Synlait is investing $260 million to build a new milk powder factory in Waikato.
The Canterbury-based dairy company said it was buying 28 hectares in Pokeno to build an infant base powder factory, with the first dryer expected to turn out 40,000 tonnes a year.
Synlait chief executive John Penno said Synlait planned to grow its a2 Milk and Lead with Pride programmes with farmers in the Waikato as a part of establishing their new milk supply for Synlait Pokeno.
"We want to partner with dairy farmers who are excited to do more with their milk.
"a2 Milk and Lead with Pride are two of our special milk programmes and we're really excited to bring these opportunities to the Waikato."
Mr Penno said there was strong demand for infant formula and the new factory would help to balance its reliance on a single powder manufacturing site and single milk supply pool at Synlait Dunsandel in the South Island.
"We have built one of the world's most sophisticated infant formula manufacturing sites in Dunsandel. With the addition of Pokeno, we will have a national portfolio of added-value capability to leverage for our future growth."
Synlait also has a research and development centre in Palmerston North, and a blending and consumer packaging facility in Auckland.
The new deal is subject to Overseas Investment Office approval.