Dairy cooperative Fonterra plans to pay a dividend of between 65% and 75% of its distributable profit and retain the rest.
Fonterra is forecasting a distributable profit of 35c to 45c.
Chairman Sir Henry Van der Heyden, says retaining up to 35% of the distributable profit is in keeping with the capital structure changes approved at last month's annual meeting in Ashburton.
He says the board indicated it would look more at retentions as a way of keeping funds within the company and strengthening the balance sheet.
The company has also announced a fair value share for the new milk production season, which establishes the price farmers pay to buy the shares to match their milk supply.
The value of shares held by farmers will remain at $4.52 for the 2010-2011 season.
Due to changes to the cooperative's constitution, two values have been provided by independent expert Grant Samuel.
A fair value of $5.10 reflects the unrestricted market value of Fonterra shares, while a restricted market value of $3.83 reflects that shares can only be held by Fonterra's farmers.
Fonterra says share price will be held at the base price until the restricted market price exceeds $4.52.