Fonterra said it was looking to expand its milk processing capacity in the lower North Island by building a new milk powder plant at its Pahiatua site.

Fonterra, which last week officially opened a new $500 million factory at Darfield, near Christchurch, said it will apply for consents to build a new high-efficiency milk powder plant at Pahiatua, in northern Wairarapa, to process an additional 2.5 million litres of milk a day.

Fonterra's director of New Zealand operations, Brent Taylor said the proposal for a third drier would help ease peak processing pressure in the lower North Island.

"Our two existing driers at Pahiatua are already running at capacity, processing 1.4 million litres a day, and for the past 12 years we've had to send at least 1.6 million litres a day by rail to our site at Whareroa to process," he said.


Taylor said most of the growth in dairy is coming from the South Island but there was still some growth in the North Island.

A new drier - similar in size to the recently-opened plant at Darfield - would help drive greater efficiencies and create another 45 jobs, on top of the work involved in building the plant.

Taylor said the cooperative had looked into a number of possible locations in the North Island to expand processing capacity and Pahiatua's proximity to good infrastructure, such as a nearby port and rail lines, had made it a good option.

"We've done some initial plans and believe we would be able to build a drier, which uses the latest technology, so wastewater could be treated and irrigated to neighbouring land," he said.

Fonterra said it would engage with the local community before any formal decision was made.

If plans were to proceed, the new drier could produce up to 85,000 tonnes of milk powder.