Fonterra chairman John Monaghan says the co-op's improved milk price forecast is "good for our farmers and good for regional New Zealand".

Fonterra has increased its 2018/19 forecast Farmgate Milk Price range to $6.30-$6.60 per kgMS, up from up from its December forecast of $6-6.30/kgMS.

A slowing in global milk production, the EU's intervention stocks of Skim Milk Powder clearing, and an increased demand out of Asia has influenced the improved milk price forecast, Monaghan told Jamie Mackay on The Country today.

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It's not all good news for farmers however, as Fonterra also announced it had revised its forecast earnings down to 15-25 cents per share, (from 25-35 cents) and that it will not be paying an interim dividend.

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"Clearly our performance is not where it needs to be ... we're having a full look at our strategy," said Monaghan.

"We're taking a hard look at the business ... we're not talking about tinkering, we're talking about fundamental change so that we'll be competitive on a permanent basis."

Fonterra will be "getting back to basics" said Monaghan and farmers will have a chance to engage in a "fundamental debate," about strategy and performance at the co-op's interim results at the end of March.