Fonterra is considering expanding its milk processing site at Studholme in South Canterbury to keep up with the increasing milk flow from the region's dairy farms.
Fonterra bought the formerly Russian owned dairy factory in 2012 after it went into receivership.
The co-operative says it has now started the consultation process with the aim of lodging consent applications to build two new milk powder driers at Studholme in the next five to 10 years.
That would give it an additional nine million litres of processing capacity.