Construction is about to begin on the country's first independent facility for developing new milk powders.
The $11 million spray dryer will be built at the Waikato Innovation Park in Hamilton.
The Innovation Park company says the pilot plant will give dairy companies an opportunity to research and develop high-value products such as infant formulas which sell in supermarkets for ten times the value of milk powder exports.
The company says most infant formulas sold in the Asia-Pacific region contain New Zealand milk powder, but it's the formula manufacturers who are capturing most of the value of the milk.
Waikato Innovation Park company chairman Michael Spaans says he's confident a number of companies will want to use the spray dryer, which will have the capacity to produce 1.5 tonnes of milk powder an hour.
Mr Spaans says it's part way between very small spray dryers that might only process a few kilograms per hour and the large ones such as Edendale in the South Island which does 30 tonnes each hour.
He says it's difficult to develop new products on a very large spray dryer because there is too much down-time.
Mr Spaans says the new spray dryer plant should be operating by May next year.