A ban on Fonterra products and marketing in Sri Lanka has been lifted.
A district court imposed a two-week ban on the sale and advertising of the company's milk products after the agricultural chemical dicyandiamide (DCD) was reported to have been detected in milk powder.
Fonterra this week closed down its operations in Sri Lanka and stood down its 750 staff until further notice after a protest by a nationalist group outside one of its plants.
Commentators say milk production is a political issue in Sri Lanka, with the government working to increase domestic production and reduce imports.
But the Sri Lankan consul in Wellington, Aruna Abeygoonesekera, says there is no political element to the Fonterra controversy.
He says Anchor has always been a respected brand in Sri Lanka but Sri Lankan consumers are very clear that they will not accept milk powder containing any DCD.
Mr Abeygoonesekeya says Fonterra should have listened to the concerns of Sri Lankan consumers.
Federated Farmers national president Bruce Wills says New Zealand farmers know the allegations are a stretch because DCD has not been used in New Zealand since last year.
He says they will be aware that the Sri Lankan government has wanted to increase its own dairy production for some time.
He describes the claims as "anti-competitive".
Mr Wills says Fonterra is doing all it can to protect its staff and assets in Sri Lanka and the company has been keeping Federated Farmers updated on the situation.
Economic Development Minister Steven Joyce says Fonterra is acting responsibly and the Government is working with it and the authorities to resolve safety concerns.
Lincoln University Professor of Agribusiness Keith Woodford says the issue is a political one that has got out of hand.
He says Fonterra has found itself in a situation it has little control over.
Professor Woodford says it is likely Fonterra's business in Sri Lanka will return to normal once the situation cools down.
He says the Government should send a minister to Sri Lanka as soon as possible.
