Fonterra, and its decision to cut more than 500 jobs.

You would hope that those who are losing their jobs are absorbed into our workforce -- and their skill-set and experience working for one of our strongest brands will see them re-employed soon.

But if we can put the human side of those job cuts to one side for a moment, i think this is the smartest move Fonterra could have made.

Dairy farmers, the industry - it's up against it. This latest fall is a big one, and it’s off the back of other big falls in the dairy price. In fact, the price is at a six year low and collectively our dairy farmers will earn some $7 - $8 billion less this year than what they did when dairy was the true ‘white gold’ and the price was peaking.

And of course that's money that doesn't go into the pockets of farmers, is also missing from our economy. The tax take will be down. If dairy farmers hurt, we all hurt.

And so Fonterra has to introduce change and adapt in a very dynamic environment right now. It’s been living off the fat of the land for some time, and frustration has set in among some farmers – you may remember that in recent times some farmers have been talking about leaving Fonterra and going with independents. They may sit and wait and watch now, and see whether Fonterra can lift its performance and adapt in very challenging times.

Fonterra is cutting back in a number of areas -- there will be job cuts across the board including in marketing and research and development. R and d, i think, is any area where they need to invest. For some time now, a long time, we've been talking about the need to clip the ticket a bit more and create value-added products, rather than shipping everything off to china and watching the Chinese add value at their end. We need to do it here. Investment in research and development is crucial.

But it's a good first step to announce a move to save $60 million in salaries. Fonterra will become, we're told, leaner and sharper. More efficient. Some 17 people earn more than $1 million at Fonterra. More than 2500 staff earn over $100,000. There is, i suspect, a bit of room to move when it comes to trimming back on salaries.

And although news of job cuts is always seen as a negative -- and it most certainly is for those involved -- long-term, for our major export industry, for our dairy farmers and our economy -- this is a step in the right direction.