In a note to the co-operative’s farmer-owners and unitholders, John Monaghan said the 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.

“The board is committed to a planned chair succession that provides Miles (Miles Hurrell) and his senior management team with the governance stability and confidence they need to maintain the co-op’s momentum”, said Monaghan.

Fonterra would announce a chair-elect by no later than August this year.

The timeline would allow for a period of handover before Monaghan retired from the board, it said.

Under Fonterra’s constitution, its chairman must be selected from its pool of seven elected farmer directors on the board.

Fonterra said it was also making good progress on securing a replacement for former independent director Simon Israel, who retired from its board in November last year.