Fonterra chief executive Theo Spierings has resigned and will step down this year.
The co-operative's chairman John Wilson made the announcement at the Fonterra half-year results presentation this morning.
Wilson said the board had started a global search for a new chief executive late last year, and the board had decided to bring forward the announcement of Spierings' departure after about seven years in the role.
"We are in the process of the CEO succession plan, and we're committed to the smooth transition to the next chief executive," Wilson said.
"It is not yet clear exactly when any appointment for Theo's replacement will be made, but it is absolutely clear that Theo will continue in the meantime to drive the Co-operative's strategy and business, with special emphasis on China."
Wilson said farmers and the wider market would be informed when more information was available and in the meantime it would be business as usual.
Spierings said he was approaching the seven-year mark and it had been "quite a ride" but when he came in he could see Fonterra was the envy of the dairy world, and that was still the case.
"Fonterra remains close to my heart," he said.
Five to seven years was a normal period of tenure, he said, adding he would now like to focus on a better world rather than a bigger job.
Wilson said Spierings had made an extraordinary contribution to Fonterra. He said the company was well positioned to find a leader for the next phase of its strategy.
"It is all about timing; we need the right leadership at the right time – and now we're in the position to determine the next step."
Spierings said the role would require someone who was able to adapt, with China a major focus.
"We are a strong co-op, and now we're starting to grow our sustainability and innovation," Spierings said.
"We need someone dedicated to that in the next five to seven years. Other industries are being heavily disrupted by technology, and if we're not on a disruptive journey every day – we're going to be affected later on."
Dutchman Spierings took over the role as Fonterra chief executive in 2011, replacing Andrew Ferrier and beating internal candidates for the job.
He previously led Dutch dairy cooperative Royal Friesland Foods in its 2008 merger with Campina and has more than 30 years' experience in the dairy industry.
Spierings caused controversy last year when it was revealed he was the highest-paid executive of a publicly listed company, pulling in $8.32m last year.
In an interview with the Herald last year, he said he wasn't looking to move on just yet, saying, "I have seen many CEOs who have been in companies like Fonterra for a very long time."
Spierings has had extensive experience across the dairy industry, particularly in Asia, Latin America, Africa, the Middle East and Europe.
His roles have included general management, operations and supply chain, and sales and marketing positions. He holds a Bachelor of Arts in Food Technology/Biotechnology and a Master of Business Administration.
Wilson said the decision was not a reaction to the cooperative's performance, saying "Theo has delivered extraordinary value".
Spierings would continue in the role until a new chief executive was appointed and was likely to continue in a consulting role during the handover process.
The announcement follows an after-tax loss of $348 million in the first half to January 31, down 36 per cent.
However, Wilson said the loss included a one-off Danone settlement and a write-down of the value of its Beingmate investment. Its normalised profit is $248 million.
"While our reported net profit after tax shows a loss of $348 million, it includes the payment to Danone and the Beingmate impairment," Wilson said.
"As these are one-off events, our normalised net profit after tax of $248 million is a better reflection of our underlying operating performance for the half year."
The company said it had written down the value of its investment in Beingmate by $405 million to $244m. Beingmate, which develops and sells children's food and infant milk formula in China, in January downgraded its earnings for 2017 to a loss of $171–$214m.
"Our shareholders and unitholders will be rightfully disappointed with this outcome. Beingmate's continued under-performance is unacceptable," Wilson said.
The result also accounted for the $183 million settlement to French food company Danone after Fonterra's precautionary recall of whey protein in August 2013.