Wellington, June 24 NZPA - Fonterra is re-merging 10 business divisions into a giant "operations and trade" business to drive the business deeper into markets offshore.

The changes will cost it a senior executive who has worked closely with farmers, the director of milk supply, Barry Harris.

Fonterra chief executive Andrew Ferrier, said Mr Harris has decided to leave his job at the end of July, but will continue to advise the co-operative to the end of the year.

Mr Harris was headhunted by Fonterra in 2005 from his role heading the Wellington Regional Council.

Mr Ferrier said the consolidation of operations and trade arms of the cooperative will give greater focus to the company's global ingredients business.

Being folded into one unit are Fonterra's milk supply division, shareholder relations, milk collection, NZ operations, offshore milk sourcing and processing, supply chain, sustainability, government relations and global trade.

It will be headed by the former director of group manufacturing and supply chain, Gary Romano, who will become managing director of operations and trade, and the former managing director of ingredients, Andrei Michalevsky, who will become managing director of global ingredients and food services.

Both will report to Mr Ferrier, who lost a number of senior executives six years ago as he absorbed administration of Fonterra's ingredient business and its consumer product arm into the central corporate structure.

"For our strategy to be successful, Fonterra's core must continue to get more and more efficient," Mr Ferrier said today.

Various parts of the cooperative's core commodity ingredients business were split up in the early days to get more clarity of where improvements in efficiency could be made.

"Each part of the core has achieved significant efficiency gains and I am confident that the time is now right to bring them back together," Mr Ferrier said today.

He said Mr Romano had lifted performance across Fonterra's manufacturing and supply chain, and his appointment would give more weight to the drive for milk quality right across the supply chain.

Mr Mikhalevsky will oversee products ranging from commodities used in high-value markets to specialised dairy ingredients and foodservice products, as well as Fonterra's Latin American consumer products, led by its Chilean flagship, Soprole.

Mr Ferrier said increased focus on value-added products and services could grow Fonterra's partnerships with key global and large regional customers.

"Many of our major customers around the world are forecasting big growth over the next few years," he said in a statement. "We have an opportunity to become much more involved with them as their preferred supplier and partner".

Mr Mikhalevsky will provide a special focus and a new level of commitment for these customers.

Regional consumer brands businesses will continue to operate as strategic business units in Australia/NZ, Asia/Africa, and the Middle East and Latin America.

"They provide a welcome profit buffer above commodity returns, which is particularly important in times of low commodity prices," Mr Ferrier said.

He acknowledged the achievements of Mr Harris in championing a sustainability strategy, and putting in place structures to build stronger shareholder support and loyalty.

Fonterra had also improved milk collection efficiency through work done by Mr Harris on tanker scheduling and collection systems.