The Oceania plant at Glenavy, south of Waimate, is owned by Chinese dairy giant Yili, which bought the business from its New Zealand developers two years ago.

Oceania Dairy was an initiative that was initially promoted by Christchurch based investment bank, Ocean Partners in an attempt to create further milk processing options for South Island farmers.

Oceania Dairy started processing milk from its 48 local farmer supplies in August this year and has produced about 13,000 tonnes of whole milk powder and infant formula powder for export to Yili in China.

Oceania chief executive Aidan Johnstone said it would undergo a multimillion-dollar expansion programme in the next five years.

"Yili have announced an expansion plan from early next year through to 2020. They'll be spending approximately $400 million increasing our capacity across a range of products, including whole milk powder, an infant formula packing line, a lactoferin plant and a UHT plant. It's about a five-year programme, with UHT and lactoferin starting next year," he said.

"This year we expect to be processing about 220 million litres (of milk). Capacity after this expansion will be 630 million litres - so effectively tripling of our current plan. We will certainly need some increase in supply from the local region, which we will expect through both (dairy farm) conversions and from existing farms.

"We've had a very good relationship with the farmers. A number of our farmers were instrumental in Oceania being set up, prior to its sale to Yili in the first place, so they are very, very committed to ensuring that Oceania is a success."

Mr Johnstone said Yili had spent more than $200 million developing the Oceania plant. It employed 75 people and that would triple to about 225 jobs with the planned expansion.