Fonterra is selling its Farm Source livestock division as it carries out a strategic review of assets.
The review comes after the co-op posted a $196 million dollar loss for the 2018 financial year.
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The livestock division is to be sold to livestock agency provider Carrfields Livestock.
Farm Source Stores Director Richard Allen said the decision to sell was made in the context of the larger review.
"In the context of the review of the co-op's assets and investments, we have made the decision to sell the livestock division to Carrfields Livestock," he said.
"This will better serve the livestock team and the farms they service," said Mr Allen.
He said while Farm Source's livestock division has contributed positive returns since inception, the co-op believes the investment required to maintain and grow the division can be more effectively targeted towards improving core areas of the Farm Source business.
"Farm Source is working with Carrfields to develop a range of partnership offerings to ensure a positive connection and competitive offer remains for Fonterra farmers."
Carrfields Group Managing Director,Craig Carr said the acquisition is both exciting and a strategic opportunity for Carrfields Livestock to fill gaps in their current national network.
"This acquisition will take the Carrfields Livestock team to over 150 livestock agents spread right across the country," he said.
"This strategic partnership will offer Farm Source clients and Fonterra farmer owners access to a nationwide agent and sale yard network provided by a New Zealand family-owned business," said Mr Carr.
Farm Source and Carrfields Livestock say they are committed to ensuring a smooth transfer of employees and clients, minimising any disruption to the business with Carrfields Livestock's ownership commencing 1 March 2019.
The said for a small number of employees who will not have the option to transition to Carrfields Livestock, Farm Source will support them in identifying new opportunities within Fonterra.
In December, Fonterra confirmed it was looking at a potential sale of Tip Top ice cream, as it looks to pay down debt.