Bay of Plenty dairy farmers could soon be supplying milk to a foreign-owned company. The factory on Maleme Street in Tauranga being re-fitted to process UHT milk, is to be supplied by Fonterra under the raw milk regulations.

This plant in Maleme Street being refitted with highly automated machinery to process long-life milk for export to China.

There are about 600 dairy suppliers in the coastal Bay of Plenty, and some may potentially supply a total of up to 220,000 litres to the new plant.

Project manager Stephen Hall says the venture is making good progress to be ready to receive milk from Fonterra soon.

'Everyday we're getting closer.”

President of Bay of Plenty Federated Farmers John Scrimgeour says the fact that the plant has appeared is disappointing.

'I'm disappointed – just as I'm sure a lot of other farmers are, that the plant has been set up.

'It's most unhelpful to the prosperity of New Zealand.”

John says there are many reasons why farmers could choose to directly supply a company other than Fonterra, but it shouldn't be a company that is subsided by their fellow farmers.

Fonterra shouldn't have to supply 50 millions litres of raw milk to rival companies, says John.

'It's totally understandable the government wants competition in the local economy. It's ridiculous that a company should have to subsidise all these other companies.

'If they need help to get started, it calls their viability into question.”

Chinese businesswoman May Wang has built the plant to export long-life milk to China.

'Personally I don't have anything against these Chinese people,” says John.

'It's just the realities of business.

'But when we have a company like Fonterra that is performing well, why we are so determined to let all these other players into the market?”

Government's recent decision to review raw milk regulations is a reaction to farmers' protests against subsidising independent companies setting up in New Zealand, says John.