Fonterra will invest more than $100 million in a new processing plant for long-life milk at its Waitoa site in the Waikato.
Chief executive Officer Theo Spierings said the move would bring 50 new jobs and construction work to the Waikato. It would also provide new opportunities for Fonterra farmers in the North Island.
The new plant would meet growing demand in Asia for long-life milk products, Spierings said. Also known as ultra heat-treated or UHT milk, long-life milk has an extended shelf life of a couple of months.
"The new plant will enable us to increase our UHT production by 100 per cent over the next few years," Spierings said.
The plant would produce a range of UHT products including milk and cream for the food service sector.
By focusing the new plant on servicing markets in Asia, Fonterra would be able to concentrate all its domestic UHT production at Takanini in Auckland, Spierings said, including milk for its feel-good Fonterra Milk for Schools programme.
The new plant would open up new winter milking opportunities for North Island farmers.
"Milk supply in New Zealand is seasonal because it follows the grass growth curve. However UHT production requires year round milk supply so we will be talking to our farmers about the opportunity for more of them to take up winter milk contracts.
"This will enable them to take advantage of the milk price premium that these contracts include," Spierings said.
A recent survey of Fonterra farmers indicated a good number of them in the Upper North Island would be keen to take up winter milk contracts.
Fonterra is a farmer-owned co-operative, New Zealand's biggest company and the world's largest dairy exporter. It has more than 16,000 staff and operates in more than 100 markets worldwide.