Fonterra has cut its estimated fair value share price for the 2009-10 season by almost 20%, citing turmoil in global equity and financial markets and the difficult global economic outlook.

The New Zealand dairy giant said today (12 December) that it was setting the valuation at NZ$4.47, a decrease of NZ$1.10 on this season's price of NZ$5.57.

The move follows a NZ$1.22 decline on the previous season.

Fonterra chairman Henry van der Heyden said the dip was the result of the sharp decline in share values around the world and the related global credit crunch, which has restricted access to and increased the cost of capital.

The value also reflects the cost of a full write-off of Fonterra's investment in San Lu following the China milk contamination crisis.

"Although as a co-operative our share price does not reflect daily market fluctuations, we are not immune to the same pressures that have affected listed companies," van der Heyden said.

"As I said recently when we forecasted a lower payout for the current 2008/2009 season, the global economic and business landscape is extremely volatile and uncertain."