Fonterra has decided to scrap its guaranteed milk price scheme at the end of the 2015/2016 season.
The co-operative introduced the scheme in 2013/14 as a price risk management tool which allowed farmers to lock in a percentage of their milk at a fixed price.
Farmers who took the guaranteed price of $7 a kilo of milk solids last season (2014/15) found themselves better off, as the price later slumped to $4.40 a kilo.
Fonterra said it had decided to end the scheme because it was not widely supported by farmers. It said it would call for applications for the final part of the scheme in December.