Dairy giant Fonterra is expected to unveil its second proposal for capital structure reform within days as the threat to its world-beating exporter status gathers pace in rival dairying countries.

Parties close to the capital structure reform plan indicated New Zealand's biggest company would reveal the long-awaited proposal within a fortnight.

Fonterra, with revenue of $19 billion last year, is a co-operative owned by farmers through redeemable shares. To advance its global growth ambitions and stabilise its balance sheet against shocks such as drought, Fonterra needs more capital.

A proposal by directors last year, which involved forming a company outside the co-operative with publicly listed shares, was rejected by Fonterra's 7000 farmer owners who feared loss of control and ownership.

With the moribund United States dairy industry considering fundamental reform which could result in a drive to export, a new competitive focus by Irish dairy farmers, and European Union approval of a merger of Netherlands-based dairy heavyweights Campina and Friesland Foods, the clock is ticking against Fonterra's strategy to be a global food power.

Farmer reaction to the second attempt by directors to muscle up Fonterra's balance sheet will determine if it stays a smallish co-operative mainly exporting commodities, or follows directors' long-held strategy to add-value to milk by becoming a serious world player in the highly lucrative ingredients and brands markets.

Paediatric and health and wellness nutrition, proteinised beverages and nutraceuticals and specialised cheeses are targets for more infrastructure investment.

Details have been kept secret within the Fonterra boardroom for more than a year as directors and the Fonterra Shareholder Council negotiated its terms.

Farming leaders suggest selling a capital restructure to farmers will be no easier second time round. Cash-strapped and debt-ridden, farmers are in no mood for high-flying corporate strategies as they struggle through a credit crunch, a severely reduced milk payout and the impact on their milk production of a harsh winter.

Recognising the need for a "softly softly" approach this time, Fonterra chairman Henry van der Heyden has said the proposed restructure would be in stages, taking up to four years to achieve. He and shareholder council chairman Blue Read have refused to discuss the possibility of external funding through public listing of shares.

Read said the Fonterra business strategy was compelling. It involves creating 12-month milk supply by establishing milk sources and additional manufacturing infrastructure in other countries.

New Zealand milk would remain the primary source of milk for export product. Underpinning the strategy is the application of New Zealand's world-respected dairy science and innovation to produce value-added products.

In addition to lifting returns, the strategy aims to smooth out the earnings peaks and troughs created by commodity cycles.

An industry leader who declined to be named said even 2 per cent growth in US or European commodity exports could "wipe us off the map". The debt levels of New Zealand dairy farmers meant they would be unable to withstand more commodity price shocks.

"We can't sit back and wait. There are too many threats."