New Zealand's Fonterra, the world's largest dairy exporter, has set out plans to divide the co-operative in two and float its business operations as a separate company.

The co-operative, which accounts for around 40% of the world's dairy exports, wants to list the business operations, with a 20% stake available to the public.

Fonterra's farmer shareholders would maintain full control of the company's milk supply business and own about 80% of the listed business.

Fonterra chairman Henry van der Heyden said the company needed to be "bold and brave" amid fierce competition in the global dairy market.

"Bold in that this is another transition for our co-operative; brave in that it is a big step, even bigger than the three-way merger that formed Fonterra six years ago."

Van der Heyden added: "What we are considering is a further evolution of our co-operative to enable Fonterra to continue to adapt, to ensure it remains relevant and competitive in the changing global dairy market. We have bitten off these challenges before and added value to the co-operative. We just have to do it again."

Some 11,000 farmers own Fonterra, which was created in 2001 and is now the world's fifth-largest dairy company. Three-quarters of the farmers would need to approve the restructuring plans for them to go ahead.

For at least two years, farmers would retain full control of both businesses before a listing of the operations unit.

Fonterra chief executive Andrew Ferrier said the company needed capital to fulfill its ambitions for growth. "Our preferred capital structure option would provide the capital to fuel our growth in the future."