Fonterra's Head of Farm Source for the Bay of Plenty Lisa Payne caught up with The Country Early Edition's Andy Thompson for an update on what's happening with the dairy giant this week.

Fonterra has finalised the details for its fat evaluation index grading system. Lisa says the fat evaluation index will give farmers an indication of whether their milk meets manufacturing requirements and customer specifications.

There are four grade levels, (A, B, C, D) with A and B meaning milk is suitable for manufacturing. There will be demerits for farmers who fall into the C and D category but Lisa says they won't receive them straight away.

Milk fat composition changes with excessive use of Palm Kernel Extract but Lisa says the index is to manage PKE not to eradicate the use of it.

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The index will come into effect in September 2018.

Also in today's interview: Lisa Payne updates Andy on what's happening in the Bay of Plenty and encourages the public to take part in Open Gates on Sunday.