Synlait has built a $100 million milk drying plant at Dunsandel in Canterbury, which the company's milk manager, John Roberts, yesterday said would reach capacity of about 100 million litres by 2010.
"We are looking for extra processing capacity for the season starting in 2010," he said.
The new dryer can produce 8.3 tonnes of milk powder an hour and another smaller unit, producing 300kg an hour, would be installed next March or April for specialist powder runs.
Mr Roberts said Synlait would be sourcing milk from 50,000 cows this season, 15,000 from its own 16 farms and 35,000 from 42 contracted suppliers.
Any shortfall milk would be supplied from Fonterra as is permitted under the Dairy Industry Restructuring Act.
Virtually all its suppliers came from within a 50km radius of the Dunsandel factory.
The volume of milk would fill the factory sooner than when Synlait designed it early last year, and Mr Roberts said the design had been amended to handle greater capacity and to give the company two years' grace before further expansion was needed.
Synlait differed from the country's six other operating dairy companies by paying for fat, protein and lactose.
Other companies did not pay for lactose.
Synlait also differed in that it planned to influence the type of powders it produced by controlling what cows were fed.
Mr Roberts said a herd of cows owned by Synlait that naturally carried high levels of a particular protein had been isolated, and milk from that herd would be dried and supplied to a baby food manufacturer.
"It just so happens that that protein is sought-after by baby food manufacturers," he said.
The small dryer would be used to produce specialist powder runs.
The base payment to farmers would be slightly less than that paid by Fonterra, but Mr Roberts said the difference related to the fact farmers did not have to own shares in Synlait to supply as they did with Fonterra.
Ownership of Synlait, like Dairy Trust, New Zealand Dairies and the soon-to-be-launched Mataura Valley, was a mix of private and overseas.
Synlait has equity from giant Japanese company Mitsui Corporation.
