A crucial growth platform for Fonterra, its "China Farms" business in the world's most populous nation, was hit by the equal biggest writedown the company announced, of $NZ200 million. Fonterra said the writedown was due to the slower than expected operating performance of the division.

We're in no doubt that farmers and unit holders will be rightly frustrated by these write-downs.

Miles Hurrell, Fonterra chief executive

"While the extent in which we participate is under strategic review, the fresh milk category in China continues to look promising and is growing," Mr Hurrell said.

The Fonterra boss described the various writedowns, including a $NZ200 million writedown in New Zealand, as "tough but necessary decisions" needed to reflect the realities of today's market conditions.

"We're in no doubt that farmers and unit holders will be rightly frustrated by these write-downs. I want to reassure them that they do not, in any way, impact our ability to continue to operate.

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"Our cashflow remains strong, our debt has reduced and the underlying performance of the business for fiscal 2019 is in-line with our latest earnings guidance of 10-15 (NZ) cents per share. We remain on track with our other targets relating to reducing capital expenditure and operating expenses," Mr Hurrell said.

In early trade, shares in the Fonterra Shareholders' Fund, which trades on the ASX, were down 3.9 per cent to $3.44.