"Our milk processing facility in Kurunegala is now running at its fullest capacity…and we are continuing to purchase as much milk as we can to support our local dairy farmers," Alois Hofbauer, managing director of Nestlé Lanka Plc said in a statement.

"We will continue to operate at maximum capacity for fresh milk processing."

Sri Lanka's rulers have announced a plan to be 'self-sufficient' in milk and prices are kept artificially high with import duties.

Days earlier a 400 gram packet of milk powder was raised by around 60 rupee to over 300 rupees after farmers threw away some milk saying it was not collected.

However there have also been attempts to increase yields in milk cows instead of simply putting milk out of reach of the poorest sections of the population by high taxes and limiting imports.

Meanwhile Nestle said the firm had supported Sri Lanka's dairy industry since the early 1980s and worked closely with the state and farmers to promote good dairy farming practices such as cattle feeding, breeding, animal health and farm management.

"Nestle further assists farmers by providing vital equipment, medicine and subsidies," the firm said.

Nestle said it had also increased efforts to buy milk from former war torn areas in the North and the East. Chilling centres have been opened in Jaffna, Kilinochchi, Mallavi and Oddusudan, for the first time in 30 years.