Fonterra has announced plans to build a $100 million ultra heat treatment plant in the Waikato.
The plant aims to double the dairy giant's milk powder production.
Strong demand in South East Asia has seen whole and skim milk powder prices leap on the world dairy market, with China importing 60 percent of its milk powder from New Zealand.
Fonterra chief executive Theo Spierings says the new plant means farmers in the upper North Island will be encouraged to take up winter supply contracts.
He says the new plant will require continuous milk supply to meet demand.