Murray Goulburn's managing director, Gary Helou, resigned this week after he massively overestimated sales figures, sparking anger from farmers.

The co-operative, Australia's biggest milk processor, will now struggle to meet half of its net profit forecast outlined in the prospectus for its partial float on the ASX less than a year ago.

But Mr Tracy did not blame Mr Helou, who has been replaced by former Fonterra executive and Murray Goulburn's business operations manager, David Mallinson.

"The sheer size of the miss between the forecast and what the actual outcome caught us all by surprise, including Gary," Mr Tracy said.

But this did not mean Murray Goulburn's board had been lax in its duties, Mr Tracy said.

He said the gulf between the forecast and actual figures came after sales of its Devondale-branded milk powder surged 300 per cent in the six months to December 31.

Mr Helou thought the co-operative could generate even more growth this half because it could not produce enough powder to meet demand. But after increasing production, a slowdown hit during Chinese New Year in February.

The board discovered the gap last Tuesday when it reviewed the sales figures for the March quarter.

"We saw a bit of a recovery in March …but it wasn't the growth we were expecting or required to meet our targets. That's why we need to make more inquiry," Mr Tracy said.

Sales were knocked further in April after China's introduced new regulations on cross border online sales, leading to some Murray Goulburn products being temporarily withdrawn from Alibaba's Tmall, a popular Chinese website.

"Naturally when you're in a rapidly developing market – we had seen 300 per cent growth in … adult dairy powders in the first half – you need to be vigilant and the board and management were vigilant," Mr Tracy said.

"I think Gary certainly owned his forecasts and said "these are my numbers". That's why I think he took the action he took [resigned].

"For the board, I say, it certainly crystallises the need to really focus on the process and execution of the strategy and also to get as much transparency of the data and as live as possible."

Mr Tracy also said the cut to farm gate price – the first since the financial crisis - from $5.60 to $4.75-$5 a kilogram, would be much lower if the company didn't switch from commodities to consumer brand products.

In the past 12 months, the price of global dairy commodities has tumbled 45 per cent, compared with Murray Goulburn's cut to the farm gate price of as much as 15 per cent.

"Look far at bulk commodities have fallen. Even after this adjustment – the comparison is still stark, so we know the strategy is delivering."

Murray Goulburn expects to generate full year net profit of $39 million to $42 million. This compared to its prospectus forecast of $89 million, and is significantly lower than its revision released to the market two months ago of $63 million.

Farmers and investors have criticised Murray Goulburn's communication to the market.

For example, the co-operative issued a statement to the ASX last Monday saying it did not expect China's new regulations to e-commerce to materially hit earnings. Meanwhile Mr Helou was upbeat about Murray Goulburn's long-term prospects at The Australian's Global Food Forum last Wednesday - a day after the board raised its concerns about the co-operative's sales.

Respected agribusiness analyst Belinda Moore said Murray Goulburn's sales and profit forecasts had been "overly aggressive" and the co-operative had been caught out "overpromising".

"The downgrade is particularly disappointing given management's recent announcements to the ASX and press comments".

But she believed units in the co-operative's listed trust, which have plummeted more than 40 per cent $1.25 this week, had been oversold.

Ms Moore said Murray Goulburn's debt levels were within the limits of its policy and its spending on factory upgrades were underpinned by long-term contracts, such as 10 year deal to supply Coles with its home brand milk and cheese.

"However, until new management is in place and there is greater certainty over the company's strategic direction and financial price, we move to a hold and a $1.38 price target."