Mataura Valley Milk general manager Bernard May said "very good progress" had been made on the McNab site since Christmas.
"Foundations are down, columns up on site and a lot of the slab is now arriving on site."
He confirmed the German engineering company GEA was awarded the tender to construct the factory. It was "well under way" with procurement and design.
The site should be processing milk on site by August next year. The factory will create up to 65 jobs in the area, many of the positions to be filled by locals.