Investment of up to $40 million in Invercargill's Blue River Dairy plant is expected following its sale to Chinese interests.
The Nith St plant, which produces sheep milk, fresh and powder, cheese and ice cream, has been sold for an undisclosed sum to Blueriver (HK) Nutrition Co Ltd.
No jobs would be lost at the plant and ''significant new investment'' was planned, with the likely addition of a second drier and up to $40 million in new development, a statement said.
Blue River, founded by Southland businessman Keith Neylon in 2003, converted three Southland sheep farms to dairying, producing about 1000 tonnes of sheep milk powder annually from 20,000 ewes.
There were plans to expand that to 100,000 ewes over the next few years, eventually producing more than 5000 tonnes of sheep milk powder. Asia was the company's main market.
Significant expansion of commercial sheep dairying on Southland farms was likely from the arrangement, Mr Neylon said.
''We are now able to fully concentrate on milk production and let Blueriver Nutrition HK focus on the finished product,'' he said.
Large-scale dairying provided a logical extension to traditional sheep farming and its expansion in the region, combined with meat and wool production, could help underpin killing capacity, he said.
''While this move is a small step, it has a significant overall benefit and benchmark for the sheep industry and comes with significantly higher rate of return potential than further expansion of the bovine dairy industry.''
Landcorp, New Zealand's largest corporate farmer, was also looking at milking sheep as a way of getting a third income from its flock.
