The board of directors of New Zealand's Fonterra Cooperative is seeking a hike of 1 per cent in salaries besides significant rises approved in recent years to their compensation packages.

The directors put forward a demand of 1 per cent increase on the current amounts of $400,000 for chairman, $160,000 for directors and $30,000 discretionary payments for committee heads, in a notice before the dairy giant's annual meeting on December 17.

The notice said that the directors' remuneration committee that was headed by Rodney Wilson looked into market expectations and trends for directors fees in the country and abroad. It also considered the expected work load and relations to different roles and concluded that an increase of 1 per cent is just.

The notice read, "The committee believes it is important to set realistic fee levels, having particular regard to the broader market to ensure skilled directors are attracted and retained on the board." Fonterra farmers are also demanding a 1 per cent hike in fees for shareholder councilors.

Meanwhile, Fonterra Cooperative is looking to increase its milk production in the Chinese market as it enters into an agreement to develop two new large scale dairy farms in the country. The company signed an agreement with the Yutian County and it completes the company's plans to develop a hub of five farms in Hebei Province.