister Nathan Guy says the strained relationship between Sri Lanka and Fonterra is improving, and that country will continue to be a growing dairy market for New Zealand.

Nathan Guy

Nathan Guy Photo: RNZ

The Sri Lankan market has been a difficult one for New Zealand in the past few years, with the safety of the dairy cooperative's exports repeatedly questioned by the Sri Lankan government and health authorities.

Last year, Fonterra was forced to recall dairy products containing whey protein concentrate due to a botulism scare that proved to be a false alarm.

Mr Guy led a trade delegation to Sri Lanka and India, which finished last week.

"Every opportunity I got to talk to ministers or the president, I said that we have had our internal inquiries here, Fonterra has done their thing, we have had the Ministerial Inquiry, which proved that we have got world-leading food safety systems here and we are going to continue to strengthen those.

"Fonterra is a large player in this market. They're working closely with farmers on the ground there, they're are looking at rolling out milk in schools, they're looking at model farms, they've started in a small way and want to grow that.

"In the first 12 months when they have been working with Sri Lankan farmers, they've proven that they can lift their productivity and viability by 55 percent. So we know there is a big upside from working with Sri Lankan farmers, we know doing that will help grow our profile in this market and the Anchor brand is incredibly strong there - it's one of the most trusted."

But Mr Guy conceded that some people in Sri Lanka aren't so welcoming to Fonterra.

"Round the country when we move around some perceive that our dairy industry is massive and a threat to the local domestic producers, but I always summarise it by saying we are a small country in the South Pacific, we can feed 40 million people, we export to 160 countries,/ So we might be a large exporter, but in world production we are only a couple of percent and when they hear those figures they understand it.

"So an opportunity we have is to continue to add more value to our products and more upside to come, I believe, in Sri Lanka and also in a very growing and large Indian market."

India is this country's 18th largest trading partner, and Mr Guy was expecting negotiations for a free-trade agreement between New Zealand and India to resume soon.

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