Fonterra's announcement of its first annual loss, $196 million, in 17 years did not come as a surprise to a Taieri dairy farmer.

Farm owner Philip Wilson has been dairy farming for more than 40 years.

He and wife Heather have investments in three properties on the Taieri.

Mr Wilson said it was not a surprise considering they had been kept informed.

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Last year Fonterra posted a $745 million profit, but in March posted its first half-year loss after a major write-down of a Chinese investment and reparation payments to a French dairy company.

"I'm disappointed in the leadership and the performance of the board... although it's easy to be wise in hindsight, this ultimately shouldn't have happened," he said.

"Dividends are a quarter of what they were previously."

Mr Wilson said he had always been a Fonterra shareholder and would not stop believing just because they had "lost a game".

"We need to look beyond what's happened and the board should have a look at how they're doing business...

"Because it is a co-op, if things go well, farmers get an advantage, and if things don't go well, they don't."

"Fonterra is a great model," farm owner Philip Wilson said.

"I'm sure nobody in Fonterra wants to see a bad result . . . they need to look at how they can get back to where they want to be."

He said looking forward, he expected to see a bit of change, and having a deputy chairman or even two to support the chief executive would be a good option.

"The best way to run a group is that it's not all on one person. There is too much pressure and power at the top . . .

"Having a deputy chair allows for overseas delegations and more control . . . just like a school has a principal and an assistant principal."

Mr Wilson said he was passionate about dairy farming and although there had been negative results he had a positive outlook on what was to come.

"I love the job. . . I love growing grass, growing crops and growing animals and doing my best for the environment."

Southland Federated Farmers dairy chairman Hadleigh Germann said the big disappointment to many farmers was in the mid-year financial results in which Fonterra struggled to deliver the good outcome it had predicted.

"Clearly there needs to be a lot of work done in improving the forecasting of financial performance and then delivering."

For those farmers having to increase shareholdings in Fonterra at a time when the dividend fails to meet the cost of capital, it would be particularly disappointing.

"I personally believe a co-op model is the best for farmers and Fonterra is still a good investment.

"We need to now allow the new chairman and CEO some time to implement the plan they have outlined to turn Fonterra's performance around."

Regarding the Fonterra financial results, Mr Germann said most farmers would be pleased with the farmgate milk price they had received, and the forecast for the coming season.

Fonterra interim chief executive Miles Hurrell said the co-operative's business performance must improve.

"There's no two ways about it. These results don't meet the standards we need to live up to . . . we did not meet the promises we made to farmers and unit holders."

Mr Hurrell said in addition to the previously reported reparation payments and loss in investments, there were four main reasons for the co-operative's poor earnings performance.

"First, forecasting is never easy but ours proved to be too optimistic.

"Second, butter prices didn't come down as we anticipated, which impacted our sales volumes and margins.

"Third, the increase in the forecast farmgate milk price late in the season, while good for farmers, put pressure on our margins.

"And fourth, operating expenses were up in some parts of the business and, while this was planned, it was also based on delivering higher earnings than we achieved."

Mr Hurrell said plans were being put in place in order to lift Fonterra's performance.