Fonterra's 'painful but necessary decisions'

Fonterra's Chief Financial Officer, Marc Rivers. Photo / Dean Purcell.

Although he understands that farmers are "very frustrated" with Fonterra this week, Marc Rivers says there are still silver linings to be found in the co-op's current situation.

The Chief Financial Officer spoke to The Country Early Edition's Rowena Duncum about Fonterra's write-downs announcement, which would result in a significant loss this year.

"I think it's important to keep in mind that while the impairments are certainly very disappointing, they are non-cash which means that really this is reflecting a change in the value on paper ... these do not affect our ability to operate in any way".

"These are painful but necessary decisions that we have to take as part of our turn-around and part of the healing process".

Listen to the full interview below:

Fonterra is also not paying a dividend, a decision that, although disappointing, will come as no surprise to many farmers said Rivers.

"We didn't pay dividends at the half year and we didn't pay one at the end of last year. So it probably was not a surprise".

"These are not decisions we take lightly, we understand that this has an impact on our owners' livelihoods".

Despite these setbacks farmers should try to focus on the positive aspects of Fonterra said Rivers.

"We're in a very good business here. The fundamentals of the business actually are very strong. We're in a market where the world wants more dairy, demand is very strong".

"I'm convinced we make that dairy in a beautiful way in New Zealand with the pasture-based model".

Also in today's interview: Rivers talked about why Fonterra announced a write-down on the New Zealand consumer business and explained the new strategy of focusing on value over volume.