A Chinese dairy firm is planning to build a build a milk-processing plant in the South Island.
Inner Mongolia Yili Industrial Group plans to spend $214 million setting up an infant formula plant in the South Canterbury town of Waimate. To acquire the land it needs, it will buy Oceania Dairy Group, a subsidiary of Oceania Gold.
Federated Farmers' dairy spokesperson, Willie Leferink, said the plant will be relatively small scale, requiring milk from between 40 and 50 suppliers.
Mr Leferink said there is plenty of room in the domestic dairy industry for another milk processor.
The plan is subject to approval by New Zealand and Chinese authorities.
Oceania Dairy Group director Don Brash said the company had tried to set up a milk powder plant with New Zealand capital for a couple of years, but in the present climate was unable to find the $80-$100 million needed. He said, "Yili came along and said, 'Look we'd like to spend more than twice that amount building a more sophisticated plant'.
"It was clearly the best of the options available to us," Dr Brash told Radio New Zealand's Summer Report programme.