One of New Zealand's big dairy export markets, Sri Lanka is putting restrictions on imports of milk powder, in a bid to protect domestic dairy farmers.
It will impose a 15% tax on all imports of milkpowder, except for infant formula.
Last year New Zealand supplied 80% of Sri Lanka's whole milkpowder imports.
It's rated as New Zealand's fifth most important export market for WMP powder, behind China, Venezuela, Algeria and United Arab Emirates.
Sri Lankan processors have been able to buy imported milkpowders at cheaper rates than local raw milk.
Fonterra employs more than 650 people there and its factory at Bigyama processes the milk from around 3000 farmers.
The company says on its website that it is "working closely to help the development of the dairy farming industry" there.