Fonterra has cut its forecast payout to farmers for the current season because of softer dairy product prices and a strong exchange rate.
Fonterra's chairman, Sir Henry van der Heyden, says auction prices have fallen 16% since May, and global supply has picked up.
The dairy co-operative dropped its forecast payout by as much as 7% to between $6.70 and $6.80 a kilo of milk solids.
That represents 45 cents below its initial forecast.
The payout for the just-completed season was a record $8.25 a kilo of milk solids.
