Landcorp is forecasting further substantial growth in last year's record dairy production.
Part of that will come from the former Crafar family farms, which the country's biggest farming operation will manage on behalf of Shanghai Pengxin of China, which will take ownership in early December.
Shanghai Pengxin will spend more than $15 million over three years to lift production on the 16 farms in the North Island to about five million kilograms of milk solids a year.
Chief executive Chris Kelly said Landcorp will also continue expanding dairy production in some other areas, including the Wairakei Estate in the central North Island.
Landcorp is converting the land from forestry to farming and already has about 4500 hectares in dairy production.
"We entered into a joint venture in 2004 to develop something like 22,000 hectares of land into dry stock and dairying,'' he said.
''That project ceased very abruptly at the end of 2010, as a result of the carbon tax impost that occurred with the Government entering into the Kyoto protocol and the Emissions Trading Scheme.
"With the cost of carbon now being at an all-time low - it was around $22 a tonne, it's now below $3 a tonne - it's actually cost-effective to buy credits and then use them to off-set where you deforest.
"We're just about to restart that programme again - there's something like 4000 hectares still lying fallow at present - and over time we'll be developing that in conjunction with our joint venture partners."
Canberbury conversion
Mr Kelly said Landcorp is also converting more farm land to dairying in Canterbury on a property called Maronan Pastures near Ashburton.
"The cheapest form of feed is irrigated Canterbury land right now, and we still have some undeveloped land where we have water available ... so we're putting big storage dams and centre pivot irrigators there.
"We have been finishing deer on that particular block - that's going to go into another dairy unit (and) we're looking at about another 1000-odd cows," he said.
