Fonterra is to establish a large dry store and cool store at Mosgiel, near Dunedin.
It has signed an agreement to buy a 16.5 hectare site from Fisher & Paykel.
The dry store will be the second-largest in the country, with the largest in Hamilton.
Fonterra says the site allows it to make greater use of rail and consolidate its cool store operations in Dunedin.
It will need increased storage capacity as processing capacity is expanded in Southland, with a new $212 million milk powder plant at Edendale.
Group supply general manager Rob Rogers says these decisions have been made in anticipation of a significant boost in milk supply over the next five years from new dairy farm conversions in the south.
He says the new facilities will create around 30 new jobs, and construction is due to begin in July next year.
The dry store will have capacity for 45,000 tonnes and the cool store, 17,000 tonnes.
Under the agreement, Fisher & Paykel Appliances will lease the property back until June next year.