Fonterra chairman John Monaghan has confirmed that he will retire as a director of the co-operative when his current three-year term ends at its annual meeting this November.
Former Zespri chair Peter McBride is seen as being the most obvious successor to oversee New Zealand's largest multi-national business.
In a note to Fonterra's farmer-owners and unitholders, Monaghan said his decision was the next step in the Fonterra board's development and succession planning.
"After 11 years as a director, and having seen through the introduction of our new strategy, operating model, and with our debt reduction efforts well progressed, the timing is right for me and for the co-op," Monaghan said.
"The board is committed to a planned chair succession that provides [chief executive Miles Hurrell] and his senior management team with the governance stability and confidence they need to maintain the Co-op's momentum."
Fonterra said its board's current plan was to announce a chair-elect by no later than August this year.
Fonterra said that this timeline would give its farmer-owners transparency of leadership prior to the co-operative's director elections and allow for a period of handover before Monaghan retires.
Under Fonterra's constitution, its chairman must be selected from its pool of seven elected farmer directors on the board. Its Independent Directors are not eligible for consideration as Chairman.
Monaghan was first appointed chairman of Fonterra in July 2018.
He comes from a long dairy lineage.
He was the third generation of his family to take the step from the paddock to the boardroom when he was appointed to the Fonterra board in 2008, following a stint as the chairman of the Fonterra Shareholder's Council.
Former Zespri chair Peter McBride is tipped as a possible successor. Photo / File
His father and grandfather were both at the helm of dairy companies in the days when dozens of co-operatives were scattered throughout rural New Zealand.
McBride was elected to the Fonterra board as a farmer-director in 2018 and has been touted as a potential successor, given his success at the kiwifruit marketer.
Leonie Guiney is the longest-serving farmer-director following her re-election in 2018.
She was an outspoken critic of the cooperative during a brief spell off the board, prompting Fonterra to seek a court order preventing her from speaking to the media.
The matter was ultimately settled out of court and she was re-elected by farmer-shareholders to the board.
In September, Fonterra signalled succession plans were in motion, stressing at the time that they didn't necessarily mean Monaghan was going to retire.
Today, it said it had made good progress finding a replacement for independent director Simon Israel.
