Fonterra is forecasting a reduced payout from farmers in the current season - as the Chinese milk scandal begins to impact on its financial results.
Suppliers will be paid $7.90 per kg of milkfat solds for last season.
But that will drop to $6.60/kg for the 2008-2009 season.
Chairman Henry van der Heyden is blames falling global demand because of rising prices.
He also says the contaminated milk problem has already impacted on Fonterra's financial results for the past year.
The company is setting aside what it calls an impairment charge of $139 million against its investment.