Canterbury dairy company Synlait is going into partnership with United States company Munchkin to create a new infant formula.
California-based Munchkin has seven offices around the world, and is a leading manufacturer of infant and toddler products.
Synlait's managing director Doctor John Penno said the unique aspect of this agreement was the product will be grass-fed.
"We're differentiating inside the farm gate and in a way that really epitomises the very good things about the New Zealand grazing system.
"So milk for this infant formula will only come from cows that are grazing pasture, eating crops, they can't be housed, they can't be fed grain and concentrate-type supplementary feeds.
"We know that this will benefit the milk, so it's exciting that we can offer farmers a premium for doing good things and then turn it into a high value product for an exciting market."
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Dr Penno said, under the deal, the grass and crop-based diet must come from product grown in New Zealand, and farmers will be independently audited.
He said Synlait had wanted to be less reliant on the Chinese market and this agreement gets it directly into the US.
"We're not moving away from China but this year only about 20 percent of our revenue will come from China.
"We've had a balanced approach to the way we've developed the market and this opportunity allows us to continue that strategic approach to make sure we are placing product with a range of customers to ensure we manage our geographic risk."
Munchkin chief executive Steve Dunn said the new product would be a premium brand in the United States.
"Grass-fed is a very growing movement in the US - you know the buzz word in the US over the past decade has been GMO-free, organic and a recent article in the Wall Street Journal said grass-fed is the new higher standard when it comes to dairy, beef and cattle.
"We saw this as a great opportunity because 90 percent of US dairy is house cows fed grain, 90 percent of cows never step foot out onto pasture in the US.
Mr Dunn said the company's forecast gross revenue for the 2015 financial year was more than $US300 million.
